OREANDA-NEWS. S&P Global Ratings assigned its 'AA-' rating to the Successor Agency (SA) to the Tustin Community Redevelopment Agency (RDA), Calif.'s series 2016 tax allocation refunding bonds (TABs). The outlook is stable.

The rating reflects our view of the project areas':Moderately large size (2,263 acres) as part of the Orange County metropolitan statistical area (MSA);Strong semiannual maximum annual debt service (MADS) coverage of 4.4x based on requested fiscal 2016 incremental tax revenues; andLow volatility ratio (base-year to total assessed value, or AV) of 0.06, suggesting low sensitivity of tax increment revenues to fluctuations in overall AV. Offsetting factors include our view of the project area's moderate taxpayer concentration.

The 2016 bonds are payable from and secured by the pledged tax revenues to be derived from the project area. Tax revenues include money deposited from time to time in the redevelopment property tax trust fund (RPTTF); and payments made from the City of Tustin to the SA pursuant to a settlement agreement.

The stable outlook reflects our view of good semiannual MADS coverage by pledged revenue. Given this good coverage, stabilization of project area AV, and low volatility ratio, we don't expect to change the rating in the next two years.

An upgrade is possible if there is significant improvement in AV leading to significant increases in debt service coverage. Should AV improve to what we consider adequate and if the city strengthens its FMA to what we consider good, we could raise the rating.

Should AV decline or the SA fail to manage and prioritize its debt obligations in a timely manner in accordance with the trust indentures, or should the city not make one of its payments to the SA, forcing the SA to rely on its reserve funds, we could lower the rating. Should the financial performance deteriorate or debt increase significantly, we could lower the rating.