By JEREMY HAY
THE PRESS DEMOCRAT
Bonds issued by California’s now-defunct redevelopment agencies have been downgraded or placed on a warning list.
The move follows the state’s elimination of redevelopment agencies and legal requirements that the agencies continue to pay their outstanding debts.
The actions by the three ratings agencies — Moody’s Investors Service, Fitch Ratings and Standard & Poors — reflect uncertainty about how that process will be managed.
“Fitch remains concerned that while the intent of the legislation is to uphold payments under bond indentures, the legislation’s language is vague,” Fitch Ratings said in a statement.
The company’s most recently reviewed redevelopment bonds include $14.5 million in A-rated bonds issued by Rohnert Park in 1999. Fitch placed them on a negative ratings watch, meaning they could be downgraded within six months.
The move is likely to affect people or institutions that bought the bonds as investments and want to trade them on the open market, not cities and counties whose redevelopment agencies issued them, experts said.
“The owners of the bonds with lower ratings will see a reduction in the price of those securities if they wish to sell them on the secondary market, because of the higher risk,” said Jim Kennedy, interim executive director of the California Redevelopment Association.
Gabe Gonzalez, the Rohnert Park city manager, said, “We keep a watchful eye on it, but it’s not a particular concern to us.”