Document elcerrito_gov_doc_577d8171a0

1 2 3, 4 5 6 7 8 9 lfl 11 12 13 14 1S 16 17 18 19 20 21 22 23 z~ 25 26 27 28 Sky Woodruff, City A~.torney {SBN; 197204) c~~y o~~l Deborah J. Pox (SBN: 110929) d fox@meyersnave. cozn Susan E. Bloch (SBN: 1 8778} sb 1 och@ iney ersnave. caz~ Erika R, RancEall (SBN: 24774) erandall m~yerszaa~ve.cazn. MEXER ,NAVE, RIBACK, SILVER & WILSt3N 633 West Fifth Street, Suite 1704 Los An;eles, California 90071 Tele~hane: (213) b2b-2906 ~acszmile: {2l3) 62b-f}215 Attorneys for Petitioners az~d ~lazntif~'s, CITY OF EL CERRZTO A.ND SUCCESSOR. AGENCY TQ THE EL C~,~t.RTT~ t RED~V~LOPMEi~xT AGENCY 3 ~a SUPERIOR CQUi2'1' (3F THE STA'T`E OF CALX~`4RI~l~A COUNTY OF SACR.AMEN'I`O j CITY OF EL C~.RRITa, a general law city; SUCCESSOR AGENCY TO THE EL CER_R..ITO R~DEVELOPME?~IT AGENCY', a public entity, Petitioners and Plaintiffs, v. R~B~RT R. CA1VI~'k3ELL, in his of£iczal capacity as the Auditor-Controiier of the COUNTY OF CUNTR.I~. COSTA; ANA MAT4SANTOS, in her offzcial capacity as }director of ~inanc~ £or the STATE OF Cr~r.I~'O~l'IA; CALI~C?R.~tIA ST.~.TE BOARD Off' EQUALIZATION, an agency of the State of California; and ~10BS 1- IflO, izzclusx~ue, Respondents and Defendants. caption C.~.SE NO. PETITTQN FOR WRIT O~ MANDATE AND COMPLAINT FOFt AND DECL~,RATOl2~S.'~ ~2ELIE~ PE'S'ITION ~'C}R WR€T OP MANDATE ANI> COMPLAINT POR INJUNCTIVE AND DBCLARA.TORY RELIEF ---PAGE BREAK--- 0 7 9 1Q II ~z 13 I4 15 1b 18 19 20 21 22~ 23 24 2d 27 ~g I BAY AREA AIR QUALITY MANAGEMENT DTST~tICT, a taxing ~ entity and a public entity; BAY AREA I~A~'~D T12ANSIT DISTRICT, a taxzng entity and a special purpose dis~ric~; cor~~R.a. cos~,~ coM~~.r~rzT~r COLLEGE DISTRICT, a taxing and a co~n~nunity college district; CONTRA eosTA covrr~rY o~rzc~ o~ ~DUCATIOI~, a taxing entity and a subdivision of the County of Contra Costa; CONTRA,. CC}STA MOSQt,~ITO & VECTaR CONTRC?L DISTRICT, a taxing entity and a special district; CONTRA CC}STA WATER DIS'T`RICT, a taxing entity and a special district; CONTRA COSTA COUN`I'~.', a taxzng entity and a political subdivision of the State of California; EAST Bf1.Y MUNICIPAL U'T'ILITY DISTRIC'~', a taxing entity and a public utzIity; BAST BAY REGIONI-~.L PARK DISTRICT,. a taxing entity and a special ~TEGE SANITARY DISTRICT, a taxing entity and a special W~57' CONT~ZA e4STA HEALTHCARE DISTRICT, a taxing entity and a public ~ntiry; 'BEST CON'T'RA COSTA UNIFIED SCHOOL DISTRICT, a taxing entity and a school district; ALAMEDA-C~~`~'Rl1. COSTA. TRANSrT a taping entity a~zd a public transit abency special district; and Does 101-200, inclusive, Real ~artzes In Interest. PE'T'I1'IO~J FOiZ WRIT OP MA~iUATB AN1~ COMPLAINT ~'O~t ANI7 }~ECLARA.TORY R~LiEP ---PAGE BREAK--- 1 z i S 6' 7 9 10 Il 12 13 14 ~5 16 17 18 19 2Q 21 22 23 24 2S 26 ~7 28 .tntr~oductory Staternent 1. Petii:ioners and Plaintiffs ch:alienge the hawed methodology and the resulting iFnproper and unlaw~'u1 "true-up"payment demanded by the Auditor-Controller under Cal~for~xa Health &Safety Code § 3~I83.5{b) as added by Assembly Bill 1484 {"AB 1 84"). AB 1.484 vas hurriedly adopted by the California Legislature on June 27, 2012, to modify and "clean-up" provisions in Asseznb~y Bill x1 26, #.lie 20l 1 statute that dissolved all redeveta~~nent agencies in the State of California as of ~ebruaxy I, 2012. In addition, Petitioners and Plaintiffs challenge the canstitutionaiit~ of the reallocation of £ands that constituted tax in.cxe~nent that was distributed ~o the former redevelopment agencies pursuant to Health &Safety Code § 33670 in December 2fl11/January 2QI2, and {ii) penalties iznpased against bath successor agencies and municipalities in the evezat of non- payznent or unti~x~eiy pa~!zrzent of the amounts demanded. The crux of t~Ze central issues addressed in phis Petition is the faziure of the .auditor-Controller of Contra Costa County ("tY~e Auditor-Controller") to perform cz~ucial duties delegated to it by the Gali~ornia Legislature as part of the legislaizon it adQpt~d to dissolve and wind down the affairs of redevelopment agencies throughout the state, Specifically at issue are two key decision points whexe the Auditor-Con~.~roller could have and should have exercised discretion. while ~aerformin~ legally mandated duties in determining the proffer amount of the "true- up" payment. Instead, the Auditor-Controllez andicaied his responsibility az~d dele~atedzfi to the California Department of Finance ("thy DOF") a state agency with no statutory authority to make such determinations, and which nonetk~eless did so but i~ an egregiously i ez-roneous manner. 