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Another Legal Win For Redevelopment Agencies

William Fulton on
Mar 15, 2015

The Third District Court of Appeal has ruled that two "re-entry agreements" between Sonoma County and its former redevelopment agency are valid under the redevelopment wind-down law. The case marks the second time this year that the Third District has upheld re-entry agreements, suggesting that local governments are beginning to get the upper hand against the state Department of Finance in post-redevelopment litigation.

The case involves the county's desire to retain $14 million in tax-increment funds for two projects: street and sidewalk upgrades on Highway 12 north of Sonoma, and a mixed-use project on the site of an abandoned shopping center in the Roseland neighborhood of Santa Rosa. 

As with the other recent case from Emeryville, the case turned in part on whether AB 1484, a 2012 law which eliminated re-entry agreements, should somehow be used to invalidate reentry agreements made before the law took effect. In addition, DOF made a series of narrow legal arguments that the Third District did not buy.

Acting as successor agency, Sonoma County received permission in March 2012 from its oversight board to move forward with the two projects via "re-entry" agreements. The county then included the two projects in the successor agency's Recognized Obligation Payment Schedule, or ROPS, for the periods of March-June 2012, July-December 2012, and January-June 2013. After DOF disallowed the two projects for the third time, Sonoma County sued.

In disallowing the two projects from the January-June 2013 ROPS, DOF argued that, although oversights could approve a reentry agreement, a particular interpretation of the AB 1x 26 – referred to by the appellate court as the "Great Dissolution" law – did not permit reentry agreements between a successor agency and its equivalent former redevelopment agency. 

On appeal, DOF argued that the express prohibition on reentry agreements contained in AB 1484 (which took effect in June 2012) suggested that such agreements were contrary to the legislative intent of AB 1x 26 (which took effect in February 2012) and therefore the agreements should be invalidated. 

Writing for the Third District panel, Justice M. Kathleen Butz wrote: "This type of ‘legislative spirit' interpretation is not well taken."

She added: "The 2011 version of (Health & Safety Code) 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." 

The Third District also rejected a series of narrower issues, including:

-- DOF's argument that the oversight board could not approve Sonoma County actions that were not authorized for oversight boards.

-- The fact that Health & Safety Code Section 34171 as amended by AB 1x 26 did not include reentry agreements in the definition of enforceable obligations or that Sections 34178 and 34180 did not include language saying that they be used "notwithstanding" the language in 34171. One deals with oversight boards; the others with successor agencies.

-- As in the Emeryville case, DOF's argument that AB 1484 should be applied retroactively.

In concurring and dissenting opinion, Justice Louis Mauro made a technical distinction about the nature of the obligations upheld in both cases. He wrote: "To the extent the majority opinion in this case and the opinion in City of Emeryville suggest that reentered agreements must be continuing obligations rather than new obligations, I disagree. The reentered agreements in this case are new obligations because the original agreements between the redevelopment agency and the County of Sonoma were invalidated by law."

The Case: 

 County of Sonoma v. Cohen, No. C075120

The Lawyers:

For State of California (Michael Cohen, DOF Director), defendant-appellant: Deputy Attorneys General Mark Beckington ([email protected]) and George Waters ([email protected])

For County of Sonoma, plaintiff-respondent: Juliet E. Cox, Goldfarb & Lipman ([email protected]) and Steven S. Shupe, Deputy County Counsel ([email protected])

 

 

 

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