California Court of Appeals, Third District, Sacramento
from a judgment of the Superior Court of Sacramento County,
No. 34-2013-80001650-CU-WM-GDS Michael P. Kenny, Judge.
Center on Law & Poverty, S. Lynn Martinez, Richard A.
Rothschild, Navneet Grewal; Legal Services of Northern
California, Alysa E. Meyer, Sarah Steinheimer; Public
Interest Law Project, Deborah A. Collins, Michael Rawson;
Arnold & Porter and Steven L. Mayer for Plaintiffs and
D. Harris, Attorney General, Douglas J. Woods, Assistant
Attorney General, Marc A. LeForestier and Nancy J. Doig,
Deputy Attorneys General, for Defendants and Respondents.
Friedman and Fulfrost, Paul G. Thompson and Travis A. Brooks
for Real Party in Interest and Respondent Winters Joint
Unified School District.
appearance for remaining Real Parties in Interest and
plaintiffs Claudia Covarrubias, Veronica Alvarado, Rebecca
Rivas, and Lucila Gomez brought this action against Michael
Cohen, in his capacity as the Director of the Department of
Finance (the Department), in order to compel the Department
to approve the City's continued payments of set-asides
from “tax increment”-the increase above the tax
base level attributed to redevelopment (City of Brentwood
v. Campbell (2015) 237 Cal.App.4th 488, 492, fn. 4 [188
Cal.Rptr.3d 88] (Brentwood))-to the fund for
subsidized housing in the City's redevelopment project
area that was previously mandated under redevelopment law
(Health & Saf. Code, §§ 33334.2, subd. (a),
33334.3, subd. (a), 33334.6, subd. (c) &
33670). Plaintiffs argued these come within
the definition of “ ‘[e]nforceable
obligations' ” (§ 34171, subd. (d)(1)) of the
City's former redevelopment agency because the
entirety of the set-asides to be paid over the life
of a redevelopment project was due ab
initio, and thus survived the abolishment of tax
increment in the “ ‘Great Dissolution'
” in 2012 (Brentwood, at p.
491). The trial court ruled that the
strictly statutory obligation to make set-asides accrued on
an annual basis and accordingly expired when the
Great Dissolution took place; the set-asides therefore were
no longer enforceable obligations of the redevelopment
agency. It entered judgment in favor of both defendants and
real parties in interest. We shall affirm.
AND PROCEDURAL BACKGROUND
generally the case in Great Dissolution appeals, the facts
are undisputed and merely serve to provide a contextual
framework. Our analysis is concerned principally with
City established its former redevelopment agency (the Winters
Community Development Agency) in 1992, and adopted a
redevelopment plan for the project area (which consists of
about 41 percent of the total land area of the City). In
2008, the City voted to extend the expiration date of the
plan to 2033, and the authority of the redevelopment agency
to receive tax increment and pay related debts until 2043. In
its 2009 five-year redevelopment plan, the City noted that
the Sacramento Area Council of Governments had identified a
need in the project area for 431 units of subsidized housing;
as of that date, none had been built with money from the
order to satisfy its constitutionally mandated minimum
funding obligation, the Legislature directed redevelopment
agencies to transfer tax increment to school and community
college districts in funds created for “educational
revenue augmentation” or “supplemental
educational revenue augmentation” on multiple occasions
between 1992 and 2009 (see California Redevelopment Assn.
v. Matosantos (2011) 53 Cal.4th 231, 245, 248 [135
Cal.Rptr.3d 683, 267 P.3d 580] (Matosantos
I); California Redevelopment Assn. v.
Matosantos (2013) 212 Cal.App.4th 1457, 1467 [152
Cal.Rptr.3d 269] (Matosantos II).) In
imposing this obligation, the Legislature authorized the
redevelopment agencies to borrow from their annual set-asides
for their subsidized housing funds, requiring the loans to be
repaid within 10 years. (E.g., §§ 33681.7, subd.
(b) [2002-2003 fiscal year], 33681.9, subd. (b) [2003-2004
fiscal year], 33681.12, subd. (b) [2004-2005 fiscal year and
2005-2006 fiscal year], 33690, subds. (a)(1)(A) & (c)(2)
[2009-2010 fiscal year, to be repaid by June 30, 2015],
33690.5, subds. (a)(1)(A) & (c)(2) [2010-2011 fiscal
year, to be repaid by June 30, 2016].) In addition, the
redevelopment agencies were authorized generally to defer
set-asides if there was insufficient tax increment to satisfy
other obligations. (§ 33334.6.) Plaintiffs do not appear
to contend that any such sums are owed to the subsidized
housing fund from the former redevelopment agency.
amount of tax increment to which a redevelopment agency is
entitled is limited to the amount of its total indebtedness
(both existing and executory), less available revenue. Thus,
the redevelopment agency must annually prepare a statement of
its total indebtedness and submit it to the county auditor
(or other responsible officer). (Matosantos
I, supra, 53 Cal.4th at p. 264;
Matosantos II, supra, 212
Cal.App.4th at p. 1465; Glendale Redevelopment Agency v.
County of Los Angeles (2010) 184 Cal.App.4th 1388,
[109 Cal.Rptr.3d 815] § 33675, subd. (b).) As noted in
the state Controller's final annual report on
redevelopment agencies for the fiscal year ending June 2011,
the definition of “indebtedness” for the purposes
of this form “is not limited to the formal accounting
definition of indebtedness, but is expanded to include all
redevelopment obligations, ” including obligations to
the housing fund. This statement of indebtedness “is
perhaps the least understood aspect of redevelopment finance.
It itemizes all future tax increment requirements
for the purpose of repaying indebtedness.” (Italics
added.) The statement is accompanied by a reconciliation
document that identifies all changes from the prior
year's statement. Moreover, pursuant to the state
Controller's instructions for preparing the statement,
total indebtedness is increased by the 20 percent obligation
for the housing fund (as well as percentages for other
similar statutory obligations) so that sufficient revenue is
available for the remaining redevelopment obligations.
(§ 33675, subd. (f) [for purposes of this statement
“the amount an agency will deposit in its...
Housing Fund... shall constitute an ...