City of Culver City v. Cohen

Prior to its dissolution, Culver City’s former redevelopment agency made an unauthorized transfer to the City of about $12.5 million. The Department of Finance (DOF) discovered the unauthorized transfer after the former redevelopment agency was dissolved and the City took over as the successor agency. Based on that discovery, DOF authorized the county auditor-controller to reduce by about $12.5 million the tax increment revenue made available to the successor agency to pay the successor agency’s enforceable obligations. In a prior action, the Sacramento Superior Court held that the former redevelopment agency should have retained the $12.5 million to pay its bills rather than transferring it to the City. DOF did not seek an order requiring the City to repay the $12.5 million. And neither party appealed the superior court’s judgment. Since judgment was entered in “Culver City I”, the City has not repaid the $12.5 million to the successor agency, and DOF has continued to authorize successive reductions to the allotment of tax increment revenue to the successor agency to pay its enforceable obligations. DOF asserts that those funds held by the City are available to the successor agency for payment of its enforceable obligations, but the City maintains that it has no duty to pay the money back. In this action, the City, both in its municipal capacity and as the successor agency of the former redevelopment agency, sought mandamus relief to stop DOF’s successive reductions of tax increment revenue to pay the successor agency’s enforceable obligations. DOF sought an order reversing the former redevelopment agency’s transfer of $12.5 million to the City and requiring the City to return the money. The superior court in this action held that DOF’s successive reductions were not authorized by the Dissolution Law. Based on this holding, the superior court granted the City’s petition for writ of mandate. While recognizing Culver City I’s holding that the former redevelopment agency’ss transfer to the City was unauthorized, the superior court denied DOF’s petition for an equitable writ of mandate requiring the return of the money because there was a statutory remedy for this situation. The State Controller conducted a review and ordered the City to return the $12.5 million to the successor agency. DOF appealed, asserting that the superior court erred by: (1) denying DOF’s petition for writ of mandate directing the City to return the money and (2) finding that successive reductions to the tax increment revenue provided to the successor agency for the same $12.5 million held by the City was not authorized by the Dissolution Law. The Court of Appeal affirmed. View "City of Culver City v. Cohen" on Justia Law