City of Anaheim v. Cohen

The city of Anaheim, as successor to the former Anaheim Redevelopment Agency, sought approval from the California Department of Finance to obtain money from the Redevelopment Property Tax Trust Fund (the fund) for two reasons: (1) to pay the city back for payments it made to a construction company to complete certain property improvements that the former Anaheim Redevelopment Agency was obligated to provide on a particular redevelopment project (the packing district project); and (2) fund to make payments to the Anaheim Housing Authority (the authority) under a cooperation agreement between the agency and the authority, the purpose of which was to provide funding for the Avon/Dakota revitalization project, which was being carried out by a private developer -- The Related Companies of California, LLC (Related) -- pursuant to a contract with the authority. The department ultimately denied the claim for money from the fund for the property improvements because the city did not disburse the loan proceeds to the city as successor, but instead paid the construction company directly, and because the city as successor did not obtain prior approval for the “loan” agreement with the city from the oversight board. The department denied the second claim because the 2011 law that dissolved the former redevelopment agencies rendered agreements between a former redevelopment agency and the city that created that agency unenforceable. The city, the city as successor, and the authority sought mandamus, declaratory, and injunctive relief on both issues in the superior court, but the trial court denied the writ petition and dismissed the complaint for declaratory and injunctive relief. After review, the Court of Appeal concluded the trial court erred. With respect to the packing district project, the fact that the city contracted directly with the construction company to construct the improvements the agency was legally obligated to provide at that project, and the fact that the city paid the company directly for its work, did not mean the agreement between the city and the city as successor with respect to the transaction was not a loan, as the department and the trial court concluded. As for the money from the fund claimed for the Avon/Dakota revitalization project, the Court concluded that enforcing the provision of the dissolution law that renders unenforceable an agreement between a former redevelopment agency and the city that created it (or an affiliated entity like the authority) would, in this case, unconstitutionally impair Related’s contractual rights under its agreement with the authority. Accordingly, that provision cannot be enforced here to deny the city as successor the right to obtain money from the fund to pay the authority that, in turn, the authority is obligated to pay Related to carry out the revitalization project. View "City of Anaheim v. Cohen" on Justia Law