Cuenca v. Cohen

Filed 2/6/17

CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELATE DISTRICT
(Sacramento)
----

HILDA CUENCA et al.,

Plaintiffs and Appellants,
C076814
v.
(Super. Ct. No.
MICHAEL COHEN, as Director, etc., et al., 34201380001427CUWMGDS)

Defendants and Respondents;

CITY OF SANTA ANA, as Successor Agency, etc.,
et al.,

Real Parties in Interest and Respondents.

APPEAL from a judgment of the Superior Court of Sacramento County,
Shelleyanne W.L. Chang, Judge. Affirmed.

MANATT, PHELPS & PHILLIPS, Roger A. Grable, Andrew H. Struve, Andrea
Ruth Bird, Cherise S. Latortue; Public Law Center, Anthony Christian Abasto and Lily
Graham; Public Interest Law Project and Craig David Castellanet for Plaintiffs and
Appellants.

Kamala D. Harris, Attorney General, Douglas J. Woods, Assistant Attorney
General, Mark R. Beckington and Jonathan M. Eisenberg, Deputy Attorneys General for
Defendants and Respondents.

No Appearance for Real Parties in Interest and Respondents.

1
 From 1945 until 2011, California’s redevelopment agencies received their funding
from a tax increment that represented the difference between the property tax “based on
the assessed value of the property prior to the effective date of the redevelopment plan”
and “[a]ny tax revenue in excess of that amount . . . created by the increased value of
project area property.” (California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th
231, 246-247 (Matosantos I).) In response to the growing perception the redevelopment
agencies avoided funding low- and moderate-income housing projects, the Legislature
required 20 percent of the tax increment be transferred to a Low and Moderate Income
Housing Fund (Housing Fund). (Id. at pp. 247-248; Health and Saf. Code, §§ 33334.2,
33334.4, & 33334.6.)1 Lawsuits were also brought to secure greater percentages of the
tax increment for low- and moderate-income housing projects. As pertinent to this case,
the City of Santa Ana (City) entered into four stipulated judgments in 1984 and one
stipulated judgment in 1994 that required the City to set aside various percentages of the
tax increment for low- and moderate-income housing projects. Even after entry of the
stipulated judgments, the City was slow to fund affordable housing projects, and it would
eventually amass more than $56 million in moneys set aside under the stipulated
judgments.
In 2011, the Legislature responded to an ailing economy by dissolving the
redevelopment agencies, eliminating the tax increment, and transferring the property
taxes back to local governments and schools. (Assem. Bill No. 26 (2011–2012 1st Ex.
Sess.) (Assembly Bill 1x 26) enacted as Stats. 2011, 1st Ex. Sess. 2011–2012, chs. 5-6;
see also Assem. Bill No. 1484 (Assembly Bill 1484) enacted as Stats. 2012, ch. 26, §§ 6-
35.)2 However, the Legislature recognized elimination of the tax increment did not also

1 Undesignated statutory references are to the Health and Safety Code.
2 We refer to the cumulative operation of Assembly Bill 1x 26 and Assembly
Bill 1484 as the “Dissolution Law.”

2
erase the enforceable obligations already created by the redevelopment agencies. (See §
34171, subd. (d).) Enforceable obligations were to be paid -- but only under the oversight
of the California Department of Finance (DOF) and State Controller. (City of Emeryville
v. Cohen (2015) 233 Cal.App.4th 293, 298-299 (City of Emeryville).) Unencumbered
funds must be transmitted to the county auditor-controller for return to the taxing entities.
(§ 34177, subd. (d).)
The issues presented here concern the effects of the elimination of the tax
increment and dissolution of the Santa Ana Redevelopment Agency on the five stipulated
judgments. In this case, petitioners Hilda Cuenca, Claudia Castaneda, Enimia
Hernandez, and Evangelina Avalos, and Habitat for Humanity of Orange County
((Habitat) cumulatively Cuenca) sought a writ of mandate to overturn DOF’s
determination that approximately $30 million set aside under the stipulated judgments
was unencumbered and must be remitted to the county auditor-controller. The trial court
affirmed DOF’s determination except for a $3.5 million loan pledged to Habitat for
construction of 17 affordable houses.
On appeal, Cuenca contends (1) the five stipulated judgments are enforceable
obligations under the Dissolution Law, (2) the tax increment moneys set aside under the
stipulated judgments remain available for use by the Santa Ana Redevelopment Agency’s
housing successor, (3) the stipulated judgments are contracts subject to protections of the
contract clauses of the United States and California Constitutions, and the Dissolution
Law may not require the diversion of tax increment moneys to the county auditor-
controller, and (4) DOF’s “taking of $30 million in pre-dissolution tax increment violates
[California Constitution article XIII, section 25.5(a)(3) (Proposition 1A) and section
25.5(a)(7) (Proposition 22)].”3

3 As summarized by the California Supreme Court, “Proposition 1A prevented the
state from statutorily reducing or altering the existing allocations of property tax among

3
 On our own motion, we asked the parties to address whether this case has
become moot after a settlement agreement was reached in Peebler v. Department of
Finance et al. (Third District Court of Appeal No. C073698) the trial court found to
be a related case. We also consider respondents’ contention Habitat lacks standing in
this appeal.
We conclude Habitat has standing to participate in this appeal, and this case is not
moot. Petitioners in this case were not parties to the settlement in Peebler v. Department
of Finance et al., and the continuing validity of the stipulated judgments after enactment
of the Dissolution Law remains to be resolved.
On the merits, we conclude the stipulated judgments meet the definition of
enforceable obligations under the Dissolution Law. However, there are no remaining
terms to be fulfilled under the stipulated judgments once the Dissolution Law became
effective. The Dissolution Law eliminated the tax increment that provided the only
source of funding subject to the stipulated judgments. Nothing in the stipulated
judgments requires the tax increment to continue to be collected after the effective date of
the Dissolution Law. And the stipulated judgments do not purport to prevent the
Legislature from recapturing unspent tax increment funds by subsequent legislation.
Thus, the moneys already set aside under the stipulated judgments, but that are
unencumbered, must be remitted to the county auditor-controller.

cities, counties, and special districts,” but “did not extend its protections to
redevelopment agencies.” (Matosantos I, supra, 53 Cal.4th at p. 249.) And Proposition
22 prohibited the Legislature from requiring redevelopment agencies “to pay, remit, loan,
or otherwise transfer, directly or indirectly, taxes on ad valorem real property and
tangible personal property allocated to the agency pursuant to Section 16 of Article XVI
to or for the benefit of the State, any agency of the State, or any jurisdiction.” (Id. at
p. 250.)

