New York, December 12, 2012 -- Moody's Investors Service has downgraded to A2 from A1 the rating for Orlando Community Redevelopment Agency (FL) $144.9 million tax increment revenue bonds (Downtown District). The outlook has been revised to stable from negative. The bonds are secured by a first lien on pledged tax increment revenues. The Build America Bond Direct Payment Subsidy for the agency's Series 2009C and Series 2010B bonds are deposited to the credit of the Redevelopment Trust Fund and applied in the same manner as the pledged tax increment revenues. All five series of tax increment revenue bonds are additionally secured by a composite reserve funded in cash at net (of Direct Payment Subsidy) maximum annual debt service ($9.86 million).

SUMMARY RATING RATIONALE

The downgrade to A2 from A1 reflects the diminished net debt service coverage of senior lien obligations resulting from ongoing taxable value declines. Incremental value has declined 36% from fiscal 2009 through fiscal 2013, reducing net coverage of peak senior lien debt service to 1.63 times (1.94 times including estimated interest earnings) in fiscal 2013. The A2 rating incorporates the diminished though still adequate net coverage of peak senior lien debt service, as well as the agency's ample available cash and reserves, flexibility with regard to payment of subordinate obligations and the project area's favorable long-term prospects. The agency's strong finances are a primary consideration in support of the current rating. To the extent the financial profile is diminished through weakened cash and reserves or significant additional leverage, the rating could experience negative pressure. Orlando remains one of the preeminent commercial and recreational centers in Florida, and this attribute is likely to support renewed private investment and tax base expansion over time.

The stable outlook reflects the decreasing rate of assessed value contraction, the likelihood that coverage ratios remain adequate as no additional senior lien debt is expected in the near-term and property values stabilize, and the location, quality and relevance of the project area to the City of Orlando (Issuer Rating Aa1/Stable) economy.

STRENGTHS

- Incremental to total taxable assessed value ratio is high

- Reserve requirement is cash funded

- Strong balance sheet affords flexibility to manage subordinate obligations

CHALLENGES

- Ongoing taxable value declines

- Significant funding commitments

- Sizable total obligations

OUTLOOK

The stable outlook reflects the decreasing rate of assessed value contraction; the expectation that the agency will maintain its strong financial profile with ample available cash and reserves to manage its sizable obligations; and the likelihood that coverage ratios remain favorable.

WHAT COULD CHANGE THE RATING UP

- Increased senior lien coverage levels

- Sustained growth in taxable values

WHAT COULD CHANGE THE RATING DOWN

- Continued contraction of senior lien coverage levels

- Ongoing declines to taxable values

- Significant additional leverage

- Weakened liquidity and reserves

Orlando Redevelopment Agency's bond rating was assigned by evaluating factors believed to be relevant to the credit profile of the issuer such as i) the business risk and competitive position of the issuer versus others within its industry or sector, ii) the capital structure and financial risk of the issuer, iii) the projected performance of the issuer over the near to intermediate term, iv) the issuer's history of achieving consistent operating performance and meeting budget or financial plan goals, v) the nature of the dedicated revenue stream pledged to the bonds, vi) the debt service coverage provided by such revenue stream, vii) the legal structure that documents the revenue stream and the source of payment, and viii) and the issuer's management and governance structure related to payment. These attributes were compared against other issuers both within and outside of Orlando's core peer group and the tax increment rating is believed to be comparable to ratings assigned to other issuers of similar credit risk.

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Moses Kopmar Associate Analyst Public Finance Group Moody'sInvestors Service, Inc.One Front Street Suite 1900 San Francisco, CA 94111 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653John Incorvaia Senior Vice President Public Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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