Lead Opinion
Aрpellants are community redevelopment agencies “empowered to prepare and effectuate a redevelopment plan for the elimination of blighted areas in the community.” (Marek v. Napa Community Redevelopment Agency (1988)
Appellants submitted SOI’s to the County of Los Angeles (County), and some time later, after realizing that the SOI’s were erroneous, submitted revised SOI’s which showed that they were entitled to additional funds. The County refused to accept the revised SOI’s or to remit additional funds, writing that under section 33675 it had no discretion to accept an amended SOL The two agencies filed a petition for writ of mandate, seeking an order that the County accept their revised SOI’s and pay the additional sums for the year in question. The trial court denied the petition. We reverse.
The Statutory Scheme
The Community Redevelopment Law (CRL) “provides for the formation of redevelopment agencies to help eradicate blight.” (Community Development Com. v. County of Ventura (2007)
Taxes which are not attributable to the increase in property values, but which are instead attributable to a pre-redevelopment “base year value,” are distributed as they would have been had a redevelopment plan not been adopted. (Redevelopment Agency v. County of San Bernardino (1978)
Importantly, an agency is entitled to the increment only in the amount of its indebtedness, less available revenue. (§ 33675, subd. (g).) Any tax increment in excess of that amount is distributed as base year taxes are distributed. (§ 33670, subd. (b).)
The amount of tax increment to which an agency is entitled each year is calculated through an annual SOL Under section 33675 “(b) Not later than October 1 of each year, for each redevelopment project for which the redevelopment plan provides for the division of taxes pursuant to Section 33670, the agency shall file, with the county auditor or officer described in subdivision (a), a statement of indebtedness and a reconciliation statement certified by the chief financial officer of the agency.” The statute specifies the information about debt and revenue which must be included in the SOI.
In September 2006, appellant Glendale Redevelopment Agency (the Glendale Agency) submitted a fiscal year 2006-2007 SOI for its San Fernаndo Road Corridor Redevelopment Project Area. This SOI showed $11,645,880 of indebtedness and $7,069,024 in available revenue. The County distributes property taxes over 10 months, beginning in November, and based on the SOI, it distributed $4,576,856 to the Glendale agency. This was $2.2 million less than the total tax increment created by the redevelopment project. That tax increment was distributed to other agencies, including the County’s general fund.
However, in May 2007, the Glendale Agency realized that its SOI had omitted debt associated with a 2000 owner participation and development agreement (OPA) between the Agency and the Walt Disney Company. The CRL provides that a redevelopment agency may pledge its tax increment to fund expenses related to a certain project and that such a pledge “shall have priority over any other claim to those taxes not secured by a prior express pledge of those taxes.” (§ 33671.5.) Pursuant to this statute, the Glendale Agency had pledged 75 percent of the tax increment attributable to the OPA. The County knew of this indebtedness and the pledge, having entered into an agreement with the Glendale Agency and the City of Glendale, under which the County agreed to pass back to the Glendale Agency a portion of the County’s share of tax increment. On May 24, 2007, the Glendale Agency submitted a revised 2006-2007 SOI to the County, reflecting the Disney OPA.
The revised SOI for appellant Redevelopment Agency of the City of Compton (the Compton Agency) concerns fiscal year 2005-2006. The Compton Agency’s SOI for that year both overstated revenue and understated debt. Pursuant to this SOI, Compton was allocated $13,351,015 in tax increment payments, leaving $4.3 million in tax increment. That sum was distributed to other entities. The Compton Agency submitted its revised 2005-2006 SOI on January 16, 2007, showing that it was entitled to the entire tax increment for 2005-2006.
With their petitions, appellants produced evidence that it was not unusual for the County to make adjustments to correct accounting discrepancies or to correct miscodings. For example, in 2004, the County acknowledged that over a period of three years, the County had paid approximately $293,000 of the Azusa Redevelopment Agency’s tax increment to the Los Angeles County Fire Protection District, and agreed to reallocate funds so that the agency received all the increment which was due to it.
