Standard & Poor’s Downgrades Certain California Redevelopment Bonds

NEW YORK Jan. 25, 2012–Standard & Poor’s Ratings Services placed its long-term and underlying ratings (SPURs) on certain taxable allocation bonds (TABs) of five redevelopment agencies (RDAs) on CreditWatch with negative implications as follows:

San Pablo RDA (‘AA’ long-term joint criteria/’BBB-‘ SPUR), variable-rate series 2006 subordinate-lien net tax increment of tenth township project area;
Pittsburg RDA (‘AAA’ long-term joint criteria/’BBB’), variable-rate series 2004A, and ‘BBB’ long-term on parity 2006B, 2006C, and 2008A subordinate-lien net tax increment of Los Medanos I, II, and III project subareas;
Manteca RDA (‘AAA’ Long-term Joint Criteria/’A’), variable-rate series 2005 and ‘A’ long-term on parity series 2006 subordinate-lien net tax increment of merged area;
Morgan Hill RDA (‘AAA’ long-term joint criteria/’A’), variable-rate series 2008A and 2008B senior-lien net tax increment of Ojo De Aqua project area; and
Menlo Park RDA (‘AAA’ long-term joint criteria/’A-‘), variable-rate series 2006 senior-lien net tax increment of Las Pulgas project area.

“We base the CreditWatch placement on our view of the judicial decision issued by the California Supreme Court to uphold legislation that dissolves redevelopment agencies in the state on Feb. 1, 2012, and the potential for fluctuating interest rates and demand features on variable-rate debt, which we believe could require short-term management of payments, agreements, and market access and which could be constrained under the new redevelopment law,” said Standard & Poor’s credit analyst Sussan Corson. “Without further clarification from the state and legislature on issues related to refunding of this debt, we could lower the ratings,” Ms. Corson added.

We expect to resolve the CreditWatch on the TABs in the next three months.

At the same time, Standard & Poor’s revised its outlook to negative from stable on Vista Community Development Commission’s (Vista CDC; ‘A-‘) series 2010 subordinate-lien TAB notes and Inland Valley Development Agency’s (IVDA; ‘A’) series 2011 A, B, and C senior-lien TABs due to our assessment of future uncertainties related to market access and scheduled take out financings. In addition to questions related to future market access, we believe it remains unclear whether the new redevelopment law applies to IVDA, which has redevelopment powers, but was not formed under the portions of the act that were dissolved. We could revise the outlook on the ratings to stable in the next two years if we receive clarification on the practical ability of these agencies to issue refunding debt. Should these issues remain unresolved in the next two years, we could lower the rating.


USPF Criteria: Special-Purpose Districts, June 14, 2007
Assessing The Credit Impact Of California’s Redevelopment Agency Legislation, Oct. 24, 2011

Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at All ratings affected by this rating action can be found on Standard & Poor’s public Web site at Use the Ratings search box located in the left column.

Media Contact:

Ola Fadahunsi, New York (1) 212-438-5095,

Analyst Contacts:

Sussan Corson, New York (1) 212-438-2014

Matthew Reining, San Francisco (1) 415-371-5044

Alda A Mostofi, CFA, San Francisco (1) 415-371-5061


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