LOS ANGELES -- A new California-based rating agency is seeking to carve a niche in the complex market of real estate-backed debt.

The Muni-Guide Corp., a three-member agency based in Del Mar, Calif., was created earlier this year to rate and analyze the state's special tax and assessment securities.

This debt, which often sells as noninvestment-grade paper, is not getting a fair shake from the New York-based rating agencies, claimed Thomas A. McPhail, vice president of Muni-Guide.

"We don't think the other rating agencies have been in this market, essentially, because they don't understand the security." said Mr. McPhail.

An official at another rating agency disagreed.

"As far as special districts are concerned, we're very familiar with the issues," said Steven Zimmermann, a senior vice president in the San Francisco office of Standard & Poor's Corp.

He said Standard & Poor's has rated more than 80 special tax districts, including assessment and tax allocation deals in Califormia.

Nevertheless, another rating agency official observed that many real estate-backed bonds have gone unrated in the past.

"There has been a lot of reluctance to rate special tax and assessment bonds, especially small parcels," said Claire Cohen, executive managing director at Fitch Investors Service. "Generally, they are too small of a base to put into your regular rating scheme."

It also has not made sense for many small issuers to pay for such a rating when the deals would fail to achieve investment-grade status, market participants noted.

Officials at both Fitch and Standard & Poor's said they had not heard of Muni-Guide. Officials at Moody's Investors Service could not be reached for comment.

Many public agencies have sought other revenues for infrastructure finance after Proposition 13 slashed property tax revenues for local governments in 1978. One popular tools is the Mello-Roos Community Facilities Act of 1982, which allows home owners to be charged a special tax to pay for streets, lighting, and other improvements. These levies back the Mello-Roos bonds.

Governments also can create a benefit assessment district, which involves assessing residents a charge to pay for improvements in the district.

Muni-Guide tells local issuers that its ratings can help avoid the "junk bond stigma" on Mello-Roos and benefit assessment debt. A rating from Muni-Guide will also reduce both the costs and risks of such financings, the company says. Mr. McPhail said his company is contacting local issuers throughout the state to offer its services.

Defaults on certain Colorado assessment bonds fed concern over real estate-backed bonds. California's real estate slump has also prompted increased scrutiny of such debt.

Muni-Guide gives "certified coverage ratings" that run from one to 10, with 10 being comparable to a triple-A. The costs of a rating can range from $5,000 to $25,000, depending on the size and complexity of the financing. Rating updates can cost from $2,000 to more than $15,000.

Muni-Guide recently issued its first rating, a 10, for five small separate assessment district bonds that financed lighting and sidewalks for the city of Newport Beach. Beverly Hills-based M.L. Stern & Co. underwrote the bonds in August with a final net interest cost of 7.34%.

Paul H. White, an executive vice president of M.L. Stern & Co., said he thought the rating was helpful. Other market participants said Muni-Guide's services could be beneficial.

"I think there is a need in the marketplace, it's just a question of who will pay the fees," said Mark J. Adler, vice president and manager of the Los Angeles public finance office for Paine Webber Inc.

Mr. McPhail said the company is asking developers to pay the rating costs because they can later be reimbursed from bond proceeds. This process is flexible because issuers also could choose to pay.

Muni-Guide will verigy the appraisal on land backing the debt, conduct a market absorption study if one is lacking, validate the value-to-lien ration, and calculate a developer's fiscal health.

"At this point real estate-based financing needs something to level out the playing field," said Mr. McPhail. "We want to give everyone the knowledge that the underwriters and financial advisers have."

Mr. McPhail said the company was the idea of four people: his father , Norman K. McPhail; his brother, company Vice President Norman A. McPhail; and company President James D. Wheaton, who also serves as city manager of Redlands, Calif, The elder Mr. McPhail recently started his own San Diego underwriting company after working for the past seven years with Miller & Schroeder Financial Inc. in Solano Beach.

The senior Mr. McPhail said he is not involved with Muni-Guide's operations or finances because, "an investment banker can't be involved in a credible rating agency."

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