Opinion
C080746
11-05-2019
JENNIFER SHAYNE et al., Plaintiffs and Appellants, v. KEELY BOSLER, as Director, etc., Defendant and Respondent.
NOT TO BE PUBLISHED California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 34201480001876CUWMGDS)
In 2011, an economic recession caused the "Great Dissolution" of California's redevelopment agencies. (Cuenca v. Cohen (2017) 8 Cal.App.5th 200, 207 (Cuenca); County of Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 44.) Even with the redevelopment agencies' dissolution, a substantial number of enforceable obligations arising out of redevelopment projects required continued funding. (Cuenca, supra, at p. 207.) As pertinent to this case, these continuing enforceable obligations include "[j]udgments or settlements entered by a competent court of law," and "legally binding and enforceable agreement[s] or contract[s]." (Health & Saf. Code, § 34171, subds. (d)(1)(A)-(F); Stats. 2015, ch. 325, § 2, eff. Sept. 22, 2015.) As part of the Great Dissolution, the Legislature specified enforceable obligations may be paid only under the oversight of the Department of Finance (DOF) and State Controller. (City of Emeryville v. Cohen (2015) 233 Cal.App.4th 293, 298-299.)
Undesignated statutory references are to the Health and Safety Code.
This case involves a stipulated judgment entered in 1993 to require the Buena Park Redevelopment Agency (RDA) to set aside 20 to 25 percent of its tax increment for affordable housing.
Appellants Jennifer Shayne and the Kennedy Commission (collectively Shayne) sought a writ of mandate to challenge a determination by respondent DOF that the 1993 stipulated judgment is not an enforceable obligation and no longer requires any money to be set aside for affordable housing in the City of Buena Park. The trial court affirmed DOF's determination the 1993 stipulated judgment no longer requires any money to be set aside for affordable housing after the Legislature's elimination of the tax increment.
"[A] community-based non-profit organization serving the affordable housing needs of Orange County families earning less than $20,000 annually."
On appeal, Shayne contends (1) the stipulated judgment constitutes an enforceable obligation under the Great Dissolution law, (2) as an enforceable obligation, DOF erred in disapproving continued payments toward the affordable housing intended to be built with the money set aside under the stipulated judgment, (3) the stipulated judgment's constraint that the set-aside funds be used for the study, planning, and construction of a 10-year housing project renders it a binding contractual obligation, and (4) DOF's disapproval of the continued payments represents an impermissible collateral attack on the stipulated judgment.
We conclude the stipulated judgment meets the definition of an enforceable obligation under section 34171. Even so, the Great Dissolution's elimination of the tax increment means there are no remaining terms of the stipulated judgment's requirement that remain to be fulfilled. We further conclude the stipulated judgment does not constitute a binding commitment in the form of a contract to build affordable housing. Finally, even if DOF mistakenly denied the stipulated judgment is an enforceable obligation, the result is still the same. The claim the stipulated judgment required continued funding even after the Great Dissolution was properly denied. Accordingly, we affirm the judgment.
FACTUAL AND PROCEDURAL HISTORY
The 1990 Stipulated Judgment
The City of Buena Park had been involved in redevelopment efforts within its city since 1979. At some point, Ellen Coffman-Tikker and Maria Lara sued the City of Buena Park and its RDA. The lawsuit was settled with the approval and entry of a stipulated judgment by the Orange County Superior Court on April 21, 1993. In pertinent part, the stipulated judgment provides:
"1. Low and Moderate Income Housing Fund Set Asides. [¶] a. Not less than the following percentages of all taxes which are allocated to the [Buena Park Redevelopment] Agency pursuant to . . . Section 33670 shall be set[]aside annually and held in a separate Low and Moderate Income Housing Fund ('L&M Fund'), except that this percentage shall be modified to the extent the percentage in Section 33334.2(a) is increased above those percentages and such increase is made applicable legislatively to any such project area. [¶] i. 20% for Project I (Central Bus.), as amended; [¶] ii. 20% for Project II, as amended; [¶] iii. 25% for Project III, as amended. [¶] These percentages shall apply to the gross amount of taxes allocated to the [RDA] pursuant to section 33670 . . . ." (Original emphasis retained and fn. omitted.)
Section 33670, subdivision (a), defines the tax increment that funded the redevelopment agencies. --------
The stipulated judgment further provides: "13. Implementation Plan. [¶] a. The [RDA] shall adopt 5-year implementation plans, commencing six (6) months from the entry of Judgment pursuant to this Stipulation, and at least every five years thereafter, for the expenditure of its Low and Moderate Income Housing Fund."
