Filed 2/5/21 City of Sunnyvale v. Bosler CA3
NOT TO BE PUBLISHED
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(Sacramento)
----
CITY OF SUNNYVALE et al., C081589
Plaintiffs and Appellants, (Super. Ct. No. 34-2015-
80002067-CU-WM-GDS)
v.
KEELY MARTIN BOSLER, as Director, etc., et al.,
Defendants and Respondents.
Plaintiff City of Sunnyvale, like cities throughout the state, dissolved its
redevelopment agency as required by law, became the successor or caretaker agency to
wind down its affairs, and attempted to obtain approval from an oversight board to
reenter a 1998 reimbursement agreement between the former redevelopment agency and
the City of Sunnyvale (Sunnyvale) so as to enable Sunnyvale to continue to receive
property tax revenue to pay its preexisting obligation.
1
The dispositive issue on appeal is whether former Health and Safety Code section
341781 required Sunnyvale to obtain its oversight board’s approval to renegotiate the
1998 agreement or to obtain its approval of the actual renegotiated agreement. We agree
with the trial court that the plain meaning of the statute required approval of the actual
agreement, not merely authorization to enter into negotiation. We, therefore, affirm the
trial court’s denial of Sunnyvale’s petition for a writ of mandate to compel respondent
Department of Finance, through its director, Keely Martin Bosler, (the Department) to
acknowledge the validity of the renegotiated agreement.
BACKGROUND
Legal Background
In 1945 the Legislature authorized the formation of community redevelopment
agencies and the use of tax increment financing to fund them. “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)
are 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—goes to the
redevelopment agency for repayment of debt incurred to finance the project.” (California
Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 246-247 (Matosantos).)
Local governments embraced tax increment financing and established nearly 400
redevelopment agencies by 2011. (Matosantos, supra, 53 Cal.4th at p. 246). The
redevelopment agencies’ coffers swelled with 12 percent of all of the property taxes
collected across the state. (Id. at p. 247; Historical and Statutory Notes, 41A Pt. 1 West’s
Ann. Health & Saf. Code (2014 ed.) foll. § 33500, p. 185.) Thus, tax increment financing
1 Undesignated statutory references are to the Health and Safety Code.
2
was a boon to these redevelopment agencies, but not to schools, special districts, and
other taxing entities equally dependent on property tax revenue. (Matosantos, at p. 248.)
For them, property tax revenue was frozen. (Id. at p. 250.)
In June 2011 the Legislature declared: “Redevelopment agencies were created by
statute and can therefore be dissolved by statute.” (Assem. Bill No. 26 (2011-2012 1st
Ex. Sess.); Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 1, subd. (h).) The Legislature
dissolved nearly 400 agencies, a decision that ultimately became effective on February 1,
2012. (Matosantos, supra, 53 Cal.4th at p. 275.) Dissolving the agencies may have been
accomplished easily by statute, but the winding down of their affairs was more complex.
The Legislature sought to establish a mechanism to ensure that all enforceable obligations
of the former redevelopment agencies were paid. But that process is fraught with risks
due to the conjoined membership of the various bodies involved.
While the former redevelopment agencies were legal entities separate from the
city or county that created them, the governing body of the sponsoring agency generally
governed them. Thus, the same decisionmakers made decisions wearing two hats and, in
essence, negotiated with themselves. In other words, decisionmakers, sitting as members
of a city council, entered into reimbursement and funding agreements with the same
decisionmakers, sitting as board members of the redevelopment agency the city created.
The statutory scheme dissolving and winding down the redevelopment agencies
thereafter swapped a successor agency for the redevelopment agency, but the
decisionmakers in most cases remain the same—the members of the city council.
Attuned to the conjoined nature of many of these decisionmaking bodies, the Legislature
declared that “agreements, contracts, or arrangements between the city or county, or city
and county that created the redevelopment agency are invalid and shall not be binding on
the successor agency.” (§ 34178, subd. (a).)
It should be noted that the role of a successor agency is quite different from the
role of a redevelopment agency. The successor agency is charged with winding down the
3
affairs of the redevelopment agency and is prohibited from taking on new obligations.
Successor agencies “succeed to the organizational status of the former redevelopment
agency, but without any legal authority to participate in redevelopment activities, except
to complete any work related to an approved enforceable obligation.” (§ 34173,
subd. (g).) Indeed, successor agencies are required to “[c]ontinue to make all scheduled
payments for enforceable obligations, as defined in subdivision (d) of Section 34167.”
(§ 34169, subd. (a); see also § 34177, subd. (a)(3); Matosantos, supra, 53 Cal.4th at
p. 275.)
Because only enforceable obligations are spared extinction, determining whether a
proposed payment meets the statutory definition is a matter of life or death. Two
definitions are relevant to this appeal. Enforceable obligations include bonds, loans,
payments required by law, judgments or settlements, and certain agreements or contracts
(§ 34171, subd. (d)) and “any legally binding and enforceable agreement or contract that
is not otherwise void as violating the debt limit or public policy.” (§ 34171, subd.