Discussion
The parties agree, correctly, that the issue is statutory interpretation and оur review is de novo. (Redevelopment Agency v. County of Los Angeles (1999)
Appellants contend that section 33675 is silent on the question of revised SOI’s, and is ambiguous. They ask us to construe the statute in light of the CRL as a whole, and argue that the statute does not prohibit the County from accepting, and acting on, a revised SOI, and that the County has a duty to distribute the additional tax increment. They cite the statutory and constitutional requirement that tax increment which reflects revenues and debt “shall” be distributed to the redevelopment agency (Cal. Const., art. XVI, § 16; §§ 33670, subd. (b), 33675, subd. (a)) and point out that under the County’s reading of the statute, that revenue is instead given to entities which have no statutory or constitutional entitlement to it. They also point out that the entire statutory and constitutional scheme for community redevelopment depends on a market for redevelopment agencies’ debt, and argue that if an error in a SOI cannot be corrected, and tax increment may be distributed to other agencies, the stability of that market is threatened.
The County sees no ambiguity, and argues that with section 33675, the Legislature limited the time within which an agency can claim a given year’s tax increment. The County further argues that the Legislature was empowered to enact such a limit, citing California Constitution, article XVI, section 16, which provides, inter alia, that “[t]he Legislature may provide that any redevelopment plan may contain a provision” for the tax increment financing and that “[t]he Legislature shall enact those laws as may be necessary to enforce the provisions of this section.” (Cal. Const., art. XVI, § 16.) The County sees appellants’ argument as a facial challenge to section 33675’s
We agree with appellants. Section 33675 is ambiguous. The statute does, as the County argues, provide that an agency “shall” file an SOI no later than October 1, but we cannot see that with that language, it also provided that an agency can never amend an SOI if an error is discovered. Nor do we agree with the County that anything else in section 33675 so provides.
The County’s first argument on this point concerns section 33675, subdivision (h), which provides that the SOI “constitutes prima facie evidence of the loans, advances, or indebtedness of the agency,” but that a county auditor may dispute that amount through a procedure and within the time limits set out in the statute. The County argues that the time limits require prompt review, and that the subdivision means that the October 1 SOI must be the final one, so that the challenge, if any, can commence. We see something different in subdivision (h). It does not provide that an SOI may never be revised, but instead indicates that the October SOI is not necessarily the end of the process. If an agency’s SOI may be challenged, it may also be corrected.
Section 33675, subdivision (c)(2) leads us to the same conclusion. It provides that “[t]he agency may estimate the amount of principal or interest, the interest rate, or term of any loan, advance, or indebtedness if the nature of the loan, advance, or indebtedness is such that the amount of principal or interest, the interest rate or term cannot be precisely determined.” A statute which allows estimates when precise data is not available clearly contemplates that an estimate may be corrected when the data is available.
Nor are we persuaded by the County’s reference to section 33675, subdivision (g), which provides that the County must pay the tax increment “at the same time or times as the payment of taxes into the funds of the respective taxing entities.” We see nothing in this direction to counties which places a limit on a redevelopment agency’s ability to correct an error in an SOI. This is especially true because the County makes its payments over time.
Thus, the question before us is not whether the Legislature could constitutionally limit redevelopment agencies to the tax increment justified by a single annual SOI, with no possible revision, but whether the Legislature has done so. In answering that quеstion, we turn to the well-established rules of statutory construction. “Our fundamental task in construing a statute is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute. [Citation.]” (Day v. City of Fontana (2001)
Our review of the statutory and constitutional scheme and the cases which have interpreted that law leads us to conclude that appellants are correct. Section 33675 does not prohibit the County from accepting a revised SOL To the contrary, on receipt of a revised SOI, it is required to pay redevelopment agencies all the tax increment to which they are entitled.
A county’s duty to distribute tax revenue in accord with the provisions of the CRL and the rest of the statutory scheme is mandatory. (City of Dinuba v. County of Tulare, supra, 41 Cal.4th at pp. 865-866.) California Constitution, article XVI, section 16 and Health and Safety Code section 33670 identically provide that tax increment “shall be allocated to and when collected shall be paid into a special fund of the redevelopment аgency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed or otherwise) incurred by the redevelopment agency to finance or refinance, in whole or in part, the redevelopment project.” (Cal. Const., art. XVI, § 16, subd. (b), italics added; § 33670, subd. (b), italics added.) Subdivision (a) of section 33675 is very similar: “The portion of taxes required to be allocated pursuant to subdivision (b) of Section 33670 shall be allocated and paid to the agency by the county auditor . . . .” (§ 33675, subd. (a), italics added.) It is not until “the loans, advances, and indebtedness . . . have been paid,” that “all moneys thereafter received . . . shall be paid into the funds of the respective taxing agencies as taxes on all other property are paid.” (Cal. Const., art. XVI, § 16, subd. (b); see § 33670, subd. (b).)