As the trial court would later find, "At the time of the stipulated judgment, the City [of Buena Park] and the RDA had approved only the three project areas noted therein. In 2002, it consolidated these three project areas with a fourth, and in 2007, it adopted an amended redevelopment plan for the consolidated project area that expires in 2033."
The Great Dissolution
This court has previously recounted that, "[i]n the midst of California's fiscal emergency in 2011, the Legislature enacted two measures that implemented the dissolution of the roughly 400 redevelopment agencies then in existence. (Assem. Bill 1X 26 & Assem. Bill No. 27 (2011-2012 1st Ex. Sess.) enacted by Stats. 2011, 1st Ex. Sess. 2011-2012, chs. 5-6 (Assembly Bill 1X 27); see generally [California Redevelopment Assn. v. Matosantos (2011)] 53 Cal.4th [231,] 241, 245-246 [(Matosantos I)].) Assembly Bill 1x 26 required the redevelopment agencies to conclude their activities and dissolve. (Matosantos I at p. 241.) Although Assembly Bill 1x 27 would have allowed redevelopment agencies to continue if they paid into funds benefitting schools and special districts, the California Supreme Court struck down this alternative as conflicting with the California Constitution's prohibition on requiring such payments. (Id. at p. 242; Cal. Const. art. XIII, § 25.5.) After Matosantos I, redevelopment agencies had no option but to wind down and dissolve. (City of Emeryville, supra, 233 Cal.App.4th at p. 298.)
"Winding down California's redevelopment agencies and their projects proved to be no simple task. A year after enacting Assembly Bill 1x 26, the Legislature passed Assembly Bill 1484 to clarify and tighten restrictions on the funds from redevelopment projects. (Stats. 2012, ch. 26, §§ 6-35.) In addition to winding down the redevelopment agencies, the Legislature also eliminated the tax increment. Subdivision (a) of section 34189 provides in pertinent part: 'all provisions of the Community Redevelopment Law that depend on the allocation of tax increment to redevelopment agencies, including, but not limited to, Sections 33445, 33640, 33641, and 33645, and subdivision (b) of Section 33670, shall be inoperative.'
"Although the Legislature eliminated California's redevelopment agencies, it provided for the continuing validity of enforceable obligations previously created by the redevelopment agencies. [E]nforceable obligations include court judgments and settlement agreements. (§ 34171, subd. (d)(1)(D).) To ensure that claimed enforceable obligations met the criteria set forth in the Dissolution Law, the Legislature provided that '[e]ach oversight board . . . has a fiduciary duty towards "holders of enforceable obligations and the taxing entities that benefit from distributions of property tax" (§ 34179, subd. (i)) to carry out its duties, which include the duty to review specified actions by the successor agencies, including "[e]stablishment of the Recognized Obligation Payment Schedule." (§ 34180, subd. (g).) The recognized obligation payment schedule (ROPS) is "the document setting forth the minimum payment amounts and due dates of payments required by enforceable obligations for each six-month fiscal period. . . ." (§ 34171, subd. (h).) The successor agency has a duty to "[c]ontinue to make payments due for enforceable obligations." (§ 34177, subd. (a).) Thus, to help ensure the orderly windup and dissolution of the redevelopment agencies, the ROPS lists what remaining enforceable obligations exist.
" 'To ensure each ROPS is accurate, both the [DOF] and the State Controller . . . have the authority to require documentation of purported enforceable obligations, and they and any "taxing entity" have authority to sue "to prevent a violation under this part. . . ." (§ 34177, subd. (a)(2).) The [DOF] also has authority to "review an oversight board action taken pursuant to" Assembly Bill 1X 26. (§ 34179, subd. (h).)' (City of Emeryville, supra, 233 Cal.App.4th at pp. 298-299.)
"Under the Dissolution Law, successor agencies could either: retain responsibility for the 'housing functions' previously performed by the redevelopment agencies, or transfer the responsibility to a 'housing successor.' (§ 34176, subd. (a)(1) & (3).) If a successor agency transferred responsibility to a housing successor, the housing successor assumed 'all rights, powers, duties, obligations, and housing assets,' except for 'any amounts on deposit in the [Housing Fund] and enforceable obligations retained by the successor agency.' (Id., subd. (a)(1).) DOF is charged with responsibility to review whether a 'transferred asset is deemed not to be a housing asset,' in which case it must be returned for allocation to the taxing entities. (Id., subd. (a)(2).)
