San Diegans for Open Government v. City of San Diego
195 Cal. Rptr. 3d 133
Cal. Ct. App.2015Background
- In 1958 the City formed the Redevelopment Agency and in 1991 joined with its Redevelopment Agency to create the Financing Authority as a separate JPA entity.
- Legislation in 2011 dissolved redevelopment agencies; a successor agency assumed RDA assets and wound-up obligations, with the City Council serving on its governing board.
- Effective Jan. 1, 2013, a Third JPA reconstituted the Financing Authority involving the City, the Successor Agency, and the Housing Authority, each a separate public entity.
- The Third JPA states bonds are special obligations of the Financing Authority and not debts of the City, Successor Agency, or Housing Authority; funds pledged for debt service are dedicated.
- In Feb. 2014 the City adopted a lease-back financing plan under Marks-Roos Act to issue up to $130 million for public capital improvements, with the Financing Authority issuing the bonds and the City leasing back the properties.
- San Diegans for Open Government (SDOG) filed a reverse validation action challenging the financing as potentially violating debt limitations requiring a two-thirds voter approval.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rider governs the debt-limit treatment of the financing authority bonds. | SDOG argues Rider controls; the Financing Authority is not distinct from the City and thus triggers two-thirds vote. | City contends the Financing Authority is a genuine separate entity; Rider applies and excuses the City from two-thirds vote. | Rider applies; authority separate from City; two-thirds vote not required for the 2014A Bonds. |
| Subject matter jurisdiction and service requirements in the reverse validation action. | SDOG argues service on Attorney General/Treasurer was timely and proper, preserving jurisdiction. | City argues noncompliance with §6599(a) requires dismissal; strict timeliness is jurisdictional. | The court had discretion to excuse slight non-strict timing; jurisdiction valid because proper service occurred and no prejudice shown. |
| Whether the Third JPA and Financing Authority have legitimate separate existence for debt purposes. | SDOG contends governance overlap shows alter ego/control; debts should be attributed to City. | Rider and statutory framework authorize separate legal existence; bonds are not City debts. | Third JPA Financing Authority has genuine separate existence; bonds are not City debts. |
| Public necessity and applicability of section 90(a) to financing through the Authority. | Section 90(a) requires two-thirds vote for city-bonded indebtedness; would apply to the Authority's use of bonds if treated as City debt. | Section 90(a) does not apply to financing by the Authority; the debt funded by bonds is not City debt. | Section 90(a) does not apply to the Financing Authority’s bonds in this structure. |
Key Cases Cited
- City of San Diego v. Rider, 47 Cal.App.4th 1473 (Cal. App. 4th Dist. 1996) (two-thirds vote not required where financing authority has independent existence)
- Offner, 19 Cal.2d 483 (Cal. 1942) (lease-back arrangements may avoid debt limitation if contingent and yearly payments align with use)
- Dean v. Kuchel, 35 Cal.2d 444 (Cal. 1950) (broadens Offner approach to financing arrangements)
- Vanoni v. County of Sonoma, 40 Cal.App.3d 743 (Cal. App. 1974) (separate legal entity status protects from county indebtedness)
- City of Cerritos v. Cerritos Taxpayers Assn., 183 Cal.App.4th 1417 (Cal. App. 4th Dist. 2010) (endorses respecting separate entity status under Rider framework)
- California Statewide Communities Development Authority v. All Persons Interested, etc., 40 Cal.4th 788 (Cal. 2007) (broad authority of JPAs to issue tax-exempt revenue bonds for member projects)
- Tucker Land Co. v. State of California, 94 Cal.App.4th 1191 (Cal. App. 2001) (joint powers agreements allowed; no improper alter ego liability)
- Starr v. City and County of San Francisco, 72 Cal.App.3d 164 (Cal. App. 1977) (consideration in off-site improvements discussed for bond use)
- City of Los Angeles v. Offner, 309 P.2d 1 (Cal. App. 1942) (early articulation of Offner-type lease arrangements and debt limitations)