In this context, section 33675, subdivision (b) is a procedural provision which sets out the method through which a county is to perform its duty. It is not a limit on the county’s duty to distribute all the tax increment to which a redevelopment agency is legally entitled
In interpreting a statute, we must embrace the meaning which best effectuates the legislative purpose. (Santa Ana Unified School Dist. v. Orange County Development Agency (2001)
The issue in Marek, supra,
Marek, supra,
In Community Development Com. v. County of Ventura, supra,
As the County argues, Marek, supra,
We thus hold that nothing in section 33675 prohibits a redevelopment agency from correcting errors in an SOI by filing a revised document. Any other reading would mean that, if an agency errs in its SOI, tax increment revenues will be retained by entities which have no statutory entitlement to those revenues, to the detriment of the agency and its lenders and bondholders.
The County makes several arguments to the contrary. First, it argues that tax collection and distribution are “time sensitive,” and that a ruling in favor of the redevelopment agencies will create a burden on the County. We are not unsympathetic to the argument. A revised SOI will no doubt place a burden on the County, but “courts, however, cannot refuse to enforce the statutory duty simply because of an alleged hardship it would pose to a county.” (City of
The County also relies on lеgislative history. It sees a different legislative intent in section 33675, an intent to limit redevelopment agencies’ access to tax increment revenue. We cannot see that the legislative history of section 33675 supports the County’s theory.
As the County argues, section 33675 was significantly amended as part of a 1993 reform of the CRL, initiated by redevelopment agencies in response to calls for reform of post-Proposition 13 practices.
From the fact that the legislation limited redeveloрment agencies in some ways, we cannot conclude that the Legislature also intended to create the additional limit the County suggests.
The County also relies on Community Redevelopment Agency v. County of Los Angeles (2001)
As Community Redevelopment Agency v. County of Los Angeles, supra,
These cases hold that the Legislature may, constitutionally, charge costs against the tax increment and thus diminish an agency’s receipt of the tax increment. They do not tell us that with section 33675, subdivision (b), the Legislature has placed a different limit on the agency’s collection of its share, a “claim it or lose it” type of limit. Indeed, they suggest that the Legislature can enact an explicit limit, leading us to conclude that they have not enacted an implied one.
Disposition
Thе judgment is reversed. Appellants to recover costs on appeal.
Turner, P. J., concurred.
Notes
All further statutory references are to this code.
In pertinent part, California Constitution, article XVI, section 16, provides that “All property in a redevelopment project established under the Community Redevelopment Law . . . shall be taxed in proportion to its value as provided in Section 1 of this article, and those taxes . . . shall be levied and collected as other taxes are levied and collected by the respective taxing agencies. The Legislature may provide that any redevelopment plan may contain a provision that the taxes, if any, so levied upon the taxable property in a rеdevelopment project each year . . . after the effective date of the ordinance approving the redevelopment plan, shall be divided as follows: [][] . . . [f] (b) Except as provided in subdivision (c), that portion of the levied taxes each year in excess of that amount shall be allocated to and when collected shall be paid into a special fund of the redevelopment agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed or otherwise) incurred by the redevelopment agency to finance or refinance, in whole or in part, the redevelopment project. Unless and until the total assessed valuation of the taxable property in a
The County’s request that we take judicial notice of the reporter’s transcript of oral argument in the trial court and the trial court’s tentative decisions in this case is granted. The request by the Glendale Redevelopment Agency that we take judicial notice of the decision of a different trial court, in a different matter (California Redevelopment Assn. v. Genest) is denied. We grant that agency’s request that we take judicial notice of evidence of the County’s 2009 adjustment to the agency’s 2008-2009 tax increment distribution.
We need not reach the issue of what happens if the original SOI is filed late.