"Under section 34177, 'Successor agencies are required to [¶] . . . [¶] (d) Remit unencumbered balances of redevelopment agency funds to the county auditor-controller for distribution to the taxing entities, including, but not limited to, the unencumbered balance of the [Housing Fund] of a former redevelopment agency.' The Dissolution Law requires successor agencies to retain licensed accountants 'to conduct a due diligence review to determine the unobligated balances available for transfer to taxing entities" that are (1) held in the Housing Fund, and (2) former redevelopment agency assets held by the successor agency in any other form or fund. (§ 34179.5, subds. (a), (c)(1)-(5).) The successor agency must review and approve each due diligence review, followed by review and approval by DOF. (§ 34179.6.) Under section 34179.6, DOF has the prerogative to adjust the amounts deemed unencumbered. (§ 34179.6, subds. (c) & (d).) The successor agencies then remit the unencumbered moneys to the county auditor- controller, who transfers the moneys to the taxing entities. (§ 34179.6, subd. (f).)" (Cuenca, supra, 8 Cal.App.5th at pp. 210-212.)
ROPS
Upon dissolution of the RDA in this case, the City of Buena Park assumed its role as successor agency. As successor agency, the City of Buena Park filed two ROPS that listed the stipulated judgment as a $103,824,908 enforceable obligation. For both ROPS, DOF disallowed payment under the stipulated judgment. DOF reasoned that "[t]he judgment is not an [enforceable obligation]. The requirement to set aside 20 percent of RDA tax increment for affordable housing purposes ended with the passing of the redevelopment dissolution legislation. Because there no longer are such taxes allocated to the Agency, there is no payment obligation."
Shayne's Petition for Writ of Mandate
Shayne filed an action for mandate, injunctive, and declaratory relief to require DOF to recognize the stipulated judgment as an enforceable obligation. DOF filed opposition. The trial court denied the petition. In denying the petition, the trial court found: "The stipulated judgment requires the RDA to set aside 20 or 25 percent of 'all taxes which are allocated to [it] pursuant to . . . section 33670.' The stipulated judgment then reiterates that the relevant percentages 'shall apply to the gross amount of taxes allocated to the Agency pursuant to section 33670.' As noted above, section 33670 is the provision of the Community Redevelopment Law authorizing the allocation of tax increment to redevelopment agencies. Following dissolution, however, taxes are no longer allocated to the RDA pursuant to section 33670. (See § 34189, subd. (a.) ['Commencing on the effective date of this part, all provisions of the Community Redevelopment Law that depend on the allocation of tax increment to redevelopment agencies . . . shall be inoperative'] [emphasis added].) Indeed, ending this allocation of tax increment to redevelopment agencies was a primary purpose [of] the Dissolution Law. (See Matosantos [I], supra, 53 Cal.4th at 263 ['The Legislature has determined that tax increment should no longer [be] allocated to redevelopment agencies']; [County] of Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 45 [Dissolution Law ended redevelopment 'in order that the ever-encroaching "tax increment" share of property taxes paid to the redevelopment agencies could then be redistributed instead to the counties, cities, special districts, and school districts otherwise entitled to these revenues'].) Because taxes are no longer allocated to the RDA pursuant to section 33670, the stipulated judgment no longer requires the set aside of any funds."
From the trial court's judgment of dismissal, Shayne timely filed a notice of appeal.
DISCUSSION
I
The Prior Stipulated Judgment's Effectiveness after the RDA's Dissolution
Shayne contends the stipulated judgment constitutes an enforceable obligation under the dissolution law that requires DOF to approve more than $103 million for affordable housing in the City of Buena Park. We disagree.
A.
Standard of Review
The question of whether the stipulated judgment in this case constitutes an enforceable obligation presents a question of law requiring us to construe the dissolution law statutes. "In construing statutes, our goal is to ascertain and effect the legislative intent. (City of Cerritos v. State [(2017)] 239 Cal.App.4th [1020,] 1034.) In City of Cerritos v. State, this court reiterated well settled canons of statutory construction in explaining that 'we first look to the language itself. (Mejia [v. Reed (2003)] 31 Cal.4th [657,] 663.) "If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature." . . . (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735.) "But, the 'plain meaning' rule does not prohibit a court from determining whether the literal meaning of a statute comports with its purpose. . . ." (Ibid.) Moreover, 'where a word of common usage has more than one meaning, the one which will best attain the purposes of the statute should be adopted, even though the ordinary meaning of the word is thereby enlarged or restricted and especially in order to avoid absurdity or to prevent injustice.' [Citation.]" (People ex rel. San Francisco Bay Conservation & Development Com. v. Emeryville (1968) 69 Cal.2d 533, 543-544.)' (City of Cerritos v. State, supra, at pp. 1034-1035.)" (Cuenca, supra, 8 Cal.App.5th at p. 220.)
