San Diegans for Open Gov. v. Pub. Facilities Financing etc.

Filed 4/19/21
CERTIFIED FOR PUBLICATION
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
SAN DIEGANS FOR OPEN D075157
GOVERNMENT,
Plaintiff and Appellant,
(Super. Ct. No. 37-2017-
v. 00004058-CU-MC-CTL)
PUBLIC FACILITIES FINANCING
AUTHORITY OF THE CITY OF SAN
DIEGO et al.,
Defendants and Respondents.
APPEAL from a judgment of the Superior Court of San Diego County,
Gregory W. Pollack, Judge. Affirmed in part; reversed in part with
directions.
Higgs Fletcher & Mack, John Morris, and Rachel E. Moffitt, for
Plaintiff and Appellant.
Mara W. Elliot, City Attorney, George Schaefer, Assistant City
Attorney, and Meghan Ashley Wharton, Deputy City Attorney, for
Defendants and Respondents Public Facilities Financing Authority of the
City of San Diego and the City of San Diego.
No appearance for Defendant and Respondent Plaza de Panama
Committee.
In order to fund construction of an underground parking garage and
other improvements in Balboa Park, the City of San Diego entered into a
“lease revenue bond” transaction. For a nominal fee, the City would lease the
land underlying the improvements to the Public Facilities Financing
Authority of the City of San Diego (Financing Authority). The Financing
Authority, in turn, would lease the land and improvements back to the City
in exchange for annual payments. The Financing Authority would issue
bonds to fund construction of the improvements, secured by the City’s annual
lease payments to the Financing Authority. In the event of default by the
Financing Authority, any recourse by the bondholders would be limited to
collection of the City’s lease payments. This type of transaction was approved
by the Supreme Court in Rider v. City of San Diego (1998) 18 Cal.4th 1035(Rider) and by this court in San Diegans for Open Government v. City of San
Diego (2015) 242 Cal.App.4th 416 (SanDOG).
After Rider and SanDOG, San Diego voters approved several
amendments to the San Diego City Charter regarding bond issuance.
Plaintiff San Diegans for Open Government (SanDOG) challenged the Balboa
Park lease revenue bond transaction based on these amendments. In
SanDOG’s view, one newly-amended provision restricts the ability of the City
to use the Financing Authority to issue bonds without voter approval. The
trial court disagreed, and we affirm the court’s judgment on this issue. The
provision in question reflects a limitation on City-issued bonds; it does not
cover bonds issued by the Financing Authority. Moreover, even if the
provision were not limited to City-issued bonds, it would not cover the lease
revenue bonds contemplated here. The additional challenge asserted by
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SanDOG (regarding a cooperation agreement) is moot; accordingly, we
reverse that portion of the judgment with directions to dismiss the challenge
as moot.
FACTUAL AND PROCEDURAL BACKGROUND
Approximately a decade ago, the City began discussions with
entrepreneur and philanthropist Irwin Jacobs about potential enhancements
to Balboa Park, the City’s premier public space. The discussions culminated
in a proposed revitalization project, including an underground parking
garage and related improvements. The project was to be supported by a
combination of public and private funds. Litigation, including an appeal to
this court, delayed the project for several years. (See Save Our Heritage
Organisation v. City of San Diego (2015) 237 Cal.App.4th 163.)
The litigation was resolved in the City’s favor. To move the project
forward, the City entered into a Cooperation Agreement with a group formed
by Jacobs, the Plaza de Panama Committee. Under the Cooperation
Agreement, the City agreed to commit at least $45 million in funding. The
Committee agreed to contribute at least $30 million.
To fulfill its funding commitment, the City entered into the challenged
transaction. Its counterparty, the Financing Authority, is a joint powers
agency organized under state law. (See Gov. Code, § 6500 et seq.) It was
formed by (1) the City, (2) the City in its capacity as the successor agency to
the Redevelopment Agency of the City of San Diego, and (3) the Housing
Authority of the City of San Diego. Although it is governed by a commission
composed of the members of the San Diego City Council, it is an entity
separate from the City. Its debts and obligations are not debts and
obligations of the City. Any bonds issued by the Financing Authority are
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special obligations of the Authority, and they do not constitute a debt of the
City or a pledge of faith and credit of the City.