2. Specii`zcal~y, the essential question addressed is whether the successor. agency to the former Redevelopz~ent Agency of the City of EI Cez'rito {"the Successor ~.ge~.cy") and the City of EI Cerrito ("thy City") should be forced to make a payment it does not awe because the Auditory-Controller improperly and unlawfully relied upon knowingly erroneous calculations prov~d~d by the D0~ to calculate the amount of the payment, and subject to unlawful and unconstitutional penalties which have placed in jeopardy 1 P~TITit3N FOR WRIT Ok MANlll~,TE .AND ~4MPLl~,I~T POR INJUNCTIVE AND DECLACZATORY RELIEF ---PAGE BREAK--- 3 4~ S~ 6~ 7 8 9 l~ ~I 12 13 l~ 15 16 18 z~ 2U 22 23 24 25 2b 27 approximately $1.75 rr~illion of the City's genezal fund xevenues and the ability of the Successor Agency to satisfy contractual obii~ations, potentially ineludin; future pay;vents to the holders of its bonded indebtedness. 3. Wkten. the Cali~orrzia Legislature, abolished ail redevelopment agencies. in the scale, the Legislature provided clear direction that the holders of bonded had certain superior priority during the winding down process of the former xedeveloprr~ent agency to other obligations that may be owed by the fox-~ner redeveIopinent agency. The Auditor-Controller's failure to exercise its authority and discretion has severely limited ( anal called rnta question the abilzty of the Successor Agency to continue to protect the ~ priority interests of the bondholders. Parties 4. Petitianez~ and P1aiz~tz;Cf the City of ~1 Cerritt~ is a California general law city. Petitioner and Plaintiff, Successor .Agene~t to fihe EI Cezrito Redev~Eoprz~.ent Agency, under HeaZtk~ & Safct~ Cade § 34173(a}, is the successor agency to the former Redevelopment Agency of the City of E1 Cerrito. ~'ursuant to Health &Safety Dade § 34I'73(g), the Successor Agency is a separate public entity from the City and in ids own name, can sue and be sued. 5. Respondent and Defendant Robert R. Campbell is the Auditor-Controller of the County of Contra Costa, and is named herein Only in hzs official capaczty as suck. 6. Respondent and Defendant Ana N~atosantos zs the Director of Finance of the State of California, an agency of the Sfiate of Caii~oxn.za, az~d is ~.am,ed herein and at all ti►~nes mentioned herein, in her official capaczty as such. 7. Respondent azzd Defendant California State Soard of ~qualizatzon is, and at all ~ times herein mentioned, an agency of the State of California. The California State Board of Equalization is responsible for ad~niztistering California's local sales and use tax probrams, and pursuant to I~ealth &Safety Code § § 3~ 183.5(b) and 34 x 79.8 nay be ordered tv offset ax v~7ith.hold Iocal sales at~d use taxes as a penairy, ru PETITION FOR WRIT OF MANDATE AND COM~'LAINT FOl2 IN3UNCTIVE AND DECLAFtATORX It~LIEP ---PAGE BREAK--- 1 2 3 4 5 6 7 8 9 10 Il I2 13 14 15 16 17 l$ 19 20 2I 22 23 24 2S 26 27 28 8. The true na~nes and capacities, whether individual, corporate, or otherwise, of Respotadents and Defendants DOSS 1 through 100, in~Iusive, are unknown to Petitioners and Pkain~iffs at this time, who therefore sue these Rcsponderzts and I?efendants by such fictitious names. Petitioners arzd ]?iaintiffs will seek leave of court to amend this Petitiarz to reflect t1~e true names and capacities o£th.ese ~ciitiously named Res~on:den~s and Defendants when they have been ascertained. Pelition~ers and Piazntiffs are infoxmed and heliev~, and based thereon alie~e, that each of the Respondents and Iaefendants named herein as DOES 1 through 100, inclusive, are legally responsible in some manner for the actions chailen;ed herein, and therefore should b~ bound by the relief sought herein.. 9. Real Warty in Interest Bay Area Air Quality Management bistrict ("BAAQMD"} is an "affected taping entity" as de~Zned under Heath &Safety Code ~ 33353.?. BAA.QM~7 is also a "taxing entity" pursuant to l~B 1484, Health &Safety Code i § 34171(k} as an entity that claims the right to recezvc payments and/or distribution of taxes pursuant to AB 1484. 10. Real Party in Interest San Francisco Bay Area Rapid Transit Dastrict ("BART") is an "affected taxing entity" as defined under Health &Safety Code § 33353.2. T3ART is also a "taxing entity" pursuant to AB I484, Health &Safety Code § 34171{lt} as an entity that claims the right to receive payzn~xzts and/ox distribution of taxes pursuant to 1484. 1 I. Real Party in Interest Conga Costa Co~ninunity College District is an "affected taping as defined under Health &Safety Code § 33353,2. is also a "taxing entity" pursuant to AB I484, Health &Safety Code § 34171(k) as an entity that claims the right to receive payments and/or distribution ~f taxes pursuant to AB 1484. I2. Reai Paxty zn Intexest Contra Costa County Office of Education ("CCCOE"} is an "affected ta~.ing entity" as defined under Healt~Z &Safety Code § 33353.2. CCCOE is also a "taxing entity" pursuant to Ali 1484, Health &Safety Code § 34I'7I{k) as an entity 3 ~'~TITIOt+f FAR W[tIT OF MANDA'T'E AI~'0 COMPLAINT F~Tt AND J~ECLARATQRY StELIEF ---PAGE BREAK--- 1 2 4~ S' 6 7 8 9 10 lI 12 13 14 1S 16 z~ 1$ 19 20 22 23 24 2S 26 27 28 t~Zat clazms the right to ;receive payments and/ar of taxes pursuant 1 to AB I484. I3. I2.eaI Party in Interest Contra Costa Mosquito &Vector Control District is an "affected taxing entity" as defined under Health &Safety Code § 33353.2. zs also a "taxi~.g entity" pursuant to AB 1484, Healtia & Sa#'ety Cade § 34171(k) as an entity that clai~xzs the right to receive payine~ts and/or distribution. of tapes pursuant to AB 1484. 