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Fitch Rates $21.1MM Riverside (CA) Public Fin Auth Tax Allocation Rev Bonds 'A-'.

SAN FRANCISCO -- Fitch assigns an 'A-' rating to approximately $21.1 million Riverside (CA) Public Financing Authority (the authority) tax allocation revenue bonds, consisting of:

--$7.3 million 2007 series A (Casa Blanca and Downtown/Airport Merged Redevelopment Projects) (tax-exempt);

--$13.9 million 2007 series B (Casa Blanca and Downtown/Airport Merged Redevelopment Projects) (taxable).

The bonds are expected to be sold through negotiation with Stone & Youngberg, LLC on or about the week of March 12th.

Bond proceeds will be used to purchase loans from two Riverside Redevelopment Agency (the agency) project areas, Casa Blanca and Downtown/Airport Merged. Bonds are secured by loan repayments to the authority from tax increment revenue in the two areas. While revenue pledged to debt service combines repayments from both project areas, neither area is responsible for shortfalls in the other's payments. Including outstanding bonds, parity debt service for each of the project areas will be substantially level and bond security includes a common debt service reserve.

The rating reflects the maturity of and diverse land uses within the project areas, sound coverage of debt service by current year revenues, as well as adequate additional bond tests of 1.25 times (x). Originally established in 1976, Casa Blanca's incremental assessed valuation (AV) equals over 15x its base value, resulting in limited revenue volatility under stress scenarios. The Downtown/Airport Merged project area was adopted in 1971, with various additions and mergers through 1984. The resulting ratio of incremental AV to base value equals over 6x. Estimated incremental revenue this year, including a conservative allowance for appeals, provides 1.23x coverage of maximum annual debt service (MADS) for Casa Blanca and 1.33x MADS for Downtown/Airport Merged. Growth potential exists, but may be slowed by appeal activity in the Downtown/Airport Merged area. Coverage levels hold up well to Fitch-designed stress scenarios, including a significant decrease in residential home values.

Casa Blanca encompasses about 725 acres in the geographical center of town. Land use is predominantly residential (43% of AV) and also includes a number of large commercial sites, including Home Depot and Stater Bros., as well as industrial uses. Taxpayer concentration is moderate, with the top-10 taxpayers representing 29% of total AV and 31% of incremental AV. The top taxpayers include Home Depot and E.R. Carpenter.

Downtown/Airport Merged is larger at 2,415 acres and includes two non-contiguous project areas which were merged in 1990. The resulting project area is largely commercial and industrial, each land use accounting for about one quarter of total AV for that project area. The downtown area includes the city's historic downtown, which includes office buildings, residences and the Historic Mission Inn (one of the top-10 taxpayers). The airport area is mostly industrial and includes large BF Goodrich and Metal Container facilities. The largest taxpayers make up a more concentrated 32% of AV and 37% of incremental AV.

Riverside is located about 60 miles east of Los Angeles and is the county seat of Riverside County. The city covers over 80 square miles, is bisected by a major interstate and three state highways, and is served by the Ontario Airport and the Metrolink to downtown Los Angeles The regional economy is strong, evidenced by average annual population growth between 2000 and 2006 of about 2.0% and average annual employment growth of about 4.5%. Fitch believes the area may be vulnerable to home price declines given the dramatic rise in its price income ratio.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
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Publication:Business Wire
Date:Feb 23, 2007
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