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California Supreme Court Denies Review of Emeryville Re-entered Agreement Decision

DOF’s Pending Legislative Proposal Attempts to Reverse Decision As Well As Other Cases Where Local Agencies Have Prevailed, DOF Expected to Propose Revisions in Conjunction with May Budget Revise

April 24, 2015
The California Supreme Court on April 22 denied review of the Third District Court of Appeal’s decision in City of Emeryville v. Cohen.
 
This closely-watched case involved various agreements between the city and its former redevelopment agency. After the Legislature dissolved redevelopment, the city re-entered into these agreements with its Successor Agency as permitted by the redevelopment dissolution statute, ABx1 26. The city then attempted to list these agreements on it recognized Obligation Payment Schedule (ROPS). The Department of Finance (DOF), however, rejected the agreements.
 
DOF advanced a number of arguments to justify its rejection of the agreements, all of which the Court rejected. The Court held that the plain language of ABx1 26 allowed the city and its successor agency, with the approval of the Oversight Board, to re-enter into agreements that were initially enter into by the city and its former redevelopment agency. DOF further argued that AB 1484, enacted after ABx1 26, applied retroactively to invalidate re-entered agreements. The Court rejected this argument finding that there was no legislative intent that AB 1484 apply retroactively to invalidate these agreements. In addition, it also rejected DOF’s suggestion that the city acted with improper motives by rushing through these agreements with knowledge that AB 1484 was pending in the legislature. In rejecting this argument, the Court took the commonsense approach that it is not “necessarily sinister for [the city] to hasten to comply with a law before adverse changes occur.”
 
With the Supreme Court’s denial of DOF’s petition for review, the Emeryville case is now final.
 
The Third District Court of Appeal has also issued a ruling in favor of re-entered agreements in County of Sonoma v. Cohen, which is currently the subject of a pending petition for review to the Supreme Court. And a third case concerning re-entered agreements, City of Riverside v. Cohen is currently under submission in the Third District.
 
DOF’s Pending Legislative Proposal
 
While such interpretations of redevelopment dissolution statutes are pending in the courts, many cities have been very concerned over a budget proposal by DOF. This proposal seeks to overturn several court decisions where local agencies have prevailed, and make other retroactive changes harmful to local agencies. 
 
A copy of the League’s most recent letter on this issue is available online. In addition, the League has prepared a document detailing the proposal’s harmful provisions, which is also available online.
 
City officials have attended budget subcommittee hearing in recent months to oppose this proposal on March 3 and April 10.  
 
DOF is expected to propose revisions to its proposal in conjunction with the May Revise.  The League continues to advocate that legislators should reject any components that attempt to reverse court decisions and cause other harm to cities.


 
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