(d)(1)(E).) The term “enforceable obligation” explicitly excludes “any agreements,
contracts, or arrangements between the city, county, or city and county that created the
redevelopment agency and the former redevelopment agency.” (§ 34171, subd. (d)(2).)
“The exclusion of agreements between the former redevelopment agencies and their
sponsors in the definition of enforceable obligations [citation] and the express legislative
invalidation of these agreements [citation] reflect legislative recognition that ‘often’ these
agreements were not the product of arm’s-length negotiations because the two bodies had
‘conjoined’ membership that was not reflective of the interests of the taxing entities.”
(County of Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 47-48 (County of Sonoma).)
For a mere year, however, the Legislature provided a limited exception to the
exclusion of agreements between the former redevelopment agencies and their sponsors
from the definition of enforceable obligations. This exception, section 34178, is the
central focus of this appeal. The 2011 version of section 34178 stated: “Commencing on
4
the operative date of this part, [any] agreements . . . between the [sponsoring entity] and
the redevelopment agency are invalid and shall not be binding on the successor agency;
provided, however, that a successor entity wishing to enter or reenter into agreements
with [its sponsoring entity] . . . may do so upon obtaining the approval of its oversight
board.” (Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 7.) Additionally, the 2011 version
of section 34180, subdivision (h) provided that: “All of the following successor agency
actions shall first be approved by the oversight board: [¶] . . . [¶] (h) A request by the
successor agency to enter into an agreement with [its sponsoring entity.]” (Stats. 2011,
1st Ex. Sess. 2011-2012, ch. 5, § 7.) These statutes “unambiguously authorized a
successor agency to request approval of a reentry agreement and the oversight board to
grant the request.” (County of Sonoma, supra, 235 Cal.App.4th at p. 48.)
A year later the statute was amended (Assembly Bill No. 1484 (2011-2012 Reg.
Sess.) enacted as Stats. 2012, ch. 26, §§6-35) to prohibit a successor agency or oversight
board from restoring funding for an enforceable obligation deleted or reduced by the
Department pursuant to section 34179, subdivision (h), unless it reflects decisions made
during the meet and confer process with the Department or pursuant to court order.
(Former § 34178, subd. (a); Stats. 2012, ch. 26, § 14.) The reentered reimbursement
agreement at issue here was executed before this amendment became effective. We have
determined the 2012 amendment is not retroactive. (County of Sonoma, supra,
235 Cal.App.4th at p. 51; City of Emeryville v. Cohen (2015) 233 Cal.App.4th 293, 310
(City of Emeryville).) Sunnyvale does not contend otherwise.
To mitigate the obvious conflicts of interest between the decisionmakers
negotiating on behalf of two masters simultaneously, the Legislature established
oversight boards with a very different constituency and with very different fiduciary
obligations. An oversight board consists of representatives of the affected taxing entities
and is charged with approving certain actions and decisions of the successor agency.
(§§ 34177, 34179, 34179.5, 34179.6, 34180, 34181.) Oversight boards have fiduciary
5
responsibilities to both the holders of enforceable obligations and the taxing entities that
benefit from distributions of property tax. (§ 34179, subd. (i).) They also must approve
the successor agency’s recognized obligation payment schedule (ROPS). If approved by
the oversight board, the ROPS must be submitted to the Department for its approval.
(§§ 34177, 34180.) Successor agencies must prepare and oversight boards must approve
a ROPS every six months. (§ 34177.) In short, the Legislature created oversight boards
because it realized the same potential for misuse of tax increment funding by successor
agencies existed that prompted the dissolution of the former redevelopment agencies in
the first place.
Factual Background
The facts are neither complicated nor disputed. In 1976 the Sunnyvale
redevelopment agency (RDA) agreed, among other redevelopment activities in the
Sunnyvale central core, to build a parking structure adjacent to a town center project. In
1977 RDA and Sunnyvale executed an agreement under which RDA would reimburse
Sunnyvale with tax increment revenue for the city’s purchase of the land for the parking
structure and other redevelopment expenditures. In 1998 RDA sold certificates of
participation to investors to refinance its debt for the parking structure. Sunnyvale leased
the parking facility from RDA for the amount necessary for RDA to pay back the
certificates of participation. RDA then reimbursed Sunnyvale for the certificates of
participation.
In February 2012 RDA was dissolved and Sunnyvale became its successor agency.
