...The 'AAA' rating on the 2021-A and 2021-B GO bonds, two notches above the city's 'AA' Issuer Default Rating (IDR), is based on the application of California's statutory lien. On July 13, 2015, the California legislature passed and the governor signed into law Senate Bill 222 amendments to Section 53515 of the California Government Code and Section 15251 of the Education Code, providing that a statutory lien automatically arises on all pledged revenues securing GO bonds issued by local agencies or school districts. Fitch Ratings believes the statute provides bondholders with a substantial preferential right in a bankruptcy proceeding, warranting a GO bond rating up to two notches higher than the entity's IDR. The upgrade of the series 2017-A and 2017-B to 'AAA' reflects the expectation that, subsequent to the scheduled Nov. 10, 2021 redemption of all outstanding series 2011-B and 2012-A GO, there will no longer be any GO bonds outstanding issued prior to the effective date of the statutory...