As noted, the City agreed to lease the land underlying the proposed
Balboa Park improvements to the Financing Authority for a nominal fee.
The Financing Authority, in turn, agreed to lease the land and any
improvements back to the City. The Financing Authority would issue bonds,
the sale of which would fund construction. Consistent with the governing
document of the Financing Authority, the bonds were obligations of the
Financing Authority, not the City. The bonds would be secured by the City’s
lease payments to the Financing Authority. The City would use its general
fund to make these lease payments. The City anticipated that the revenue
from operating the parking garage, which would be deposited in the general
fund, would cover the payments.
In December 2016, the City Council approved the form and content of
the lease agreements and the proposed bond documentation. Its ordinance
stated, “The City hereby authorizes and approves, and requests the
[Financing] Authority to approve and authorize, the issuance and sale by the
Authority of the Bonds in a total aggregate principal amount not to exceed
$50,000,000 . . . .” The members of the City Council, sitting as the governing
commission of the Financing Authority, approved the form and content of the
documents on its behalf. The Financing Authority’s resolution stated, “The
Authority hereby approves and authorizes the issuance and sale of its Bonds
in a principal amount not to exceed $50,000,000 . . . .”
After these approvals, SanDOG filed the underlying lawsuit. The
lawsuit challenged the bond issuance as well as various aspects of the
Cooperation Agreement. It contended that the bond approvals were
inconsistent with the recently-amended San Diego City Charter. The trial
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court held a multiday bench trial and rejected SanDOG’s contentions.
SanDOG appeals.
DISCUSSION
I
Standards of Review and Interpretation
SanDOG contends the trial court misinterpreted the San Diego City
Charter, specifically section 90.1, titled “Revenue Bonds.” (San Diego
Charter, art. VII, § 90.1.)1 We review the trial court’s interpretation de novo.
(United Association of Journeymen v. City & County of San Francisco (1995)
32 Cal.App.4th 751, 759, fn. 6.)
“We begin with the cardinal principle that the charter represents the
supreme law of the City, subject only to conflicting provisions in the federal
and state Constitutions and to preemptive state law. [Citation.] In this
regard, ‘[t]he charter operates not as a grant of power, but as an instrument
of limitation and restriction on the exercise of power over all municipal
affairs which the city is assumed to possess; and the enumeration of powers
does not constitute an exclusion or limitation.’ ” (Domar Electric, Inc. v. City
of Los Angeles (1994) 9 Cal.4th 161, 170.)
“The principles of construction that apply to statutes also apply to the
interpretation of charter provisions. [Citation.] ‘In construing a provision
adopted by the voters our task is to ascertain the intent of the voters.’
[Citation.] ‘We look first to the language of the charter, giving effect to its
plain meaning. [Citation.] Where the words of the charter are clear, we may
not add to or alter them to accomplish a purpose that does not appear on the
face of the charter or from its legislative history.’ [Citation.] ‘ “An
1 Subsequent undesignated section references are to the San Diego City
Charter.
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interpretation that renders related provisions nugatory must be avoided . . . ,
[and] each sentence must be read . . . in the light of the [charter’s overall]
scheme . . . .” ’ [Citation.] ‘When statutory language is susceptible of more
than one reasonable interpretation, courts should consider a variety of
extrinsic aids, including the ostensible objects to be achieved, the evils to be
remedied, the legislative history including ballot pamphlets, public policy,
contemporaneous administrative construction and the overall statutory
scheme.’ ” (Don’t Cell Our Parks v. City of San Diego (2018) 21 Cal.App.5th
338, 349 (Don’t Cell).)
Although we must independently interpret the text of the charter, an
agency’s “interpretation of the meaning and legal effect of a [provision] is
entitled to consideration and respect by the courts[.]” (Yamaha Corp. of
America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7.) “Where the
meaning and legal effect of a [provision] is the issue, an agency’s
interpretation is one among several tools available to the court. Depending
on the context, it may be helpful, enlightening, even convincing. It may
sometimes be of little worth. [Citation.] Considered alone and apart from the
context and circumstances that produce them, agency interpretations are not
binding or necessarily even authoritative. To quote the statement of the Law
Revision Commission in a recent report, ‘The standard for judicial review of
agency interpretation of law is the independent judgment of the court, giving
deference to the determination of the agency appropriate to the circumstances
of the agency action.’ ” (Id. at pp. 7-8.)
