Santa Monica Gets A Ratings

By Lookout Staff

July 2, 2009 – Santa Monica’s rating to bankroll key bonds reached an A after a San Francisco-based rating agency found that, unlike other municipalities in Los Angeles County, the City’s economic outlook was “stable."

Fitch San Francisco on Tuesday upgraded $12.5 million of outstanding Santa Monica Redevelopment Agency Ocean Park Redevelopment Projects tax allocation bonds from to BBB+ to A-. The agency also affirmed the ‘A+’ rating on both Earthquake Recovery Redevelopment Area bonds.

“The upgraded rating reflects the long-term strength of Santa Monica’s economy, as well as the City’s careful stewardship of public resources,” said Santa Monica City Manager Lamont Ewell.

According to Fitch, the upgrade to ‘A-’ reflects the Ocean Park redevelopment project’s premier location along the Pacific Ocean and near Santa Monica’s premier commercial areas, strong assessed valuation (AV) gains providing solid debt service coverage and closed lien.

Those factors were “balanced against its high taxpayer concentration and small size coupled with the area’s vulnerability to earthquake damage,” City officials said.

While many areas in Los Angeles County are experiencing tax base contraction, Fitch found that Santa Monica’s low level of sub-prime and negative amortization loans and low foreclosure rates point to stability in the Santa Monica market.

Fitch found that the ‘A+’ rating on the earthquake recovery redevelopment project area “reflects its very high debt service coverage, desirable location and importance to the city, strong assessed valuation growth, and limited total debt outstanding,” City officials said.