14. Real Party in Interest Contra Costa Wafer District ("CCj7JD") zs an "affected taxing entity" as defined under Health &Safety Code § 33353.2. CC't7t~D is also a "taxing entity" pursuant to AB 14$4, Heath &Safety Cade § 34171(lc} as an entity that claims the right to rec~zve payXnents andJor distribution of taxes pursuant to AB l4$4. 15. Real Party in Interest Contra Costa Co~n~y ("CGC") is an "affected taxing entity" as defined under Health &Safety Cade § 33353.2. CCC is also a "taxing entity" pursuant to AB ~ 484, T~eatth &Safety Code § 34171(k} as aza en~.it~ that claims the to receive pay3nen~s and/or distribution of taxes pursuant to AB 1484. 16. Real Party in Interest East Bay Mu~.ici~a~ Utility Distxict ("EBMUD") is an "affected taking entity" as defined under Health &Safely Code § 33353.2. EBNIUD is also a "taxing entity" pursuant to ~1.B 1484, Health &Safety Cade § 34I71(k) as an e~nt~ty ~ that claims the right to receive payments and/or dis~ributiar~ of fasces pursuant to .AB 1484. 17. Real Party in Znt~rest East Bay Rcgzanal Park District ("EBItPD") is an "affected taxing entity" as defined under Health &Safety Code § 33353.2. EB~'A is also a "taxing entity" pursuant to AB 1484, health 8r. Safety Code § 34I71{k) as an e~.tity that ciairrzs the xight to receive payments andlar distribution of taxes pursuant PETITION TOI2. WTtIT OF MA,NDA"1'E AND GOMPI.,AIN'1' FOI2. TNJUNCTiV~ AIVD I~ECLAI2ATORY RELIEF ---PAGE BREAK--- l 2 3 4 5' 6 7 i $I 9 10 lI 12 z~ l~ 15 1C 17 I8 19 20 21 22 23 24 25 26 27 28 18. Real Party in Interest Ste~;e Sanitary District ("SSD") is an "affected Ming entity" as de~z~ed under I~ea~th &Safety Code § 33353.2. SSD is also a "taxing entity" pursuant to AB 1484, H~aI~:h & Sa~'ety Cade § 34171(lc) as an that claims the right to receive payments anal/ax distribution of taxes pursuant to AB 1484. 19. Real Party in Interest West Contra Casta Healthcare District ("WCC~~D") is an "affected taxing entity" as defined under Health & ~afcty Code § 33353'.2. zs also a "taxing entity" pursuant to AB I484, Health &Safety Code § 3417I{k) as an entity' that ciaixns the right to receive paymenfs and/or distribution of taxes pursuant to AB 1484. Z0. Real I.'arty in Interest West Contra Costa Unified School District ("WCCUSD"} is aaa "affected ta~.ing entity" as de~ncd under Health &Safety Code § 33353.2. WCCUSD is also a "taxing entity" pursuant to AB 1484, ~~ealth &Safety Code § 34171(k) ~ as az~ ezztity that claims Lhe right Co receive pay€x~ents and/or of tapes pursuant to 1484. 21. Real Party in T~terest Alaz~neda-Contra CosCa Transit Distarzct {"ACCTD") is an "affected taxing entity" as de~neci under Heath &Safety Code § 33353.2. ACCTD is also a "taxin; e~atity" pursuant to AB 14$4, Health &Safety Code § 34171(k) as an. entity that claims the right to recezve payt~ents and/or distribution of taxes pursuant to ~B 14 22. The true names and capacities, whether individuals, cozpora~e or otherwise, of Read Parties in Interest DOES IO i-240, inclusive, are unknown to Petitioners and Plaintiffs at thas tune, ~vho therefore sue these Real Parties ~n Interest by such fictitious Harries. Petitioners and Plaintzf£s will seek leave of court to amend this }?etition to reflect the true nax~es and capacities of these fictitiously rained Real Parties Interest when they have been ascertained. Petitioners az~d ~'lainti~fs are informed and believe, and based thereon allege, that each of t~z~ Real Pareies zn Interest named herein as DOES 141 ttaraugh 200, inclusive, are Real Paz-ties in InCerest. 5 PETITION FOB. WRIT OF MAND.A.xG AND COMPLAINT FOR INJUNCTIVE AND A~CLARATORY RELIEF ---PAGE BREAK--- 1 2, 3 5i 7 S 9 IO 11 12 i3 l~ 15 I6 17 1$ 19 20 21 22 23 24 2S 26 27 ~g venue 23. ~'ursuant to I Iealth &Safety Code § 34 ~ 89.3, "An actxor~ cantestin.g any act ta[cen ox determ~inatiozzs ox decisions made pursuant to this [Part 1.85] or Paxt (commencing with Section 341d~} nay be brought in superior court and shall be filed in tlae County of Sacramento." This action is taken pursuant to Part 1.$S and there are venue zs proper zn this court. Background 24. Prior tt~ 2ai i, the Coz~znunity Redevelap~nent Law {I~ealt~a &Safety Code ~ 33Q00 et seq.} authozized cities aid counties to form redevclapment a;encies to ~ rernediate urban decay and to zevitalize neighborhoods. Redeveiopiment agencies had the po~~ver to acquire, se11 ox lease property, construct infrastructure, arzd. iznprave public facilities. (Health &Safety Code 3339I, 33430, 33431, X3435.) RedeveIopax~en~ projects were financed through what t~vas known as "ta~c incre;merzt" financing. (Cal. ~onst..Ar~. XVI, § 16; ~~ealth &Safety Code § 33670.} As the Court describes tax increment financin.~: Local redevetopmer~t agencies have no power to tax, and instead axe funded by "tax increment revenue." jCitations o~nitted.