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Bond Insurer Sues California Over Redevelopment Agency Dissolution

August 17, 2012

On Aug. 1, Bond insurer Syncora Guarantee filed a lawsuit in the Sacramento County  Superior Court claiming that the dissolution of California’s 400 redevelopment agencies violates contractual rights and short-changes bondholders and insurers.

 

The lawsuit claims that the dissolution of redevelopment agencies violates existing contracts signed by redevelopment agencies, bond holders and Syncora Guarantee. The Department of Finance maintains that the California Supreme Court upheld the state’s right to dissolve redevelopment and that existing bond obligations will be met.

In July, Fitch Ratings revised ratings for tax allocation bond securities (TABs) issued by 36 former redevelopment agencies. For more please see “Fitch Completes Review of 62 California Redevelopment Agency Tax Allocations Bonds, Revises Ratings.”  

Syncora Guarantee and other bond insurers have also been closely following the municipal bankruptcy cases in San Bernardino, Stockton and Mammoth Lakes to see if bond obligations will be paid.

The case number of Syncora Guarantee Inc. v. State of California is No. 34-2012-80001215.



 
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