Agreements Re-Entered Into Between City and Successor Agency Pre-AB 1484 are Enforceable Obligations - These Agreements May be Placed on ROPS and Successor Agency May Receive Funding

A Sacramento County Superior Court has ruled that agreements formerly entered into between the city of Riverside and its redevelopment agency, and subsequently re-entered into between the city and the redevelopment agency’s successor agency and approved by the successor agency’s oversight board before AB 1484 went into effect, are enforceable obligations. The Riverside decision is in line with the May ruling in City of Emeryville v. Matosantos, based on similar facts. Although neither are published cases, Judge Balonon took judicial notice of Emeryville in the Riverside ruling, providing that while this decision is not controlling or precedential, it may be relevant in certain cases. BB&K attorneys successfully argued this case on behalf of the city of Riverside.

Based on the consistent rulings, city and successor agency agreements entered or re-entered into and approved by the oversight board prior to June 27, 2012 are enforceable obligations. Therefore, these agreements may be placed on a Recognized Obligation Payment Schedule (ROPS) and a successor agency may receive funding for these agreements. However, due to the filing of a Notice of Appeal in Emeryville, cities and successor agencies should proceed with caution under these agreements or consider re-entering into these agreements after receiving a finding of completion from the Department of Finance.

Pursuant to Health and Safety Code Section 34171(d)(2), agreements entered into between a city and a former redevelopment agency are invalid, except in limited circumstances. However, pre-AB 1484 (effective June 27, 2012), Health and Safety Code Section 34178(a) authorized a successor agency to enter or re-enter into an agreement with the city that formed the former redevelopment agency, subject to the approval of the successor agency’s oversight board. AB 1484 added language to Section 34178(a) restricting a successor agency or oversight board’s ability to approve these agreements without the Department of Finance’s approval or a court order. Judge Balonon, however, determined that AB 1484’s amendments to Health and Safety Code Section 34178(a) were not retroactive, that the city and successor agency properly re-entered into agreements between the city and former redevelopment agency, and that the Department of Finance abused its discretion in rejecting funding to the successor agency for these agreements from a subsequent ROPS.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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