In our occasional criticisms of California’s redevelopment, we have viewed with concern the mountain of bonded indebtedness accumulated by redevelopment agencies over the years. According to a report published by California Officials for Redevelopment Reform, as of the mid-2000s, there were some $81 billion worth of such bonds outstanding, and by now it must be more. So now, when redevelopment has been abolished in California, what happens to those outstanding redevelopment bonds? The answer is that they have been taken over by “successor agencies” along with the assets of redevelopment agencies when the latter were abolished. That means cities.
Now, the California Lawyer magazine tells us that there are questions arising about those cities’ ability to service and repay those bonds. See Worry Grown Over Municipal Defaults, May 14, 2012 — click here. This is more of a “squib” than an article and it provides no details. But since tens of billions in bonded indebtedness is involved, this seems like an appropriate topic to keep an eye on. Stay tuned.