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Lawsuits Filed Challenging DOF Rejection of ROPS

DOF Launches Webpage Hosting ROPS Review Letters

May 25, 2012

On Tuesday, two lawsuits were filed in Sacramento Superior Court challenging the Department of Finance’s decisions rejecting certain items listed on Recognized Obligation Payment Schedules (ROPS).


City of Palmdale v. Matosantos (Case no. 34-2012-80001154) was filed by the cities of Palmdale, Glendale, Culver City, Huntington Beach, Pasadena, Inglewood, National City, Imperial Beach, and Hayward in their capacities as successor agencies. The lawsuit seeks a court order that property taxes be distributed to pay for each valid enforceable obligation and further seeks a court order that each auditor-controller set aside sufficient property tax to pay enforceable obligations that remain in dispute after June 1 until such disputes have been resolved.

The second lawsuit, Hercules LLC v. Department of Finance (Case no. 34-2012-80001155), involves a contract between a private developer and a former redevelopment agency. This contract entitled the developer to a certain percentage of tax increment funds generated by the development project to reimburse for development costs related to environmental remediation and installation of public improvements. This agreement was included as an enforceable obligation in the ROPS by the successor agency, but was rejected by DOF, which asserted that after ABx1 26, there would no longer be any tax increment funds. Therefore, in DOF’s view, the agreement was not an obligation that could be funded through post-ABx1 26 property tax. The developer is seeking a court order to set aside the DOF’s rejection of the contract as an enforceable obligation, and to prevent the diversion of funds that may be owed to the developer under the contract.

A hearing is scheduled in the city of Palmdale lawsuit on May 30 in Sacramento Superior Court. The hearing in the Hercules LLC lawsuit is tentatively scheduled for May 29 in the same court.

ROPS Review Letter Webpage

Earlier this week, the Assembly Budget Sub Committee 4 requested further information from DOF on enforceable obligations including process and the number of projects denied and approved. Within the last few days, DOF launched a comprehensive new webpage to host Recognized Obligation Payment Schedule (ROPS) review letters.

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