The notice and agenda for the oversight board’s April 9, 2012 meeting includes
“Presentation and Approval of Certified Recognized Obligation Payment Schedule
(ROPS).” There is nothing on the agenda regarding approval of an amended
reimbursement agreement. A unanimous board passed a motion that “ ‘The Oversight
Board, under Section 34178(a), directs the Successor Agency to enter into a
reimbursement agreement for Item 2, Certificates of Participation, to reimburse the City
6
for this debt, and adds the item to the ROPS, subject to the Auditor/Controller’s
certification of the item.’ ” The certified ROPS was approved.
On April 24, 2012, the Sunnyvale City Council, not the oversight board,
considered a resolution entitled “Approval for City to Execute an Amended and Restated
Reimbursement Agreement for 1998 Certificates of Participation.” The staff
recommended the city council approve the resolution “authorizing the City of Sunnyvale
to enter into an Amended and Restated Reimbursement Agreement with the Sunnyvale
Successor Agency pursuant to Health and Safety Code Section 34178(a) for the
reimbursement of payments, costs and interest on the Certificates of Participation
(Parking Facility Refunding) Series 1998A.” The city council approved and adopted the
amended and restated reimbursement agreement. As did the successor agency. The
oversight board did not. The city and successor agency executed an amended and
restated reimbursement agreement on April 24, 2012.
Sunnyvale insists that the oversight board again approved the successor agency’s
action of re-entering the reimbursement agreement on April 26 and May 14, 2012, by
approving the second ROPS, ROPS II. But the oversight board’s consideration of ROPS
II was tabled at the April 26 meeting, and it does not include any reference to a
reimbursement agreement.
In May 2012 the Santa Clara County Auditor-Controller would not add the
reimbursement agreement and certify the successor agency’s ROPS. On May 14, the
oversight board passed a motion “to approve the obligation for the 1998 Certificates of
Participation as noted in Item 2 subject to Successor Agency staff working out an
appropriate reimbursement agreement and subject to certification by the County
Auditor/Controller.” Item No. 2 read, “2) Reimbursement for 1998 Certificates of
Participation.” The Sunnyvale City Attorney thereafter revised the agreement. The city
and the successor agency did not execute the amended reimbursement agreement, until it
was revised by the Sunnyvale City Attorney.
7
It was not until September 2014 that the successor agency listed the “Amended
and Restated Reimbursement Agreement for the 1998 Certificates of Participation” on
the ROPS for the period from January 1, 2015, through June 30, 2015. The oversight
board approved the ROPS for the period but the county controller again objected and
asked that the amended and restated reimbursement agreement be removed from the
ROPS.
On December 17, 2014, the Department rejected the amended and restated
reimbursement agreement. The Department wrote, “The Agency stated that this
Agreement was reentered into pursuant to HSC section 34178(a). However, it is our
understanding that neither the Oversight Board (OB) nor Finance approved the terms of
the Agreement.” Sunnyvale complains that the Department had approved earlier ROPS
without mention of the approval deficit. But the Department’s letter regarding ROPS I
and II provides that decisions approving items on the ROPS are not binding on future
ROPS.
Sunnyvale, in its own right and as the successor agency to the RDA, filed a
petition for a writ of mandate and a complaint for declaratory relief alleging that Michael
Cohen, then the director of the Department, abused his discretion by refusing to
recognize the amended and restated reimbursement agreement as an enforceable
obligation. The trial court denied the petition, ruling that the reimbursement agreement
was not an enforceable obligation because the oversight board never approved it, as
required by section 34178 and dismissed the claim for declaratory relief. Sunnyvale, as
the city and as the successor agency, appeals.
DISCUSSION
I
Standard of Review
Because tax increment financing is no longer available and redevelopment
agencies have met their demise, the only way Sunnyvale can continue to receive a
8
disproportionate share of the property tax revenue is to demonstrate that it reentered a
valid reimbursement agreement, which now constitutes an enforceable obligation the
county auditor must honor and pay from the redevelopment property tax trust fund
(RPTTF). There are no disputed facts, only a debate over the meaning of various statutes
enacted as a part of dissolving all the redevelopment agencies in the state. As Sunnyvale
points out we are not asked to reweigh the evidence, but only to determine the legal
consequence of the undisputed facts. We are, therefore, confronted with a quintessential
question of statutory construction, a question of law we review de novo. We are no
stranger to this task in cases involving the winding down of redevelopment agencies.
(Cuenca v. Cohen (2017) 8 Cal.App.5th 200, 220; City of San Jose v. Sharma (2016)
5 Cal.App.5th 123, 134; City of Tracy v. Cohen (2016) 3 Cal.App.5th 852, 860; County of
San Bernardino v. Cohen (2015) 242 Cal.App.4th 803, 809; City of Brentwood v.
Campbell (2015) 237 Cal.App.4th 488, 493; County of Sonoma, supra, 235 Cal.App.4th
42, 47; City of Emeryville, supra, 233 Cal.App.4th 293, 297.)
