LOS ANGELES -- A South San Francisco redevelopment issue that failed to attract any bidders yesterday apparently illustrates a growing wariness toward certain borrowers affected by a real estate slowdown and California's general budget malaise, market participants said.

The city's redevelopment agency tried to sell $11 million of tax allocation bonds for its Gateway redevelopment project. But the deal, which was postponed earlier this fall to address certain underwriters' concerns, received no bids despite interest expressed prior to the sale.

"I don't know what happened," especially because the issuer tried to address specific questions raised previously, said Lora Stovall, a principal of Bartle Wells Associates in San Francisco, the agency's financial adviser.

"I don't know right now' what the agency's next step will be, Stovall said, adding that city officials would discuss the matter late yesterday afternoon.

But potential underwriters interviewed yesterday pointed to uncertainty about the project area -- in particular pending appeals of assessed valuations -- as one reason that could have spooked bidders.

"That probably has a lot to do with it," said a trader at one firm.

An official in the municipal bond department at another firm noted that "people are getting a little more particular about what [redevelopment bonds] they own."

The nonrated South San Francisco deal "was a little bit below creditwise what we would bid on," the official added.

At least two underwriters also questioned the projected debt service coverage ratios contained in the preliminary official statement. "Someone else might read it differently" if they make their own assumptions, said an underwriter who studied the transaction.

"I don't understand that" assertion, Stovall said, because the appeals involve specific numbers. "We didn't finagle with the calculations at all," Stovall added.

Another municipal analyst who examined the deal expressed puzzlement that no bidders stepped forward.

"I maintain that it's a decent credit," said the analyst, speculating that investors possibly felt the bonds would not come cheap enough for a nonrated deal.

In addition, the analyst said the herd instinct that sometimes sways market participants might be coming into play. "No one wants to go against the tide," the analyst said.

Stovall said the redevelopment agency looked into obtaining a rating. But rating officials expressed concern over the relatively small project area -- 117 acres -- and the fact that about half of the assessed valuation in the area is concentrated in one owner.

Bond proceeds from the issue would have paid down developer advances to that owner, Homart Development Co., which is a member of the Coldwell Banker Real Estate Group, a subsidiary of Sears, Roebuck & Co.

The redevelopment agency planned a $13.2 million bond sale earlier this fall, but the issuer subsequently downsized the proposed deal and made other changes to address underwriters' concerns.

The agency's property tax revenue is expected to decline in the current fiscal year to about $1.58 million, down from $1.87 million in fiscal 1992. The decrease reflects a recent drop in assessed valuation of office building property in the project area to reflect current market conditions.

Current tax increment revenue is projected to be 1.32 times maximum annual debt service, according to the preliminary official statement.

But the prospectus noted that two other owners of property in the Gateway project area also are appealing their assessed valuations. If those appeals succeed, net tax increment revenue available for debt service could decline further and result in a coverage ratio of 1.2 times maximum annual debt service.

That prospect was cited by underwriters as one reason the issue probably failed to attract bids yesterday. They also cited uncertainty generated by the California budget problems, which could lead to further state diversions of redevelopment monies.

A similar diversion this year is expected to cost the South San Francisco agency $377,772, but the agency said that payment is not expected to reduce tax revenues available for the Gateway project.

The Gateway project is a master-planned office park development, including hotels and commercial space north of San Francisco International Airport.

Stovall noted that "we've got a track record of [tax] increment collection for 10 years." The municipal analyst who believes the credit is solid noted that much of the project area -- 74 acres -- already is developed, and that should make the deal more palatable to investors, he said.

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