The CRA based its decision to refinance on a number of factors, among them the recent upgrading of the bonds' credit ratings by both Moody's Investors Service and Standard & Poor's Corp. in response to rising property values in the Bunker Hill project area.

The CRA wants to take advantage of that situation to restructure its debt, explains Bill Huck, managing director at San Francisco-based Stone & Youngberg's San Diego office.

Huck tells GlobeSt.com that the tax increment revenue that backs the CRA bonds dropped by about half in the early 1990s, when a real estate slump devalued properties throughout Southern California, but the rising Downtown values in recent years have boosted tax increment revenues. He notes that the $310 million will include refinancings of three different bond issues. This is the second time that most of the bonds have been refinanced, Huck says, with the previous refinancing having occurred in 1993. Unlike most commercial mortgages, he explains, tax-exempt bonds like these typically have a "call-protection feature" that prohibits them from being called by the issuer and redeemed in advance of their maturity for a 10-year period—hence the 10 years since the previous refinancing.

The Bunker Hill area, which includes many of the most prestigious properties in Downtown L.A., was formed in 1959 and represents the CRA's oldest active redevelopment project. It comprises 11.3 million sf of high-rise office and retail space, 2,200 hotel rooms and 3,255 residential units, along with several cultural facilities including the Museum of Contemporary Art (MOCA) and the Colburn School of Performing Arts. Within the Bunker Hill area, seven large office buildings that have been sold over the last 18 months at prices that total at least $150 million more than their present assessed value, according to CB Richard Ellis. The recovery in property values and the increase in CRA's tax revenues mean that tax dollars that would have been used to pay debt service will now be utilized to fund future improvements such as CRA envisions for Grand Avenue and Upper Second Street, the city agency says.

Sone & Youngberg's Huck says the new series of bonds will offer "something of interest to a wide variety of investors." Buyers of the bonds typically include high net worth individuals, bond mutual funds, and some institutions, Huck says. Other investors also have been showing strong interest in municipal bonds lately, Huck tells GlobeSt.com, including hedge funds and others that do not traditionally buy many municipal bonds. But the spreads between municipal bond yields and treasury bond yields, CMBS and other investments. "Right now they see the muni market as attractive," Huck says.

Stone & Youngberg was founded in 1931 and is one of the largest underwriters of tax-exempt local government debt in the West. In 2003, the firm underwrote more than 250 new municipal bond issues in California, Arizona, Nevada and 11 other states.