SAN DIEGANS FOR OPEN GOVERNMENT, Plaintiff and Appellant, v. CITY OF SAN DIEGO et al., Defendants and Respondents.
No. D067127
Fourth Dist., Div. One.
Nov. 20, 2015.
242 Cal. App. 4th 416
Briggs Law Corporation, Cory J. Briggs and Anthony N. Kim for Plaintiff and Appellant.
OPINION
HUFFMAN, Acting P. J.—The issue in this appeal is whether a leaseback financing plan the City of San Diego (City) adopted to fund public infrastructure improvements violates state and local requirements that municipal indebtedness exceeding annual income and revenue be approved by a two-thirds vote of the electorate. (
FACTUAL AND PROCEDURAL BACKGROUND1
In 1958, the City created the Redevelopment Agency of the City of San Diego (Redevelopment Agency). In 1991, the City and the Redevelopment Agency formed a joint powers authority called the Public Facilities Financing Authority of the City of San Diego (Financing Authority), pursuant to the Joint Exercise of Powers Act (
In 2011, legislation was enacted that required the dissolution of the state‘s redevelopment agencies. (Assem. Bill No. 26X (2011–2012 1st Ex. Sess.) and Assem. Bill No. 27X (2011–2012 1st Ex. Sess.) enacted as
Effective January 1, 2013, the City, the Successor Agency, and the Housing Authority of the City of San Diego (Housing Authority) entered into a third amended and restated joint exercise of powers agreement (Third Agreement) to reconstitute the Financing Authority. The Housing Authority is a state agency created in conformance with the Housing Authorities Law (
The Third Agreement provides the agreement was made “for the purpose of . . . financing of certain public capital facilities improvements.” It also provides: “The Bonds, together with the interest and premium, if any, thereon, shall not be deemed to constitute a debt of the City, the Successor Agency or the Housing Authority or pledge of the faith and credit of the City, the Successor Agency, [or] the Housing Authority . . . . The Bonds shall be only special obligations of the [Financing] Authority, and the [Financing] Authority shall under no circumstances be obligated to pay the Bonds or the respective project costs except from revenues and other funds pledged therefor.” The Third Agreement acknowledges that the Successor Agency “will terminate pursuant to State law at some future date and that a joint exercise of powers agreement must have at least two members.”
In February 2014, the City Council adopted an ordinance that authorizes the Finance Authority‘s issuance of lease revenue bonds (2014A Bond Series) of up to $130 million (for a net of $120 million) under the Marks-Roos Local Bond Pooling Act of 1985 (Marks-Roos Act;
The 2014A Bond Series financing is based on a leaseback arrangement. The City owns properties that were already the subject of lease agreements
SDOG brought a reverse validation action (
The court denied SDOG any relief. It determined that Rider governs and under that opinion the debt limitation is inapplicable to the 2014A Bond Series financing because the Financing Authority is a separate public entity. The court disagreed with SDOG‘s argument that the Financing Authority is not legally autonomous, and thus its debt is actually a debt of the City.
DISCUSSION
I
Subject Matter Jurisdiction
Preliminarily, we address the City‘s contention the judgment is void because the trial court lacked subject matter jurisdiction. Under
” ’ “Subject matter jurisdiction . . . is the power of the court over a cause of action or to act in a particular way.” ’ ” (Saffer, supra, 225 Cal.App.4th at p. 1248.) ” ‘Lack of jurisdiction in its most fundamental or strict sense means an entire absence of power to hear or determine the case, an absence of authority over the subject matter or the parties.’ ” (People v. National Automobile & Casualty Ins. Co. (2000) 82 Cal.App.4th 120, 125 [97 Cal.Rptr.2d 858].) “When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and ‘thus vulnerable to direct or collateral attack at any time.’ ” (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660 [16 Cal.Rptr.3d 76, 93 P.3d 1020].)