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 We also conclude DOF’s determination that the Dissolution Law requires the
turning over of unencumbered moneys to the county auditor-controller does not violate
the contract clauses of the United States or California Constitutions.
Finally, we determine the Dissolution Law’s requirement that unencumbered
funds be remitted to the county auditor-controller does not violate Proposition 1A or
Proposition 22. This court rejected a nearly identical challenge to the Dissolution Law
under Proposition 1A in City of Cerritos v. State (2015) 239 Cal.App.4th 1020. And the
Supreme Court rejected a similar challenge under Proposition 22 in Matosantos I, supra,
53 Cal.4th 231. The reasoning employed in these decisions applies here and compels the
conclusion the Dissolution Law, as implemented in this case, does not violate
Propositions 1A or 22.
Accordingly, we affirm the judgment.
BACKGROUND
The Community Redevelopment Law (§ 33000 et seq.)
In 1945, the Legislature authorized cities and counties to form community
redevelopment agencies to address issues of urban decay in California. (Stats. 1945, ch.
1326, § 1, p. 2478 et seq.; Matosantos I, supra, 53 Cal.4th at p. 245.) In 1951, the
Legislature renamed the statutory scheme as the Community Redevelopment Law (CRL)
and codified it at section 33000 et seq. (Matosantos I, at pp. 245-246; Stats. 1951, ch.
710, § 1, p. 1922 et seq.) “The Community Redevelopment Law ‘was intended to help
local governments revitalize blighted communities.’ ” (Matosantos I, at p. 246, quoting
City of Cerritos v. Cerritos Taxpayers Assn. (2010) 183 Cal.App.4th 1417, 1424
(Cerritos Taxpayers Assn.).) Included in the aim of the CRL was the goal “to increase
the supply of low- and moderate-income housing.” (Cerritos Taxpayers Assn. at
p. 1424.)
To fund their projects, the redevelopment agencies “rel[ied] on tax increment
financing, a funding method authorized by article XVI, section 16 of the state

5
Constitution and section 33670 . . . . (City of Dinuba v. County of Tulare (2007) 41
Cal.4th 859, 866; City of El Monte [v. Commission on State Mandates (2000) 83
Cal.App.4th 266,] 269–270.) Under this method, those public entities entitled to receive
property tax revenue in a redevelopment project area (the cities, counties, special
districts, and school districts containing territory in the area) [were] allocated a portion
based on the assessed value of the property prior to the effective date of the
redevelopment plan. Any tax revenue in excess of that amount—the tax increment
created by the increased value of project area property—[went] to the redevelopment
agency for repayment of debt incurred to finance the project. (Cal. Const., art. XVI, § 16,
subds. (a), (b); § 33670, subds. (a), (b); City of Dinuba, at p. 866.) In essence, property
tax revenues for entities other than the redevelopment agency [were] frozen, while
revenue from any increase in value [was] awarded to the redevelopment agency on the
theory that the increase [was] the result of redevelopment. (Cerritos Taxpayers Assn., at
p. 1424.)” (Matosantos I, supra, 53 Cal.4th at pp. 246-247.)
Over the years, “a perception had grown that some redevelopment agencies were
used as shams to divert property tax revenues that otherwise would fund general local
governmental services, and legislative efforts were made to address these concerns.”
(City of Emeryville, supra, 233 Cal.App.4th at p. 298, citing Matosantos I, supra, 53
Cal.4th at pp. 247–248.) Among these, the Legislature required “redevelopment agencies
to make certain transfers of their tax increment revenue for other local needs” including a
provision that “20 percent of the revenue generally must be deposited in a fund for
provision of low- and moderate-income housing. (§§ 33334.2, 33334.3, 33334.6; see
City of Cerritos . . . supra, 183 Cal.App.4th at p. 1424.)” (Matosantos I, supra, 53
Cal.4th at pp. 247-248.) This requirement addressed the trend that “redevelopment
agencies . . . historically devoted their resources to the commercial sector, rather than
low-income housing development.” (Craig v. City of Poway (1994) 28 Cal.App.4th 319,
330.)

6
 Dissolution of the Redevelopment Agencies
In 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 Nos. 26 & 27 (2011–2012 1st Ex. Sess.) enacted
as Stats. 2011, 1st Ex. Sess. 2011–2012, chs. 5–6 (Assembly Bill 1X 26 and Assembly
Bill 1X 27); see generally Matosantos I, supra, 53 Cal.4th at pp. 241, 245–246.)
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 No. 1484 to clarify and tighten restrictions on the funds from
redevelopment projects. (Stats. 2012, ch. 26, §§ 6-35, pp. 1093-1124.) 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. As pertinent to this case, enforceable obligations include court
judgments and settlement agreements. (§ 34171, subd. (d)(1)(D).) To ensure that

7
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, fn. omitted.)
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).)

8
 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).)

The Five Stipulated Judgments Entered into by the Community Redevelopment Agency
of the City of Santa Ana (Santa Ana Redevelopment Agency)
The Santa Ana Redevelopment Agency was established in 1973 and eventually
created six merged redevelopment areas. Litigation focusing on five of these
redevelopment areas resulted in stipulated judgments, four of which were entered in 1984
and one in 1994. For convenience, the four 1984 stipulated judgments are referred to by
the lead plaintiffs: Rodriguez, Edwards, Gibson, and Peebler. The 1994 stipulated
judgment is referred to as Gonzalez. As pertinent to this case, each of the stipulated
judgments incorporated by reference resolutions by the City that required the Santa Ana
Redevelopment Agency to set aside various percentages of the received tax increment to
fund low- and moderate-income housing projects. Rodriguez required a 30 percent set
aside, Edwards required 30 percent, Gibson required 60 percent, Peebler required
20 percent, and Gonzales required 30 percent.

9
 As required by the stipulated judgments, portions of the tax increment were set
aside in the Santa Ana Redevelopment Agency’s low- and moderate-income housing
fund. By February 2012, more than $56 million had been collected for use on low-
and moderate-income housing projects within the redevelopment areas of the City of
Santa Ana. Most of the funds were unencumbered with the notable exception of a
March 2011 development agreement between the Santa Ana Redevelopment Agency
and Habitat that provided for a loan of about $3.5 million for construction of 17
affordable homes.
In February 2012, approximately $56 million was transferred from the
redevelopment agency’s low- and moderate-income housing fund to the housing
successor for deposit into a new Low and Moderate Income Housing Asset Fund (Asset
Fund). (See § 34176, subd. (d) [requiring, with an exception not pertinent here, that “any
funds transferred to the housing successor, together with any funds generated from
housing assets . . . shall be maintained in a separate Low and Moderate Income Housing
Asset Fund which is hereby created in the accounts of the housing successor”].) Under
the Dissolution Law, housing successors may assume “housing assets,” that include
“[a]ny funds that are encumbered by an enforceable obligation to build or acquire low-
and moderate-income housing, as defined by the Community Redevelopment Law . . .
unless required in the bond covenants to be used for repayment purposes of the bond.”
(§ 34176, subd. (e)(2), italics added.) However, successor agencies were required to
“[r]emit 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.”
(§ 34177, subd. (d), italics added.)

10
 DOF Disapproves of the Recognized Obligation Proposal Filed by the
Successor Agency
In February 2012, the Santa Ana Redevelopment Agency dissolved and the City
became the successor agency. The City designated the Santa Ana Housing Authority as
the housing successor to retain the former redevelopment agency’s housing assets and
functions. The trial court found that “the record [does] not clearly state what happened,
however, it appears that $26,080,925 in cash from the former [redevelopment agency’s
Housing Fund] was transferred to the Housing Successor.”
The successor agency’s due diligence review had concluded only $30,593,530 had
been improperly transferred. However, DOF completed its due diligence review in
November 2012 when it determined that “[c]ash and cash equivalents improperly
transferred” to the housing authority “totaled $56,674,455.” As a result, DOF adjusted
the amount by $26,080,925.
Over the next 17 months, DOF several times revised the amount of money held in
the Asset Fund it deemed to be unencumbered. By April 2013, DOF acknowledged
several enforceable obligations involving the Santa Ana Station District New
Construction, Vista Del Rio Housing Partners LP, and WBB New Construction. DOF
also approved various payments listed on the successor agency’s recognized obligation
proposal -- including $1,543,728 for a project undertaken by Habitat. The successor
agency, however, sought $2,337,191 as full payment for its obligation to Habitat.
Ultimately, DOF refused to recognize $33,174,377 in funds set aside under the five
stipulated judgments as enforceable obligations.
Cuenca’s Petition for Writ of Mandate
Cuenca filed an action for mandamus, injunction, and declaratory relief to require
DOF to recognize the five stipulated judgments as enforceable obligations under the
Dissolution Law and to compel DOF to release funds to Habitat for construction of 17
low-income houses. DOF opposed the petition.

