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Where is the Razzle-Dazzle over bond debts now?

By   /   April 11, 2012  /   1 Comment

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Much like 29 Palms, the City of Riverbank was  razzled-dazzled onto believing that taking out a $15.4 million debt bond to “eliminate blight and spur economic development” was a deal made in heaven.

Much like 29 Palms Riverbank spend $1.7 million to buy a playhouse and renovate the Del Rio Theater for a performing arts center. The theater has been condemned the site shuttered.

Much like 29 Palms, they went for the fried ice and sold their soul to the devil. Now the town can’t pay back the yearly bond fees; their economy faltered; the redevelopment project spurred only more blight;  property tax revenues tanked; they fear law suits from bond holders, and others; and they want the state providing legal protection [costs] from lawsuits; they fear not enough money for fire and safety; and Standard & Poor’s downgrades the former redevelopment agency’s debt to the near the bottom of the ratings for defaut.  Yikes!

 Medestobee -Legal worries could doom Riverbank RDA group

RIVERBANK — The three-person board appointed by Gov. Jerry Brown to unwind the affairs of the city’s former redevelopment agency may disband.

Members of the Designated Local Authority met Monday and talked about the barriers to carrying out their duties: a lack of money and no legal protection from being sued.

Group chairman Wendell Naraghi said he will talk to the governor’s office about the state providing legal protection from lawsuits.

 He and board member Walter Schmidt said they may resign if the state does not protect the board from litigation. Board member Paul Baxter said he would resign for sure.

The board only has $10,000 to carry out its duties. It has no staff and no legal counsel.

These are not the only problems the group faces.

The finances of the former redevelopment agency are upside down. The agency issued $15.4 million in bonds five years ago to eliminate blight and spur economic development, such as rebuilding downtown and spending $1.7 million to buy the Del Rio Theater for a performing arts center.

The city has condemned the Del Rio and shuttered the site.

The former agency’s property tax revenues tanked in the real estate crash. The agency owes about $1 million annually for the money it borrowed, but its annual revenues are about $500,000 and it faces defaulting on its debt early next year.

The state abolished the approximately 400 redevelopment agencies across California in February. Cities and counties with redevelopment agencies had the option of naming themselves as the successor agency, which will wrap up the former redevelopment agencies’ affairs, such as completing projects, paying off debt and other financial obligations.

Riverbank was the only city in Stanislaus County and one of about a half-dozen statewide that chose not to become a successor agency. City officials said they feared Riverbank would be responsible for the agency’s debt and that would leave less money for law enforcement and other essentials.

Baxter, a former Modesto deputy city manager, said DLA members across the state, including in Los Banos and Merced, have resigned because of the risk of being sued over their actions.

But Baxter, Schmidt and Naraghi said they want to serve, provided they are legally protected. They also received good news at Monday’s meeting.

Riverbank City Manager Jill Anderson said she would ask the City Council to take a new look at whether the city can provide the Designated Local Authority with assistance, especially if Riverbank were protected from financial and legal exposure.

Riverbank declined to provide the group with official help in part because of the risk to the city of lawsuits if bondholders sued.

Mayor Virginia Madueño said it’s important to revisit that decision in light of the credit rating service Standard & Poor’s recent decision to downgrade the former redevelopment agency’s debt from CCC to CC, which is two rungs from the bottom rating of D for default. Standard & Poor’s has a dozen ratings, from AAA to D.

“We need to look at this from a business perspective, as a business decision,” she said. “Can we protect our credit rating?”

Bee staff writer Kevin Valine can be reached at kvaline@modbee.com or (209) 578-2316.









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About the author

Branson Hunter

(This story was posted by Cactus Thorn contributor Branson Hunter)

"The ends do not justify the means." If you use illegal mean to accomplish a legal and even desirable result, the good result does not make the bad means you used justifiable.

1 Comment

  1. Riverbank, Cal.-Population just shy of 23,000 according to their upbeat/optimistic website: http://www.Riverbank.org

    Their list of Sister Cities did not include 29Palms.

    Identical twins separated at birth going through a similar fate? Including grand theatre plans that tanked?

    (Twilight Zone music-insert here)

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