An August 18, 1993 Senate Committee analysis reported that “Because of its two extraordinary powers—property tax increment financing and real property management— redevelopment remains a ‘hot button’ political issue. Besides being controversial, redevelopment is very lucrative for communities that use its powers to attract and retain private investment. Stung by repeated criticisms and trying to stave off more radical changes, some redevelopment officials seek statutory reforms.” (Sen. Com., Analysis of Assem. Bill No. 1290 (1993-1994 Reg. Sess.) Aug. 18, 1993, p. 1.) The final Assembly floor analysis stated that “Existing CRL provides for a unique relationship between agencies and affected taxing entities. Ideally, affected taxing entities are supposed to act as ‘watch dogs’ over the adoption of redevelopment plans and challenge inappropriate plans due to the potential loss of property taxes to redevelopment agencies. [][] While this once may have been the case, the passage of Proposition 13 has substantially changed that relationship. Because of their ability to issue bonds without an election, redevelopment agencies have become one of the few sources of public infrastructure money available to local governments, [f] Today, instead of being critical of redevelopment taxing entities, some school districts and counties have become very adept at negotiating mitigation agreements for cash, bond payments, and development agreements. Some counties, particularly the County of Los Angeles, have been able to negotiate mitigation agreements which provide an almost 100% pass-through of the property taxes which would have been received by the county in the absence of the redevelopment agency’s allocation, [f] This bill, as passed by the Assembly, eliminated thesе negotiated mitigation agreements .... [$ By eliminating negotiated pass-through agreements, the sponsor stated, affected taxing entities would be returned to their position of challenging redevelopment plans. With no ability to ‘pay off affected taxing entities, theoretically redevelopment plans will be smaller in scope
Concurrence Opinion
concur to discuss a few matters.
In this case, Health and Safety Code sections 33675, subdivision (b) and 33671.5 require the County of Los Angeles (County) to pay the redevelopment agencies amounts for the indebtedness of the redevelоpment agencies (see also Cal. Const., art. XVI, § 16; Rev. & Tax. Code, § 96.5). Health and Safety Code section 33675 sets forth the procedures for the allocation and payment of taxes to the redevelopment agencies. In order for the redevelopment agencies to receive timely payments to which they are entitled, they are to file the statement of indebtedness by October 1 of each year. But the statute does not say that failure to file a statement by October 1 bars any right of a redevelopment agency to the payment of taxes, nor does the statute preclude amendments to the statements of indebtedness after Octоber 1. Health and Safety Code section 33670, subdivision (b) provides, “Except as provided in subdivision (e) or in Section 33492.15, that portion of the levied taxes each year in excess of that amount shall be allocated to and when collected shall be paid into a special fund of the redevelopment agency to pay . . . loans [to] ... or indebtedness [of the agency].” (Italics added.) The exceptions to these mandatory duties do not include the time provisions of Health and Safety Code section 33670.
The Supreme Court has said in an administrative law case, “We have held that, generally, requirements relating to the time within which an act must be done are directory rather than mandatory or jurisdictional, unless a contrary
Even if the Health and Safety Code section 33675 could be read as a deadline,
The County argues that it already distributed the redevelopment agenсies’ tax increment amounts to other taxing authorities and that it would be impractical to recover those amounts in order to make additional payments to the redevelopment agencies after they submit their amendments. These taxing authorities presumably have received monies to which they are not entitled. There are means to correct for errors in the distribution of tax revenues. As the court in City of Dinuba v. County of Tulare (2007)
The County and the trial court reasonably observed that assessments, tax receipts, and allocations are annual and time-sensitive processes that are reflected in Health and Safety Code sectiоn 33675. I note that the redevelopment agencies have an incentive to file all the information on time to avoid delays and costs in recovering the funds owed to them, which funds they in turn must pay to their creditors. I am sympathetic to the County’s position that if that provision is too elastic, the mechanism could become unwieldy. That is a matter for future resolution. I agree that in this case, the amendments do not violate Health and Safety Code section 33675.
The trial court suggested the possibility that a late statement of indebtedness could be deemed substantial compliance with the time deadline. Here, the statements of indebtedness were filed months after October 1, and therefore the trial court did not find substantial compliance.