“Questions of subject matter jurisdiction are questions of law, which are reviewed de novo.” (Tearlach Resources Limited v. Western States Internat., Inc. (2013) 219 Cal.App.4th 773, 780 [162 Cal.Rptr.3d 110].) Matters of statutory interpretation are also subject to de novo review. (Bean v. Pacific Coast Elevator Corp. (2015) 234 Cal.App.4th 1423, 1427 [185 Cal.Rptr.3d 63].)
A public agency may test the legal validity of certain of its acts by filing an in rem action within 60 days. (
“[P]ublication is the primary means of notice in a validation case.” (Katz v. Campbell Union High School Dist. (2006) 144 Cal.App.4th 1024, 1035 [50 Cal.Rptr.3d 839] (Katz); see Planning & Conservation League v. Department of Water Resources (2000) 83 Cal.App.4th 892, 921 [100 Cal.Rptr.2d 173] [jurisdiction over ” ‘interested parties’ ” ” ‘may be had by publication of summons’ “].) “In a reverse validation action, the summons must be (1) in the prescribed form, (2) directed to all persons interested in the matter and to the public agency, and (3) published for the period and in the manner required by statute.” (Protect Agricultural Land v. Stanislaus County Local Agency Formation Com. (2014) 223 Cal.App.4th 550, 559 [167 Cal.Rptr.3d 343]; see
The City does not dispute that SDOG satisfied the publication requirements for its reverse validation action. Rather, the City asserts
Subdivision (b) of
“As in any case involving statutory interpretation, our fundamental task here is to determine the Legislature‘s intent so as to effectuate the law‘s purpose. [Citation.] We begin by examining the statute‘s words, giving them a plain and commonsense meaning. [Citation.] We do not, however, consider the statutory language ‘in isolation.’ [Citation.] Rather, we look to ‘the entire
Further, “[o]ur Supreme Court has said, ‘Where the interpretation claimed leads to injustice, oppression or to absurd consequences, the general terms used in a statute will be limited in their scope so as to avoid such a result.’ [Citation.] The court has added that it is ’ “presumed the Legislature intended reasonable results consistent with its expressed purpose, not absurd consequences.” ’ [Citation.] Even ‘the literal meaning of the words may be disregarded to avoid absurd results.’ ” (Lyles v. Sangadeo-Patel (2014) 225 Cal.App.4th 759, 765 [171 Cal.Rptr.3d 34], quoting People v. Ventura Refining Co. (1928) 204 Cal. 286, 290 [268 P. 347].) When it appears that a literal interpretation of a statute may lead to absurd results, a review of the legislative history is proper. (Roger Cleveland Golf Co., Inc. v. Krane & Smith, APC (2014) 225 Cal.App.4th 660, 677–678 [170 Cal.Rptr.3d 431].)
As the trial court noted,
” ’ “It is a settled rule of statutory construction that where a statute, with reference to one subject contains a given provision, the omission of such provision from a similar statute concerning a related subject is significant to show that a different legislative intent existed with reference to the different statutes.” ’ ” (Los Angeles County Metropolitan Transportation Authority v. Alameda Produce Market, LLC (2011) 52 Cal.4th 1100, 1108 [133 Cal.Rptr.3d 738, 264 P.3d 579].) The Legislature could have explicitly mandated dismissal for the failure to strictly comply with the time limit specified in
In addition to adding
Under the City‘s theory, an action would be subject to mandatory dismissal if service on the Attorney General and the Treasurer was even a day late and no prejudice resulted, i.e., they had sufficient time to intervene or perhaps even did intervene. We cannot reasonably attribute that intent to the Legislature, particularly because the validation statutes “implement[] important policy considerations.” (Friedland v. City of Long Beach (1998) 62 Cal.App.4th 835, 842 [73 Cal.Rptr.2d 427].) ” ‘Assurance as to the legality of the proceedings surrounding the issuance of municipal bonds is essential before underwriters will purchase bonds for resale to the public.’ ” (Ibid.) Indeed, in Assembly Bill 2300, the Legislature actually expressed a preference for resolution on the merits, as it sought to preclude a JPA from eluding court scrutiny by filing and then dismissing a validation action after a challenge was raised.
