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

--$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.

SOURCE: Fitch Ratings

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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