The volatile labyrinthine turns that receiving and leaving funding from the now defunct Redevelopment Agency have been taking for three years gained a patch of temporary good news last week.
The state Dept. of Finance reversed its final determination by approximately $11.5 million on the upcoming payments schedule. Therefore, not enough property tax increment was made available last week to meet the former Redevelopment Agency’s upcoming debt service payment in May.
A Superior Court judge in Sacramento last Friday ordered that the Los Angeles County Auditor-Controller, Wendy Watanabe, may not distribute $11.5 million to taxing authorities, pending a hearing on the preliminary injunction, scheduled for Jan. 24.
The decision came down one day before the County was to spread the revenue among assorted entities.
“Absent this order,” City Councilman Andy Weissman said this morning, “the $11.5 million would have been disbursed and would no longer be available to the Successor Agency to pay recognized obligations of the former Redevelopment Agency.”
Where did the $11.5 million originate?
“The County decided that was the right number – but we are not sure, quite frankly because it seems capricious and we don’t agree with them,” the Councilman said. “The court in Sacramento must have doubts as well, given its temporary ruling. It is difficult to get restraining orders, generally speaking. You generally don’t get them unless the court is pretty well convinced on the pleadings and oral arguments that you are going to prevail on the merits. So we are encouraged, at least for now.
“This ruling preserves the possibility for payment of the $11.5 million to the Successor Agency. The temporary restraining order is basically a placeholder to keep the money from being paid to other tax entities, pending a final ruling by the court. Otherwise, the County Auditor would have released the money and it would be gone.”
As Mr. Weissman elaborated, “the Successor Agency prepared its semiannual schedule of legally recognized obligations. When those obligations are approved, which we thought they had been, until the Dept. of Finance, at the urging of the County Auditor, reversed itself, the money that used to be called tax increment goes to the Successor Agency to pay the previously incurred legally enforceable obligations of the former Redevelopment Agency.”
These legally enforceable obligations of the former Redevelopment Agency debts are not City Hall (or General Fund) obligations. They do not directly affect the city’s finances. However,the city and the Successor Agency are working aggressively work to resolve this matter on behalf of holders of Redevelopment Agency bonds to avoid a bond default, Mr. Weissman said.
