"Payment was due today," Fulbright & Jaworski LLP partner Don Hunt told Reuters by telephone.
The airport authority in Victorville, California could not make its $10 million payment because it cannot receive a loan from the city's redevelopment agency due to a review by the state supreme court of a lawsuit challenging two state laws that could shutter many redevelopment agencies across the state.
Governor Jerry Brown and lawmakers approved the laws to scrap some 400 redevelopment agencies earlier this year. The laws will effectively dissolve the agencies unless they pay $1.7 billion to the state, which aims to use the money to bolster its budget.
Until the lawsuit is resolved, it is unclear whether new financial transactions such as a loan by Victorville's redevelopment agency to the airport authority would be legal, said Hunt.
"It's in limbo," Hunt said, noting that a decision by the court that is widely expected by mid-January could allow the loan to proceed.
Otherwise, the airport authority needs to wait until its next scheduled distribution of tax increment revenue in March to pay its debt service, Hunt said.
Officials at the airport authority and Victorville's redevelopment authority were not available for comment. (Reuters)