“Interpreting statutes against a backdrop of undisputed facts, as here, presents
questions of law that we determine independently. ‘Our objective in interpreting a statute
is to determine legislative intent so as to effectuate the law’s purpose. The first thing we
do is read the statute, and give the words their ordinary meanings unless special
definitions are provided. If the meaning of the words is clear, then the language controls;
if not, we may use various interpretive aids,’ such as the statutory context and
framework, and legislative history.” (County of Colusa v. Douglas (2014)
227 Cal.App.4th 1123, 1129.)
II
The Meaning of Approval in Sections 34178 and 34180
We begin with the statutes at the fulcrum of this appeal. The 2011 version of
section 34178 provided: “Commencing on the operative date of this part, agreements,
contracts, or arrangements between the city or county, or city and county that created the
9
redevelopment agency and the redevelopment agency are invalid and shall not be binding
on the successor agency; provided, however, that a successor entity wishing to enter or
reenter into agreements with the city, county, or city and county that formed the
redevelopment agency that it is succeeding may do so upon obtaining the approval of its
oversight board.” (Former § 34178, subd. (a); Stats. 2011, 1st Ex. Sess. 2011-2012,
ch. 5, § 7.) “Further, section 34180, subdivision (h) requires oversight board approval of
a request by a successor agency to enter into such an agreement.” (City of Emeryville,
supra, 233 Cal.App.4th at p. 299.)
In City of Emeryville, supra, 233 Cal.App.4th 293 and County of Sonoma, supra,
235 Cal.App.4th 42, we considered whether agreements approved by oversight boards
under these sections were enforceable obligations of a former redevelopment agency that
continue to be payable out of property taxes before distribution of the remainder to the
taxing agencies. (§ 34171, subd. (d); see § 34183, subd. (a)(2)(C).) Sunnyvale argues
these cases are dispositive and validate their claim that the amended and restated
reimbursement agreement is an enforceable obligation. The trial court found our cases
inapposite. Although the same statutes were involved in both cases, we agree with the
trial court that neither case addressed the issue now before us.
Sunnyvale insists that we equated authorization with approval in these cases. Not
so. The meaning of approval was not before us. In City of Emeryville, we did uphold the
city’s contention that the agreements it reentered as the successor agency to the former
redevelopment agency and were then put on the amended ROPS were enforceable
obligations precisely because the city had sought and obtained the approval of its
oversight board. (City of Emeryville, supra, 233 Cal.App.4th at pp. 301-302.) We
rejected the Department’s assertion that section 34178, subdivision (a) did not authorize
Emeryville to reenter into the agreements because disparate sections of the law
established the Legislature’s desire to halt redevelopment agency activity and freeze
existing assets. (City of Emeryville, at p. 303.) “Most agreements between former
10
redevelopment agencies and their organic bodies were invalidated (§ 34178, subd. (a)) as
Emeryville conceded. A definitional section provides: ‘For purposes of this part,
“enforceable obligation” does not include any agreements, contracts, or arrangements
between the city, county, or city and county that created the redevelopment agency and
the former redevelopment agency.’ (§ 34171, subd. (d)(2).) [¶] . . . But none of these
statutes, individually or collectively, changes the fact that in the very same bill, Assembly
Bill IX 26, the Legislature explicitly authorized successor agencies to enter or reenter
into agreements, subject to approval by oversight boards.” (Id. at p. 305.)
Secondly, we found that the 2012 amendment to section 34177.3 is not retroactive.
“[S]ection 34177.3, subdivision (c) partly provides that, ‘Successor agencies shall lack
the authority to . . . transfer any powers or revenues of the successor agency to any other
party . . . except pursuant to an enforceable obligation on a [ROPS] approved by the
department. Any such transfers of authority or revenues that are not made pursuant to an
enforceable obligation on a [ROPS] approved by the [Department] are hereby declared to
be void . . . .’ Subdivision (a) of section 34177.3 precludes ‘new redevelopment work,’
except as to enforceable obligations that existed before Assembly Bill IX 26 took effect.
Subdivision (d) partly provides: ‘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 p. 307.) We did not agree
with the Department’s claim that the only extant obligations before the dissolution law
was enacted in June of 2011 were obligations of the redevelopment agencies, not the
successor agencies. To the contrary, reentry into an enforceable obligation that existed
before June of 2011 is exactly what section 34178 permits. (City of Emeryville, at
p. 309.)
Nowhere in the opinion in City of Emeryville did we, however, examine the
meaning of approval by an oversight board. We recognized that section 34178
authorized successor agencies to reenter agreements, subject to approval by the oversight
11
board, that would then remain enforceable obligations. Nowhere did we suggest that
authorization is equivalent to approval.