~ Tax revenues available far local agencies from land zvit~-~in a redevelapme~t area are firozen as of the date a redevelopment plan zs adopted, and any tai revenues generated by an increase in properly values after adoption of Che plan--the ta~c znereineni--are paid to the Iocal redevelopzx~ent agency for use in financing the redevetopnnent project. (Citations oinitted.l {City O~f CeYritos v. Cerritos Taxpayers assn. (2010) 183 Ca1..F~.pp.~tka 1417, 1424; see also California ,Redevelopment Assoc: v, .R~Iatosantos (2011} 53 Ca1.4th 231 at 24f-247.) 25. Because the of tax increment to the redevelopment agencies potentially could have an unzz~tended adverse iinpac~ on the aver taxing entities, the Conn~r~unity Redevelopment Law included provisions for redevelopment agencies to make a series of payments whereby affected local government taxing entitzes that P~"('ITION ;F4R WSiIT OF MANDATE AT~[D COMPJ.AINT ['OR II~7UNCTIVB ANJ3 D~CI.AItATORX RGLTEF ---PAGE BREAK--- 1 levzed a property tax witk~in the redevc(apment praj~ct area in the fiscal year priax to the 2 adoption of t~.e redevelopment plan, such as cries, counties aid school districts, would be 3 entitled to receive a of'ta~c increment payments allocated to the 4 agency in order to alleviate the financial burden anal detriment they may 5 incur as a result of the adoption of a redevelo~mcnt ptan. (Health &Safety Code 6 § 33b07.5{f}(1)(A).) The schedule for disburse~ei-►t o~these "stiatutozy" 7 pa~r~ents is established pursuant to Health &Safety Godc § 3300'1.5. In addition, for 8 redevelopment plans adopted prior ~0 1994, taxing entities nay be entitled to receive 9 "contractual" pass through payments pursuant to negotiated agreements executed with the 10 redevelopment agency. Cacnmunity Redevelopment Law pernnitted a redevelopment 11 agency to subordinate both. statutory and contractual pa~~nents to loans, bonds 12 and other indebtedness zf such payinenCs were contractually suY~ordinated or if the agency 13 xeceived approval {ar deemed approval] #Torn the affected taxing entities and satisfied 14 other procedural re~uirements..(Health &Safety Code § 33b07.5(e}.) 15 26. Ors ax about Dece~~ber 16, 2411, the former El Cezrita Redevelopment ~.gency 16 ("RDA") received its installment of tax increscent from the Auditor-Controller. A.t the 17 time the I2D,~. received i.~,e tax increin.ent installment paytx~ent, ABxI 26 was stayed by tYze X $ California Supreme Court pending its final ruling on the .lE~atosantas case. Tlae L)eceinber I9 16, 2~11, installment of tax inere~nent was the final tax increment distribution received by 20 the RDA prior to its dissolution ("the final Tax Increment Distribution"}. The RI].t1. 21 deposited the Fzz~al Tax Incre~ner~t Distribution into ids reserve Funds, ar~d used the 22 pxaceeds to pay for various obligations incurred during the period December lb, 241 I 23 through December 31, 20I l ..ns veil, fihe R~7A paid various oblz~ataons during the month 24 of 3anuary 2Q12, v~~hich totaled approxi~r,ately one million four hundred thousand dollars 2S ($1,400,400}. 26 27. Ire the legislative session of 2010-2011, the Cali~orrkia Legislature passed, and 27 the Governor signed into taw ABxI 26, whack dissaived aII redevelo~rnent agencies ~n 28 California as of February 1, 2012, and provided for successor agencies to the dissolved PETiT~O~+i ~'OR WR.iT OF MANDATE AND COMPLAINT FOR i~lJUNCTIV~ AND DECLA.RA.TORY Tt~L[EF ---PAGE BREAK--- 101 11 12 13 14 IS 16 17 I$ 19 21 22 23 24 25 26 27 28 redevelopment agencies to wind down the affairs of the £ozm~r redevetopinent agencies. The Successor Agency cane into e~is~ence on February 1, 20I2 as a result of ghat process. A criiical task for the successor agencies in the winding down process is to prepare orc a sex~ni-anztual basis a ~tecogrzized Oblibatzon Payzn.ent Schedule ("ROPS"), which zs a schedule that establisk~es the items for which each successor ag;~nc~ can. spend its revenues "enforceable abligatiQns" as defined.. in the AB:~1 2b), Those revenues consist primarily of the property tax revenue that tivould have been cilaraate~•ized as tax increment and that would have been received by the former redevelopment agency. This property tax revenue received after the February 1, 2012 dissolution of redevelopment agencies that would have been tax increment r~~venue Inad such dissolution not occurred is deposited into the Redev~;lop~nent Property Tex Trust Fund established by each audit~r- controller and is distributed to each successor agency to pay the obligations listed on: the RAPS. Aftez~ payment of enforceable obligatiazas, certain administrative costs and transfer to certain taxing entities, any remaining funds in the R.