Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

City of Galt v. Cohen

California Court of Appeals, Third District, Sacramento

June 2, 2017

CITY OF GALT et al., Plaintiffs and Appellants,
v.
MICHAEL COHEN, as Director, etc., Defendant and Respondent CALLANDER ASSOCIATES LANDSCAPE ARCHITECTURE, INC., Real Party in Interest and Respondent.

         APPEAL from a judgment of the Superior Court of Sacramento County No. 34-2013-80001380-CUWMGDS, Eugene L. Balonon, Judge. Affirmed.

          Best Best & Krieger, Iris P. Yang, Kimberly E. Hood for Plaintiffs and Appellants.

          Kamala D. Harris and Xavier Becerra, Attorneys General, Douglas J. Woods, Senior Assistant Attorney General, Mark R. Beckington, Susan K. Smith, and John W. Killeen, Deputy Attorneys General, for Defendant and Respondent.

          No appearance for Real Party in Interest and Respondent.

          NICHOLSON, Acting P. J.

         After Governor Brown announced his intention to dissolve redevelopment agencies, but before the legislation passed, City of Galt entered into an agreement (the Cooperative Agreement) with its former redevelopment agency under which the former redevelopment agency agreed to finance several parts of the redevelopment plan, totaling more than $22, 000, 000. To obtain money for the financing, the former redevelopment agency issued tax allocation bonds, which were to be repaid using tax increment revenue. With the dissolution of redevelopment agencies discussed but still not signed into law, City of Galt and its former redevelopment agency filed a complaint to validate the Cooperative Agreement. No one responded to the complaint, so the trial court entered a validation judgment.

         The Legislature and Governor eventually dissolved redevelopment agencies (the Dissolution Law). The Dissolution Law, on its face, renders unenforceable any agreement between a local agency and its former redevelopment agency (sponsor agreements) during a specified period of time before dissolution took place (the freeze component of the Dissolution Law). The Department of Finance (DOF) determined that the Cooperative Agreement here is unenforceable under the freeze component. City of Galt filed a petition for writ of mandate, but the trial court upheld DOF's determination.

         On appeal, City of Galt contends: (1) the state must allow City of Galt to use the proceeds from the tax allocation bonds to fund the Cooperative Agreement projects; (2) the Cooperative Agreement is enforceable because it was the subject of a validation judgment, and (3) equitable estoppel bars DOF from determining that the Cooperative Agreement is unenforceable. None of City of Galt's contentions has merit.

         BACKGROUND

         As background in this redevelopment dissolution case, we quote parts of the Supreme Court's decision in California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231 (Matosantos), which upheld the provisions of the Dissolution Law relevant to this case:

         “Assembly Bill[] 1X 26... consist[s] of [two] principal components, codified as new parts 1.8 [and] 1.85... of division 24 of the Health and Safety Code. Part 1.8 ([Health & Saf. Code, ] §§ 34161 to 34169.5)[1] is the ‘freeze' component: it subjects redevelopment agencies to restrictions on new bonds or other indebtedness, new plans or changes to existing plans, and new partnerships, including joint powers authorities (§§ 34162 to 34165). Cities and counties are barred from creating any new redevelopment agencies. (§ 34166.) Existing obligations are unaffected; redevelopment agencies may continue to make payments and perform existing obligations until other agencies take over. (§ 34169.) Part 1.8's purpose is to preserve redevelopment agency assets and revenues for use by ‘local governments to fund core governmental services' such as fire protection, police, and schools. (§ 34167, subd. (a).)

         “Part 1.85 (§§ 34170 to 34191) is the dissolution component. It dissolves all redevelopment agencies (§ 34172) and transfers control of redevelopment agency assets to successor agencies, which are contemplated to be the city or county that created the redevelopment agency (§§ 34171, subd. (j), 34173, 34175, subd. (b)). Part 1.85 requires successor agencies to continue to make payments and perform existing obligations. (§ 34177.) However, unencumbered balances of redevelopment agency funds must be remitted to the county auditor-controller for distribution to cities, the county, special districts, and school districts in proportion to what each agency would have received absent the redevelopment agencies. (See §§ 34177, subd. (d), 34183, subd. (a)(4), 34188.) Proceeds from redevelopment agency asset sales likewise must go to the county auditor-controller for similar distribution. (§ 34177, subd. (e).) Finally, tax increment revenues that would have gone to redevelopment agencies must be deposited in a local trust fund each county is required to create and administer. (§§ 34170.5, subd. (b), 34182, subd. (c)(1).) All amounts necessary to satisfy administrative costs, pass-through payments, and enforceable obligations will be allocated for those purposes, while any excess will be deemed property tax revenue and distributed in the same fashion as balances and assets. (§§ 34172, subd. (d), 34183, subd. (a).)” (Matosantos, supra, 53 Cal.4th at pp. 250-251.)

