By Jim Steinberg Staff Writer
Posted: 01/24/2012 08:43:11 PM PST

The Fontana and Rialto city councils scrambled on Tuesday night to approve measures paving the way for a Feb. 1 deadline for the dissolution of their redevelopment agencies.

Meanwhile, because of the complexity of what needs to be accomplished in a short time frame, two bond-rating agencies have taken negative actions toward billions of dollars in California bonds secured by redevelopment tax increment revenue.

Moody’s Investor Services recently downgraded by one notch $11.6 billion in these state bonds, rated Baa2 and above.

It also placed billions of dollars in the remaining bonds in this category on credit watch.

“Compliance with the requirements of the new legislative framework may prove challenging, particularly in the near term as affected agencies attempt to interpret the law and comply with its specified time lines,” Moody’s analysts wrote.

On Tuesday, Fitch Ratings placed all California bonds secured by redevelopment tax increment revenue on “Rating Watch Negative.”

Fitch cited “the short time frame to create guidelines to implement the legislation and the apparent lack of progress in resolving a number of inconsistencies and uncertainties contained therein.”

“…It is clear that a number of questions remain which ultimately may need to be addressed through follow-up legislation,” Fitch said.

A coalition of labor, business, local government public safety and affordable housing advocates are working with members of the Legislature to pass Senate Bill 659, which would postpone the deadline until April 15.

Jim Kennedy, the executive director of the California Redevelopment Association, said he was hopeful the measure will pass.

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