11
 The trial court granted in part and denied in part Cuenca’s writ petition. The trial
court found the Habitat development agreement “is a ‘contractually dedicated’
enforceable obligation,” and allowed the housing successor to retain the entire amount
claimed by petitioners as owing to Habitat without having to list the amount on any
future recognized obligation proposals. DOF has not appealed, and this portion of the
trial court’s decision is not an issue on appeal.
Except for the determination the Habitat real estate construction loan constituted
an enforceable obligation, the trial court denied Cuenca’s writ petition in all other
respects. The trial court concluded the stipulated judgments do not constitute
enforceable obligations to set aside money for low-income housing after the Legislature
implemented the dissolution of California’s redevelopment agencies. The trial court
reasoned the Legislature had the power to eliminate the tax increments regardless of
the terms of the stipulated judgments. Finding the “funds set aside for these [stipulated
judgments] are unencumbered,” the trial court ordered that the funds “must be remitted”
to the taxing entities. In so ordering, the trial court rejected Cuenca’s contention that
remittance of the funds set aside under the stipulated judgments violates Propositions
1A and 22. The trial court also rejected Cuenca’s assertion remittance of the funds
violates the doctrine of separation of powers or represents an unconstitutional impairment
of contracts.
From the trial court’s judgment, Cuenca timely filed a notice of appeal.
DISCUSSION
I
Mootness
On our own motion, we asked the parties to address whether this appeal became
moot, in whole or in part, after the “Notice of Settlement of Entire Case” was filed in
Peebler v. Matosantos (Super. Ct. Sacramento Co., 2012, No. 34-2012-800001172; Third
District Court of Appeal No. C073698, dism. Jan. 12, 2015). We have received and

12
considered supplemental briefing from Cuenca on behalf of appellants and the Attorney
General on behalf of respondents. We have also had the opportunity to review the
Peebler v. Matosantos settlement agreement entered into in November 2014 (2014
Peebler settlement agreement). Based on our review, we determine this appeal is not
moot.
A.
Prior Related and Unrelated Cases
The redevelopment agency district at issue in this case has also been the subject
of other, prior litigation in the Sacramento County Superior Court.4 (Peebler v.
Matosantos (Super. Ct. Sacramento Co., 2012, No. 34-2012-800001172); Santa
Ana Station District LLC et al. v. Matosantos (Super. Ct. Sacramento Co., 2013, No. 34-
2013-800001477).)
After Cuenca filed a notice of a related case, a Sacramento County Superior Court
judge found Peebler v. Matosantos (Super. Ct. Sacramento Co., 2012, No. 34-2012-
800001172) was related to this case “because they involve the same or similar claims and
many of the same parties; arise from the same or substantially identical transactions,
incidents, or events requiring the determination of the same or substantially identical
questions of law or fact; and are likely for other reasons to require substantial duplication
of judicial resources if heard by different judges.” Consequently, this case was
reassigned to the judge who was also presiding over Peebler v. Matosantos. Cuenca filed
a peremptory challenge under Code of Civil Procedure section 170.6, and this case was
transferred to a different judge.

4 Under section 34168, subdivision (a), the Sacramento County Superior Court is
the venue for “any action contesting the validity” of the Dissolution Law. (City of
Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 492, fn. 1.)

13
 Peebler v. Matosantos, supra, Sacramento County No. 34-2012-800001172
resulted in a settlement agreement to which the petitioners in this case were not parties.
Under the terms of the settlement agreement, the City agreed to establish a $4.7 million
“Peebler Fund” for the construction of public improvements in the South Main Corridor
area as well as administrative and related costs. The settlement agreement did not
address the funds set aside for low- and moderate-income houses that are at issue in this
case.
At the same time the trial court determined this case was related to Peebler v.
Matosantos, supra, Sacramento County No. 34-2012-800001172, it found this case
was not related to Santa Ana Station District LLC et al. v. Matosantos. The court found:
“In Santa Ana Station District LLC et al. v. Matosantos, the petitioners challenged the
[DOF]’s refusal to recognize as enforceable obligations various agreements related to
a particular affordable housing project, which petitioners allege were to be funded
with moneys available to the former redevelopment agency in the [Housing Fund].
This action settled and the case was dismissed. The court finds that Cuenca v.
Department of Finance is not related to Santa Ana Station District LLC, et al. v.
Matosantos.”
B.
Justiciability
“California courts will decide only justiciable controversies. (County of San
Diego v. San Diego NORML (2008) 165 Cal.App.4th 798, 813; see 3 Witkin, Cal.
Procedure (5th ed. 2008) Actions, § 21, pp. 84–86.) The concept of justiciability is
a tenet of common law jurisprudence and embodies ‘[t]he principle that courts will
not entertain an action which is not founded on an actual controversy. . . .’ (California
Water & Telephone Co. v. County of Los Angeles (1967) 253 Cal.App.2d 16, 22
(California Water); see also Stonehouse Homes v. City of Sierra Madre (2008) 167
Cal.App.4th 531, 540 (Stonehouse Homes).) Justiciability thus ‘involves the intertwined

14
criteria of ripeness and standing. A controversy is “ripe” when it has reached, but has
not passed, the point that the facts have sufficiently congealed to permit an intelligent
and useful decision to be made.’ (California Water, at p. 22, fn. omitted.) But
‘ripeness is not a static state’ (Consumer Cause, Inc. v. Johnson & Johnson (2005)
132 Cal.App.4th 1175, 1183), and a case that presents a true controversy at its inception
becomes moot ‘ “if before decision it has, through act of the parties or other cause,
occurring after the commencement of the action, lost that essential character” ’ (Wilson
v. L.A. County Civil Service Com. (1952) 112 Cal.App.2d 450, 453).” (Wilson &
Wilson v. City Council of Redwood City (2011) 191 Cal.App.4th 1559, 1573 (Wilson &
Wilson).)
“A case is considered moot when ‘the question addressed was at one time a live
issue in the case,’ but has been deprived of life ‘because of events occurring after the
judicial process was initiated.’ (Younger v. Superior Court (1978) 21 Cal.3d 102, 120.)
Because ‘ “the duty of . . . every . . . judicial tribunal is to decide actual controversies by a
judgment which can be carried into effect, and not to give opinions upon moot questions
or . . . to declare principles or rules of law which cannot affect the matter in issue in the
case before it[,] [i]t necessarily follows that when . . . an event occurs which renders it
impossible for [the] court, if it should decide the case in favor of plaintiff, to grant him
[or her] any effectual relief whatever, the court will not proceed to formal judgment. . . .”
[Citation.]’ (Consol. etc. Corp. v. United A. etc. Workers (1946) 27 Cal.2d 859, 863.)
The pivotal question in determining if a case is moot is therefore whether the court can
grant the plaintiff any effectual relief. (Giles v. Horn (2002) 100 Cal.App.4th 206, 227;
see also Daily Journal Corp. v. County of Los Angeles (2009) 172 Cal.App.4th 1550,
1557 [case moot where contract with county had expired and court could not award it to
disappointed bidder].) If events have made such relief impracticable, the controversy has
become ‘overripe’ and is therefore moot. (California Water, supra, 253 Cal.App.2d at