To any extent a literal interpretation of
II
Analysis of Merits
A
Rider Opinion and Attempts to Distinguish It
1
SDOG contends the court erred by finding the finance plan does not violate state and local debt limitation provisions. The state Constitution provides: “No county, city, town, township, board of education, or school district, shall incur any indebtedness or liability in any manner or for any purpose exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the voters of the public entity voting at an election to be held for that purpose . . . .” (
The trial court determined Rider resolves the matter against SDOG. In Rider, the plaintiffs (collectively, Rider) brought a reverse validation action to
Rider argued the plan violated the debt limitation provisions because the financing authority had “no existence independent of the City, but rather [was] a mere financing ‘shell’ that acts at the City‘s behest, doing for the City what the City may not do in its own name.” (Rider, supra, 18 Cal.4th at p. 1041.) The City obtained summary judgment and this court affirmed. (Ibid.) “Because of the widespread use of similar financing plans throughout the state, and because any doubt about the validity of these financing plans could impact the cost of capital for the improvement of public resources,” the Supreme Court granted review. (Ibid.)
Rider affirmed the judgment. (Rider, supra, 18 Cal.4th at pp. 1055–1056.) The opinion explained: “The short answer to plaintiffs’ argument is that the Constitution and the City‘s charter permit the City to avoid the two-thirds vote requirement by creating a joint powers agency to finance public works projects. Therefore, however we might characterize the financing plan at issue here, we cannot characterize it as unlawful.” (Rider, at p. 1042, italics added.)
Rider elaborated that
For instance, City of Los Angeles v. Offner (1942) 19 Cal.2d 483 [122 P.2d 14] (Offner) approved a plan under which the city would lease land to a private party for $1 per month, and the private party would construct an incinerator on the land and lease the land and the incinerator back to the city for a monthly rental to be determined by competitive bid. (Rider, supra, 18 Cal.4th at p. 1047.) “At various intervals, the city would have the option of purchasing the incinerator at its then appraised value, subject to certain limitations.” (Ibid.) Under those circumstances, the court “held that the two-thirds vote requirement did not apply, rejecting the argument that the lease would be in essence a sales contract with payment of the purchase price in a series of installments.” (Ibid.) The court noted the lease terms were reasonable, the city never had the right to purchase the incinerator at less than its market value, and ” ‘the city is not required to exercise the option in order to protect its prior investment in the form of rental payments.’ ” (Ibid.)
Rider observed that in Dean v. Kuchel (1950) 35 Cal.2d 444 [218 P.2d 521] (Dean), “we significantly broadened our holding in Offner, approving a financing plan that has many of the characteristics of the financing plan now before us. Significantly, we applied Offner although the transaction involved an automatic transfer of title at the end of the lease term, not an option to purchase at fair market value. Thus, the rent payments in Dean looked much more like installment payments on the purchase price than did the rent payments in Offner.” (Rider, supra, 18 Cal.4th at pp. 1047–1048.)7
Rider also explained that “the financing arrangements in this case insulate the City in a real economic sense from prohibited ‘indebtedness.’ The City is required to pay each year only for its use of the Convention Center during that year; the City‘s obligation to pay rent abates if, for any reason, it loses
In Rider, the court added: “We are not naive about the character of this transaction. If the City had issued bonds to pay for the Convention Center expansion, the two-thirds vote requirement would have applied. Here, the City and the Port District have created a financing mechanism that matches as closely as possible (in practical effect, if not in form) a City-financed project, but avoids the two-thirds vote requirement. Nevertheless, the law permits what the City and the Port District have done. Plaintiffs are correct that this conclusion allows local governments to burden taxpayers with potentially high costs that voters have not approved, but local governments impose similar burdens on taxpayers every time they enter into long-term leases involving property of substantial value. We have long held that the two-thirds vote requirement does not apply to these leases so long as the obligation to pay rent is contingent on continued use of the leased property.” (Rider, supra, 18 Cal.4th at p. 1055.)