~'TT~ are distributed to the affected taxing entities as ordinary property ta~es..F1,s a result, the RODS controls what is spent b~ the Successor Agency to retire the farine~ xedevelopzn.ent agency's debts and to complete its projects, and determine the amount of the remaining funds that will be available to he distributed to the' Iocal taxinb entities. The St~ecessor Agency is required to have an Oversight Board, ~~hich seven-x~ernl~~r board oversees the Successor Agency actions in t~vindin~, down tJ~e affairs of the fari~ner redevelopment agency. Once the BOPS is prepared by the Successor Agency, it must be reviewed and approved by tl~e oversight 'Board. (Healt[~ & ~a~'eCy Code § 34180(8).) The RODS must also be submitted to the Counfiy Auditor-Controller, the Stag Co~~tratler and the I?epartment o£~inance. (Health & Safety Cody; § 34I77(1}(2}{C}.j The Department of Finance has the autk~ority to revze~v actions taken. by the Oversight Board. Health & Saiety Cade § 34179(h}.j Prior to the adoption and certification afth~ BOPS, the spending plan for the Successor Agency (and foz the Toz er redeveloprn~nt agency prior to its dissolution.) was known as the Enforceable Obligation Payment Scfzedule ("EON'S"). P6TITTON ~'OR WRTT Off' MAI~IDATE AMC? FOR INJUNCTIVE AND 3~ECLARATORY RELIEF ---PAGE BREAK--- 1 2 3 4 5 b 7 8 9 10 11 12 13 I4 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28. As required by law, the Successor Agency timely pre~azed and submitted for review and approval of the Clversight Board the ROPE covering-the periods 7anuary 1, 2412 through June 30, 2012 (<`~'irst RODS") and July 1, 2012, through December 31, 2012 {"Second BOPS"}. The Oversight Board duly approved the First RODS and the Second RODS, The First R(3PS and the Seca~~d R4PS ~c~vere also approved by the DOi'; and the Auditor-Controller vas prepared to make its distribution of Redevelopment Property Tax on June 1, 2012, as provided in ABxI 25. 29. O~ particular concern in this action are three issues related to the First R4PS period, specifically the subord'znatian of payzxzents; the characterization o~ certain affordable housing obligations; az~d the abiigations paid during January of 120I2. 30. Retarding the subordinafiron of payments, the First RODS lists a series ofpayinents scheduled in June 2012, in connection with tax allacatio~ bonds issued in I R37 and 2 04. The total a~naunt of debt service fog• the series of tax allocation ~ bon.ds scheduled for payment in June 2012, was $1,543,1 IO payable to the bond trustee, Union Bank. T~.e bond payments were due an July 1, 20I2; however; pursuant ~o tl~~ bond indenture, the band tzustee required the amount of the payment to be deposited with it several days ahead of the due date. Here, the Auditor-~c~ntrollez• agreed with aid DOF~`~ initially advised the Successor A~;erzcy to include Juiy 1, 2012, bond payments oz~ the First Rfl~'S to ensure that funds ru~re available to the bond trustee in advance of th.e July 1 bond payment due date, as is generally required in bond inden~zres, Of particular zaote, when. adopting ABx1 26 the Legislature recognized the extreme importance of avozdi~g any default on bonds issued by the former redevelopment agencies, and, as a result directed r~developnnent agencies to "take alt xeasonabte measures to avoid triggering an event of default" under bond ~ayinents (and otk~er enforceable obligations}. (Health &Safety Code § 341 IV~oreover, payment of debt s~rv~ce an tai allocation bands was given priority in ABxI 2b over all other types of enfozceable obligations. (Health & Safe~l Code § 341$3(a)t2)(~.)•) PET'IT'ION ~'4R WItI'T OF MANDATE AND COMPS.AINT' ~~Tt INJtINCT1VE AND T]~CLARA"~'~R.Y 12ES.I~T' ---PAGE BREAK--- 1 2 3 4 5 6 7 8 9 14 11 12 13 14 15 16 17 18 19 20 z~ 22 23 24~ 25 2b 27 28 31. In EI Cerrito, the a£fccted Ming entities had ag~•eed to subordinate their payments to the fox~ner RDA's tax allocation bonds at this time that the former RDA issued th.e bonds. On or about may 22, 2012, the Successor t~.ge~cy forinalfy requested that the Auditor-Controller to subordinate the payinen.ts to tie tax allocation bond payments on the first RODS and the Second ROWS. Despite originally agreeing to subordinate the payrt~ents, on or abaut June 11, 2012, the Auditor- Controller determined that he could not and would nat subordinate the pay~~nen~s on the first ROPS based on his "new" interpre~ation~ of tie permitted uses o~'the Final Tax Increc~ent Distribution. Ho~ve~ver, he agreed to subordinate suck€ payments on f.~.e Second ~2OP~. The Auditor-Controller's decision not to subordznate the payments on tie First ROWS would have caused ~kle Successor Agency to default on the debC service payments due on January 1, 2013, and have insufficzent funds to snake full debt service payxx3.ents due on July 1, 2012. ~r aced with the disastrous prospect that the successor Agency would default on its bonds, on ox about lone 12, 2412, the Auditox- Contraliexdirected the Successor Agency to seek approval from the DOS' ar~d Oversight ar Board to shift the tax allocation band ~ayrrzents frocn the f first RODS to Second RODS, and agreed to r~ithholc~ distributing fiscal year 2011-12 payments to the ~axinb to entities ~~hite the Successor Agency sought this approval. T~iis shit allowed the Auditor- Controller to subordinate the pay~nertts payable under the Second RODS to the pa~inent of the tai allocation bonds, and prevented a default on the bonds far the July 1, 2012 arzd January 1, 2x13 payments. On or about June I9, 2Q12, the Board approved amendments to the First R4PS and the Secozad ROPS to shift the tax allocation band payrrzez~ts..