15
pp. 23–23, fn. 9; see Paul v. Milk Depots, Inc. (1964) 62 Cal.2d 129, 132.)” (Wilson &
Wilson, supra, 191 Cal.App.4th at p. 1574.)
This case is not moot because none of the claims advanced by Cuenca was
resolved by the settlement agreement in Peebler v. Matosantos. And there is no dispute
the trial court properly concluded Santa Ana Station District LLC, et al. v. Matosantos
was not related to this case. Consequently, the outcomes of the earlier related and
unrelated cases do not moot this case even though they involved issues arising out of the
City’s redevelopment projects.
Moreover, the issues presented are subject to relief within the jurisdiction of this
court. Cuenca and DOF disagree as to whether the tax increment must still be collected
under the terms of the five stipulated judgments. And the parties disagree as to whether
the moneys already collected must be spent on low- and moderate-income housing under
the stipulated judgments or must be remitted to the county auditor-controller for transfer
to the taxing entities. For these reasons, there is an actual and ongoing controversy
between the parties that is not moot.
The Attorney General argues the 2014 Peebler settlement agreement “mooted the
question of whether” the successor agency “could keep tens of millions of dollars of
already accumulated tax-increment funds that the Redevelopment Agency of the City of
Santa Ana had set aside from 1984 to 2011 . . . .” In so arguing, the Attorney General
acknowledges that “the questions of whether and to what extent, under the RDA
Dissolution Law, the ‘affordable-housing’ provisions of the five vintage settlement
agreements are enforceable obligations of the Successor Agency going forward, and
therefore payable from future property-tax revenues, are not moot and remain to be
determined . . . .” We agree the prospective operation of the stipulated judgments
remains an issue to be addressed.
However, we disagree with the Attorney General’s argument the 2014 Peebler
settlement agreement resolved the issue of the proper disposition of moneys collected

16
before 2011. The 2014 Peebler agreement did not purport to resolve the controversy
between the petitioners in this case and DOF. Indeed, the Attorney General notes that
“DOF was not a party to, and did not even know in advance about, the 2014 Peebler
settlement. DOF neither imposed nor accepted any obligations in connection with that
settlement . . . .” And as we have noted, none of the petitioners in this case was party to
the 2014 Peebler settlement agreement. In short, the 2014 Peebler settlement agreement
did not resolve any of the issues presented in this appeal.
II
Standing of Habitat
The Attorney General contends Habitat lacks standing in this appeal. Specifically,
the Attorney General argues DOF has already recognized Habitat’s entitlement to
payment under its affordable housing redevelopment contract and Habitat “has no other
pertinent contracts with any Santa Ana entity, nor is H[abitat] standing in for an absent
party here.” We conclude Habitat has standing to appeal.
As a jurisdictional prerequisite, a petitioner must have standing in order to invoke
the power of a court to grant writ relief. (Waste Management of Alameda County, Inc. v.
County of Alameda (2000) 79 Cal.App.4th 1223, 1232 (Waste Management) disapproved
on another point in Save the Plastic Bag Coalition v. City of Manhattan Beach (2011) 52
Cal.4th 155, 167-168, 170 & fn. 5 (Save the Plastic Bag).) “As a general rule, a party
must be ‘beneficially interested’ to seek a writ of mandate. (Code Civ. Proc., § 1086.)
‘The requirement that a petitioner be “beneficially interested” has been generally
interpreted to mean that one may obtain the writ only if the person has some special
interest to be served or some particular right to be preserved or protected over and above
the interest held in common with the public at large. [Citations.] As Professor Davis
states the rule: “One who is in fact adversely affected by governmental action should
have standing to challenge that action if it is judicially reviewable.” (Davis, 3
Administrative Law Treatise (1958) p. 291.)’ (Carsten v. Psychology Examining Com.

17
(1980) 27 Cal.3d 793, 796–797.) The beneficial interest must be direct and substantial.
(Parker v. Bowron (1953) 40 Cal.2d 344, 351; Braude v. City of Los Angeles (1990) 226
Cal.App.3d 83, 87; 8 Witkin, Cal. Procedure (5th ed. 2008) Extraordinary Writs, § 75,
p. 956.)” (Save the Plastic Bag, at p. 165.)
Petitioners in this case sought to overturn DOF’s denial, in part, of the successor
agency’s claimed obligation for $3.5 million related to Habitat’s construction of 17
affordable homes. As the writ petition alleged, DOF’s “denial and delay of payments,
jeopardizes the ability of [HABITAT] to complete the project.” The trial court agreed
and found the Habitat project “is a ‘contractually dedicated’ enforceable obligation” for
which “the Housing Successor is entitled to retain the entire amount owing under the
Habitat [project agreement] without the Successor Agency having to apply for those
moneys on future” recognized obligation payment schedules.
The Attorney General contends Habitat lacks standing because it has secured
its relief and is not aggrieved by the judgment. We reject the contention. Although
Habitat could not appeal from the portion of the judgment in its favor, that does not
mean it lacks standing to continue to participate. The petition was filed with the
purpose of representing the interests of persons requiring low- and moderate-income
housing in Santa Ana. In essence, this action was filed in the public interest based on
a claim that moneys collected under stipulated judgments still remain available to fund
low- and moderate-income housing in Santa Ana. “ ‘ “[W]here the question is one of
public right and the object of the mandamus is to procure the enforcement of a public
duty, the [petitioner] need not show that he [or she] has any legal or special interest in
the result, since it is sufficient that he [or she] is interested as a citizen in having the
laws executed and the duty in question enforced.” ’ (Bd. of Soc. Welfare v. County
of L.A. (1945) 27 Cal.2d 98, 100–101.)” (Save the Plastic Bag, supra, 52 Cal.4th at
p. 166.)

18
 Moreover, Habitat has a particular interest in availability of the tax increment
funds for low- and moderate-income housing in Santa Ana. The petition stated Habitat
“creates home ownership and home repair opportunities to qualified, hardworking, low-
income families in need of safe, affordable homes.” Thus, Habitat stands to further its
mission by securing moneys through this action to fund construction of low-income
housing in addition to the 17 houses for which the trial court confirmed the previously
collected tax increment may be spent. Habitat’s interest in the outcome of this litigation
confers it with standing.
III

Whether the Tax Increment Must Continue to be Collected under the
Stipulated Judgments
Cuenca contends the five stipulated judgments meet the definition of enforceable
obligations under the Dissolution Law so that the tax increment must continue to be made
available as required by the judgments. We do not interpret the stipulated judgments to
require the tax increment to be collected after the Legislature eliminated tax increment
funding of redevelopment projects.
A.
Principles of Statutory and Contract Construction
This issue turns on questions of statutory construction for the panoply of statutes
enacted to wind down the state’s redevelopment agencies. In construing statutes, our
goal is to ascertain and effect the legislative intent. (City of Cerritos v. State, supra, 239
Cal.App.4th at p. 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

