County of Sonoma v. Cohen ( 2015 )

Filed 3/12/15
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
COUNTY OF SONOMA, as Successor, etc., C075120
Plaintiff and Respondent, (Super. Ct. No.
34-2013-80001378-CU-WM-GDS)
v.
MICHAEL COHEN, as Director, etc.,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Sacramento County, Eugene
L. Balonon, Judge. Affirmed.
Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney
General, Mark R. Beckington and George M. Waters, Deputy Attorneys General, for
Defendant and Appellant.
Goldfarb & Lipman, Juliet E. Cox; Bruce D. Goldstein, County Counsel, Steven S.
Shupe, Deputy County Counsel, for Plaintiff and Respondent.
This is another case arising out of the 2011 legislation that brought about the
“Great Dissolution” of California’s redevelopment agencies. (See City of Pasadena v.
1
Cohen (2014) 228 Cal.App.4th 1461, 1463 (Pasadena).) This enactment (Stats. 2011, 1st
Ex. Sess. 2011-2012, ch. 5X (hereafter chapter 5X)), which focused chiefly on the Health
and Safety Code,1 barred any new obligations for redevelopment activity and provided a
process to wind up the obligations of the nearly 400 redevelopment agencies then
existing, 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. (Pasadena,
supra, at p. 1463 & fn. 2; California Redevelopment Assn. v. Matosantos (2011)
53 Cal.4th 231, 246-247 (Matosantos).)
Plaintiff County of Sonoma (Sonoma), in its capacity as the “successor agency”
(§§ 34171, subd. (j), 34173, 34177) to the former Sonoma County Community
Redevelopment Agency (Sonoma Redevelopment Agency), “reentered” into agreements
between the Sonoma Redevelopment Agency and itself that were now invalid, after it
received authorization from its “oversight board”2 (§§ 34178, subd. (a), 34180, subd. (h))
in March 2012 to take this action. Defendant Department of Finance, through its
Director, Michael Cohen (the Department), appeals from the trial court’s ruling that these
are “enforceable obligations” of a former redevelopment agency that continue to be
payable out of property taxes before distribution of the remainder to the taxing entities.
(§§ 34171, subd. (d), 34183, subd. (a)(2)(C)).
The Department argues the agreements are not enforceable obligations because
the definition specifically excludes agreements between former redevelopment agencies
1 Undesignated statutory references are to the Health and Safety Code.
2 An oversight board has supervisory power over successor agencies. (§§ 34171, subd.
(f), 34179.) It is composed primarily of the representatives of the “taxing entities”
otherwise entitled to the net property taxes after payment of enforceable obligations
(§§ 34171 subd. (k), 34183, subd. (a)(4), 34179, subd. (a)), to which it owes fiduciary
duties (§ 34179, subd. (i)).
2
and “sponsoring” entities.3 (§ 34171, subd. (d)(2).) The Department asserts that the
statutory power of an oversight board to authorize a successor agency to reenter into this
type of agreement is contrary to legislative intent, and to June 2012 legislation. We
disagree and shall affirm the trial court’s judgment and writ directing the Department to
treat two county redevelopment agency agreements as enforceable obligations.
FACTUAL AND PROCEDURAL BACKGROUND
This case turns on the legal issue of statutory interpretation. Consequently, even
though the parties have supplied an exhaustive account of the nature of the projects that
underlie the challenged reentry agreements and the path their dispute has taken on the
way to the courthouse, the specific underlying facts are mostly immaterial.
In January 2011, the Sonoma Redevelopment Agency and Sonoma entered into
agreements under which the Sonoma Redevelopment Agency agreed to fund the
acquisition of a former shopping center for redevelopment (including the cleanup of toxic
wastes), and improvements to State Highway 12. In January 2012, Sonoma adopted a
resolution to accept the role of successor agency to the Sonoma Redevelopment Agency.
In March 2012, Sonoma’s oversight board adopted a resolution that authorized Sonoma
to reenter into these agreements. It found these were in the best interests of the county’s
taxing entities because they would both ameliorate adverse conditions in the project areas
and result in increased property values in surrounding areas.4 Sonoma executed reentry
agreements for the two projects effective as of the date of the oversight board’s
resolution.
