Fitch Upgrs Santa Monica Redev Agency, CA (Ocean Park Redev Proj) $12.5MM Bonds to 'A-'

SAN FRANCISCO--(Business Wire)--
Fitch Ratings upgrades to 'A-' from 'BBB+' $12.5 million of outstanding Santa
Monica Redevelopment Agency (the agency) Ocean Park Redevelopment Projects tax
allocation bonds, series 2002. In addition, Fitch affirms the 'A+' rating on the
following Earthquake Recovery Redevelopment Area bonds:

--$49.9 million tax allocation refunding bonds, series A;

--$9.4 million taxable tax allocation refunding bonds, series B.

The Rating Outlook is Stable.

The upgrade to 'A-' reflects the Ocean Park redevelopment project's premier
location, strong assessed valuation (AV) gains providing solid debt service
coverage, and closed lien, balanced against its high taxpayer concentration and
small size coupled with the area's vulnerability to earthquake damage.

The Ocean Park project area is located along the Pacific Ocean and near Santa
Monica's premier commercial areas. The tax base is highly concentrated, with the
top taxpayer - owner of two luxury apartment towers - and the top 10 taxpayers
representing 27% and 34% of AV, respectively. Offsetting this concentration risk
is the high proportion of land value within the total AV. Land totals 66% of AV
and the buildings and improvements 34%. Current year coverage of debt service is
estimated at 2.0 times (x), well above the 1.7x projected for fiscal 2009 upon
issuance. While the AV for fiscal 2010 is not available and many areas in Los
Angeles County are experiencing tax base contraction, Santa Monica's (the city)
low level of sub-prime and negative amortization loans and low foreclosure rates
point to stability in the Santa Monica market. Furthermore, even if the project
area sustained a loss of 34%, debt service coverage would remain strong at 1.3x.

The 'A+' rating on the earthquake recovery redevelopment project area reflects
its very high debt service coverage, desirable location and importance to the
city (44% of total city AV), strong AV growth, and limited total debt
outstanding as well as the taxpayer concentration, vulnerability to earthquakes
and potential for the city to leverage tax increment on a subordinate basis.

The earthquake recovery redevelopment project area was established in 1994
following the Northridge earthquake to stimulate and assist redevelopment of
damaged areas. The project area covers 2.9 square miles and includes much of the
city's commercial and residential base. The project area is concentrated, with
the top 10 taxpayers representing 22% of AV; however, no single taxpayer
represents more than 6% of AV and 9.8% of incremental AV. Current year coverage
of debt service is estimated at 9.8x, well above the 8.0x projected at issuance.
Again, while the AV for fiscal 2010 is not yet available, should the project
area sustain a decline in value as large as 50%, debt service coverage would
remain at 2.0x.

Fitch has withdrawn its 'A+' long-term rating on the Santa Monica Redevelopment
Agency (CA) (Earthquake Recovery Redevelopment Proj Area) tax allocation bonds
series 1999. The rating withdrawal is in conjunction with the advanced refunding
of the above-referenced bonds.

Fitch's rating definitions and the terms of use of such ratings are available on
the agency's public site, www.fitchratings.com. 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.

Fitch Ratings, San Francisco
Karen A. Ribble, 415-732-5611
Amy S. Doppelt, 415-732-5612
or
Media Relations:
Cindy Stoller, 212-908-0526, New York
Email: cindy.stoller@fitchratings.com

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