II
Prior Judicial Approval of Financing Authority Bonds
The Supreme Court in Rider and this court in SanDOG previously
approved the type of financial transaction at issue here. (See Rider, supra,6
18 Cal.4th at p. 1039; SanDOG, supra, 242 Cal.App.4th at p. 424.) The
Supreme Court explained that a joint powers agency, like the Financing
Authority, has the power under state law to issue bonds in its own name.
(Rider, at p. 1053; see Gov. Code, § 6540 et seq.) It therefore need not comply
with the limitations that would apply to City-issued bonds, such as voter
approval: “[W]hen the Financing Authority issues bonds, it does so
independently of any common powers delegated in the joint powers
agreement, and therefore it is not subject to the limitations that would apply
to the City, including the two-thirds vote requirements in the [California]
Constitution and the City’s charter.” (Rider, at p. 1054.) “[T]he Financing
Authority is a separate legal entity from the City [citation], and the
Financing Authority’s debts are not the City’s debts [citation].” (Id. at
p. 1055.)
In SanDOG, this court followed Rider even where, as here, the
Financing Authority is under the control of the City. We explained, “Rider
made clear that for purposes of the debt limitation provisions, when a
financing authority created to issue bonds ‘has a genuine separate existence
from the City,’ ‘it does not matter whether or not the City “essentially
controls” the [f]inancing [a]uthority.’ ” (SanDOG, supra, 242 Cal.App.4th at
pp. 437-438, quoting Rider, supra, 18 Cal.4th at p. 1044.) “Under the Joint
Exercise of Powers Act, the Financing Authority has a genuine separate
existence from the City. [Citation.] The Successor Agency and the Housing
Authority also have genuine separate existences from the City. [Citations.]
In recognition of the separate status, the [Financing Authority’s governing
document] specifies that bonds are not a debt of the City, the Successor
Agency, or the Housing Authority, and are only special obligations of the
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Financing Authority to be paid from revenues and other funds pledged
therefor. This arrangement comports with Rider.” (SanDOG, at p. 438.)
Along with its approval, the Supreme Court noted, “We are not naive
about the character of this transaction. If the City had issued bonds . . . , the
two-thirds vote requirement would have applied. Here, the City and the Port
District have created a financing mechanism that matches as closely as
possible (in practical effect, if not in form) a City-financed project, but avoids
the two-thirds vote requirement. Nevertheless, the law permits what the
City and the Port District have done. Plaintiffs are correct that this
conclusion allows local governments to burden taxpayers with potentially
high costs that voters have not approved, but local governments impose
similar burdens on taxpayers every time they enter into long-term leases
involving property of substantial value. We have long held that the two-
thirds vote requirement does not apply to these leases so long as the
obligation to pay rent is contingent on continued use of the leased property.”
(Rider, supra, 18 Cal.4th at p. 1055; see SanDOG, supra, 242 Cal.App.4th at
p. 435.)
III
The City Charter Amendments
In 2016, the City Council proposed several amendments to the City
Charter provisions governing bond issuance. In its ordinance submitting the
amendments for voter approval, the Council stated, “the provisions of the
Charter dealing with the authorization and issuance of bonds have not been
amended to reflect changes in state law, and updates are designed to simplify
and conform the City’s processes with the California Constitution[.]” San
Diego voters approved the amendments later the same year.
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Prior to the amendments, the Charter contained three sections covering
bond issuance. Former section 90 authorized the City Council to “contract
bonded indebtedness” by “pledging the credit of the City or the property or
revenue of any public utility owned by the City[.]” (Former § 90, subd. (a).)
Former section 90.1 authorized the City Council to issue “revenue bonds” for
the construction and improvement of waterworks in the City. (Former § 90.1,
subds. 2, 4.) These bonds “shall not constitute an indebtedness of the City”
but shall be payable only from revenues of the City Water Department.
