City of Cerritos v. State of California
239 Cal. App. 4th 1020
| Cal. Ct. App. | 2015Background
- In 2011 the Legislature enacted Assembly Bill 1X 26 (and 1X 27) to address a declared fiscal emergency by dissolving nearly 400 redevelopment agencies (RDAs) and reallocating their tax-increment resources; the Supreme Court later upheld ABx1 26 and struck down ABx1 27 in California Redevelopment Assn. v. Matosantos (Matosantos I).
- ABx1 26 (and subsequent clarifying AB 1484) imposed a freeze on RDA activity, dissolved RDAs effective Feb 1, 2012, created successor agencies and oversight boards, and established Redevelopment Property Tax Trust Funds with a waterfall for distributions (auditor costs, passthroughs, enforceable obligations, successor admin, then pro rata local distributions).
- Plaintiffs (cities, successor agencies, a housing corp., and a taxpayer) sought a preliminary injunction alleging multiple constitutional violations of ABx1 26 (Prop 1A/Art XIII §25.5(a)(3); single-subject; home-rule; Prop 25/budget rules; presentation timing; and others). The trial court denied the injunction; plaintiffs appealed.
- The State argued the appeal was moot because RDAs already were dissolved; the court concluded the appeal is not moot because meaningful prospective relief or statutory reformation could still be afforded.
- The appellate court reviewed the denial of the preliminary injunction de novo as the trial court focused on likelihood of success, and ultimately affirmed, rejecting plaintiffs’ constitutional challenges and remanding for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness of appeal | Dissolution of RDAs moots challenge because harm is total and irreversible | Matter not moot: dissolution is ongoing wind-down and court can provide prospective relief or reform statutes | Not moot; appeal may yield effective relief and was adjudicated on merits |
| Proposition 1A (Art XIII §25.5(a)(3)) — pro rata shares | ABx1 26 reallocated former RDA increment as general ad valorem taxes and thereby changed local agencies’ pro rata shares without 2/3 vote | ABx1 26 preserves local agencies’ pro rata percentages; successor agencies and trust fund mechanism handle former increment and obligations first | No violation; ABx1 26 did not change pro rata shares of local agencies and thus complied with Prop 1A |
| Home-rule (Art XI §5) | ABx1 26 intrudes on municipal affairs (not raised below) | Argument forfeited; not litigated in trial court | Forfeited; appellate court declined to consider it |
| Presentation timing / Article IV §12(c)(4) (pre-budget appropriations) | Sending ABx1 26 to Governor before budget passed violated prohibition on sending appropriation bills pre-budget | Governor declared fiscal emergency and recommended dissolution; ABx1 26 was an emergency bill recommended by Governor | No violation; ABx1 26 fell within exception for emergency bills recommended by the Governor |
| Single-subject rule (Art IV §9) | ABx1 26 combined unrelated items (appropriation + substantive redevelopment changes) in one bill | Provisions are germane and functionally related to dissolution/wind-down and budget-related objectives | No violation; bill’s title and provisions are reasonably germane to a single, narrow subject (redevelopment/budget) |
| Proposition 25 / Article IV §12(e) — majority approval for budget-related bills | ABx1 26 has multi-year effects and substantive law changes so it is not a bill “related to the budget” and cannot be passed by simple majority | Prop 25 permits majority passage of bills identified as related to the budget in the budget bill; ABx1 26 was so identified and its appropriation was budget-related | No violation; ABx1 26 qualified as a budget-related trailer bill and could be enacted by majority vote |
| Scope of Governor’s emergency proclamation (Art IV §10(f) / §3(b)) | Legislature exceeded the governor’s special-session subject by enacting multi-year structural changes | Governor invoked fiscal emergency under Art. IV §10(f); dissolution directly advanced the proclaimed fiscal purpose | No violation; statute was within the scope of the fiscal-emergency proclamation |
Key Cases Cited
- California Redevelopment Assn. v. Matosantos, 53 Cal.4th 231 (Cal. 2011) (upheld ABx1 26; foundational ruling on RDA dissolution)
- California Redevelopment Assn. v. Matosantos, 212 Cal.App.4th 1457 (Cal. Ct. App. 2013) (post-Matosantos appellate decision addressing related issues)
- Auto Equity Sales, Inc. v. Superior Court, 57 Cal.2d 450 (Cal. 1962) (principle that lower courts are bound by Supreme Court precedent)
- Deukmejian v. Brown (Harbor etc.), 43 Cal.3d 1078 (Cal. 1987) (single-subject rule analysis and limits on omnibus fiscal measures)
- Kopp v. Fair Political Practices Com., 11 Cal.4th 607 (Cal. 1995) (statutory reformation doctrine to preserve statute against constitutional invalidation)
- Dyna-Med, Inc. v. Fair Employment & Housing Com., 43 Cal.3d 1379 (Cal. 1987) (statutes must be construed in context and harmonized)
- People v. Davenport, 41 Cal.3d 247 (Cal. 1986) (canon favoring constitutional construction when statute reasonably susceptible to it)