B.
Stipulated Judgment as an Enforceable Obligation
Section 34171, subdivision (d)(1)(D), defines enforceable obligations under the dissolution law to include "[j]udgments or settlements entered by a competent court of law or binding arbitration decisions against the former redevelopment agency, other than passthrough payments that are made by the county auditor-controller pursuant to Section 34183." Subdivision (d)(1)(E) of section 34171 also includes among enforceable obligations, "Any legally binding and enforceable agreement or contract that is not otherwise void as violating the debt limit or public policy."
The stipulated judgment in this case meets the definition of an enforceable obligation under section 34171. The record establishes the stipulated judgment was entered by the Orange County Superior Court. There is no argument the superior court acted in excess of its jurisdiction in entering the stipulated judgment. There is also no suggestion the stipulated judgment is the product of any fraud or mistake. Consequently, we conclude the 1993 stipulated judgment is an enforceable obligation under the dissolution law.
C.
Post-dissolution Requirements of the Stipulated Judgment
The continuing enforceability of the stipulated judgment under the dissolution law requires us to consider what the stipulated judgment requires now that the tax increment has been eliminated.
In Cuenca, this court construed stipulated judgments involving the Santa Ana Redevelopment Agency. The stipulated judgments in Cuenca required that "[t]hirty percent (30%) of the tax increments or tax increment generated or related revenues, or moneys repayable from tax increment from the project area shall be set aside solely and exclusively for affordable housing and related activities such as rebates, low interest rehabilitation loans, public improvements or assisting in low income housing construction." (8 Cal.App.5th at p. 222.) This court concluded that "the clear import" of the stipulated judgments was to set aside a certain percentage of the tax increment. (Ibid.) Cuenca holds that "[t]he Legislature's elimination of the tax increment had the effect of extinguishing the obligation of the redevelopment agency (or its successor agency) to set aside anything because any percentage of zero is zero. None of the stipulated judgments guaranteed any minimum level of funding for low- and moderate-income housing projects in the City [of Santa Ana]. The stipulated judgments do not require further set aside of any moneys from the tax increment because the redevelopment agencies (and their successor agencies) no longer receive any tax increment." (Id. at p. 223.)
In Cuenca, this court rejected the argument that, for purposes of the stipulated judgments, the tax increment continues to exist in the form of property taxes. (8 Cal.App.5th at p. 223-224.) We explained that "the stipulated judgments could not have imposed a requirement that the Santa Ana Redevelopment Agency continue to collect the tax increment even after its elimination by the Legislature because the redevelopment agencies had no authority to tax. The California Supreme Court has held that '[r]edevelopment agencies generally cannot levy taxes.' (Matosantos I, supra, 53 Cal.4th at p. 246; accord [City of Cerritos v.] Cerritos Taxpayers Assn. [(2010)] 183 Cal.App.4th [1417,] 1424 ['Local redevelopment agencies have no power to tax'].)" (Cuenca, supra, at pp. 223-224.) Based on this reasoning, Cuenca concludes that "the stipulated judgments cannot be read to impose any obligation on the successor agency or housing successor to continue to collect the tax increment or set aside any portion of it for low-and moderate-income housing." (Id. at p. 224.)
We reach the same conclusion in this case. The 1993 stipulated judgment requires only that a percentage of the tax increment be set aside for construction of affordable housing. The stipulated judgment's provision that "[n]ot less than" specified "percentages of all taxes which are allocated to the Agency pursuant to . . . Section 33670 shall be set-aside annually" does not require the continued collection of taxes now that the redevelopment agencies have been dissolved. The dissolution law declares that "all provisions of the Community Redevelopment Law that depend on the allocation of tax increment to redevelopment agencies, including . . . subdivision (b) of Section 33670, shall be inoperative." (§ 34189, subd. (a).) We agree with the trial court that, "[t]o put it mathematically, 20 to 25 percent of zero is zero."
As in Cuenca, we reject the contention that the elimination of the tax increment poses no impediment to continue collection of the same amount of tax under another name such as "property tax." The parties to the 1993 stipulated judgment lacked power to endow the RDA with taxing authority to make up for elimination of the tax increment. (Cuenca, supra, 8 Cal.App.5th at pp. 223-224.) The stipulated agreement in this case allocates portions of the tax increment for affordable housing rather than purporting to provide a source of funds for that goal. Thus, "[n]othing in the stipulated judgment[] purports to prevent the Legislature from recapturing unspent tax increment funds by subsequent legislation." (Id. at p. 227.)