(Former § 90.1, subd. 2.) Former section 90.2 similarly authorized the City
Council to issue “revenue bonds” for the acquisition and construction of sewer
facilities. (Former § 90.2, subds. 1, 2.) These bonds likewise “shall not
constitute an indebtedness of the city” but shall be payable only from a Sewer
Revenue Fund. (Former § 90.2, subd. 1.)
The 2016 amendments rewrote sections 90 and 90.1, and replaced
section 90.2. Section 90, titled “General Obligation Bonds,” now provides,
“The Council is authorized to provide for the issuance of general obligation
bonds in accordance with the California Constitution. General obligation
bonds may be issued and sold in accordance with state law and any other
local procedure adopted by ordinance.” Section 90.1, titled “Revenue Bonds,”
provides, “The Council may authorize the issuance of revenue bonds by a two-
thirds vote of the Council provided the bonds are not secured by or payable
from the general fund or any fund other than an enterprise fund and that the
purpose of the bond issue is to provide for the construction, reconstruction or
replacement of water facilities, wastewater facilities, or stormwater facilities.
All revenue bonds may be issued and sold in accordance with state law or any
procedure established by ordinance.”
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The parties dispute whether section 90.1 applies to lease revenue bonds
issued by the Financing Authority. SanDOG contends that section 90.1
applies to revenue bonds, including those issued by the Financing Authority,
and lease revenue bonds are a type of revenue bond. SanDOG argues that
the Financing Authority’s lease revenue bonds are impermissible because
they violate section 90.1’s two conditions, that the bonds not be “payable from
the general fund” and that they be used “for the construction, reconstruction
or replacement of water facilities, wastewater facilities, or stormwater
facilities.” The City and the Financing Authority, by contrast, contend that
section 90.1’s limitations do not apply to the Financing Authority. Even if
they did, they argue that the “revenue bonds” described in the section do not
encompass the “lease revenue bonds” at issue here.
To resolve this dispute, we look first to the language of section 90.1.
(Don’t Cell, supra, 21 Cal.App.5th at p. 349.) The section itself is silent
regarding the scope of its application. It states that the City Council may
“authorize the issuance of revenue bonds,” but it does not specify the issuing
entity. (§ 90.1) Given the Financing Authority’s separate legal existence, it
would be reasonable to conclude that this City Charter section does not apply
to it. However, given the role of members of the City Council in governing
the Financing Authority, it is possible to read the section more broadly. We
therefore turn to extrinsic aids to resolve this potential ambiguity.
“If . . . the language is susceptible of more than one reasonable
meaning, we may consider the ballot summaries and arguments to determine
how the voters understood the ballot measure and what they intended in
enacting it.” (In re Tobacco II Cases (2009) 46 Cal.4th 298, 315 (Tobacco II).)
The amendments here were placed before the voters as “Proposition B” in a
municipal special election. The ballot title for the proposition was “Charter
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Amendments Regarding the Authorization and Issuance of General
Obligation Bonds and Revenue Bonds by the City of San Diego.” The ballot
summary stated, “This proposition would amend the San Diego Charter to
revise the processes by which the City authorizes the issuance of General
Obligation Bonds and Revenue Bonds to conform the processes more closely
with the California Constitution.”
The ballot materials included an impartial analysis by the San Diego
City Attorney. The analysis explained, “The City of San Diego may choose to
issue bonds when the City does not have sufficient cash available in any one
year to fund the cost of certain capital improvements such as libraries, fire
stations and streets. Bonds are a form of borrowing in which the City sells
bonds to investors and promises to pay the investors back over time.”
The analysis described “General Obligation Bonds,” which are paid
from ad valorem property taxes imposed to pay debt service on the bonds
each fiscal year. It noted that the California Constitution requires voter
approval of general obligation bonds. The analysis stated that the proposed
amendments would eliminate additional local requirements for general
obligation bonds, some of which conflicted with state law.
As to “Revenue Bonds,” the analysis explained that they “are bonds
that are payable from enterprise funds, such as those related to the City’s
Water and Wastewater utilities.” It went on, “The Charter contains
extensive provisions setting forth requirements for the City’s issuance of
Revenue Bonds for the Water and Wastewater utilities. These provisions
require a vote of the public and have not been used by the City to issue bonds
in decades.” The proposed amendments “would allow the City to authorize
the issuance of Revenue Bonds with a two-thirds vote of the City Council.
