$5.6 billion in debt affected
New York, June 24, 2015 -- Moody's Investors Service has placed under review for possible upgrade
the ratings on the tax allocation bonds (TABs) of 45 successor agencies
to the former California redevelopment agencies (RDAs). The review
is in conjunction with today's publication of a new, updated methodology
for rating tax increment debt. In the methodology, Moody's
has introduced a scorecard that outlines its approach to rating tax increment
debt nationally with special considerations for the unique credit attributes
of California tax allocation bonds.
Moody's expects to complete the reviews within 90 days. While the
updated methodology applies to tax increment debt nationally, it
is leading to reviews of the California tax allocation bonds only.
Moody's expects any upgrades resulting from the reviews to be between
one and three rating levels or notches.
RATINGS RATIONALE
In the updated methodology, Moody's introduces a scorecard that
assigns weights and values to the factors Moody's considers most important
in the credit analysis of tax increment debt. The primary factors
in this analysis are the characteristics of the project area and the tax
base (including size, volatility, socioeconomic and economic
diversity), the financial strength of the project area, and
the debt provisions and legal structure of the bonds. The scorecard
contains both a "Standard Approach" that applies to tax increment debt
nationally except for California and a "California TABs Approach" designed
to accommodate the unique features of California Tax allocation bonds
after the legislative dissolution of the redevelopment agencies in the
state in 2012.
For California tax allocation bonds, Moody's includes an important
consideration regarding the post-RDA dissolution governing legal
structure and framework. Moody's has calibrated the methodology
to incorporate the relatively smooth implementation of legislative changes
over the last three years, which have led to the timely payment
of debt service on California TABs.
"We intend for this methodology to help investors, issuers,
and other interested market participants understand how key quantitative
and qualitative risk factors are likely to affect ratings in this sector,"
says Managing Director Naomi Richman.
The methodology updates, replaces and expands nationally the California
Tax Allocation Bonds, December 2013 methodology.
This final publication follows a Request for Comment period on the proposed
methodology, that was open from 31 December 2014 to 6 March 2015.
Market comments led to several adjustments to the methodology's scorecard
with the changes reflected in the published version. Certain scorecard
factors, weights, and breakpoints were amended and the language
in the methodology was expanded and clarified to add transparency around
the types of additional considerations that are incorporated into Moody's
rating analysis and can lead to scorecard adjustments.
The methodology "Tax Increment Debt" is available on Moodys.com
at:
http://www.moodys.com/viewresearchdoc.aspx?docid=PBM_PBM181116
The affected successor agencies are:
Successor Agency to the Alameda County RDA
Successor Agency to the Atwater RDA
Successor Agency to the Azusa RDA
Successor Agency to the Bakersfield RDA
Successor Agency to the Buena Park Community RDA
Successor Agency to the Carson RDA
Successor Agency to the Cathedral City RDA
Successor Agency to the Colton RDA
Successor Agency to the Fontana RDA
Successor Agency to the Fountain Valley Agency for Community Development
Successor Agency to the Glendale RDA
Successor Agency to the Huntington Beach RDA
Successor Agency to the Indian Wells RDA
Successor Agency to the Industry Urban DA
Successor Agency to the La Habra RDA
Successor Agency to the Lompoc Community RDA
Successor Agency to the Los Angeles Community RDA
Successor Agency to the Menlo Park Community Development Agency
Successor Agency to the Oakland RDA
Successor Agency to the Oakley RDA
Successor Agency to the Oceanside CDC
Successor Agency to the Petaluma CDC
Successor Agency to the Pomona RDA
Successor Agency to the Port Hueneme RDA
Successor Agency to the Rancho Mirage RDA
Successor Agency to the Riverside County RDA
Successor Agency to the Roseville RDA
Successor Agency to the San Diego RDA
Successor Agency to the San Francisco RDA
Successor Agency to the San Jose RDA
Successor Agency to the San Juan Capistrano Community RDA
Successor Agency to the San Marcos RDA
Successor Agency to the Santa Ana Comm. RDA
Successor Agency to the Santa Barbara RDA
Successor Agency to the Santa Monica RDA
Successor Agency to the Santa Rosa RDA
Successor Agency to the Santee CDC
Successor Agency to the Soledad RDA
Successor Agency to the Sunnyvale RDA
Successor Agency to the Torrance RDA
Successor Agency to the Union City Community RDA
Successor Agency to the Walnut Creek RDA
Successor Agency to the Watsonville RDA
Successor Agency to the Westminster RDA
Successor Agency to the Whittier RDA
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Tax Increment Debt
published in June 2015. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
The following information supplements Disclosure 10 ("Information Relating
to Conflicts of Interest as required by Paragraph (a)(1)(ii)(J) of SEC
Rule 17g-7") in the regulatory disclosures made at the ratings
tab on the issuer/entity page on www.moodys.com for each
credit rating as indicated:
Moody's was not paid for services other than determining a credit rating
in the most recently ended fiscal year by the person(s) that paid Moody's
to determine this credit rating.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Robert Azrin
Vice President - Senior Analyst
Public Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Florence Zeman
Associate Managing Director
Public Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's places ratings of CA tax allocation bonds under review for upgrade in conjunction with new methodology
