LOS ANGELES — Culver City officials had little time to celebrate a favorable court ruling in the city's three-year dispute with the California Department of Finance stemming from the redevelopment agency wind-down process, as DOF filed an appeal three days later.
The state's failure to pay the amount stipulated by Sacramento Superior Court Judge Shellyanne W.L. Chang in her Oct. 27 ruling resulted in the successor agency being $1.7 million short on the Nov. 3 payment for the city's $229 million in outstanding redevelopment debt, though the city was able to tap excess reserves held with the trustee to make the payment, according to a Nov. 10 filing on the Municipal Securities Rulemaking Board's EMMA website.
"As a result of the judge's decision and order approved on Oct. 31, the Successor Agency expected to receive an immediate disbursement from the Los Angeles County Auditor-Controller of approximately $10.4 million," said Jeff Muir, Culver City's chief financial officer. "However, [the auditor-controller] determined that the appeal filed by DOF stayed the judge's decision, even though there was specific language in the judgment stating that the request for stay was denied."
Culver City's dispute with the DOF stems from a $12.5 million loan repayment by the RDA to the city just as the state began winding them down in 2011. The state argues that the RDA's transfer of the money was illegal and has been holding back $11.2 million.
According to DOF spokesman D.F. Palmer, the writ ordered money be released to the successor agency, but the appeal on Oct. 31 held the transfer in abeyance.
The state has made it its highest priority to ensure that successor agencies are able to make debt service payments, Palmer said.
Muir said while bond payments have been made, the dispute has meant that other enforceable obligations of the successor agencies aren't being paid.
For instance, the successor agency owes several million dollars to a developer for a disposition and development agreement that hasn't been paid. It has a settlement agreement with another developer worth $400 million that was approved by the DOF as an enforceable obligation that it can't pay.
Except for bonds, nothing on the successor agencies recognized obligation payment schedule is getting paid, Muir said.
"This has also caused our debt rating to drop to BBB-minus [from Standard & Poor's], which is preventing us from proceeding with a refinancing where the present value savings that would be passed on to taxing entities meet or exceed the amount of the dispute," Muir said.
Although Palmer wouldn't theorize on what might occur if the state loses the appeal, if it does, it could take the case to the state Supreme Court.