The Assembly today approved SB 1069, a bill by State Senator Nell Soto (D – Pomona) to enable a redevelopment agency to refinance bond debts if the terms of the refinance are less than the existing bond. 

Specifically, Soto’s measure states that time limits required for older redevelopment plans do not affect a redevelopment agency's right to receive property taxes to pay for refunding bonds that refinance debt authorized before January 1, 1994 if:

• The refunding bonds' maturity date is not later than the refunded bonds' maturity date;

• The refunding bonds' principal and interest is less than the refunded bonds' principal and interest.

Existing law places time limits on redevelopment activities. For a redevelopment plan adopted before January 1, 1994, the plan's effectiveness ends 40 years after its adoption or January 1, 2009, whichever is later.  The agency continues to receive property tax increment revenues to repay the project area's debts for 10 years after the redevelopment plan ends.  Although there are some exceptions, most of the older redevelopment projects will stop receiving property tax increment funds by 2019 (although some bonds issued before 1994 have maturity dates beyond 2019). 

With interest rates near historic lows, some redevelopment officials would like to refinance their outstanding debt by issuing refunding bonds that would last as long as their currently outstanding bonds, provided that the total cost of the new bonds' principal and interest would be less than the total cost of the outstanding bonds.

“With the municipal bond market offering lower interest rates, refinancing redevelopment bonds makes good sense,” Senator Soto says.  “Refinancing their older bonds may allow redevelopment officials to get more capital while making lower interest payments – basically, they can get more for less.  

“My bill simply allows redevelopment agencies to refinance their older bonds with new bonds that have the same maturity dates as their older bonds, provided that the total payments for principal and interest are less.”