The General Fund could not be used to pay Revenue Bonds. The Revenue
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Bonds could only be used to fund water facilities, wastewater facilities or
stormwater facilities. Revenue Bonds could be issued and sold in accordance
with state law or local procedures adopted by City Council.”
The ballot materials also included a fiscal impact statement. After
summarizing the amendments, it stated, “There is no fiscal impact associated
with these Charter amendments.”
The ballot materials contained an argument in favor of the proposition
that was submitted by the City Council president and a City Council
member, as well as the presidents of the San Diego Regional Chamber of
Commerce and the League of Women Voters of San Diego. The argument
stated, “These recommended Charter changes regarding the City’s issuance
of bonds” will streamline the Charter, simplify the section regarding general
obligation bonds, and “[a]uthorize the issuance of revenue bonds by a two-
thirds vote of the Council.” It explained, “Your ‘yes’ vote on Prop B will
update the City’s issuance of bonds to read in plain language, accurately
reflect existing practices, move appropriate provisions to the Municipal Code,
and repeal language that is outdated or superseded by state or federal law.”
The ballot materials stated that no argument against the proposition was
received by the City Clerk.
It is evident from the ballot materials that the amended provisions
were not intended to effect any significant change in the City’s practices. The
argument in favor of the proposition explicitly states that it was intended, in
part, to “accurately reflect current practices.” The fiscal impact was
estimated to be zero.
The ballot materials focused on the City’s issuance of bonds. The City
Attorney’s impartial analysis notes that “[t]he City of San Diego may choose
to issue bonds when the City does not have sufficient cash available” and
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“[b]onds are a form of borrowing in which the City sells bonds to investors
and promises to pay the investors back over time.” This description does not
cover bonds issued by the Financing Authority, which are not City-issued
bonds, are not sold by the City, and do not involve a promise by the City to
pay back investors over time. The argument in favor of the proposition
explicitly references “the City’s issuance of bonds” and later highlights that a
vote in favor “will update the City’s issuance of bonds to read in plain
language, accurately reflect current practices, move appropriate provisions to
the Municipal Code, and repeal language that is outdated or superseded by
state or federal law.”
It is notable that the ballot materials do not mention the Financing
Authority or lease revenue bonds. Their absence is evidence that the voters
did not contemplate that the proposed amendments would impact bonds
issued by the Financing Authority. (See Tobacco II, supra, 46 Cal.4th at
p. 318.) Indeed, the ballot materials’ discussion of section 90.1 relates only to
bonds for water and related facilities, payable from enterprise funds set up
for that purpose. There is no indication the voters intended that this section
would prohibit the issuance of bonds by a separate entity whose financing
practices and purposes are unrelated to any of the concepts covered by the
section.
Indeed, the historical context is relevant. (See Woo v. Superior Court
(2000) 83 Cal.App.4th 967, 976-977.) Section 90.1 is descended from prior
Charter provisions covering water facilities and funding specific thereto. The
ballot materials confirm that the section continues to address water facilities
and the financing tool used by the City in that context. The ability of the
City to use the Financing Authority to issue lease revenue bonds is a
separate, more general financing tool that is well-established in San Diego
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and elsewhere. (See Rider, supra, 18 Cal.4th at p. 1041 [noting “the
widespread use of similar financing plans throughout the state”]; SanDOG,
supra, 242 Cal.App.4th at p. 425.) Given the history of section 90.1, and the
City’s prominent and separate use of the Financing Authority, the limited
scope of section 90.1 is apparent.
Based on the extrinsic evidence, as well as the language and context of
section 90.1, we conclude that the more reasonable interpretation of the
section is that it covers bonds issued by the City, not bonds issued by the
Financing Authority. (See Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735
[“[I]f a statute is amenable to two alternative interpretations, the one that
leads to the more reasonable result will be followed[.]”].) The language of
section 90.1 appears in the City Charter and does not purport to regulate the
activities of legally separate entities like the Financing Authority. The ballot
materials repeatedly discuss the City’s issuance of bonds and do not mention
the Financing Authority. The anticipated fiscal impact of the amended
provisions, including section 90.1, was zero. And section 90.1 fits squarely
within the City’s established practice of issuing bonds for water-related
improvements payable from specific enterprise funds. It does not regulate
Financing Authority-issued lease revenue bonds.