3 We apologize for the plethora of statutory citations and footnotes, but we are in the
land of terms of art. A “sponsoring entity” is that which authorized the creation of its
redevelopment agency. (§ 34171, subd. (n).)
4 We note that the Department does not challenge the sufficiency of the factual bases of
these findings, beyond pejoratively describing them as boilerplate.
3
In February 2012, Sonoma prepared a “Recognized Obligation Payment Schedule”
(ROPS)5 for the period of January to June 2012 that included the two projects (in items
70 & 71) as enforceable obligations of the Sonoma Redevelopment Agency. The
oversight board’s March 2012 resolution had approved this ROPS (ROPS I). Sonoma
transmitted copies of ROPS I to the Department. (§§ 34177, subd. (l)(2)(B), 34180, subd.
(g).) The Department asserted its authority (§ 34179, subd. (h)) to review “one or more”
items, after which it disallowed (inter alia) items 70 and 71 as contracts between a former
redevelopment agency and its sponsoring entity. The Department thereafter also
disallowed inclusion of the two projects as enforceable obligations 12 and 13 in the
approved ROPS for the period of July to December 2012 (ROPS II) for the same reason.
This brings us to the ROPS at issue for the period of January to June 2013 (ROPS
III), approved in August 2012, which yet again included the two projects as enforceable
obligations 70 and 71. The Department eventually disallowed them one more time in
December 2012, expanding upon its previous rationale; it recognized that oversight
boards had statutory authorization to approve a reentry agreement with a sponsoring
entity as an enforceable obligation, but the Department asserted that the definition
of enforceable obligations in section 34171 did not itself expressly include reentry
agreements, and sections 34178 and 34180 did not expressly contain a “notwithstand”
reference to section 34171.
Sonoma filed its petition for writ of mandate in January 2013. It sought a
declaration that the two projects were enforceable obligations and a writ of mandate
directing the Department to approve their inclusion in ROPS III. Sonoma also sought a
ruling that it was entitled to reimbursement for the Department’s incorrect classification
5 This is “the document setting forth the minimum payment amounts and due dates of
payments required by [the] enforceable obligations” of a former redevelopment agency.
(§§ 34171, subd. (h), 34177, subds. (a)(1), (l) & (m).)
4
of certain expenditures as administrative expenses incurred in connection with the ROPS
III, and for a “true-up”6 payment of $2.2 million (rounded) that its auditor-controller
assessed against it in July 2012 pursuant to section 34183.5 (which subjects 2011-2012
tax increments distributed solely to former redevelopment agencies prior to the court-
reformed effective date of the Great Dissolution legislation7 to the distribution
mechanism of section 34183), which Sonoma had paid under protest. The trial court
found the two agreements were enforceable obligations. It also concluded that Sonoma
failed to satisfy its burden of proof in its challenge to the designation of the expenses as
administrative (a ruling not at issue on appeal), and the true-up payment—while valid
(another ruling not at issue on appeal)—required recomputation of the total assessment in
order to deduct the amount that was attributable to these additional enforceable
obligations (the trial court directing the Department to reimburse the amount in
adjustments to future ROPS).
DISCUSSION
While we accord at least “ ‘weak deference’ ” to an agency’s interpretation of its
governing statutes where its expertise gives it superior qualifications to do so (Spanish
Speaking Citizens’ Foundation, Inc. v. Low (2000) 85 Cal.App.4th 1179, 1215-1216
[contrasting the “ ‘strong deference’ ” standard in other jurisdictions]), the issue
nonetheless is one subject to our de novo review (State Compensation Ins. Fund v. Brown
6 This is a slang expression that the Department employs, presumably derived from the
verb “to true” (adjusting to make accurate). (E.g., Pacific Gas & Electric Co. v.
Department of Water Resources (2003) 112 Cal.App.4th 477, 487.)