~.s a result, because DC3F's m.ethodoLogy for d~t~r~ining the amou~zt of the July I2, 2412 residual payment due pursuant to Section 34183.5(b} only deducts. payments listed an the ~i~•st BOPS amended to shift the .Tiny 1, 2012 debt service pay€nents, the amount ofthe residual payment is grossly ovez~stated. 32, The second issue on. the First RODS of particulaz concern zs the characterization of housing Ioan obligations for Ohlone Gardens LP and Eden dousing which total Seven PETITION FOIZ WRI'~ O~ MANDATE AND COMPLAiN'I' FOk21I~t7Ui~lCTiV~ AIvD DECLARATORY RELIEF ---PAGE BREAK--- 11 12 13 I4 15 16 17 IS I9 20 21 22 23 24 25 26 z7 28 Hundred Eighty-One Thousand One ~-Iundred Fifty-Two ($78 i ,152.00). '~'he 1~4F concurs that these pausing obii~atzons arE enforceable obligations, but has asserted tkaat they should not be paid out of the Rcdevelop~nen[ Property Tax Tz-ust Fund. Instead, DOF asserts thaC the obligations should be paid fro~~a the Law and Made~rate Income I-~ousing Fund. That distinction does not make sense. The I,otiv and Moderate Income Housing ~'uncf is fiinded from the tax increincnt distributions — tk~~ very funds from wvhich the RODS items (including ezzforcea~te housing obligations) are to be paid and from which the residual payment afnount is derived. 33. Tkze third issue ofconcern on. the first ROPE relates !o the obligations paid duri~ag January 12. ABxI 26 included certain. deadlines of approval of tl~.e ~irsi BOPS. By November 1, 20I 1, a draft of the First RAPS vas required to be prepared, and by January 2012, an.ly those payzner~ts Iisted on the First RO~'~ were pernnitted to be paid. However, these deadlines were stayed while the Calzfornia Supreme Court eras considering the legal claal~en~e to A,BxI 26 in the case CalifoYnia Redevelogment.~ssoc. v. Matosantos (2011 } 53 Cai.4th 231 ("the Mcztosantos case"). Because of Fhe stay and the issues with the deadlines, the RD.~ placed its ez~fa~rceable payment obliga~iorzs on the EOPS. Although the first RAPS includes a coluzx~n for payrrkents in xanuary 2012, no dollar amounts were lisCed because the RDA accounted fox them on the E(JPS. In fact, the RDA applied over $1,44 ,911 in January 2012 froze its availably fonds {fine source ofv~i~ich was the Final Ta~c Increment Distribution) to pay eligible EC}~'S-app~ovcd costs. T~Ze Successor A~encv could have and would have shown this amount on its First RUPS had it known that the DOS wauZd direct, and the County tluditar-Controller would fallow, an erroneous interpretation of later enacted AB 1484. These legitimate additions to the First RODS tivauId Dave resulted in a coz'z'~sponding significant reduction in the amount awed try the Successor Abency under Section 34183.5(b} "The True-Up Paytaaent" 34. Subsequently, the California Legislature passed, and the Governor signed into Iaw AB I484 4vhich went into effect on Tune 27, 2012. This legzslatian provided "clean- 11 wPE1'11'!ON ~'OR WRl'I' OF MAt~1DATE AND COMPLAINT FOR IT~€JLJ?~IC'T'IVE A1VB DECLARATpRY RELTE~' ---PAGE BREAK--- 1 2 3 4 S 6 7 9 10~ 1I l.2 ' 13 19- 15 16 t7 18 19 20 2~ 22 23 24 25 26 28 ~zp"provisions to existzn~ law governing the wind down of dissolved redevelopment agencies thrau~;k~out the state. Aa~nong other things, ,A.B 1484 addresses tk~e disruption of the intended application of ABxI 26 witkz respect to distribution of and residual property ta,~ payments to taxzn~; entities that tnay have occurred as a result of the delayed implementation of parts Qf Ia.Bxl 26 due t~ the Califarr~ia Supreme Court's ruling in Matasantos, S3 Ca1.4th 231. {kiealth &Safety Code ~ 34183.5(a}.) AB 1484 z~ncludes a process for successor agencies to maEce a "true-up" payzx~ent to address the possible disruptions in. distribution of residual property tax ~ayi~;ents. As provided in ~-ieal~h & Safety Code § 34183.5(b)(A}, if an affected taxing entity has not received the full amount to which it was entitled pursuant to Section. 34183(a}(4) of the property tax distributed for the period January 1, 2012, through June 30, 2012 (i.e.,the residual property tax reznainin~ in the after: pa~3~ent of pass throu~hs, en~'oxceabie obligations and other specified sums) then by 7uly 9;.2012, the Auditor-Controller must send a derrian.d far payznenfi to the Successaz Agency for the amount owed to taxing entities ("True-Up Payzx~ent"). The Successoz Agency must rz~ake the demanded True-Up Payment no later than 3uly 12, 2012, which shall be deposited into the Redevetapxnent Property Tax Tr~zst Fund and the Auditor-Controller must disf~ibute the 'rue-Up Payix~ents to the applicable taxing entities no later than July lb, 2x12 in accordance with Section 341$3. (Heal~la &Safety Code § 34183.5(h)(2}(.