SanDOG argues that we need not resort to extrinsic evidence because
the plain meaning of section 90.1 compels its application to “all” revenue
bonds, including lease revenue bonds issued by the Financing Authority. We
disagree. Section 90.1 is silent regarding the scope of its application. Given
the separate legal status of the Financing Authority, it is at least ambiguous
whether the provision applies to bonds issued by the Financing Authority.
Indeed, in its briefing, SanDOG repeatedly states that the bond provisions of
the City Charter, before and after amendment, apply to the issuance of all
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bonds “ ‘in the name of the City’ ”—which necessarily excludes bonds issued
by the Financing Authority. (See Rider, supra, 18 Cal.4th at p. 1043
[“[T]hough the City’s charter places restrictions on the City when it incurs
certain debt, nothing in that charter indicates that those restrictions apply to
a joint powers agency that the City might create.”]; SanDOG, supra,
242 Cal.App.4th at p. 443 [“When read as a whole, [former] section 90(a) does
not apply to the Financing Authority.”].)
We requested supplemental briefing to address more precisely whether
section 90.1 is limited to bonds issued by the City, as opposed to the
Financing Authority. SanDOG responded that section 90.1’s use of the word
“authorize” reflects an intent to encompass bonds issued by both the City and
the Financing Authority. (See § 90.1 [“The City Council may authorize the
issuance of revenue bonds by a two-thirds vote of the Council . . . .”].) While
the term may introduce additional ambiguity, we disagree that it compels the
conclusion that section 90.1 applies to bonds issued by the Financing
Authority. The Financing Authority is a separate entity, governed by its own
commission. The ballot materials make clear that section 90.1 does not apply
to it. SanDOG argues that the ballot materials are unenlightening because,
although they reference the City’s “issuance” of bonds, that language is
necessarily “subsume[d]” by the broader term “authorize” in section 90.1. We
disagree. The language of section 90.1 is ambiguous. The ballot materials
shed light on its meaning. For the reasons discussed above, the most
reasonable interpretation of section 90.1 is that it does not apply to bonds
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issued by the Financing Authority. This interpretation does not create a
“loophole,” as SanDOG contends. It gives effect to the intent of the voters.2
Finally, even if section 90.1 applied to bonds issued by the Financing
Authority, it would not apply to the lease revenue bonds here. SanDOG
correctly points out that, in the world of municipal finance, lease revenue
bonds are generally a type of revenue bond. While the general meaning of
“revenue bond” is relevant, it is not determinative. We must interpret the
phrase as it is used in the City Charter, and not in a vacuum. The City
Charter distinguishes between “revenue bonds” and “lease revenue bonds,”
such that the first does not necessarily encompass the second. Section 90.3
identifies a number of “financing mechanism[s]” including “cash, loans,
revenue bonds, lease revenue bonds or certificates of participation.” (§ 90.3,
subd. (b)(4).) While not definitive, the separate enumeration of “revenue
bonds” and “lease revenue bonds” indicates that they may refer to different
2 At oral argument, SanDOG emphasized that the ballot materials
repeatedly reference “conform[ity] . . . with the California Constitution” as a
purpose of the proposed amendments. For example, as noted, the ballot
summary stated, “This proposition would amend the San Diego Charter to
revise the processes by which the City authorizes the issuance of General
Obligation Bonds and Revenue Bonds to conform the processes more closely
with the California Constitution.” SanDOG argued that these references to
the California Constitution show that the voters intended to prohibit the
issuance of Financing Authority lease revenue bonds without the voter
approval prescribed by the Constitution for City-issued bonds. We disagree.
First, SanDOG’s argument ignores the other indications of voter intent
discussed above. Second, as held by the Supreme Court in Rider and this
court in SanDOG, the City’s use of the Financing Authority to issue lease
revenue bonds already conforms with the California Constitution. (Rider,
supra, 18 Cal.4th at pp. 1050, 1054; SanDOG, supra, 242 Cal.App.4th at
pp. 437-438.) It is therefore unpersuasive to interpret the ballot materials as
impliedly prohibiting this practice, especially in the absence of any reference
to the Financing Authority or its bonds.
