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City of Azusa v. Cohen

California Court of Appeals, Third District, Sacramento

July 8, 2015

CITY OF AZUSA et al., Plaintiffs and Appellants,
v.
MICHAEL COHEN, as Director, etc., Defendant and Respondent.

APPEAL from a judgment of the Superior Court of Sacramento County, No. 34-2013-80001540-CU-WM-GDS Allen H. Sumner, Judge.

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COUNSEL

Burke, Williams & Sorensen, J. Leah Castella and Nicholas J. Muscolino for Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney General, Marc A. LeForestier and S. Michele Inan, Deputy Attorneys General, for Defendant and Appellant.

OPINION

DUARTE, J.

This case arises, as have many, from what we have previously characterized as the “Great Dissolution” of California redevelopment

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agencies. (City of Pasadena v. Cohen (2014) 228 Cal.App.4th 1461, 1462-1463 [176 Cal.Rptr.3d 729] (Pasadena).)

The City of Azusa, its municipal utility (Azusa Light and Water, hereafter Utility) and the successor agency to its redevelopment agency (hereafter collectively City except as noted), timely appeal from a judgment denying their amended mandamus petition (Code Civ. Proc, § 1085). The petition sought to compel the Director of the Department of Finance (Department) to recognize as enforceable certain obligations between the City and the Utility. These consisted of loans from the Utility to the City’s former redevelopment agency (RDA). The City asserts the invalidation of these loans in effect harms the Utility’s ratepayers and therefore is unlawful for various reasons. The trial court rejected the City’s view, and the City timely appeals from the ensuing judgment.

We agree with the trial court that once Utility money was loaned to the RDA, it ceased to be “ratepayer money.” Because the City’s legal claims hinge on a contrary view--whether or not explicitly acknowledged in its briefing--each of the City’s claims fails.

BACKGROUND

1. Redevelopment Agencies Generally

The Community Redevelopment Law (Health & Saf. Code, § 33000 et seq.) was adopted to address post-World War II urban blight, by allowing the formation of redevelopment agencies to make municipal improvements via “tax increment” funding, which reallocated tax revenues; however, over time concerns grew that abuses were occurring. (See California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 245-248 [135 Cal.Rptr.3d 683, 267 P.3d 580] (Matosantos); City of Emeryville v. Cohen (2015) 233 Cal.App.4th 293, 297-298 [182 Cal.Rptr.3d 578] (Emeryville).)

Amid a fiscal crisis in 2011, the Legislature adopted the dissolution law via statutes “that barred any new redevelopment agency obligations, and established procedures for the windup and dissolution of the obligations of the nearly 400 redevelopment agencies then existing.” (Pasadena, supra, 228 Cal.App.4th at pp. 1462-1463; see Matosantos, supra, 53 Cal.4th at p. 241.) Our Supreme Court invalidated a portion of the law, but upheld provisions requiring windup and dissolution of redevelopment agencies, as provided by the Health and Safety Code.[1] (Matosantos, supra, 53 Cal.4th at pp. 274-276.)

The dissolution law provides that successor agencies shall “[e]xpeditiously wind down” the redevelopment agency under “direction of the oversight

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board.” (§ 34177, subd. (h).) Oversight boards consist of appointed members (§ 34179, subd. (a)), and have a fiduciary duty towards “holders of enforceable obligations and the taxing entities that benefit from distributions of property tax” (§ 34179, subd. (i)), including the duty to review actions by successor agencies, such as “[e]stablishment of the Recognized Obligation Payment Schedule.” (§ 34180, subd. (g).) The recognized obligation payment schedule (ROPS) sets forth remaining “enforceable ...


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