19
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.)
When the statutory language is ambiguous or reasonably susceptible to more than
one interpretation, “we refer to other indicia of legislative or voter intent such as
legislative history, public policy, or analyses and arguments contained in the voter
information guide. (Robert L. [v. Superior Court (2003)] 30 Cal.4th [894,] 900–901;
Hoechst Celanese Corp. v. Franchise Tax Bd. (2001) 25 Cal.4th 508, 519, 106.) Our task
is simply to interpret and apply the language of a statute or initiative so as to effectuate
the Legislature’s or electorate’s respective intent. (Ibid.) [¶] Courts must also construe
words in context, ‘keeping in mind the statutory purpose, and statutes or statutory
sections relating to the same subject must be harmonized, both internally and with each
other, to the extent possible.’ (Dyna–Med, Inc. v. Fair Employment & Housing Com.
(1987) 43 Cal.3d 1379, 1387 (Dyna–Med).) Every statute, then, should be construed in
light of the whole system of law of which it is a part, so that all may be harmonized and
have effect. (Mejia, supra, 31 Cal.4th at p. 663.)” (City of Cerritos v. State, supra, 239
Cal.App.4th at p. 1035.)
DOF asserts its interpretation of the governing statues should be accorded
deference. “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

20
(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).” (County of Sonoma v.
Cohen (2015) 235 Cal.App.4th 42, 47.)
B.
The Stipulated Judgments are Enforceable Obligations
Subdivision (d)(1) of section 34171 defines “[e]nforceable obligations” under the
Dissolution Law to include bonds issued for redevelopment projects, loans incurred by
redevelopment agencies, payments required by federal and state governments, judgments
and settlements, and any other “legally binding and enforceable agreement or contract
that is not otherwise void.” (§ 34171, subd. (d)(1)(E).) Subdivision (d)(1)(D) of section
34171 also includes among enforceable obligations, “Judgments 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.”
The five stipulated judgments in this case meet the definition of enforceable
obligations under the Dissolution Law. (§ 34171, subd. (d)(1)(D).) Each stipulated
judgment was entered by the superior court, and there is no contention the trial court
acted in excess of its jurisdiction in doing so. Moreover, there is no assertion of fraud or
mistake by the parties reaching the agreements memorialized in the stipulated judgments.
C.

The Stipulated Judgments Do Not Require Continued Collection of the Tax Increment
after its Elimination
Our conclusion that the stipulated judgments meet the definition of
enforceable obligations under the Dissolution Law does not answer the question
of whether they require continued collection of the tax increment. Accordingly, we
turn to the language of the stipulated judgments to ascertain what actions, if any, they
compel.

21
 “ ‘ “ ‘[A] stipulation or consent judgment, being regarded as a contract between
the parties, must be construed as any other contract. [Citations.] . . . .’ [Citation.]”
[Citation.]’ Unless the interpretation of a contract turns on the credibility of extrinsic
evidence, the matter is a question of law. (California Assn. of Professional Scientists v.
Schwarzenegger (2006) 137 Cal.App.4th 371, 382.) We review the trial court’s
determination de novo. (Ibid.; Lamantia v. Voluntary Plan Administrators (9th Cir.
2005) 401 F.3d 1114, 1118.)” (Roden v. AmerisourceBergen Corp. (2007) 155
Cal.App.4th 1548, 1561.) And “[u]nder statutory rules of contract interpretation, the
mutual intention of the parties at the time the contract is formed governs interpretation.
(Civ. Code, § 1636.) Such intent is to be inferred, if possible, solely from the written
provisions of the contract. (Id., § 1639.) The ‘clear and explicit’ meaning of these
provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the parties in
a technical sense or a special meaning is given to them by usage’ (id., § 1644), controls
judicial interpretation. (Id., § 1638.) Thus, if the meaning a layperson would ascribe to
contract language is not ambiguous, we apply that meaning. (See, e.g., Reserve
Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 807; Crane v. State Farm Fire & Cas.
Co. (1971) 5 Cal.3d 112, 115.)” (AIU Ins. Co. v. Superior Court (1990) 51 Cal.3d 807,
821-822.)
Accordingly, we proceed to examine the language of the five stipulated
judgments. The 1984 stipulated judgments in Rodriguez, Edwards, and Gibson use
identical language (except for the specific percentage) to describe the redevelopment
agency’s obligation to set aside a portion of the tax increment. Rodriguez provides a
representative example where it states:
“Tax Increments [¶] Thirty 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 low and moderate income housing and

22
related activities such as rebates, low interest rehabilitation loans, public improvements
or assisting in low income housing construction.” (Italics added.)
The 1984 Peebler stipulated judgment used the same language, but also added:
“Twenty percent (20%) of the tax increments shall be utilized for public
improvements including parking and financial incentives such as rebates and commercial
improvements and reduced interest rehabilitation loans on Main Street North of Warner
Avenue and on First Street, provided, however, no Agency funds shall be used for center
dividers on Main Street between First Street and Warner Avenue or on First Street.”
(Italics added.)
Coming a decade later, the 1994 Gonzalez resolution used different language to
describe the obligation to set aside money for low- and-moderate income housing, in
pertinent part as follows:
“[Housing Fund] Set Asides. [¶] a. Notwithstanding Section 33334.2 or any
other provision of law, not less than 30% of all taxes which are annually allocated to the
Agency pursuant to . . . §33670 during the life of the Bristol Corridor Project Area, as
amended, shall be set-aside annually and held in a separate [Housing Fund] (‘L & M
Fund’), except that this percentage shall be increased to the extent that the percentage in
. . . §33334.2[, subd. ](a) is increased above 30%. [¶] b. The percentage specified in this
paragraph shall apply to the gross amount of taxes allocated to the Agency pursuant to
Section 33670, including any monies which the Agency transfers to other taxing
agencies, notwithstanding any provisions of such agreements, except that monies which
other taxing agencies elect to have allocated to them under Section 33676 shall not be
included in the amounts allocated to the Agency.” (Italics added.)
The clear import of each of the stipulated judgments is a certain percentage of the
tax increment received by the Santa Ana Redevelopment Agency was to be set aside for
low- and moderate-income housing. The Legislature’s elimination of the tax increment
had the effect of extinguishing the obligation of the redevelopment agency (or its

23
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.
Cuenca argues the stipulated judgments are enforceable obligations requiring
their terms to continue to be fulfilled, including the requirement to collect and set
aside funds for low- and moderate-income housing. In support, Cuenca argues the
tax increment continues to exist as property taxes. We reject the argument for two
reasons.
First, the stipulated judgments could not have imposed a requirement that the
Santa Ana Redevelopment District 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
Cerritos Taxpayers Assn., supra, 183 Cal.App.4th at p. 1424 [“Local redevelopment
agencies have no power to tax”].) Consequently, the stipulated judgments represented
the outer limit to which the Santa Ana Redevelopment Agency could agree, namely
to allocate a certain percentage of the tax increment received to low- and moderate-
income housing.
Second, the tax increment has been eliminated and is no longer received by the
now-dissolved Santa Ana Redevelopment Agency or its successor agency. Subdivision
(a) of section 34189 declares that “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.” Because no tax increment is received, none must be set

24
aside under the stipulated judgments. The continued payment of other obligations such
as bonds and contracts that became valid before the dissolution of the redevelopment
agencies represents the Legislature’s determination not to default on redevelopment
agency obligations. However, these continuing obligations do not establish the
continuing existence of the tax increment. To the contrary, the Legislature’s funding of
these continuing obligations out of property taxes confirms the elimination of the tax
increment.
In short, 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. This conclusion, however,
does not resolve the issue of the proper disposition of the tax increment collected before
the elimination of the tax increment and not yet spent. Thus, we turn to the issue of the
moneys set aside under the stipulated judgments prior to the effective date of the
Dissolution Law.
IV
Past Tax Increment Moneys Collected
Cuenca contends the moneys collected prior to the Dissolution Law’s elimination
of the tax increment under the terms of the stipulated judgments but not yet spent must
still be made available for low- and moderate-income housing in Santa Ana. We are not
persuaded.
A.

