NEW YORK -- Fitch Ratings affirms its 'A' rating on approximately $89 million of City of Los Angeles' Special Parking Revenue Fund (SPRF) parking facilities bonds, series 1999A and 2003A (the bonds) outstanding. The Rating Outlook is Stable.
"I have the benefit of working with some of the biggest trend-setters and celebrities in the industry every day," she said. "It's allowed me to truly identify what they are wearing, what inspires them and what is coming next. Industry 1212 is essentially a peek into the celebrity lifestyle made affordable."--The parking system's monopolistic position over essential street parking spaces and garages located in the city's central business, commercial center, and entertainment districts, serving a populous metropolitan area;SECURITY:--Should the city's financial position materially deteriorate, negative rating would be likely.Parking assets within the SPRF parking system produce strong cash flows, resulting in strong debt service coverage levels of over 2.0x from fiscal year 2005 to present and adequate capacity to fund all capital needs on an ongoing basis. In fiscal 2010, net revenues grew by 9.7% when compared to fiscal 2009, reflecting the city's recent investment in upgrading a large portion of the asset base with enhanced revenue control technology and tightly managing its expense profile. Debt service coverage, when calculated on a net revenue basis, generated 3.43x debt service coverage in fiscal 2010, slightly higher than debt service coverage of 2.95x generated in fiscal 2009. For fiscal 2011, the city estimates debt service coverage will be above 2.0x, consistent with historical performance. Although the SPRF revenue stream provides for healthy debt service coverage ratios and high levels of surplus cash flow, the current need to address major maintenance and repairs will likely diminish some its financial flexibility, albeit not dramatically.--Decisions made by the city relative to asset maintenance and reinvestment, and retention of commensurate financial resources within the parking system indenture;For media inquiries or press tours of the center, please contact Shaila Arora at Shaila@AroraPR.com .SPRF debt is secured on a gross lien basis, before operations and maintenance on the system, or capital requirements. No tax or other city revenue is pledged. The SPRF was established by ordinance in 1972, amended in 1998 and codified under Los Angeles Administrative Code and is a special fund of the city and not an enterprise fund. Under the Master Trust Indenture, the city's obligation to pay debt service from parking revenues is unconditional and irrevocable. In spite of the legal gross lien, Fitch's analysis focuses on the parking system as a viable enterprise and hence on debt service coverage on a net revenue basis."Throughout my years in the music business, I've become very aware of the incomparable energy that is created by live music performances. It inspires people to move, to dance and simply be happy," says Winnaman. "Live music creates the perfect atmosphere in which to get people up and on their feet, and when I conceptualized pairing DJs with the best choreographers and trainers in the business, I knew Rock It Workouts would resonate, especially with people who are tired of the same old fitness routine. We've already had so many people come in and tell us that they can't wait to get started."For more information about memberships, classes or pricing, interested individuals can sign up on the Rock It Workouts website at www.RockItWorkouts.com .The complex, a stunning 6000 square-foot space designed for luxury, form and style, is located at 54 West Green Street and is the brainchild of well-known entertainment branding executive Nicole Winnaman ( www.Winnaman.com ), who has launched campaigns for dozens of celebrities including Britney Spears, Justin Timberlake, Justin Bieber, The Rolling Stones, Paul McCartney and Ellen DeGeneres.As a result of the system's low leverage and substantial financial flexibility, internal liquidity within the fund has historically been robust, but during fiscals 2009 and 2010 was substantially depleted as the city transferred undesignated funds to the city's General Fund to alleviate budgetary deficits. In fiscals 2009 and 2010, approximately $57 million and $62 million, respectively, were transferred to the city's General Fund out of the SPRF. Notably, transfers to the General Fund are subordinate to annual debt service and budgeted five-year capital needs, capturing management's focused effort to confront deferred maintenance. In the current year's budget, approximately $16.5 million is anticipated to be transferred to the City Reserve fund. As of May 2011, the SPRF's undesignated balance stood at approximately $24 million, roughly about 20% of par outstanding, which Fitch views as adequate compared to the total debt outstanding. The subordination of these payments to the general fund under this indenture and the importance of the parking system as a generator of net income to the city are key mitigants to the risks of unfettered transfers and protracted periods of deferred maintenance.Parking facilities are located throughout the city and are generally priced below market rates. The SPRF's assets include on-street parking spaces, off-street parking meters, parking garage spaces, and off-street parking lot spaces catering to the city's various downtown and suburban business districts. Spaces within the city's parking system are dominated by parking meters (representing nearly 83% of the city's 406,870 available parking spaces), which due to the ease of use and competitive parking rates, provides a very stable component to its revenue stream, allowing the system's finances to be largely resilient to the competitive forces for downtown parking garages and lots. In fiscal 2010, the city tabulated receipts by type of facility, which showed that 79% came from street meters, and the remainder was collected from parking lots and garages.KEY RATING DRIVERS:Rock It Brands is a lifestyle company whose focus is to inspire, energize and motivate people into committing to a healthy, social-conscious life. Launched in April 2011 by uber-successful entertainment industry branding executive Nicole Winnaman, it is the parent company to such brands as Rock It Workouts ( www.RockItWorkouts.com ), tea bar Blend 54 ( www.Blend54.com ) and luxury retailer Industry 1212 ( www.Industry1212.com ), as well as Rock It Entertainment. Rock It Brands will open its first lifestyle complex in Pasadena, CA in fall of 2011, with additional centers being planned for 2012.The SPRF receives all monies, income, and investment earnings derived from operations of the on-street and off-street parking meters in the city and the parking lots, garages, and structures owned by the city except for excluded facilities, which according to the master indenture are defined as parking lots, garages, and other parking structures owned by the city and operated by the Los Angeles Department of Airports, the Los Angeles Department of Water and Power, the Los Angeles Harbor Department, the Los Angeles Convention and Exhibition Center, and the Community Redevelopment Agency of the City of Los Angeles.--The SPRF's low leverage permits the funding of capital needs on a pay-as-you-go basis; however, the city's track record of funding reinvestment has been varied;WHAT COULD TRIGGER A DOWNGRADE:--The system's backlog of capital and refurbishment needs, due to little capital investment in prior years, which the city has recently started to address;
The SPRF receives all monies, income, and investment earnings derived from operations of the on-street and off-street parking meters in the city and the parking lots, garages, and structures owned by the city except for excluded facilities, which according to the master indenture are defined as parking lots, garages, and other parking structures owned by the city and operated by the Los Angeles Department of Airports, the Los Angeles Department of Water and Power, the Los Angeles Harbor Department, the Los Angeles Convention and Exhibition Center, and the Community Redevelopment Agency of the City of Los Angeles.
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