(~),) 3S. If the Successoz Agency fails to make ox does not timely make the 'Z'ruc-Up Payment, it automatically wilt be subjected to severe civil penalties to the tune oi' 10 percent of the Txue-Up Payn~aent demand p lus one and one-kZalf percea~t of the demand for each man,~h that th:e is not made. {I-~eatth &Safety Code § 341.83.5(b)(C).) The Successor Agency will also be prohibited from making ~ayznents on its other obligations, except for bond debt service, until foil payment is made to die Auditor- Controlier. (Health &Safety Code § 34I 83.5(b)(2)(C).) Virhat is snare, even though the Successor Agency is a separate legal entity its failure to timely pay also subjects the City to the same civil penalties, and pravents the City from receiving the distribution of 9aea1 F~TfT10N FOR WRIT QF MANC3~TE AND COMPLAII~IT POR INJUNCTIVE A,I~D DECLARATORY R~I.TEF ---PAGE BREAK--- 8! 9 10 I1 12 I3 ~4 1S 16 17 18 19 20 21 az 23 24 25 26 27 28 sales and use tax under the Bradley-Burns Uniform Local Sales az~d Use Tax Law {Revenue & Taxafii4n Code § '7204 et seg.} up to the amount owed to tl~e taking entities until the zequired Tc-ue-'LJp payrne~nt is made. {I~ealth &Safety Code § 3183.5{b)(2)(C).) AB 1484 does not provide a meehaniskn for challenging tine azx~ount of ox applicability off' the True-Up ~'ayinent, not• does it provide an appeal process to contest any assessment of penalties. 36. 4n Jui~ 9, 2012, the Auditor-Controller sent a demand letter to the Successor Agency pursuant to AB ~ 484 demanding the Successpr Abency remit the True-Up Payment in the a~noun~ of $1,75d,794.b7. (A true and correct copy is found at Exhibit Contrary to the mandates of Health &Safety Code § 34I the Auditor- Contraller did not determine the amount, if any, that is owed by the Successor Agency to affected taxing ezztities. Instead, the Auditor-Controller xelzed on the erroneous DOF buidance. 3uly 3, 2012, the DC)F provided guidance on zfis we6site, which the DOr refers to as the "July True-Up Process" ("the ~?4F Guidance"}, (A true and correct copy of tb.e DOF's J~zly True-Up Pcacess zs attached as Exhibit-D.) In the July 9, 2012, demand letter, tkce Audztar-Co~atralIer acknowledges that it used the DOF's "`E~Ini~it T2, Caluznn E' amount, plus or minus any corrections agreed to with the D0~" to determine the az~nount of the True-Up Payment. Tie Auditor-Controller's reliance on the DOF Guidance is both procedurally az~d substantially unlawful. Praceduxally, Health &Safety Code § 3~183.5(b}(2)(A) requires the Auditor-Cantzoller —gat the DOF — to calculate the aanount of the 'I'xue-Up Payrr~ent. This methodology of calculating the True-U'p Payzz~ent is got consistent with AB 1484 that zt improperly relies upon a spreadsheet crated by DOS to calculate tt~e True-Up Payment which includes inaccurate az~d inco~n~iete information. well, the True-Up Payment is #awed because zt does riot include all 'payments zxzade pursuant to the ROWS. Instead it includes only payments made from the ~ RPTT~', and it does not include ~aayments made for en#'orceabi~ obligations pursuant to the EQPS from reserves. PETITION FOk2 WRIT OF MANDATE AND COMPLAINT FO[t INJL:NCTIVE At~I1J DECLARATORY ItEL Ef ---PAGE BREAK--- 1 2 3, 4' 5 6 7 8 9 10 ll 12 13 14 IS 16 17 1& 19 20 2I 22 23 24 25 26 28 37. Health &Safety Code § 341$3.5(b}, added by AB I484, provides that: `~'he amount to be retained by taxing entities pursuant to paragraph of subdivision of Section 34183 for the ~anuazy 1, 2012, throubh Tune 30, 2012, period is detet-mined based on tlae Recognized Obligation Payment Schedule approved by the Department of finance pursuant 1:o subdzvision of Section 34179 and any amr~unt dcte~r~nz~ed to be owed pursuant to subdivision ~E~x~phasis added.} The rclevazxt portion ~f the DO~r Guidance states that: For purposes of d~t~rznining the axnount of RP'I'T~` that a successor agency vvas authorized by [the B(?F~ to expend for the 3anuary ZOl2-June 2012 period, county audztor-contx'ollers must use the. amounts shown in Column E of the Exhibit 12 document on this webpage. ~ Column E of Exhibit 12 dents only with a subset of'the approved First ROl'S and does not 'i include all enforceable obligations approved by DOS'. In particular, Column ~ includes only the po~rt~o~~ o~'the ~zrst R4PS payable from the Redevelopment Property Tax Trust Fund, and fails to recognise that other enforceable obligations were ~ayabie from other sources, including the Final Tax Increment The Pirst ROPS showed az~z~aunts to be paid from the Final Tax Tncreinent Distribution as payable fram "Fund Balance" rather ~ha~. from tine 1~~develapz~aent Property Tax Trust Fund, because at the ti;ne the Final Tax Increment Distribution was received, ABx126 had been stayed, and the Redeveioptnent Property Ta~c Trust Fund did not exist. T'he monies wera not properly characterized as part of the Redevelopment Property Tai "Trust Fund until February 1, 2012, so taxes that were distributed in December 201 1. were not part of tl~e Redevelopment Property Tax Trust Fund, To exclude from the approved First BOPS those payments for enforceable obligations made from the anal Tax Increment Distribution results in double payment by the Successor Agency. U~aiess the entire enforceable obligation payrr~ent azx~ount shown zrt the first ROPS is deducted from the Final Tax Increm~rzt Distribution, the True-Up Payment ~a~culation overstates arriount of revenues fronn the Final Tax 1~ PETITION POR WRIT O~ MANDATE AND COMPLAINT F0121NJt1NCTIVE Al~lD DECLARATOttY REI;IE~ ---PAGE BREAK--- 1 2 4' 5 b 7! 