2
SDOG contends “the structure of the financing at issue here is so very different from the structure approved in Rider that Rider does not compel a ruling against [SDOG].” SDOG submits that Rider is distinguishable because here there is more “governance overlap.” SDOG characterizes the relationship among the City, the Successor Agency, and the Housing Authority as “incestuous.”
SDOG points out that in Rider, the joint powers agreement that created the financing authority consisted of the Port District, an “independent governmental entity” (Rider, supra, 18 Cal.4th at pp. 1039–1040), and the City, whereas here the Third JPA that created the Financing Authority consists of the City and two of its own entities, the Successor Agency and the Housing Authority. Further, in Rider one-half of the financing authority‘s governing board was comprised of the City‘s mayor and manager (id. at p. 1042), whereas here, the Financing Authority‘s governing board is comprised exclusively of City Council members, as are the governing boards of the Successor Agency and the Housing Authority. Additionally, the Financing Authority‘s secretary is the City‘s clerk, its treasurer/controller is the City‘s chief
financial officer, and its general counsel is the City Attorney.8 SDOG also points out that the Financing Authority has never owned tangible property, and “never in its own name entered into any contract that was not a component of a broader transaction involving bonded indebtedness.”
SDOG asserts the 2014A Bond Series is subject to the two-thirds vote requirement because the Financing Authority is a “subordinate agency” of the City. The Legislature, however, has specified that the Financing Authority, along with the Successor Agency and the Housing Authority, are all public entities legally separate from the City. (
Rider relied on Vanoni v. County of Sonoma (1974) 40 Cal.App.3d 743 [115 Cal.Rptr. 485] (Vanoni), in which the plaintiffs argued the Sonoma County Flood and Water Conservation District (district) was indistinguishable from the County of Sonoma (county) for purposes of the constitutional debt limitation. (Id. at p. 748.) The district‘s geographical boundaries were coterminous with the county‘s, the county board of supervisors sat ex officio as the governing board of the district, lower level county employees sat ex officio as officials of the district, and the district performed traditional county functions. (Id. at pp. 745-746, 748–749.) The court rejected the argument because the district “is a legal entity separate from the county and created by act of the Legislature as a body corporate and politic.” (Id. at p. 749.)
Vanoni also explained that while the district “may be performing functions traditionally performed by counties, [the plaintiffs] have offered no evidence, beyond the fact that the same individuals sit on the governing boards of both the county and the... district, that [the county] exercises actual control over the actions of the district.” (Vanoni, supra, 40 Cal.App.3d at p. 750.) Vanoni
The City cites Pacific States Enterprises, Inc. v. City of Coachella (1993) 13 Cal.App.4th 1414, 1424 [17 Cal.Rptr.2d 68], which observed: “Well-established and well-recognized case law holds that the mere fact that the same body of officers acts as the legislative body of two different governmental entities does not mean that the two different governmental entities are, in actuality, one and the same.” (Citing County of L.A. v. Continental Corp. (1952) 113 Cal.App.2d 207, 219-220 [248 P.2d 157] [county and local flood control district were separate legal entities even though both were governed by county‘s board of supervisors]; Riverside etc. Dist. v. Jos. W. Wolfskill Co. (1957) 147 Cal.App.2d 714, 717-718 [306 P.2d 22] [same].)