We conclude the trial court properly affirmed DOF's determination the 1993 stipulated judgment no longer requires any money to be set aside for affordable housing after the Legislature's elimination of the tax increment.
D.
Binding Commitment
Shayne argues the trial court erred in finding, "there is no binding commitment under the [stipulated judgment] to build, acquire and rehabilitate affordable housing in the City of Buena Park." We reject the argument.
In Cuenca, we examined the requirements for a binding commitment as follows: "Since June 2011, section 34163 has precluded redevelopment agencies from incurring any new contracts by providing that 'an agency shall not have the authority to, and shall not, do any of the following: [¶] . . . [¶] (b) Enter into contracts with, incur obligations, or make commitments to, any entity, whether governmental, tribal, or private, or any individual or groups of individuals for any purpose, including, but not limited to, loan agreements, passthrough agreements, regulatory agreements, services contracts, leases, disposition and development agreements, joint exercise of powers agreements, contracts for the purchase of capital equipment, agreements for redevelopment activities, including, but not limited to, agreements for planning, design, redesign, development, demolition, alteration, construction, reconstruction, rehabilitation, site remediation, site development or improvement, removal of graffiti, land clearance, and seismic retrofits.' (See Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 6, eff. June 29, 2011.)
"Also part of the legislation enacted by Assembly Bill 1x 26, subdivision (a) of section 34167 provides: 'This part is intended to preserve, to the maximum extent possible, the revenues and assets of redevelopment agencies so that those assets and revenues that are not needed to pay for enforceable obligations may be used by local governments to fund core governmental services including police and fire protection services and schools. It is the intent of the Legislature that redevelopment agencies take no actions that would further deplete the corpus of the agencies' funds regardless of their original source. All provisions of this part shall be construed as broadly as possible to support this intent and to restrict the expenditure of funds to the fullest extent possible.' (See Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 6, eff. June 29, 2011.)
"And effective June 27, 2012, Assembly Bill 1484 'added new section 34177.3, providing in part as follows: [¶] "(a) Successor agencies shall lack the authority to, and shall not, create new enforceable obligations . . . or begin new redevelopment work, except in compliance with an enforceable obligation that existed prior to June 28, 2011 [(i.e., before the effective date of Assem. Bill 1X 26)]. [¶] . . . [¶] (d) . . . Any actions taken by redevelopment agencies to create obligations after June 27, 2011, are ultra vires and do not create enforceable obligations." ' (City of Emeryville, supra, 233 Cal.App.4th at pp. 299-301, italics added.)" (Cuenca, supra, 8 Cal.App.5th at pp. 225-226.)
The stipulated judgment in this case provides that the tax increment set aside for affordable housing be deposited and held in a low- and moderate-income housing fund. The stipulated settlement agreement does not refer to any existing contractual obligation to construct any housing. Thus, even if funds were still available under the stipulated judgment, any contract to actually build housing would constitute new redevelopment work. New redevelopment work, however, is prohibited under section 34177.3, subdivision (a). (Cuenca, supra, 8 Cal.App.5th at p. 226.) Consequently, DOF correctly determined the stipulated judgment did not constitute a binding commitment to build any housing in Buena Park.
II
Collateral Attack on the Stipulated Judgment
Shayne argues DOF's refusal to approve any payment under the stipulated judgment as claimed in the City of Buena Park's ROPS constitutes an impermissible collateral attack on the validity of the stipulated judgment. We reject the argument based on our conclusion the 1993 stipulated judgment is an enforceable obligation under the dissolution law. Nonetheless, as we explained in part I B., the stipulated judgment's terms do not allow the City of Buena Park (as successor agency) to continue to collect the tax increment after the Great Dissolution. The elimination of the tax increment also eliminated the very reason for the stipulated judgment - ensure a minimum portion of the tax increment would be allocated to affordable housing. Regardless of whether DOF erroneously determined the stipulated judgment not to be an enforceable obligation, the result is the same: there are no more funds remaining to be allocated under the stipulated judgment. Consequently, we determine DOF reached the correct result under the dissolution law when it denied the stipulated judgment as a claim on the City of Buena Park's ROPS.
DISPOSITION
The judgment is affirmed. Respondent Keely Bosler as Director of the Department of Finance shall recover costs on appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)
/s/_________
HOCH, J. We concur: /s/_________
HULL, Acting P. J. /s/_________
DUARTE, J.