ANAHEIM — Moody's Investors Service said Friday it has assigned its highest rating to $135 million in tax allocation revenue bonds soon to be reissued by the city's Redevelopment Agency, which is taking advantage of low interest rates to raise capital.
The reissuance of the bonds, most of which were initially sold in 1988, will raise about $12 million to be used for capital improvements, Anaheim Finance Director George P. Ferrone said. The old bonds will be recalled when the new issue is marketed, possibly within the next two weeks.
"It really is very good news," Ferrone said about the favorable rating. "We were pleasantly surprised. We knew we would reissue them, but we didn't know we'd get such a high rating."
Those electing to roll over their old bonds to this offer will see a drop in yield. The Redevelopment Agency will benefit from the offering by a drop in the interest it pays, from 8.1% to 6.5%, Redevelopment Agency Director Elisa Stipkovich said.
Barbara Flickinger, vice president-manager for Moody's Investors Services in New York, said that the A-1 rating, the highest rating given to tax allocation bonds issued by redevelopment agencies in California, was given because of a solid tax base in two redevelopment areas that virtually guaranteed repayment to bondholders.
Currently, no other such bond issue by a redevelopment agency has a similar rating, Flickinger said.
Included in the redevelopment zone is Rockwell International Corp., which "represents a significant portion of the project area's taxable base," Flickinger said, adding that tax revenue has grown by an average of 5.7% per year.
"There's been a lot of major, high-quality development" since the redevelopment zone was created in 1973, Flickinger said.
The bond issue is "a way to pay off the old debt and take a lower debt," Flickinger said. "It's really just a refinancing."
The new bonds will be secured by tax revenue on 2,655 acres of redevelopment land. About 200 acres of that is in the downtown area and 94 of the remaining 2,455 acres in north Anaheim is vacant land, according to a Moody's Services analysis.
Stipkovich noted that the financial strength of the downtown redevelopment zone, called Downtown Project Alpha, was given a boost in recent years with construction of the Koll Anaheim Center. The center includes a Pacific Bell office building and a nearby retail center.
The estimated $12 million to be raised in the reissue will go toward capital improvements within the redevelopment areas, Stipkovich said. The agency is also required to set aside 20% of revenue for low- and moderate-income housing.