Redevelopment Bond Refunding Program

About the Program

Category: Financial Management (Best in Category)

Year: 2015

The County of Los Angeles formed its Redevelopment Bond Refunding Program in January 2013 as a response to State legislation that permanently dissolved redevelopment agencies (RDAs) in California. Since their formation in 1945, RDAs grew substantially in size and claimed approximately $4 billion of annual property tax revenue by 2011. This revenue was used to fund redevelopment and affordable housing projects, and to support the administrative needs of the former RDAs. To further leverage this revenue stream, the former RDAs also issued more than $10 billion of long-term bonds to fund their ongoing projects. In the aftermath of dissolution, it was widely assumed that the $10 billion of outstanding bonds would remain untouched by the former RDAs. Moody's Investors Services promptly downgraded all ratings on redevelopment bonds in California and any debt refinancing seemed wholly out of the question. The County of Los Angeles was undeterred by this consensus view and formed its refunding program to assist former RDAs in refinancing outstanding bonds. Since its formation, the program has refunded more than $430 million of bonds. These refundings will provide local taxing entities (counties, cities, school districts, and the State) with more than $140 million of new property tax revenue that would have otherwise gone to Wall Street bond investors.