City of Brentwood v. Campbell
237 Cal. App. 4th 488
| Cal. Ct. App. | 2015Background
- Brentwood, as both city and successor agency to its former redevelopment agency, received ~ $15.5 million in cash (plus bond proceeds) from the redevelopment agency under five public improvement agreements (PIAs) executed in Feb–Mar 2011 to fund downtown projects.
- The Great Dissolution (2011, amended 2012) abolished redevelopment agencies, defined which obligations were "enforceable," and excluded sponsor agreements executed after Jan 1, 2011 from being enforceable obligations; successor agencies were required to audit post‑Jan 1, 2011 transfers (§ 34179.5) and remit improper transfers to taxing entities.
- Brentwood’s auditor and oversight board concluded the PIAs were enforceable obligations and included payments in ROPS filings; the Department of Finance rejected that conclusion, finding the PIAs were excluded sponsor agreements and disapproved items on ROPS IV.
- Brentwood filed a writ petition challenging the Department’s audit determination and ROPS disapprovals, arguing (1) retroactive invalidation violated Cal. Const. art. XIII, § 25.5; (2) the statute’s "transfer"/"payment for goods or services" exception covers reimbursements to sponsors; (3) third‑party contractors’ contract rights were impaired; and (4) the Department should be estopped from reversing prior ROPS approvals.
- The trial court denied relief; the Court of Appeal affirmed, holding the Legislature could retroactively invalidate sponsor agreements in this dissolution context, the goods‑or‑services exception did not cover reimbursements to sponsors, Brentwood lacked standing to assert third‑party beneficiary rights, and estoppel did not apply.
Issues
| Issue | Plaintiff's Argument (Brentwood) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| 1) Constitutionality of retroactive invalidation of sponsor agreements under art. XIII, § 25.5 | Matosantos protects tax‑increment allocations during operation; retroactive abrogation of post‑Jan‑2011 sponsor agreements unlawfully redirected tax increment | Legislature may abolish agencies and retroactively abrogate sponsor agreements as part of dissolution policy to prevent post‑announcement transfers | Affirmed: Retroactive abrogation is constitutional in the dissolution context; Matosantos does not forbid this remedial retroactivity |
| 2) Statutory interpretation: whether § 34179.5’s exclusion for transfers “in payment for goods or services” covers reimbursements paid to sponsor (Brentwood) for third‑party work | The statutory exception should broadly include reimbursements made pursuant to valid redevelopment agreements; legislative history supports protecting bona fide payments for goods/services | The statute’s plain language excludes only transfers that are direct payment for goods/services received by the payee; reimbursements to sponsors are not payments for goods or services to the sponsor and thus are recoverable | Affirmed: Exception does not apply — reimbursements to sponsor for third‑party work are "transfers" subject to audit and recovery |
| 3) Third‑party beneficiary contract‑impairment claim (contractors) | PIAs were drafted to benefit contractors who relied on sponsor funding; disapproval impairs contractors’ contractual rights | Brentwood lacks standing to assert contractors’ rights; no evidence of intent to create third‑party beneficiaries or of contractor reliance/impairment | Affirmed: Brentwood lacks standing to assert third‑party beneficiaries’ rights; court declines to reach merits absent third‑party suit |
| 4) Equitable estoppel based on prior ROPS approvals | Department’s previous non‑objection to earlier ROPS approvals induced reliance; reversal is estopped | Department expressly reserved right to revisit prior ROPS; statutory remedy (final and conclusive determination) existed; reliance was not reasonable | Affirmed: Estoppel fails — reliance was unreasonable and statutory remedies/department reservations defeat estoppel |
Key Cases Cited
- California Redevelopment Assn. v. Matosantos, 53 Cal.4th 231 (2011) (upheld Legislature’s power to abolish redevelopment agencies; distinguished freeze vs. dissolution; limited constitutional constraints on dissolution authority)
- City of Pasadena v. Cohen, 228 Cal.App.4th 1461 (2014) (discussed post‑dissolution review and ROPS process)
- DeVore v. Department of California Highway Patrol, 221 Cal.App.4th 454 (2013) (interpretive principle about scope of judicial holdings and factual context)
- County of Sonoma v. Cohen, 235 Cal.App.4th 42 (2015) (agency interpretation entitled to "weak deference"; statutory construction principles)
- Mallon v. City of Long Beach, 44 Cal.2d 199 (1955) (public entities have no vested contractual rights immune from legislative abrogation in this context)
- Redevelopment Agency of San Diego v. San Diego Gas & Electric Co., 111 Cal.App.4th 912 (2003) (real party in interest and real‑party‑in‑interest/standing principles for contract/third‑party beneficiary claims)
- Steinberg v. Chiang, 223 Cal.App.4th 338 (2014) (ripeness considerations for declaratory relief/challenges to administrative decisions)