The Stipulated Judgments Require only the Setting aside of Portions of the
Tax Increment
As determined above, in part III C., the five stipulated judgments require only the
setting aside of specified percentages of the tax increment received by the Santa Ana
Redevelopment Agency. Although the stipulated judgments identify the general
locations of the redevelopment areas within the City of Santa Ana where the set-aside

25
funds should be spent, the stipulated judgments themselves do not constitute contracts to
construct any housing.
In November 2012, DOF determined about $52.3 million of the approximately
$56.7 transferred to the housing successor’s Asset Fund were unencumbered balances
because they were not subject to contracts for construction or loans pledged to facilitate
construction. Although DOF subsequently adjusted the amount several times, it
ultimately deemed a total of approximately $33.2 million to be unencumbered.
B.
The Prohibition on New Redevelopment Projects after June 2011
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. 2011-2012, 1st Ex. Sess., 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

26
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.”
(Stats. 2011-2012, 1st Ex. Sess., 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 Assembly 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.)
C.
Unencumbered Balances Held in the Asset Fund
Cuenca does not dispute the Legislature has eliminated tax increment funding for
new redevelopment projects. Cuenca also does not deny $33.2 million held in the Asset
Fund and deemed unencumbered by DOF is not subject to any construction contract or
pledge for construction loans. Instead, Cuenca argues the Dissolution Law’s elimination
of the tax increment only “affects [the California Redevelopment Law], not judgments.”
Pointing out the same difference in property values before and after establishment of the
Santa Ana Redevelopment Agency still exists, Cuenca asserts these funds must still be
available to fulfill the terms of the stipulated judgments. We disagree.
Cuenca essentially argues the Dissolution Law’s provision for the enforceability of
the stipulated judgments also safeguards the moneys collected under the judgments from
the “claw-back” provisions of the Dissolution Law. In considering this argument, “ ‘we
are mindful that “all intendments favor the exercise of the Legislature’s plenary authority:

27
‘If there is any doubt as to the Legislature’s power to act in any given case, the doubt
should be resolved in favor of the Legislature’s action. Such restrictions and limitations
[imposed by the Constitution] are to be construed strictly, and are not to be extended to
include matters not covered by the language used.’ ” ’ (Matosantos I, supra, 53 Cal.4th
at p. 253; see Methodist Hosp. of Sacramento v. Saylor (1971) 5 Cal.3d 685, 691.)” (City
of Azusa v. Cohen (2015) 238 Cal.App.4th 619, 628 (City of Azusa).)
Nothing in the stipulated judgments purports to prevent the Legislature from
recapturing unspent tax increment funds by subsequent legislation. Moreover, the
stipulated judgments could not have prevented subsequent legislation from reclaiming
unencumbered tax increment funds. The United States Supreme Court has explained that
“just as the adopting court is free to reject agreed-upon terms as not in furtherance of
statutory objectives, so must it be free to modify the terms of a consent decree when a
change in law brings those terms in conflict with statutory objectives. . . . The parties
have no power to require of the court continuing enforcement of rights the statute no
longer gives.” (System Federation No. 91, Ry. Emp. Dept. v. Wright (1961) 364 U.S.
642, 651-652 [5 L.Ed.2d 349] italics added.) California case law likewise recognizes that
“a consent decree mandating future compliance with a statutory obligation does not
invest the parties thereto with a contractual right to demand continued performance in the
event that the underlying statutory obligation is changed.” (Welfare Rights v. Frank
(1994) 25 Cal.App.4th 415, 423 (Welfare Rights).)
The Dissolution Law unequivocally provides unencumbered moneys originally
collected for redevelopment projects must be remitted to the county auditor-controller.
(§ 34177, subd. (d).) As this court has previously explained, “the Legislature wanted to
divert all RDA assets, while specifying which RDA obligations remained enforceable.”
(City of Azusa, supra, 238 Cal.App.4th at p. 627.) Here, the enforceable obligation is the
requirement that a percentage of the tax increment be set aside. Once set aside, the tax
increment moneys previously held in the Housing Fund and currently in the Asset Fund

28
are unencumbered unless subject to specific and enforceable agreements such as
contracts for construction or pledges for construction loans. If the moneys are
unencumbered, they are subject to the Dissolution Law’s requirement they be remitted to
the county auditor-controller. (§ 34177.) For this reason, the trial court correctly
affirmed DOF’s determination approximately $33 million of unencumbered funds held in
the Asset Fund must be remitted to the county auditor-controller.
V
Contract Clause Claims
Cuenca argues transferring moneys from the Asset Fund to the county auditor-
controller for transfer to the taxing entities violates the contract clauses of the United
States and California Constitutions. Cuenca reasons the stipulated judgments are valid
contracts the Legislature may not undermine. We reject the argument.
A.
Impairment of Vested Contractual Rights
In Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109, this court
explained: “The contract clauses of the federal and state Constitutions limit the power of
a state to modify its own contracts with other parties, as well as contracts between other
parties. (Allen v. Board of Administration (1983) 34 Cal.3d 114, 119; Valdes v. Cory
(1983) 139 Cal.App.3d 773, 783.) ‘The state occupies a unique position in the field of
contract law because it is a sovereign power. This gives rise to general principles which
may limit whether an impairment has [occurred] as a matter of constitutional law. First,
“[a]n attempt must be made to ‘reconcile the strictures of the Contract Clause with the
“essential attributes of sovereign power”. . . .’ ” [Citation.] “Not every change in a
retirement law constitutes an impairment of the obligations of contract, however.
[Citation.] Nor does every impairment run afoul of the contract clause.” [Citation.] “
‘The constitutional prohibition against contract impairment does not exact a rigidly literal
fulfillment; rather, it demands that contracts be enforced according to their “just and

29
reasonable purport”; not only is the existing law read into contracts in order to fix their
obligations, but the reservation of the essential attributes of continuing governmental
power is also read into contracts as a postulate of the legal order. [Citations.] The
Contract Clause and the principle of continuing governmental power are construed in
harmony; although not permitting a construction which permits contract repudiation or
destruction, the impairment provision does not prevent laws which restrict a party to the
gains reasonably to be expected from the contract.”’”’ (California Teachers Assn. v.
Cory (1984) 155 Cal.App.3d 494, 510–511 [state’s reduction of contributions to teachers’
retirement system was unconstitutional impairment of contract].) [¶] ‘Our analysis
requires a two-step inquiry into: (1) the nature and extent of any contractual obligation . .
. and (2) the scope of the Legislature’s power to modify any such obligation.’ (Valdes v.
Cory, supra, 139 Cal.App.3d at p. 785.)” (Board of Administration v. Wilson, supra, at
pp. 1130-1131, fn. omitted.)
Regarding the first step of the inquiry about the nature and extent of any
contractual obligation, we find instructive the case of Welfare Rights, supra, 25
Cal.App.4th 415. Welfare Rights involved an action to enforce a previously entered
consent decree in which Humboldt County agreed to “set general assistance grant levels
at $376 per month, which was equal to the $326 grant level for Aid to Families with
Dependent Children (AFDC) plus $50. The agreement provided that the grant level
would ‘increase annually according to the AFDC MBSAC Annual [cost of living
adjustment] [plus] $50.’” (Id. at p. 418.) The trial court approved the consent decree and
retained jurisdiction to enforce its terms. (Ibid.) Two years later, the Legislature enacted
Welfare and Institutions Code section 17000.5 that allowed counties to “discharge their
general assistance obligations by setting grant levels at 62 percent of a guideline that is
equal to the 1991 federal official poverty line and by annually adjusting that guideline by
the amount of any adjustment provided under the AFDC program.” (Id. at pp. 418-419.)
“Significantly, however, subdivision (c) of [Welfare and Institutions Code] section