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instruments. Moreover, section 77.1, which establishes an “Infrastructure
Fund,” prohibits the use of certain revenues “to fund debt service on General
Fund lease revenue bonds issued before the date of this section.” (§ 77.1,
subd. (f).) The phrase “General Fund lease revenue bonds” is somewhat of an
oxymoron, given that the City’s general fund is not pledged to repay lease
revenue bonds. As relevant here, it shows that the meaning of these phrases
in the City Charter is not self-evident.
Again, we conclude the meaning of section 90.1, and specifically the
phrase “revenue bond,” is ambiguous. Even assuming the extrinsic evidence
can be read to apply to Financing Authority-issued bonds, it does not support
SanDOG’s position that “revenue bond” encompasses “lease revenue bond.”
As used in section 90.1, the phrase “revenue bond” refers to a specific type of
bond supported by a City enterprise fund. This reflects the City’s
longstanding practice, which it sought to make explicit in the Charter. (See
City of Monterey v. Carrnshimba (2013) 215 Cal.App.4th 1068, 1091.) It also
reflects the ballot materials, which describe revenue bonds in specific terms
and predict no fiscal impact as a result of the amendments.
SanDOG claims that the lease revenue bonds here are supported by an
“enterprise fund,” i.e., the revenues from the parking garage, and therefore fit
within section 90.1. The record does not support SanDOG’s claim. The
revenues from the parking garage will be deposited in the City’s general
fund, not a segregated “enterprise fund.” While the City will use its general
fund to make lease payments to the Financing Authority, there is no actual
relationship between the parking garage revenues and the lease payments.
Moreover, unlike the enterprise funds discussed in section 90.1, the parking
garage revenues are not pledged in support of the lease revenue bonds. The
lease revenue bonds are issued by the Financing Authority, not the City, and
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the Financing Authority pledges the City’s lease payments as security for the
bonds.
SanDOG argues that the purpose of section 90.1 was “to preclude the
City from incurring additional debt backed by the general fund without voter
approval” and therefore it must apply to lease revenue bonds. This argument
is unpersuasive because lease revenue bonds are not debt incurred by the
City, nor are they backed by the City’s general fund. (See Rider, supra,18 Cal.4th at pp. 1045, 1056.) SanDOG also refers to the Charter’s goal of
“ ‘limit[ing] City officials,’ ” which appeared in City planning materials three
years before the election. Even setting aside the issue of whether we may
properly consider these materials, this general language is insufficient to
support a specific interpretation of the phrase “revenue bonds.”
In sum, we conclude section 90.1 does not apply to lease revenue bonds
issued by the Financing Authority. The plain language does not
unambiguously encompass such bonds, and the ballot materials make clear
that the voters intended section 90.1 to have a limited scope. The type of
financial transaction at issue here, approved in Rider and SanDOG, is not
prohibited by the 2016 amendments to the San Diego City Charter.
IV
Cooperation Agreement
As noted ante, in addition to challenging the bond approvals, SanDOG’s
lawsuit also challenged various aspects of the Cooperation Agreement
between the City and the Plaza de Panama Committee. During this appeal,
the Plaza de Panama Committee terminated the Cooperation Agreement.
SanDOG’s challenge to the Cooperation Agreement is therefore moot.
Consequently, we grant SanDOG’s unopposed motion to take evidence of the
Cooperation Agreement’s termination (see In re K.M. (2015) 242 Cal.App.4th
18450, 456) and reverse the judgment in part with directions to dismiss as moot
SanDOG’s challenge to the Cooperation Agreement itself (see Coalition for a
Sustainable Future in Yucaipa v. City of Yucaipa (2011) 198 Cal.App.4th 939,
944, 947).
DISPOSITION
The judgment as to section 90.1 is affirmed. The judgment as to the
Cooperation Agreement is reversed with directions to dismiss SanDOG’s
challenge as moot. The parties shall bear their own costs on appeal.
GUERRERO, J.
WE CONCUR:
McCONNELL, P. J.
HUFFMAN, J.
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