LOS ANGELES -- Standard & Poor's Corp. yesterday said various Los Angeles Community Redevelopment Agency bonds "should not be negatively impacted" by the city's recent civil unrest.
Some of the redevelopment agency's project areas suffered higher levels of damage, generating market concern over certain debt of the agency on grounds that property tax losses could weaken the financial cushion for small bond issues.
Project areas with the most damage are Adams Normandie, Normandie/5, and Hoover, according to Standard & Poor's. All the areas are near south central Los Angeles, where much of the unrest occurred after the April jury verdict largely exonerating four policemen in the Rodney King beating case.
The rating agency said the initial estimates of potential taxable value reduction are $2.5 million in the Hoover area, $2.3 million in Adams Normandie, and $3.2 million in Normandie/5.
The agency noted that the Hoover project's total assessed value equals $251 million, meaning that the potential taxable value loss represents less than 1%. Accordingly, the agency affirmed its A-minus rating on $4.9 million of Hoover Series A tax allocation bonds.
"Debt service coverage is strong at 3.1 times, based on fiscal 1992 revenues," Standard & Poor's said. "This excess coverage would allow the agency to absorb up to a 35% loss in assessed value while the project area rebuilds and still provide adequate debt service coverage."
The agency also affirmed AAA ratings, based on bond insurance, for $8 million of Adams Normandie Series A and B debt and $4.4 million of Normandie/5 Series B tax allocation bonds.
Standard & Poor's said that "damage in other areas, including Hollywood, Bunker Hill, and the central business district, is considered minor and is not expected to have any significant impact on tax increment revenues or debt service coverage."
Moody's Investors Service in May said it would not take any rating action following the civil disturbances, but would look for any long-range rating implications.