30
17000.5 specifically exempted counties under ‘preexisting settlements.’ ” (Id. at p. 419.)
This exemption for preexisting agreements was repealed a year later. (Ibid.) Humboldt
County then began setting its general assistance grant levels based on the statutory
formula instead of the formula specified in the earlier consent decree. (Id. at pp. 419-
420.) Plaintiffs sued Humboldt County on grounds the repeal of the exemption for
preexisting agreements violated the contract clauses of the California and United States
Constitutions. (Id. at pp. 419-420.)
The trial court in Welfare Rights agreed with plaintiffs that the repeal of the
exemption for preexisting agreements unconstitutionally impaired the obligation in the
consent decree. (25 Cal.App.4th at p. 420.) The Court of Appeal reversed, and
explained: “The contract clauses of the state and federal Constitutions protect only
vested contractual rights. (Legislature v. Eu (1991) 54 Cal.3d 492, 528, 534.) Contrary
to plaintiffs’ assertion, a consent decree mandating future compliance with a statutory
obligation does not invest the parties thereto with a contractual right to demand continued
performance in the event that the underlying statutory obligation is changed.” (Welfare
Rights, supra, at p. 423.)
The Welfare Rights court articulated a second rationale for its holding in that
“[n]othing in the Consent Decree purports to give plaintiffs a vested contractual right to
continue to have their general assistance grant levels set according to the formula
specified in the decree in the event the underlying statutory obligation to provide for the
‘minimum subsistence needs’ of general assistance recipients is changed, as happened
here. Since no vested contractual rights are involved, the contract clause protections of
the state and federal Constitutions are simply not implicated.” (25 Cal.App.4th at p. 424,
fn. omitted.)
Similarly, Mendly v. County of Los Angeles (1994) 23 Cal.App.4th 1193 involved
a motion to enforce an earlier stipulated judgment after the County of Los Angeles
decided to follow the subsequently enacted statutory formula in Welfare and Institutions

31
Code section 17000.5. (Id. at pp. 1198-1199.) The Mendly court rejected a contract
clause challenge on grounds the “instant stipulated judgment does not constitute a
‘contract’ for purposes of contract clause analysis.” (Id. at p. 1205.) Mendly explained,
“Although the instant judgment was based upon the parties’ settlement agreement, the
settlement occurred within a case seeking injunctive and declaratory relief. ‘It is settled
that where there has been a change in the controlling facts upon which a permanent
injunction was granted, or the law has been changed, modified or extended, or where the
ends of justice would be served by modification or dissolution, the court has the inherent
power to vacate or modify an injunction where the circumstances and situation of the
parties have so changed as to render such action just and equitable. [Citations.] This
principle governs even though the judgment providing the injunctive relief is predicated
upon stipulation of the parties.’ ” (Mendly, at pp. 1206-1207, quoting Welsch v. Goswick
(1982) 130 Cal.App.3d 398, 404–405.)
B.
The Stipulated Judgments Did Not Provide Vested Rights to Use of the Tax Increment
The Legislature’s elimination of the tax increment and requirement to remit
unencumbered tax increment moneys to the taxing entities under section 34177 did not
violate the contracts clauses of the United States and California Constitutions. The
reasoning of Welfare Rights and Mendly applies here where the stipulated judgments are
also not subject to contracts clause challenges. Even though the stipulated judgments in
this case were entered upon agreement of the parties, none of the parties could bind the
Legislature to continued authorization of tax increment spending for redevelopment
projects. Because the stipulated judgments incorporated no vested right to receipt or
disposition of tax levies, we reject Cuenca’s argument under the contracts clauses. The
five stipulated judgments did not provide any vested contractual right to receive or retain
tax increment moneys. The five stipulated judgments did not include terms requiring an
amount of the tax increment to be collected or to disallow unspent moneys from being

32
legislatively reallocated. Instead, the five stipulated judgments required only that certain
specified percentages of the tax increment moneys received be set aside for low- and
moderate-income housing in Santa Ana. Consequently, the Dissolution Law’s
elimination of the tax increment and requirement to remit unencumbered moneys in the
Asset Fund to the county auditor-controller do not violate the contracts clauses of the
federal and state constitutions.
VI
Cuenca’s Challenge under Propositions 1A and 22
Cuenca next argues requiring the housing successor to remit Asset Fund
moneys to the county auditor-controller violates Proposition 1A and Proposition 22.
We disagree.
A.
Cognizability
Respondents assert this issue has not been preserved for appeal because Cuenca
did not present this argument in the trial court. Generally, we do not consider issues
raised for the first time on appeal. (California Clean Energy Committee v. City of
Woodland (2014) 225 Cal.App.4th 173, 191.) However, Cuenca did present the issues
in the trial court by arguing Propositions 1A and 22 prevented DOF from ordering the
City to remit moneys from the Asset Fund to the county auditor-controller. Cuenca
preserved the issues by raising the same challenges under Propositions 1A and 22 in
the trial court before advancing them on appeal. Accordingly, we consider the issues
on the merits.
B.
Proposition 1A
In City of Cerritos v. State, supra, 239 Cal.App.4th 1020, this court considered
challenges to the Dissolution Law under seven different provisions of the California
Constitution, including article XIII, section 25.5, subdivision (a)(3), Proposition 1A.

33
(City of Cerritos v. State, at pp. 1027, 1030.) The central argument in City of Cerritos v.
State was that “Assembly Bill 1X 26 violates Proposition 1A, which the electorate
approved at the general election in November 2004. (Stats. 2004, res. ch. 133.)
Proposition 1A added Article XIII, section 25.5(a)(3) to the state Constitution.
([California Redevelopment Assn. v. Matosantos (2013)] 212 Cal.App.4th [1457,] 1467.)
That section generally ‘prohibits the Legislature from raiding local property tax
allocations to help balance the budget.’ (Ibid.)” (City of Cerritos v. State, supra, at
pp. 1033-1034.)
The plaintiffs in City of Cerritos v. State argued the Dissolution Law reallocated
the tax increment in a manner that would have required approval of a two-thirds majority
of the Legislature. (239 Cal.App.4th at p. 1034.) This court rejected the argument and
explained, “Assembly Bill 1X 26 reallocates to successor agencies, which are not local
agencies within the meaning of Proposition 1A, the property tax revenues that would
have gone to redevelopment agencies had they not been dissolved in order to satisfy
indebtedness previously incurred under Article XVI, section 16.3 (Assem. Bill 1X 26,
§ 1, subds. (i), (j)(2); § 34172, subds. (c) [‘Solely for purposes of Section 16 of Article
XVI of the California Constitution, the Redevelopment Property Tax Trust Fund shall
be deemed to be a special fund of the dissolved redevelopment agency. . . .’] & (d)
[‘Revenues equivalent to those that would have been allocated pursuant to
subdivision (b) of Section 16 of Article XVI of the California Constitution shall be
allocated to the Redevelopment Property Tax Trust Fund of each successor agency
for making payments on the principal of and interest on loans, and moneys advanced to
or indebtedness incurred by the dissolved redevelopment agencies. Amounts in excess
of those necessary to pay obligations of the former redevelopment agency shall be
deemed to be property tax revenues within the meaning of subdivision (a) of Section 1
of Article XIII A of the California Constitution’].) Once such obligations are satisfied,
any excess revenues are then allocated to local agencies according to their Assembly Bill