Nor was the meaning of approval addressed in County of Sonoma, supra,
235 Cal.App.4th 42, the other case heralded by Sunnyvale as dispositive. Like City of
Emeryville, County of Sonoma rebuffed different issues involving section 34178 raised by
the Department and affirmed the trial court’s finding that the agreements it reentered, and
the oversight board approved, remained enforceable obligations. Again we rejected the
Department’s reliance on the alleged spirit of the overall legislation, a spirit at odds with
the plain and unambiguous language of sections 34178, subdivision (a) and 34180,
subdivision (h). (County of Sonoma, at pp. 47-48.) We concluded: “The 2011 version of
sections 34178, subdivision (a) and 34180, subdivision (h) . . . unambiguously authorized
a successor agency to request approval of a reentry agreement, and an oversight board to
grant the request. Under the well-established interpretive principle just cited, this express
grant of authority cannot simply be negated through resort to the spirit of the Great
Dissolution Law.” (Id. at pp. 48-49, fn. omitted.)
We further rejected the Department’s contention that an oversight board could not
approve a reentry agreement because a successor agency was not authorized to take on
new obligations. We relied on the clear language of section 34178, subdivision (a) that
“successor agencies with the approval of their oversight boards could also establish a
reentry agreement as an enforceable obligation in an ROPS. (Former § 34178[, subd.]
(a).) Thus, an oversight board is not approving an unauthorized act.” (County of
Sonoma, supra, 235 Cal.App.4th 42 at p. 49.) What we did not say is that an oversight
board may simply authorize a successor agency to negotiate revisions to an agreement
previously executed by the former redevelopment agency and the sponsoring agency
without thereafter approving the amended agreement. Sunnyvale has quite simply
asserted a false equivalency between two words, authorization and approval, which have
very distinct meanings.
12
City of Emeryville and County of Sonoma are, as Sunnyvale suggests, important
cases reaffirming that successor agencies had a year in which the Legislature allowed
them to protect a disproportionate share of property tax revenue by reentering agreements
of their former redevelopment agencies. They do not, however, support Sunnyvale’s
central claim that the oversight board did not need to approve the actual agreement the
successor agency proposes to execute. On this point, we agree with the trial court that
City of Emeryville and County of Sonoma are inapposite. We must rely therefore on
common rules of statutory construction beginning with the most elemental principle that
we must turn first to the words of the statute.
Under former section 34178, the Legislature established the general rule
invalidating agreements between the sponsoring agencies and the former redevelopment
agencies. The governance of a sponsoring agency, as in this case, is often the same body
that governs the successor agency. Here the pivotal entity is the City of Sunnyvale.
Section 34178 provided that those type of incestuous agreements were invalid and not
binding on the successor agency. But, of course, the Legislature carved out an express
exception to this general rule of invalidity, and it is the Legislature’s narrow exception
that is at issue here. The general rule set forth in former section 34178, subdivision (a) is
followed by a huge “however.” Following the general rule of invalidity, the statute
provided: “However, that a successor entity wishing to enter or reenter into agreements
with [its sponsoring entity] . . . may do so upon obtaining the approval of its oversight
board.” (Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 7.)
The question squarely presented is approval of what? Sunnyvale insists the
successor agency need only approve the “act” of entering into negotiations. The
Department argues, and the trial court found, that the oversight board must approve the
result of those negotiations—the actual amended and restated reimbursement agreement.
The trial court explained: “The evidence furnished by Petitioners shows that while the
Oversight Board may have directed the Successor Agency to enter the Re-entered
13
Reimbursement Agreement at its April 9, 2012 meeting, it did not approve it. Indeed, the
Oversight Board could not have approved it, as it did not yet exist. Additionally,
Petitioners have furnished no evidence indicating that the Oversight Board did, in fact,
‘approve’ the Re-entered Reimbursement Agreement.”
Sunnyvale argues there is nothing in the language of section 34178 requiring the
oversight board to later review and then approve the agreement. In the absence of such a
directive, they maintain that directing or authorizing the successor agency to reenter the
agreement is sufficient. Indeed, they cite to the wisdom of the oversight board in making
its approval contingent upon certification by the county auditor-controller who, according
to Sunnyvale, vigilantly protected the interests of the other taxing entities. They also cite
to administrative cases in entirely different contexts wherein “approval” is a decision by
an agency which commits the agency to a definite course of action, but may involve
instructing others or its staff to follow through.
Sunnyvale’s cases are easily distinguished as neither involve the dissolution of
redevelopment agencies or the specific statute at issue. “Approval” is the word that
triggers extensive environmental review under the California Environmental Quality Act
(CEQA) (Pub. Resources Code, § 21000 et seq.) and its accompanying Guidelines (Cal.
