S&P Rates Duarte Redev Agy,CA Tax Alloc Rfdg Bnds A-.

NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 9/8/98-- Standard & Poor's today assigned its single-'A'-minus rating to Duarte Redevelopment Agency, Calif.'s tax allocation refunding bonds (Merged Redevelopment Project Area) dated Oct. 1, 1998 due Sept. 1, 2016. The bonds are scheduled to sell Sept. 21, 1998.

The rating reflects the security provided by the first lien on tax increment revenues net of tax-sharing agreements from the Merged Redevelopment Project Area (MRPA), subject only to the prior lien of the agency's 1997 refunding bonds for the Amended Davis portion of the MRPA. Bond proceeds will be used to refund certain outstanding tax allocation bonds issued by the agency. General credit characteristics on the rating include:

-- The closed lien nature of the security with a first lien on all

revenues from property tax increments (excluding the Amended Davis sub-area); -- Moderate concentration in the MRPA's 10 leading taxpayers; -- Low volatility in base-to-total assessed valuation revenues; and -- Strong coverage of maximum annual debt service (MADS) and a

declining debt service that will boost coverage over time.

Offsetting factors include low growth in assessed property valuation within the MRPA and pending tax appeals ($44.1 million); however, the average rate of successful tax appeals along with the rate of reduction has been only 10% over the past five years.

The MRPA is located in the city of Duarte (population 22,500), situated in Los Angeles County and approximately 20 miles northeast of Los Angeles, Calif. The MRPA (excluding the Amended Davis sub-area) is mixed-use and covers 475 acres, or 10.5% of Duarte's total acreage. The MRPA is zoned for 58% residential use, 22% commercial, 17% industrial, and 3% vacant land. Approximately 3% of its total acreage is available for development.

In fiscal 1996, there was a countywide revaluation that reduced assessed property valuations of the MRPA by 5% to $310 million. The MRPA's assessed valuation has been virtually stable since fiscal 1996, increasing just 2.4% to $316 million. The project area's 10 leading taxpayers are moderately concentrated at 26.7% of total assessed valuation and 31.8% of incremental value. The largest single taxpayer's assessed valuation is only 6.5% of incremental value. The base-to-total assessed valuation revenue volatility is very low at 0.16. There are no new developments slated for fiscal 1999.

Fiscal 1999 pledged revenues provide strong coverage (1.42x) of MADS. The bonds have a declining debt service structure. These bonds have no additional bonds test as additional monies generated from the MRPA's property tax increments must be employed to satisfy the 20% housing fund set aside for low and moderate income housing, which is subordinate to the bonds.

Duarte is mainly a bedroom community. Residents have employment opportunities within the city and also have access to the greater Los Angeles County area. Duarte's population has sustained level growth of approximately 1.5% per year since 1994, which reflects the city's growth in affordable housing stock. Housing prices in Duarte range from $80,000 to $275,000. As a result of the countywide revaluation in fiscal 1996, Duarte's property valuations dipped 2%, to $902 million. However, the city has since experienced three continuous years of growth (5.7%) and is now at $954 million. Duarte's wealth levels are below average. The city's per capita effective buying income is below average at 83% of the state average and 80% of national averages. However, median household effective buying income is slightly above average at 104% of the state average and 108% of the national averages.

OUTLOOK: STABLE The outlook reflects the MRPA's continued solid coverage of debt service with a closed lien on these bonds, and easy access to the Los Angeles County employment base, Standard & Poor's said.---CreditWire

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