The rating on Redlands Financing Authority, Calif.'s water revenue bonds, issued for the City of Redlands, is downgraded to 'A-' from 'A' and placed on CreditWatch Negative due to declining debt service coverage, high capital needs, and the potential for a further downgrade if the rate structure is not promptly adjusted to preserve solid coverage. The rating action reflects the following factors: Delays in implementing long-overdue rate increases despite a significant decline in debt service coverage (DSC) exclusive of connection fee revenues to about 1.37 times (x) estimated for 2002 from 1.71x in 2001; High capital needs due to heightened federal clean water requirements; Moderate debt at 65% debt to net plant; and Supply risk, and especially hydrological risk, due
