City of Azusa v. Cohen
238 Cal. App. 4th 619
| Cal. Ct. App. | 2015Background
- Redevelopment agencies were dissolved under 2011 California legislation; the City of Azusa, its Utility, and the RDA successor agency challenge Department of Finance’s rejection of loans as enforceable obligations.
- Six loans from the Utility to the RDA totaled nearly $8 million; by 2012, loans remained unpaid with over $10 million due.
- The Department rejected treating the Utility loans as enforceable obligations under the dissolution law, citing section 34171(d)(2).
- The dissolution law reallocates RDA assets and imposes restrictions on enforceable obligations; assets are transferred to successor agencies for administration.
- The trial court found no ratepayer money was diverted and that the loans became RDA assets subject to dissolution; City appeals.
- The proceeding seeks mandamus relief to compel recognition of the loans as enforceable obligations of the City as successor agency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether RDA assets remained ratepayer assets after the loans | City: loans preserved ratepayer assets despite dissolution | Department: assets became RDA assets and subject to dissolution | Affirmed: loans became RDA assets and not ratepayer assets on dissolution. |
| Whether Department's action diverts special funds | City claims funds diverted to unrelated purpose | Department did not divert funds; transfers governed by dissolution law | Affirmed: no diversion of ratepayer funds occurred. |
| Whether dissolution law increases taxes | Loans will require higher rates/taxes | Dissolution law does not set rates; utility sets rates | Affirmed: no tax increase triggered by dissolution law. |
| Whether Department's actions constitute an unlawful gift of public funds | City claims unconstitutional gift via ratepayer funds | Funds reallocated as RDA assets; no improper gift | Affirmed: no improper gift under constitutional limits. |
| Whether there is an unlawful taking of private property | Ratepayers claim taking via reallocation | No private taking; funds are public assets redistributed | Affirmed: no taking of private property. |
Key Cases Cited
- City of Pasadena v. Cohen, 228 Cal.App.4th 1461 (Cal. Ct. App. 2014) (discusses Great Dissolution of redevelopment agencies)
- Matosantos, 53 Cal.4th 231 (Cal. 2011) (legislature dissolution and windup authority; enforceable obligations)
- Emeryville, 233 Cal.App.4th 293 (Cal. Ct. App. 2015) (overviews dissolution effects on redevelopment)
- Sanchez v. City of Modesto, 145 Cal.App.4th 660 (Cal. Ct. App. 2006) (standing and taxpayer rights in municipal challenges)
- Edgemont Community Service Dist. v. City of Moreno Valley, 36 Cal.App.4th 1157 (Cal. Ct. App. 1995) (loans as budgetary components; public funds)