Code Regs., tit. 14, §15000 et seq.). In Save Tara v. City of West Hollywood (2008)
45 Cal.4th 116, 134, the issue was whether a private-public development agreement
conditioned on CEQA compliance but allowing postponement of the preparation of an
environmental impact report constitutes “approval” under CEQA. The Supreme Court
held that “[a] CEQA compliance condition can be a legitimate ingredient in a preliminary
public-private agreement for exploration of a proposed project, but if the agreement,
viewed in light of all the surrounding circumstances, commits the public agency as a
practical matter to the project, the simple insertion of a CEQA compliance condition will
not save the agreement from being considered an approval requiring prior environmental
review.” (Id. at p. 132.) The court’s construction of approval to mean the point at which
14
the public agency commits to a project is consistent with the essential purpose of CEQA
to compel environmental study and review at the earliest possible juncture. It has
absolutely no bearing, however, on the dissolution of redevelopment agencies and the
distinctly different purpose “approval” by an oversight board during the dissolution
process is designed to achieve.
Golightly v. Molina (2014) 229 Cal.App.4th 1501 is equally inapposite. Golightly
involved a county board of supervisors’ delegation of authority to enter into social
program agreements to four administrative officers to provide social services to county
residents. (Id. at p. 1505.) Each of the administrative officers was required to approve
the proposed agreement, but they did not meet collectively to approve it. (Ibid.) The
issue presented, whether the Ralph M. Brown Act (Gov. Code § 54950 et. seq.) applied,
bears no relevance to the meaning of approval in Health and Safety Code section 34178.
Neither case casts any light on the meaning of approval as used by the Legislature in
Health and Safety Code section 34178.
The plain meaning of the word, the context in which it appears, and the statutory
purpose for the requirement of an oversight board to approve these specific kinds of
agreements, however, do illuminate the Legislature’s intent. A successor agency, under
the limited exception provided by former section 34178, must “obtain[ ] the approval of
its oversight board.” Sunnyvale, mimicking the logic of the cases we distinguished
above, contends that it is undisputed that the oversight board authorized entry into a
reimbursement agreement, whatever the precise terms of that agreement turned out to be.
Sunnyvale’s interpretation would allow approval of any sponsoring-entity agreement—
whether a reentered agreement or entirely new—without any examination by the
oversight board of whether the terms of that agreement are in the best interests of the
taxing entities or the holders of enforceable obligations. Such an interpretation does
violence to the statutory language, design, and purpose.
15
We emphasize that the Legislature chose the word “approval,” not authorization,
and we have debunked Sunnyvale’s attempt to equate the two. The “ ‘meaning of a
statute is to be sought in the language used by the Legislature.’ ” (City of Emeryville,
supra, 233 Cal.App.4th at p. 304.) Had the Legislature intended to use the term
“authorize,” it could have done so. But given the Legislature’s decision to require
“approval,” rather than “authorization,” approval must mean more than simply
authorizing the successor agency to enter into an agreement. Rather, the Legislature must
have meant for the oversight board to engage in meaningful review of the terms of the
agreement.
The plain meaning of approval of the terms of the reentered agreement is
consistent with the structure of section 34178 and the purpose for the limited exception to
the general rule of invalidity. Remember the inherent conflicts of interest that plague the
conjoined governing bodies of the former redevelopment agency, the sponsoring entity,
and the successor agency. The Supreme Court highlighted the problem in Matosantos,
supra, 53 Cal.4th 231: “Redevelopment agencies and their community sponsors are
conjoined to the extent that, in virtually all instances, the same individuals constitute both
the redevelopment agency governing board and the city council or county board of
supervisors that created the agency.” (Id. at p. 266.) Our observation was more targeted
in County of Sonoma, supra, 235 Cal.App.4th 42 wherein we explained why the
Legislature sought to prohibit agreements between sponsoring and successor agencies.
“The exclusion of agreements between the former redevelopment agencies and their
sponsors in the definition of enforceable obligations (§ 34171, subd. (d)(2) . . .) and the
express legislative invalidation of these agreements (§ 34178, subds. (a) & (b) . . .) reflect
legislative recognition that ‘often’ these agreements were not the product of arm’s-length
negotiations because the two bodies had ‘conjoined’ membership that was not reflective
of the interests of the other taxing entities.” (Id. at pp. 47-48.)
16
When the Legislature decided, albeit briefly, to create a limited exception, it did so
carefully. That is to say, the Legislature created a mechanism to give those tax entities
which would lose tax revenue if agreements between sponsoring entities and former
redevelopment agencies were reentered by sponsoring agencies the power to determine
whether or not to approve them. Thus, it was the oversight boards which became the
bulwark against merely replacing redevelopment agencies with successor agencies armed
with unfettered freedom to perpetuate the inequities tax increment financing had allowed.
We return to basic rules of statutory construction. The intent of the statute
“ ‘prevails over the letter, and the letter will, if possible, be so read as to conform to the
spirit of the act.’ [Citation.]” (People v. Pieters (1991) 52 Cal.3d 894, 899.) Moreover,
statutes must be read “ ‘with reference to the entire scheme of law of which it is part so
that the whole may be harmonized and retain effectiveness.’ [Citation.]” (Ibid.) Finally,
“[i]t is a fundamental rule that a statute should be construed in the light of the history of
the times and the conditions which prompted its enactment,’ [citation].” (People v. Fair
(1967) 254 Cal.App.2d 890, 893.)