The City also cites Tucker Land Co. v. State of California (2001) 94 Cal.App.4th 1191 [114 Cal.Rptr.2d 891], which rejected the argument that the members of a JPA were liable under an alter ego theory for the contractual obligations of the JPA. The joint powers agreement there “made provision for the executive officer of one of the constituents to serve in the same capacity for the JPA, and the general manager of another constituent to serve as the treasurer.” (Id. at p. 1202.) Tucker explained this arrangement was not irregular, as
Rider is factually distinguishable to some degree, but we conclude the differences are immaterial. Rider made clear that for purposes of the debt limitation provisions, when a financing authority created to issue bonds “has
Under the Joint Exercise of Powers Act, the Financing Authority has a genuine separate existence from the City. (
SDOG asks us to ignore the separate legal status of the entities, but we may not do so. (City of Cerritos v. Cerritos Taxpayers Assn. (2010) 183 Cal.App.4th 1417, 1442 [108 Cal.Rptr.3d 386], citing Rider, supra, 18 Cal.4th at p. 1044.) Other than attempting to distinguish Rider, SDOG cites no authority to support its position.10
3
Additionally, SDOG contends Rider is distinguishable on the ground that here, the City‘s financial reporting shows that the Financing Authority‘s debts
GASB is an advisory board located in Norwalk, Connecticut, which “sets standards of accounting and reporting for state and local governments.” (In re City of Stockton (Bankr. E.D.Cal. 2015) 526 B.R. 35, 47.) According to Stockton, GASB “was established in 1984 by agreement of the Financial Accounting Foundation and [10] national associations of state and local government officials. GASB recommendations are advisory but have achieved credibility among auditors and bond raters that leads most state and local governments to comply with them....” (Id. at p. 47, fn. 23.) We conclude that a public agency‘s adherence to GASB and GAAP guidelines does not override California law or delineate the legal rights and responsibilities of this state‘s public agencies. SDOG cites no authority to support a contrary conclusion.11
4
SDOG also contends Rider is distinguishable because there, the property that was the subject of the lease, the Convention Center, was to be improved with the bond funds, whereas here, the several properties that are the subject of the facilities lease are not to be improved with the bond funds. Rather, the bond funds will be used for the construction of numerous other improvements. While a factual distinction exists, it is again unavailing.
SDOG claims this court‘s opinion in City of San Diego “recogniz[ed] the difference between leases that are to generate money to improve what is collateral for the lease and leases that are to generate money to
Further, SDOG has not cited any legal authority on the issue of consideration or developed any particular argument on the issue. SDOG relies exclusively on the two sentences from City of San Diego, supra, 47 Cal.App.4th at page 1492, quoted above. “The absence of cogent legal argument or citation to authority allows this court to treat the contention[] as waived.” (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 830 [79 Cal.Rptr.3d 588].) Each point in a brief must be supported by “argument and, if possible, by citation of authority.” (
Additionally, SDOG ignores that in City of San Diego, part of the bond funds were for improvements to property other than the leased property. (City of San Diego, supra, 47 Cal.App.4th at p. 1478.) Rider argued that under Starr v. City and County of San Francisco (1977) 72 Cal.App.3d 164 [140 Cal.Rptr. 73] (Starr), it was improper “to spend part of the bond proceeds on off-site improvements to build a training facility and offices for the San Diego Chargers.” (City of San Diego, at p. 1492.) We rejected the argument, explaining: “In Starr, the court determined a municipal lease-back arrangement was valid because each rental payment would be supported by consideration furnished that year, i.e., occupancy and use of the project. [Citation.] A separate Department of Housing and Urban Development repayment contract, however, was held not to satisfy the Offner-Dean rule because it created a ‘future charge against general funds,’ which was not supported by consideration in the year the obligation was incurred and which could not be included in the yearly budget. [Citation.] Contrary to Rider‘s contention, nothing in the opinion suggests a restriction on how or for what purpose a public entity may use bond proceeds obtained in the financing arrangement.” (Ibid., italics added.) SDOG cites no authority to the contrary.
Further, SDOG attempts to distinguish Rider on the issue of consequences of a default. SDOG asserts that since the City does not own the Convention Center, if it defaulted on the lease in Rider it would not incur economic harm. Here, in contrast, if the City defaulted on the facilities lease it could lose possession of properties it already owns, and rents the City collects on some of the properties could go to bondholders if they assumed the lease.