7 Matosantos, supra, 53 Cal.4th at pages 274 through 276 had judicially reformed the
October 1, 2011 effective date generally to February 1, 2012, and in the context of
section 34183 had extended the date for county auditor-controllers’ initial distributions of
property tax from January 16 to May 16, 2012 (by which time the fall 2011 tax
increments that should have been subject to the provisions of section 34183 had been
distributed to the Sonoma Redevelopment Agency in December 2011).
5
(1995) 32 Cal.App.4th 188, 199; Troy Gold Industries, Ltd. v. Occupational Safety &
Health Appeals Bd. (1986) 187 Cal.App.3d 379, 387, fn. 4).
The exclusion of agreements between the former redevelopment agencies and their
sponsors in the definition of enforceable obligations (§ 34171, subd. (d)(2) [also listing
exceptions not relevant in the present case]) and the express legislative invalidation of
these agreements (§ 34178, subds. (a) & (b) [latter also including exceptions not relevant
in the present case]) reflect legislative recognition that “often” these agreements were not
the product of arm’s-length negotiations because the two bodies had “conjoined”
membership that was not reflective of the interests of the other taxing entities.
(Matosantos, supra, 53 Cal.4th at pp. 258, fn. 12, 266.) From this premise, the
Department argues that an interpretation of the 2011 version of sections 34178 and
341808 (see chapter 5X, § 7) that would allow the reentry agreements to become
enforceable obligations with the permission of an oversight board is contrary to the
overall intent behind the Great Dissolution legislation.9
This type of “legislative spirit” interpretation is not well taken. “[N]o legislation
pursues its purposes at all costs. Deciding what competing values will or will not be
sacrificed to the achievement of a particular objective is the very essence of legislative
choice—and it frustrates rather than effectuates legislative intent simplistically to assume
that whatever furthers the statute’s primary objective must be the law. Where, as here,
‘the language of a provision . . . is sufficiently clear in its context and not at odds with the
8 As we will detail presently, 2012 legislation made a significant change to both statutes.
9 The Department derives this contention from uncodified statements of legislative
purpose in the act (chapter 5X, § 1(j)) and other statutes—in particular the 2012
enactment of section 34177.3, which contains a prohibition against successor agencies
creating new enforceable obligations postdating the 2011 enactment of chapter 5X or any
new diversions of property taxes beyond the existing enforceable obligations, along with
a proviso that the statute was “declaratory of existing law” (§ 34177.3, subd. (e)).
6
legislative history, . . . “[we should not] examine the additional considerations of ‘policy’
. . . that may have influenced the lawmakers in their formulation of the statute.” ’ ”
(Rodriguez v. United States (1987) 480 U.S. 522, 525-526 [94 L.Ed.2d 533, 538]; accord,
Foster v. Workers' Comp. Appeals Bd. (2008) 161 Cal.App.4th 1505, 1510 [purpose of
law cannot supplant legislative intent expressed in particular statute].)
The 2011 version of sections 34178, subdivision (a) and 34180, subdivision (h)
(hereafter former sections 34178(a) and 34180(h), respectively) unambiguously
authorized a successor agency to request approval of a reentry agreement, and an
oversight board to grant the request.10 Under the well-established interpretive principle
just cited, this express grant of authority cannot simply be negated through resort to the
spirit of the Great Dissolution law. We thus turn to the Department’s interpretive efforts
derived from the interplay of the various actual statutes.
The Department argues that the Sonoma oversight board could not approve acts of
Sonoma that were not authorized for successor agencies. But this truism does not have
any application to the present dispute. As originally enacted, all sponsor-former
redevelopment agency agreements were not included in the definition of enforceable
agreements, and were legislatively invalidated. (§§ 34171, subd. (d)(2), former
34178(a).) However, certain of these sponsor-former redevelopment agency agreements
were allowed to remain in effect as enforceable obligations. (§§ 34171, subd. (d)(2),
10 Former section 34178(a) then provided: “Commencing on the operative date of this
part, [any] agreements . . . between the [sponsoring entity] and the redevelopment agency
are invalid and shall not be binding on the successor agency; provided, however, that a
successor entity wishing to enter or reenter into agreements with [its sponsoring entity]
. . . may do so upon obtaining the approval of its oversight board.” (Chapter 5X, § 7.)
