The rating on Watsonville Redevelopment Agency, Calif.'s bonds reflects a limited local economic base and a concentrated project area tax base. These weaknesses are offset by strong debt service coverage by pledged revenues and a strong additional bonds test. The bonds are secured by incremental property tax revenues from the project area. The project area covers 569 acres in downtown Watsonville, which is six miles inland from Monterey Bay and 14 miles south of Santa Cruz. Watsonville (population 36,000) is a service and food-processing center, with below-average income and very high unemployment. Income levels are 73% of U.S. averages, and the unemployment rate averaged 14.6% for 1998. Agribusiness is the dominant industry in Watsonville, and intense international competition has changed