         “During the freeze, redevelopment agencies were authorized to continue distributing tax increment pursuant to enforceable obligations, the definition of which included ‘sponsor agreements' between a former redevelopment agency and its sponsor agency [such as City of Galt and the former redevelopment agency here]. (§§ 34167, subd. (d), 34169, subd. (a)). Postdissolution, however, the definition of ‘enforceable obligations' entitled to tax increment from the successor agencies excluded all sponsor agreements. (§§ 34171, subd. (d)(2), 34177, subd. (a).)” (City of Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 494 (Brentwood), original italics, fn. omitted.)

         TIMELINE OF RELEVANT EVENTS

         Retroactive to December 31, 2010 - Proceeds from bonds issued by a former redevelopment agency after this date may not be used by the successor agency if they are not encumbered by an enforceable obligation. (§ 34191.4, subd. (c)(2); statute eff. June 27, 2012.)

         Retroactive to January 1, 2011 - After this date, transfers of assets from the former redevelopment agency to the sponsoring agency were “deemed not to be in the furtherance of the Community Redevelopment Law and [] thereby unauthorized.” (§ 34167.5; statute eff. June 29, 2011.)

         January 6, 2011 - City of Galt entered into an agreement with real party in interest Callander Associates Landscape Architecture, Inc. (the Callander Agreement). Callander agreed to provide design, engineering, and other services on the Central Galt Corridor Rehabilitation and Union Pacific Railroad (UPRR) Parking Lot projects in exchange for $326, 029, with some additional compensation for optional services. The former redevelopment agency was not a party to this agreement.

         January 18, 2011 - Governor Brown proposed eliminating redevelopment agencies as a partial means of closing the state's projected operating deficit. (Matosantos, supra, 53 Cal.4th at p. 250.)

         January 21, 2011 - City of Galt and its former redevelopment agency entered into a Cooperative Agreement under which the City agreed to complete nine redevelopment projects and the former redevelopment agency agreed to reimburse City of Galt a total of $22, 015, 000 for those projects. The following projects were specified: Central Galt Corridor Improvements ($2, 000, 000), UPRR Parking Lot and Landscaping ($1, 000, 000), Simmerhorn Commercial Property Acquisition ($3, 000, 000), Simmerhorn Infrastructure Improvements ($10, 100, 000), Industrial Way/Live Oak Road Improvements ($1, 000, 000), SR 99 Water Crossing Improvement ($500, 000), Old Town Property Acquisitions ($1, 000, 000), Theater Property Acquisition and Infrastructure Improvements ($2, 000, 000), and Brewster Building Rehabilitation ($1, 415, 000). Further details of the Cooperative Agreement are provided below.

         February 1, 2011 - The board of directors of the former redevelopment agency passed a resolution authorizing the former redevelopment agency to issue up to $17 million in tax allocation bonds to pay for redevelopment activities in Galt. The indentures would provide that the bond indebtedness would be paid from tax revenues.

         March 1, 2011 - The former redevelopment agency issued tax allocation bonds in the amounts of $7, 720, 000 (Series A) and $6, 005, 000 (Series B) under an Indenture of Trust.

         March 14, 2011 - City of Galt and the former redevelopment agency filed a complaint for validation judgment of the Cooperative Agreement between the City and the former redevelopment agency.

         June 29, 2011 - The Dissolution Law was enacted, as described above. (Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5X.)

         October 26, 2011 - The superior court entered judgment on the complaint for validation judgment, declaring the validity of the “Cooperative Agreement Between the Redevelopment Agency of the City of Galt and the City of Galt.”

         December 29, 2011 - The California Supreme Court upheld the Dissolution Law as constitutional. (Matosantos, supra, 53 Cal.4th 231.)

         February 1, 2012 - Redevelopment agencies in California were dissolved under the Dissolution Law as reformed in Matosantos. (Matosantos, supra, 53 Cal.4th at p. 275.) City of Galt became the successor agency of the Redevelopment Agency of the City of Galt.

         May 15, 2012 - City of Galt, as successor agency, adopted Recognized Obligation Payment Schedules (ROPS I & II), which included the Callander Agreement and project delivery costs under the Cooperative Agreement as enforceable obligations to be paid with tax allocation bond proceeds, for the periods from January 2012 to June 2012 and from July 2012 to December 2012. The oversight board of the former redevelopment agency approved ROPS I and II. DOF approved ROPS I and II, with exceptions to that approval not relevant here.

         June 28, 2012 - The oversight board of the former redevelopment agency authorized use of the tax allocation bond proceeds to fund projects in Galt. DOF did not object to this action by the oversight board.

         August 23, 2012 - City of Galt submitted ROPS III to DOF for the period from January 2013 to June 2013, listing the tax allocation bonds and the Cooperative Agreement as obligations of the former redevelopment agency. Separately, ROPS III listed ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.