Former section 34180(h) then provided: “All of the following successor agency
actions shall first be approved by the oversight board: [¶] . . . [¶] (h) A request by the
successor agency to enter into an agreement with [its sponsoring entity].” (Chapter 5X,
§ 7.)
7
34178, subd. (b).) In addition, successor agencies with the approval of their oversight
boards could also establish a reentry agreement as an enforceable obligation in an ROPS.
(Former § 34178(a).) Thus, an oversight board is not approving an unauthorized act.
It is also irrelevant that section 34171 does not include reentry agreements in
the definition of enforceable obligations,11 or that former sections 34178 and 34180 did
not contain “notwithstand” references to section 34171. The subject of section 34171 (in
subdivision (d)(2)) is the agreements of the former redevelopment agencies, and not the
powers of oversight boards or successor agencies; on the other hand, the subjects of the
other two statutes are the authority of the oversight board and successor agency regarding
agreements of the successor agencies. The Department’s suggested reading of the
statutes as limiting the oversight board’s power of approval only to the exceptions in
section 34178, subdivision (b) is also not plausible. The latter are a limited class of
former redevelopment agency agreements that are deemed enforceable obligations
without any approval from an oversight board, and thus the Department’s interpretation
would leave the grant of power without any meaning because successor agencies do not
have any need to reenter into a binding enforceable obligation.
This interpretation is not at odds with the overall purpose of the Great Dissolution
law such that we can apply the “absurd result” doctrine and disregard plain statutory
language, as the Department urges. (See County of Sacramento v. Superior Court (2012)
11 We note that an approved reentry agreement arguably could be among those included
in a different section of the definitions of enforceable obligations: “Any legally binding
and enforceable agreement . . . that is not otherwise void as violating the debt limit or
public policy” (although the successor agencies and oversight boards are empowered to
terminate such contracts if they so choose). (§ 34171, subd. (d)(1)(E).) However, as it is
not necessary to rely on it, and as it received the glancing attention of only Sonoma, we
do not explore the significance of this subdivision further. (Sourcecorp, Inc. v. Shill
(2012) 206 Cal.App.4th 1054, 1061 (Sourcecorp) [in absence of adequate argument,
court not obligated to consider issue].)
8
209 Cal.App.4th 776, 782, citing Rehman v. Department of Motor Vehicles (2009)
178 Cal.App.4th 581, 586, 588.) Rather, authorization of reentry agreements is a rational
escape hatch which allows oversight boards composed of the taxing entities that are
otherwise entitled to the benefits of the law to determine that certain of the sponsor-
former redevelopment agency agreements present sufficient countywide benefit to them
such that it is in their best interests to approve reentry. It is hyperbole on the part of the
Department to suggest that this will “create a major exclusion to [its] authority to review”
under which oversight boards will capriciously and without due consideration of their
fiduciary duties approve all reentries of sponsor-former redevelopment agency
agreements as new enforceable obligations (decisions which the Department—along with
the State Controller or any affected taxing entity—in fact has the standing to challenge
(§ 34177, subd. (a)(2)).
We turn to the Department’s argument regarding the present version of sections
34178, subdivision (a) (hereafter current section 34178(a)) and 34177.3, subdivision (a)
(hereafter section 34177.3(a)). The 2012 legislation added a sentence to former section
34178(a), so that it now concludes: “A successor agency or an oversight board shall not
exercise the powers granted by this subdivision to restore funding for an enforceable
obligation that was deleted or reduced by the Department . . . pursuant to subdivision (h)
of Section 34179 unless it reflects the decisions made during the meet and confer process
with the Department . . . or pursuant to a court order.”12 (Current § 34178(a).) To the
12 The legislation also amended section 34180, subdivision (h) to add, “An oversight
board shall not have the authority to reestablish loan agreements between the successor
agency and the [sponsoring entity] except as provided in [section 34191.1 et seq.].
