Chowchilla’s redevelopment successor agency has been issued an A credit rating by Standard & Poor’s Rating Services for about $6.2 million in long-term bonds.
“The rating reflects what we view as the (successor agency’s) strong maximum annual debt service coverage and fully funded debt service reserve,” S&P Global Ratings credit analyst Li Yang said. “The rating further reflects our view of the agency’s diverse tax base.”
After the state dissolved all redevelopment agencies in California, the city of Chowchilla is serving as the successor agency in the community. The bonds are payable from money that is occasionally deposited in the city’s Redevelopment Property Tax Trust Fund.
S&P rates both bond issuers and the bonds themselves on a rating scale ranging from the highest level of AAA to CC, based on apparent creditworthiness. The A rating assigned to Chowchilla’s redevelopment successor agency indicates “a strong capacity to meet its financial obligations, but is somewhat vulnerable to the adverse effects of changes in circumstances and economic conditions” than higher-rated AA or AAA issuers, according to S&P.
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S&P also deemed the city’s credit outlook to be stable.
Chowchilla City Administrator Brian Haddix said financial challenges in 2010 forced a missed bond payment, prompting the city to refinance the debt. He added that refinancing will save the successor agency about $2 million, and the city will save about $377,000, over the life of the bonds.