City of Grass Valley v. Cohen
C078981
| Cal. Ct. App. | Nov 20, 2017Background
- In 2011–2012 California enacted statutes dissolving redevelopment agencies (RDAs), created a process to identify "enforceable obligations," and required a due diligence review (DDR) to claw back certain transfers made between Jan 1, 2011 and June 30, 2012.
- City of Grass Valley (successor agency) had pre-dissolution agreements between the City and its RDA: a 1986 "umbrella" Cooperation Agreement, and two January 17, 2011 agreements — an Omnibus Agreement (payments ≈ $307,161 by 1/31/2012) and a Dorsey highway-project Agreement (payments ≈ $695,000 by 1/31/2012).
- The Department of Finance disallowed these as enforceable obligations under section 34171(d)(2) (agreements between an RDA and its creator generally not enforceable) and ordered clawbacks; the City paid under protest and sought writ relief.
- Postjudgment, 2015 legislation (part of Senate Bill No. 107) amended section 34171(d)(2) to create a limited exception: agreements entered before June 28, 2011 that relate to state highway infrastructure improvements per § 33445 may be enforceable.
- The trial court granted partial relief: it ordered the Department to reconsider whether Omnibus Agreement transfers were for “goods and services” (DDR §34179.5(b)(3)), and remanded to consider the Dorsey highway-project claim; Department cross-appealed the goods-and-services writ as unexhausted administratively.
Issues
| Issue | Plaintiff's Argument (City) | Defendant's Argument (Department) | Held |
|---|---|---|---|
| Whether the Department must reconsider if Omnibus Agreement transfers were "goods and services" under §34179.5(b)(3) | City: raised issue in court; asks remand for Department to consider goods/services classification | Dept.: City failed to raise goods/services in the required meet-and-confer; administrative exhaustion required, so court should not order agency to consider it | Court: City failed to exhaust; remand order on goods/services was erroneous — vacated and writ recalled for that claim |
| Whether 2015 amendment (SB107) making pre‑6/28/2011 highway agreements enforceable applies to Dorsey Agreement and entitles City to relief | City: new statutory definition should be applied (retrospectively) so Dorsey is enforceable | Dept.: either statute is not retroactive or, if it is, Dept. should decide enforceability first via administrative review | Court: statute is properly read to apply retrospectively here, but Dept. gets first opportunity — trial court must direct Dept. to consider Dorsey under new definition |
| Whether 1986 umbrella Cooperation Agreement converted later 2011 payments/loans into enforceable obligations | City: 1986 agreement authorized advances/repayments and thus supports enforceability / loan characterization | Dept.: 1986 agreement is an umbrella, not a definite loan (no amounts/terms) so it does not create enforceable loan obligations | Court: 1986 agreement is not a loan; trial court correctly found it only marginally relevant and not an enforceable obligation basis |
| Whether prior validation judgments or constitutional limits (Prop 22; contract‑clause) bar clawbacks or application of dissolution law | City: validation judgments declared 2011 agreements valid; Prop 22 and contract clause protect transfers/rights | Dept.: validation judgments did not adjudicate postdissolution enforceability; Prop 22 and contract‑clause arguments do not preclude dissolution statutes and clawback mechanism | Court: validation judgments irrelevant to DDR/enforceability; Prop 22 and contract‑clause challenges rejected under controlling precedent; no relief on these grounds |
Key Cases Cited
- California Redevelopment Assn. v. Matosantos, 53 Cal.4th 231 (Cal. 2011) (upheld RDA dissolution scheme and addressed scope/effect of dissolution statutes)
- City of Brentwood v. Campbell, 237 Cal.App.4th 488 (Cal. Ct. App.) (interpreting DDR/clawback regime and retroactivity of dissolution provisions)
- NBS Imaging Sys., Inc. v. State Bd. of Control, 60 Cal.App.4th 328 (Cal. Ct. App.) (failure to raise issues administratively precludes court from ordering agency to consider them)
- City of San Jose v. Sharma, 5 Cal.App.5th 123 (Cal. Ct. App.) (postjudgment statutory changes and remand to agency for first‑instance decisions)
- City of Bellflower v. Cohen, 245 Cal.App.4th 438 (Cal. Ct. App.) (narrow holding that withholding local tax revenues as administrative remedy violated constitutional limits)