34
No. 8 (1977-1978 Reg. Sess.) allocations. (§§ 34172, subd. (d); 34188, subd. (a)(1).)
Thus, rather than take funds away from local agencies, which Proposition 1A was
intended to halt, Assembly Bill 1X 26 provides local agencies with more money than they
otherwise would have received.” (City of Cerritos v. State, at p. 1041, italics added;
fn. omitted.)
As City of Cerritos v. State explains, “Local agencies have no vested right to a
certain amount of property taxes. (Matosantos I, supra, 53 Cal.4th at p. 245.) Nothing in
Proposition 1A changes that. Proposition 1A simply protects an agency’s pro rata share
of property taxes. Because Assembly Bill 1X 26 does not change the pro rata shares of
local agency property tax allocations, it does not run afoul of Proposition 1A.” (City of
Cerritos v. State, supra, 239 Cal.App.4th at p. 1042.) This holding also applies to
Cuenca’s challenge under Proposition 1A because the housing successor has no vested
right to retain unencumbered moneys held in the Asset Fund. Consequently, the
Dissolution Law does not violate Proposition 1A by requiring unencumbered moneys to
be remitted to the county auditor-controller.
C.
Proposition 22
Cuenca contends the Dissolution Law violates Proposition 22 by requiring that
unencumbered moneys collected under the stipulated judgments and held in the Asset
Fund must be remitted to the county auditor-controller.
This court has previously determined that “[t]he Supreme Court has already
found that Assembly Bill 1X 26 did not violate . . . Proposition 22, which added Article
XIII, section 25.5, subdivision (a)(7).” (City of Cerritos v. State, supra, at p. 1038,
fn. 2, citing Matosantos I, supra, 53 Cal.4th at pp. 241–242.) The petitioners in
Matosantos I argued the Dissolution Law violated Proposition 22, “which amended
the state Constitution to place limits on the state’s ability to require payments from
redevelopment agencies for the state’s benefit. (See Cal. Const., art. XIII, § 25.5,

35
subd. (a)(7), added by Prop. 22, as approved by voters, Gen. Elec. (Nov. 2, 2010).)”
(Matosantos I, at p. 241.)
“Proposition 22 expressly adds numerous limits to the Legislature’s statutory
powers (Prop. 22, Gen. Elec. (Nov. 2, 2010) §§ 3–5, 5.3, 6–6.1, 7), and in one instance
withdraws from the Legislature a preexisting constitutional power (id., § 5.6 [repealing
Cal. Const., art. XIX, former § 6]), but makes no mention of any intent to divest the
Legislature of the power to dissolve redevelopment agencies. If the initiative proponents
and voters had intended to strip the Legislature of that power or to alter the Legislature’s
article XVI, section 16 permissive authority, it stands to reason they would have said so
expressly.” (Matosantos I, supra, 53 Cal.4th at p. 261.)
However, “Proposition 22’s limit on state restrictions of redevelopment agencies’
use of their funds is best read as limiting the Legislature’s powers during the operation,
rather than the dissolution, of redevelopment agencies. Article XIII, section 25.5,
subdivision (a)(7)(B) prohibits, with minor exceptions, further legislative restrictions on
the use of property taxes allocated to redevelopment agencies under article XVI, section
16. Article XVI, section 16, in turn, creates no absolute right to an allocation of property
taxes. (See Cal. Const., art. XVI, § 16 [‘The Legislature may provide that any
redevelopment plan may contain a provision’ diverting tax increment to redevelopment
agencies (italics added)].) Thus, if the Legislature exercises its constitutional power to
authorize allocation of property taxes to redevelopment agencies, and if a redevelopment
plan so provides, then those taxes so allocated to an operating redevelopment agency may
not be restricted to benefit the state by further legislative action.
“The Legislature in fact exercised that constitutional power when adopting and
subsequently amending the Community Redevelopment Law (see §§ 33670, 33675), but
the right of redevelopment agencies to tax increment funding thereby created was
statutory, not constitutional. In turn, Assembly Bill 1X 26 revises those statutory rights.
The Legislature has determined that tax increment should no longer be allocated to

36
redevelopment agencies (Assem. Bill 1X 26, § 1, subd. (i) [upon agencies’ dissolution,
property taxes are no longer to be deemed tax increment and allocated to redevelopment
agencies]), except insofar as necessary to satisfy existing obligations. The measure
exercises the Legislature’s constitutional power to authorize property tax increment
revenue for, or to withdraw that authorization from, redevelopment agencies. (See Cal.
Const., art. XVI, § 16.) As such, the measure modifies the constitutional predicate for the
operation of article XIII, section 25.5, subdivision (a)(7)(B) of the state Constitution. In
the absence of property tax increment allocated under article XVI, the latter subdivision
has no force or effect.” (Matosantos I, supra, 53 Cal.4th at p. 263.)
Cuenca attempts to distinguish Matosantos I on grounds the California Supreme
Court’s decision was issued six months before the Legislature enacted the statute that
unencumbered moneys held in Asset Funds must be remitted to the county auditor-
controller. (Compare Matosantos I, supra, 53 Cal.4th 231 [decided Dec. 29, 2011] with
(§ 34179.6, subd. (f) [added by Stats. 2012, ch. 26, § 18, eff. June 27, 2012].) Regardless
of timing, the reasoning articulated in Matosantos I applies to the analysis of whether
section 34179.6 violates Proposition 22. As the California Supreme Court explained,
“Redevelopment agencies . . . have a conditional right to the tax increment only to the
extent of any existing indebtedness. (§§ 33670, 33675; Cal. Const., art. XVI, § 16, subd.
(b); cf. Marek v. Napa Community Redevelopment Agency [(1988)] 46 Cal.3d [1070,]
1082 [interpreting ‘indebtedness’ to include all existing obligations, including executory
ones].) They have no particular right to incur additional future indebtedness. The
provisions of part 1.8 of division 24 of the Health and Safety Code, which respect the
need to satisfy existing indebtedness (see § 34167) while precluding the creation of
additional indebtedness (§§ 34162–34163), invade no rights protected by article XIII,
section 25.5, subdivision (a)(7)(B) of the state Constitution.” (Matosantos I, supra, 53
Cal.4th at p. 264, italics added.) In short, Proposition 22 does not prohibit section
34167’s provision that requiring unencumbered moneys held in Asset Funds to be

37
remitted to the county auditor-controller because the dissolution of the redevelopment
agencies also eliminated their claims to unencumbered moneys.
DISPOSITION
The judgment is affirmed. Each party shall bear its own costs on appeal. (Cal.
Rules of Court, rule 8.278(a)(1) & (5).)

/s/
HOCH, J.

We concur:

/s/
NICHOLSON, Acting P.J.

/s/
DUARTE, J.

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