Given the importance of the oversight boards in fostering the legislative goal of
redistributing property tax revenue and ensuring the reentered agreements were a product
of arm’s-length bargaining, it is clear the Legislature did not intend for “approval” by an
oversight board to be a rubber stamp. To the contrary, the Legislature vested oversight
boards with the fiduciary responsibility to carefully consider the terms of any agreement
between the sponsoring entity and the successor agency and make sure those terms are
consistent with the dissolution law. Needless to say, the oversight board here could not
exercise its fiduciary duties to the taxing entities and the holders of the obligations if it
merely authorized negotiations and never reviewed the actual terms of the agreements it
was obliged to approve.
For the first time on appeal, Sunnyvale contends sections 34180, subdivision (h)
and 34179, subdivision (c) support its position that the oversight board’s approval of
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negotiations, or as Sunnyvale characterizes it, approval of “actions,” satisfies its fiduciary
obligations under section 34178. Section 34180 identifies “[a]ll of the following
successor agency actions” that must be first approved by the oversight board and
subdivision (h) includes “[a] request by the successor agency to enter into an agreement
with the city, county, or city and county that formed the redevelopment agency that it is
succeeding.” Sunnyvale tortures the letter and the spirit of the section. We disagree that
the Legislature’s utilization of the broad term “actions” as a prologue to a list of a wide-
ranging activity by the successor agency, thereby excuses the agency of the obligation to
scrutinize the terms of the actual agreement.
Section 34179, subdivision (c) authorizes an oversight board to “direct the staff of
the successor agency to perform work in furtherance of the oversight board’s duties and
responsibilities under this part.” The statute is unremarkable in providing an oversight
board with staffing to fulfill its mandate. But there is nothing in the language of the
statute allowing an oversight board to delegate its authority to approve agreements and,
indeed, such a delegation to the staff of a successor agency would undermine the very
purpose for establishing an oversight board.
Sunnyvale raises a number of arguments we need not address. It contends there
were only minor differences between the preexisting agreement executed by RDA and
the city and the ultimate amended and restated reimbursement agreement. It insists the
oversight board did not breach its fiduciary duties because the Santa Clara Auditor-
Controller took an active role in redrafting the agreement, approved the amended
agreement incorporating the controller’s changes, approved the ROPS schedule
identifying the 1998 Certificates of Participation, and informed the Department the
obligation was payable. Finally, Sunnyvale emphasizes the oversight board was
approving reentry into an existing agreement. It was thus familiar with the terms of the
existing 1998 Certificates of Participation and did not abdicate all responsibility with
regard to the agreement Sunnyvale sought to reenter. None of these arguments affect our
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de novo review of the meaning of the statutes before us and, more to the point, elucidate
the Legislative intent in requiring oversight board approval of reentered agreements.2
Sunnyvale does raise one final argument that bears mentioning. Sunnyvale asserts
that oversight board approval of the ROPS in essence was approval of the amended and
restated reimbursement agreement. If, as phrased this way, the question presented is a
question of fact—whether there was oversight board approval, there is ample evidence to
support the trial court’s finding the oversight board did not approve an agreement on
April 9, 2012, that did not exist and the obligation did not appear on the ROPS until
months later. But we continue to believe the question is one of law, not fact. Simply put,
the statute calls for the oversight board to approve the agreement, not the amount of the
obligation because, as we discussed at length above, the role of the taxing entities and
other independent voices on the oversight board is crucial to achieving the goal of the
dissolution law to redistribute property tax revenue more equitably, except in the rare
instances it remains in the taxing entities best interest to recognize and reenter former
agreements.
III
Does Section 34171 obliterate Section 34178?
Section 34171, subdivision (d)(2) excludes agreements between the city, county,
or city and county that created the former redevelopment agency and the former
redevelopment agency from the definition of enforceable obligations, but section 34171,
2 While Sunnyvale argues how similar the amended and restated reimbursement
agreement was to the original, the Santa Clara Auditor-Controller insists that the various
drafts of the amended agreement were substantially different. The controversy highlights
the very need for oversight board review. It should be up to the board, not us, to examine
the minutia of the agreements and determine the significance of any differences. The
Legislature wisely assigned this task to the oversight boards, which have a fiduciary
obligation to review all the terms and conditions before they approve an agreement
between a sponsoring entity and a successor agency.