Any actions to reestablish any other agreements that are in furtherance of enforceable
obligations, with [sponsoring entities] are invalid until they are included in an approved
and valid [ROPS].” (Italics added.) The parties do not discuss the amendment’s effect,
and we will not strike out on our own. (Sourcecorp, supra, 206 Cal.App.4th at p. 1061,
fn. 7.)
9
extent the Department again derives a general legislative spirit from these 2012
enactments to defeat the express language of former section 34178(a), we do not find
the argument persuasive. This leaves the Department’s claim that the June 2012
enactments should be given retroactive effect to invalidate the March 2012 approval of
the reentry agreements; in a scant page of argument, the Department asserts “there is no
doubt” that the legislation is retroactive because section 34177.3 expressly indicates this
and the “context” of current section 34178(a) and other enactments “make[] it clear that
both were meant to be retroactive.”
The general rule is that a statute overcomes the presumption of prospective-only
effect only where there is express language to the contrary or if there are other indicia of
legislative intent that provide a “ ‘clear and unavoidable implication’ ” of retroactive
intent. (McClung v. Employment Development Dept. (2004) 34 Cal.4th 467, 475.)
If declaratory of “existing” law, applying section 34177.3(a)’s prohibition on a
successor agency’s creation of new enforceable obligations to former section 34178(a)
would (as the trial court concluded) render the unambiguous grant of authority in the
former language of the latter without any effect. That, as already discussed, is not a
permissible interpretation, so it is instead more plausible to read the authority to approve
reentry agreements as a limited exception to the existing law expressed in section
34177.3(a) when in the interest of taxing entities to do so. An interpretation otherwise
would render section 34177.3(a) a change in the preexisting law. (In any event, it would
not appear that reentry agreements are the subject of the prohibition in section
34177.3(a), because as a matter of definition one cannot “reenter” a new obligation.)
The 2012 amendment, current section 34178(a) (Stats. 2012, ch. 26, § 15), on the
other hand, is indisputably a change in the law, without any declaration that it nonetheless
10
is to be given retroactive effect.13 The Department suggests the current provisions for
retroactive application of the 2012 legislation to invalidate asset transfers from former
redevelopment agencies to sponsor entities dating back to January 2011 (§ 34167.5) and
from successor agencies to sponsor entities dating back to January 2012 (former
§ 34178.8, as added by Stats. 2012, ch. 26, § 15) indicate we should infer the intent to
apply a similar invalidating effect to existing approvals of reentry agreements. Putting
aside the disruptive effect this would have on the existing agreements (regardless of the
legitimacy of such legislative action) or the justification for subjecting only sponsor-
successor agency agreements to this disruption, we do not find this to be a plausible
interpretation of the absence of any express retroactive application to reentry agreements.
Rather, we presume the absence is an intentional legislative lacuna, reflecting a belief
that retroactive application was not necessary and prospective application would be
sufficient to meet the purposes of the Great Dissolution law. (People v. McRoberts
(2009) 178 Cal.App.4th 1249, 1256 [as with legislative additions, court should not adopt
interpretation that renders legislative omission surplusage].)
Having determined that the trial court correctly interpreted the statutes in favor of
Sonoma, we do not need to reach Sonoma’s alternative argument that the Department
forfeited objections to the items in ROPS III because it did not challenge them in a timely
fashion. Sonoma also asks that we affirm the direction to recalculate the effect of the
new enforceable obligations on its true-up payment, which the Department conceded in
the event we rejected its interpretation.
13 In its reply brief, the Department makes an abbreviated argument that retroactivity is
not an issue because its disapproval of ROPS III did not occur until after June 2012. The
tardy presentation of this argument absolves us of any duty to respond in more plenary
fashion (Sourcecorp, supra, 206 Cal.App.4th at p. 1061, fn. 7) than observing it misses
the focus of the claim of retroactive effect.
11
DISPOSITION
The judgment is affirmed. Plaintiff shall recover its costs on appeal. (Cal. Rules
of Court, rule 8.278(a)(1), (2).) (CERTIFIED FOR PUBLICATION)
BUTZ , J.
I concur:
BLEASE , Acting P. J.
