California Redevelopment Ass'n v. Matosantos
212 Cal. App. 4th 1457
| Cal. Ct. App. | 2013Background
- Legislation AB 4X 26 (2009) required redevelopment agencies to transfer portions of property tax increment to SERAFs for 2009-2010 and 2010-2011 to fund K-12 education within redevelopment areas, but this did not increase overall education funding and redirected funds to the state General Fund.
- In CRA v. Matosantos I, the trial court invalidated AB 1389 transfers of tax increment to ERAFs as unconstitutional under article XVI, section 16; this led to related consolidated actions challenging AB 4X 26.
- AB 4X 26 added sections 33690-33691 and defined redevelopment to include SERAF payments; it directed transfers while allowing other funding sources and prioritizing existing indebtedness.
- Propositions 1A and 22 later constrained tax allocation; Matosantos upheld the Legislature’s power to dissolve redevelopment agencies and to reallocate tax increment, while Prop. 22 supplemented protections for redevelopment funding in later contexts.
- The Courts of Appeal held AB 4X 26 constitutional under article XVI, section 16, and that Prop. 1A does not bar the transfers to SERAFs for redevelopment purposes; it reversed an attorney fees award related to CRA v. Matosantos I and affirmed the other judgments.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Constitutionality of AB 4X 26 under article XVI, section 16 | CRA argues it violates §16 by diverting tax increment | State contends AB 4X 26 is within legislative power to limit funding | AB 4X 26 valid under §16 |
| Proposition 1A applicability to AB 4X 26 | CRA argues 1A prohibits such reallocations | Prop. 1A does not apply to redevelopment agencies | Prop. 1A did not prohibit the transfers |
| Impairment of contract and takings claims | CRA asserts impairment of bondholders’ liens and takings | Legislation not impairing contracts or taking property | No impairment or taking established |
| Attorney fees under CCP 1021.5 or 1988 | CRA seeks fees for public-interest litigation | Fee award disproportionate to stake; no Federal basis | No fee entitlement; fee award reversed |
| Mootness due to dissolution of redevelopment agencies | Transfers moot because agencies dissolved | Not moot; successor agencies may benefit from relief | Not moot; relief could affect successor agencies |
Key Cases Cited
- California Redevelopment Assn. v. Matosantos, 53 Cal.4th 231 (Cal. 2011) (upheld dissolution of redevelopment agencies and legislative power to reallocate tax increment)
- Marek v. Napa Community Redevelopment Agency, 46 Cal.3d 1070 (Cal. 1988) (special fund concept; redevelopment indebtedness)
- Serrano v. Priest, 5 Cal.3d 584 (Cal. 1971) (federal/state funding limits; equal protection in education funding)
- Serrano v. Priest, 18 Cal.3d 728 (Cal. 1976) (subsequent Serrano decision on funding)
- White v. State, 88 Cal.App.4th 298 (Cal. Ct. App. 2001) (reallocation of Orange County funds; home-rule considerations)
- Sutter Basin Corp. v. Brown, 40 Cal.2d 235 (Cal. 1953) (contractual impairment principles in changing laws)
- May v. Board of Directors, 34 Cal.2d 125 (Cal. 1949) (contract rights and statutory changes)