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subdivision (d)(1)(E) includes “[a]ny legally binding and enforceable agreement or
contract that is not otherwise void as violating the debt limit or public policy” as
enforceable obligations. Sunnyvale contends that the amended and restated
reimbursement agreement qualifies as a subdivision (d)(1)(E) legally binding and
enforceable agreement and it does not violate the debt limit or public policy. As a result,
in Sunnyvale’s view, the agreement qualifies as an enforceable obligation under the
subdivision (d)(1)(E) alternative, even if the agreement was not approved by the
oversight board as required by section 34178. If we were to ignore prominent rules of
statutory construction, as we would need to do to accept Sunnyvale’s argument, we
would obliterate section 34178 for all practical purposes and allow successor agencies to
evade their statutory responsibility to obtain approval from their oversight boards to
reenter agreements formerly executed by the sponsoring and successor agencies.
To name but the most obvious of the applicable rules of statutory construction,
“ ‘Courts should give meaning to every word of a statute if possible.’ ” (Reno v. Baird
(1998) 18 Cal.4th 640, 658.) In other words, various parts of a law must be harmonized
to render each of the sections operable and to avoid an implied repeal. Most apt in these
circumstances, a specific, special provision prevails over a general one, the former to be
treated as an exception to the general provision. (Medical Board v. Superior Court
(2001) 88 Cal.App.4th 1001, 1005.)
Sections 34178 and 34171, subdivision (d)(1)(E) are easily harmonized by treating
section 34178 as a special exception to the general definition of enforceable obligation
and by giving meaning to each word in both statutes. Section 34171, subdivision
(d)(1)(E) states the general rule that legally binding contracts existing at the time the
redevelopment agencies were dissolved become enforceable obligations of the successor
agency. But that general rule is limited by the special circumstance recognized in section
34178 and 34171, subdivision (d)(2)—those preexisting agreements between the
sponsoring entity and successive agency. As to those dangerous deals, former section
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34178 required approval by the oversight board. Thus, both statutes can, and should, be
harmonized.
But Sunnyvale, relying on a footnote immersed in an analysis of retroactivity,
insists that in City of Emeryville we made the expansive proclamation that reentered
agreements are enforceable obligations either pursuant to section 34178 or section
34171, subdivision (d)(1)(E). We disagree. First, the issue posed by Sunnyvale was not
before us in City of Emeryville and cases do not provide authority for issues that are not
presented and decided. We simply did not consider whether applying the definition of an
enforceable obligation under section 34171, subdivision (d)(1)(E) would nullify the
approval requirement set forth in section 34178. Second, in the footnote cited, we were
merely describing our befuddlement over the Department’s reliance on a statute to
support its argument the statute was retroactive. In that context, we observed that the
dissolution law contained an expansive definition of enforceable obligations. We did not
opine, in this footnote involving retroactivity, how the two sections might collide and
how any potential conflict between our construction of the two could be reconciled.
Sunnyvale betrays a level of desperation in attempting to catapult an irrelevant footnote
into persuasive authority for an unrelated and important proposition of law.
IV
Leftovers
Sunnyvale submitted a declaration of a single member of the oversight board with
its reply brief in the trial court. It argues the trial court abused its discretion by sustaining
the respondents’ evidentiary objections to most of the declaration. On appeal, it fails to
present a cogent argument or a single case citation to demonstrate an abuse of discretion.
On the record before us, we can find no abuse of discretion.
The board member declares that the oversight board did not contemplate any
further action on the reentered amended and restated agreement after it authorized the
successor agency to reenter into the agreement and that it was not the practice of the
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oversight board to review and approve the exact language of agreements oversight boards
authorize and approve. “[T]he views of individual legislators, staffers, or other interested
persons” are not relevant for ascertaining the intent of a governmental body “ ‘as a
whole.’ ” (People v. Patterson (1999) 72 Cal.App.4th 438, 443.) Moreover, because we
reject Sunnyvale’s dilution of the meaning of approval, exclusion of the board member’s
declaration was not prejudicial even if it was misguided. A single board member’s
expectation as to whether or not the final draft of the agreement would be presented to the
full board would have been irrelevant to resolution of the question what approval means
under the statute as a matter of law.
Finally, Sunnyvale maintains that the oversight board approved the reentered
agreement at an open meeting in full compliance with the Ralph M. Brown Act. The
Ralph M. Brown Act is a non-issue in this appeal. The trial court did not rule there was a
violation of the Ralph M. Brown Act and we need not address it here. The sole
dispositive issue is whether former section 34178 allowed the oversight board to approve
an agreement that otherwise would not qualify as an enforceable obligation by
authorizing respondents to negotiate its terms without reviewing and approving the actual
terms of the agreement. For all the reasons discussed herein, we conclude it did not. The
Ralph M. Brown Act is simply not an issue.
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DISPOSITION
The judgment is affirmed. Respondents shall recover costs on appeal. (Cal. Rules
of Court, rule 8.278(a)(1) & (2).)
/s/
RAYE, P. J.
We concur:
/s/
ROBIE, J.
/s/
MURRAY, J.
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