Rider does not discuss the lease‘s default terms other than to acknowledge the City‘s rent could not be accelerated on default. (Rider, supra, 18 Cal.4th at p. 1044.) In City of San Diego, the leased property did belong to the City, and this court rejected the theory that default provisions took “the facility lease beyond constitutionally acceptable limits.” (City of San Diego, supra, 47 Cal.App.4th at p. 1485.) We explained that “the constitution by its terms requires only that current debt not exceed current revenue. The constitutional debt limitation is to prevent deficit financing, i.e., incurring debt in one year to be paid in future years, only to find it has increased ‘like a rolling snowball,’ placing the public entity in a position where it might not be able to meet financial obligations in the future.” (Ibid.)
In the event of default in City of San Diego, the financing authority or its assignee could elect to terminate the lease, or affirm the lease, and “(1) continue to collect rent from the [C]ity without taking possession or (2) take possession, relet the stadium and collect the rent deficiency from the [C]ity.” (City of San Diego, supra, 47 Cal.App.4th at pp. 1479-1480; see id. at fn. 5.) Bond investors were advised that if the City defaulted, “there is no right to accelerate base rental payments.” (Id. at p. 1480.) The opinion notes that “if the [C]ity defaults on the rent, the lease creates no immediate indebtedness for aggregate payments due because the [Financing Authority] has waived its Civil Code section 1951.2 rights to future rent on an accelerated basis [citation].” (Id. at p. 1484.)
Rider argued the reletting provision violated Offner-Dean because the City would obtain no benefit when not in possession of the property. (City of San Diego, supra, 47 Cal.App.4th at p. 1486.) We disagreed, explaining that “[w]here reletting permits the initial tenant to continue to receive consideration, i.e., some present economic value from the lease, the constitution is not offended, even if the tenant is precluded from possession and still must take some form of payment.” (Id. at p. 1487, citing County of Los Angeles v. Nesvig (1965) 231 Cal.App.2d 603, 612 [41 Cal.Rptr. 918].) We noted that if the
Here, the default provisions of the facilities lease are substantively the same as in City of San Diego. On a default by the City, the trustee, as assignee of the Financing Authority‘s rights, may elect to terminate the lease, or affirm the lease, and continue to collect rent from the City without taking possession, or take possession, relet the properties (other than ground lease sites) and collect any rent deficiency from the City. Further, the facilities lease provides: “[I]n no event shall the [t]rustee have the right to accelerate the payment of any [rent] hereunder and, without limiting the generality of the foregoing, the [t]rustee specifically waives its rights under Section 1951.2 of the... Civil Code to accelerate payment of [rent] in the event of default by the City.”
It is the appellant‘s burden to affirmatively demonstrate reversible error. (California Pines Property Owners Assn. v. Pedotti (2012) 206 Cal.App.4th 384, 393 [141 Cal.Rptr.3d 793].) SDOG does not explain how the default provisions here cause the facilities lease to exceed constitutionally acceptable limits, and thus it does not meet its burden. SDOG predicts potential economic consequences to the City that do not pertain to the issue under review, whether the financial plan violates the debt limitation provisions. SDOG makes no showing that the City has taken on noncontingent debt.
None of SDOG‘s attempts to distinguish Rider is well taken. The City presumably uses the Financing Authority to avoid the two-thirds vote requirement, but doing so is legal. (Rider, supra, 18 Cal.4th at p. 1055.)
III
Public Necessity
SDOG also makes several claims of error unrelated to Rider. SDOG contends section 90(a) requires that as a threshold issue, voters must decide whether each of the projects to be funded by the 2014A Bond Series is a matter of public necessity.
Section 90(a) provides: “Whenever the Council... determine[s] that the public interest or necessity demands the acquisition, construction or completion of any municipal improvement authorized to be acquired, constructed,
SDOG concedes that the first sentence of section 90(a) applies only to the bonded indebtedness of the City, and not to that of the Financing Authority. SDOG submits, however, that the second sentence of section 90(a) “imposes a separate requirement for the adoption of every ordinance or resolution determining that the public interest or necessity demands a municipal improvement authorized to be acquired, constructed, completed or maintained by the City.”