12
Mauro, J., concurring and dissenting:
I concur in the disposition. The result is based on an interpretation of relevant
statutory language that controlled during a finite period of time: a time when the
statutory scheme expressly authorized a successor agency to “enter or reenter” into
agreements with its sponsoring entity regarding redevelopment activities if the successor
agency obtained the approval of its oversight board. (Health & Saf. Code, § 34178,
subd. (a).)1 That window of opportunity came to an end when the Legislature and the
Governor subsequently amended the statutory scheme to eliminate such authority.
Assembly Bill No. 26 (Stats. 2011, 1st Ex. Sess. 2011, ch. 5, § 7, pp. 5848-5862)
(Assembly Bill 26) was enacted on June 29, 2011. Among other things, Assembly Bill
26 added section 34178, which authorized the reentered agreements in this case. But the
Legislature and the Governor subsequently amended the Assembly Bill 26 statutory
scheme when they approved Assembly Bill No. 1484 (Stats. 2012, ch. 26, §§ 6-35,
pp. 1093-1124) (Assembly Bill 1484), a law that took effect on June 27, 2012. Assembly
Bill 1484 eliminated the authority of a successor agency to enter or reenter into new
enforceable obligations. (See, e.g., §§ 34173, subd. (g) [“As successor entities, successor
agencies succeed to the organizational status of the former redevelopment agency, but
without any legal authority to participate in redevelopment activities, except to complete
any work related to an approved enforceable obligation.”], 34177.3, subd. (a) [“Successor
agencies shall lack the authority to, and shall not, create new enforceable obligations
under the authority of the Community Redevelopment Law (Part 1 (commencing with
Section 33000)) or begin new redevelopment work, except in compliance with an
enforceable obligation that existed prior to June 28, 2011.”].)
1 Undesignated statutory references are to the Health and Safety Code.
1
In discussing the Department of Finance’s contention that the current versions of
sections 34178, subdivision (a) and 34177.3, subdivision (a) are retroactive, the majority
opinion states that section 34177.3, subdivision (a) does not apply to reentered
agreements because “as a matter of definition one cannot ‘reenter’ a new obligation.”
(Maj. opn., ante, p. 10; see also City of Emeryville v. Cohen (2015) 233 Cal.App.4th 293,
309 [“Taking the last point first, section 34177.3, subdivision (a) refers to ‘new’
obligations, and by its terms does not preclude reentry into ‘an enforceable obligation
that existed prior to June 28, 2011.’ ”].) To the extent the majority opinion in this case
and the opinion in City of Emeryville suggest that reentered agreements must be
continuing obligations rather than new obligations, I disagree. The reentered agreements
in this case are new obligations because the original agreements between the
redevelopment agency and the County of Sonoma were invalidated by law. (Stats. 2011,
1st Ex. Sess. 2011, ch. 5, § 7, p. 5854 [§ 31478, subd. (a)].) County of Sonoma agrees
the original agreements were not enforceable obligations binding the successor agency.
(See Stats. 2011, 1st Ex. Sess. 2011, ch. 5, § 7, pp. 5848-5849 [§ 34171, subd. (d)(1) &
(2)].) Rather, County of Sonoma argues the law allowed a successor agency to make “its
own” agreements with the host community and allowed the successor agency’s oversight
board to “replace” the original agreements with agreements between the successor
agency and the host community. This understanding makes sense, because if the original
agreements had been continuing enforceable obligations binding the successor agency,
there would have been no need for the successor agency to “enter or reenter” into them;
they would have continued to be enforceable under the law. (Stats. 2011, 1st Ex. Sess.
2011, ch. 5, § 7, pp. 5848-5849, 5852-5854 [§§ 34170, subd. (d)(2), 34177, subds. (a),
(c), (l), 34178, subd. (a)].)
Accordingly, the reentered agreements in this case were new obligations.
Although section 34178, subdivision (a) gave the successor agency a window of authority
2
to enter or reenter into such new obligations with the approval of the oversight board,
Assembly Bill 1484 subsequently eliminated that authority.
MAURO , J.
3