In other words, SDOG asks us to view the second sentence in isolation. Under settled rules of statutory interpretation, however, “the various sections of a charter must be construed together, giving effect and meaning so far as possible to all parts thereof, with the primary purpose of harmonizing them and effectuating the legislative intent as therein expressed.” (Creighton v. City of Santa Monica (1984) 160 Cal.App.3d 1011, 1017 [207 Cal.Rptr. 78].) The terms “such improvement” and “said indebtedness” in the second sentence of section 90(a) obviously refer, respectively, to the terms “any municipal improvement” and “bonded indebtedness” in the first sentence. When read as a whole, section 90(a) does not apply to the Financing Authority. Additionally, SDOG‘s interpretation would lead to absurd results, as the City could not make even emergency improvements covered by annual income and revenue without calling for a vote.
IV
Validity of Third Agreement
A
Additionally, SDOG contends the Third Agreement is “void” because under the law dissolving redevelopment agencies the Successor Agency “had
“Since 1949, the Joint Exercise of Powers Act has permitted two or more municipalities to form a joint powers authority which they agree will exercise any power that each municipality has power to exercise individually.” (City of La Mesa v. California Joint Powers Ins. Authority (2005) 131 Cal.App.4th 66, 69 [31 Cal.Rptr.3d 411].) The Joint Exercise of Powers Act allows “governmental agencies [to] join together to accomplish goals that they could not accomplish alone, or that they might more efficiently and more effectively accomplish together.” (Robings v. Santa Monica Mountains Conservancy (2010) 188 Cal.App.4th 952, 962 [115 Cal.Rptr.3d 828].) “‘[T]wo or more public agencies by agreement may jointly exercise any power common to the contracting parties,’ and they may join in the creation of a separate entity to exercise those powers on their behalf.” (Ibid.; see
A housing authority is expressly authorized to enter into joint powers agreements. (
The projects to be funded by the 2014A Bond Series are City infrastructure projects, but the Third Agreement‘s stated purpose is to provide a financing mechanism for each of the three public agency members. The Third Agreement provides: “SECTION 1. PURPOSE [[]] This Agreement is made pursuant to the provisions of the [Joint Exercise of Powers] Act, relating to the joint exercise of powers common to public agencies for the purpose of assisting the financing of certain public capital facilities improvements of the City, the Successor Agency or the Housing Authority ....” As the City observes, “the Housing Authority will be able to use the vehicle of the [Financing Authority] to assist the financing of capital improvements necessary for the development of affordable housing such as the installation of streets, sidewalks and storm water systems.”
At trial, SDOG cited
SDOG cites no authority precluding a housing authority from entering into a joint powers agreement whenever there is a potential that bond funds may be used to finance nonhousing projects of another member agency. Under SDOG‘s theory, a housing authority could only enter into a joint powers agreement with another housing authority.
B
SDOG asserts the Successor Agency was unauthorized to enter into the Third Agreement because the Legislature created successor agencies to wind down a redevelopment agency‘s activities rather than conduct any new business. SDOG cites
Division 24, part 1.85 of the Health and Safety Code (commencing with
Part 1.85 of division 24 of the Health and Safety Code authorizes a successor agency to enter into contracts, including JPAs. Section 34180, subdivision (h) of the Health and Safety Code requires that
More specifically,
The City asserts that participation in the Third Agreement is not redevelopment work, as defined by
Our conclusion is bolstered by the Department of Finance‘s acquiescence in the Successor Agency‘s participation in the Third Agreement in the place of the dissolved Redevelopment Agency.
V
Financing Authority‘s Power to Issue Bonds
Lastly, SDOG contends that because the Successor Agency is precluded from conducting new redevelopment business, as long as it is a member of the Third Agreement the Financing Authority may not conduct new business of any kind, such as issuing the 2014A Bond Series. In SDOG‘s view, a successor agency has no power in common with other member agencies since it cannot conduct new redevelopment business.
The judgment is affirmed. Defendants are entitled to costs on appeal.
Nares, J., and McDonald, J., concurred.
Appellant‘s petition for review by the Supreme Court was denied March 9, 2016, S231508. Kruger, J., did not participate therein.