8 9 l0 11 12 13 14 IS 16 I7 18 19 20 21 zz 23 24 25 26 27 28 ~ Incxer~aent Distribution available for distribu~ian to the affected taxing entzties in a manner j incansisient wiCh the legislative intent that requires the use of all enforceable abti;ati~ns listed on the First RODS, not just a portzon of as the basis for the calculation. ]3ecause serious concerns ~vcre raised while AB 1484 was before the Senate Committee an the Budget and Fiscal Review on .dune 2d-27, 20 ~ Z regarding the proccdur~ for calculating and collecting the True-Up ~'~y~nent, theDOF committed that it would ~o~rk ~vit~: successor agencies and communities sponsoring foz~ner redevelopment agencies to avert assesszner~t of tb,e penait~ and offset provisions associated with. untimely payment of the Tzue-Up Payment. Specifically, the DOF represented it would engage zn a rneeE and confer process. On or about July 9, 20 i 2; Petitioners and Plaintiffs attempted to pursue administrative remedies that may be available as expressed by DOF. (A tr~a~ and correct copy of Petitioners' and PIainizffs' duly 9, 20121etter is attached hereto as E~aibit To no avail, Petitioners ar►d Plaintiffs requested to meet and confer wz~ the DOF to discuss the True-Up ~'ay~nent dezx~anded, and also requested that DOF notify the Auditor- Con~t~roller and tlae State Controller that no True-Up Payment should be required until an amount due, if any, is properly calculated and n.o penalties anal sales tax offsets would be assessed during the pendency o~ the dzspute. On or about July 12, 2~ ~ 2, the Petitioners and Plaintiffs notified the auditor-Controller of ifis decision to decline to make the True- U~a Payment due to the herein described defects with the methadoiogy and calculation of the amount dennandcd. true and correct copy of 1'eeitioners aid Plaintiffs July 12, 2412 letter is attached herafio as E~ibit 39. The Petitioners and Plaintiffs allege that Respondent and Aefendant Robert R. Ca~~npbell, in his capacity as the Auditor-Cantro~~er for the County of Contra Costa, has a duty to calc~zlate tie aznounC, if any, the Successor Agency nay o~ex~e to affected taxing entities as residual property ta.~ distributions in accordance with tY~e intent of and directions provided by AB 1484, The Auditor-Controller breached this duty when he deferz~ed to the DOF Cxuidance and relied upon icz~owin.gly erroneous calculations provided by the provided by the DOF, PETITION FOCI WAIT OF MANDI~,TE ANn COMPLAINT FOFt AI~II7 DECLARATORY RELIEF ---PAGE BREAK--- 3' 4~ 5 6 7~ 8 9 1Q 11 12 13 14- 15 16 17 1$ I9 20 zz 22 ?3 24 25 26 z~r zs Fi~•st Claim~or Relfef {Writ of Mazxdate Directed to Respondent arzd Defendant la.udztor-Controller Robert R. Campbell} 4Q. Petitioners and S'~airztiffs hexeby xe-allege paragraphs 1-39, and incar~orate then ~ by reference as if fully set forth hexein. 41. Respondent and Defendant Robert Campbell acting in his capacity as fihe Audztor~Contra~~er of the County of Cantr~ Costa breached ~.zs duty to calculate the azx~ount, if any, of the True-Up ~'ayznent owed by the former ~2.DA to taxing entities as required b~ law. Instead of perforaning tl~e duty kle is bound to perform under I-health & Safety Code § 34183.5(b)(2?(t~}, the ~.uditor-Conixotler iznper~nzss~bly relinquished his duty to the DOF. In relizzquishin~ this duty, said Respondent and Defendant was acting contrary to, law and his actions constitute a clear h~each of duty and abuse of discretiarz. 42. The Successor ,~lgenc~ is entitled to performance of the duties alleged above. In the absence of a writ, the Successor Agency ~vclill be required to make erroneous payments they do not ovve and thereby dazna;e their ability to satisfy ox pay legiti~~.ate obligations in tha future including the potential to default an bond debt service. Moreover, the City and Successor Agency will be subject to unconstitutional penalties, including izx~praperly de~rivin; the City of local sales and use tai revenue used to fund beneraI r~aunicipal (services. 43, There zs no adequate z~m.edy at law to protect t ae successor Ag~z~cy otiaer than the issuance of a merit of Mandate. WHEREFORE, the Successor I~.gez~cy prays for judgment as foi~ows: A. That the C;ouz-~ issue a Wait of Mandate dzrecting Respondent and Defendant Robert Campbell to reject the methodology describedzn the DOF Guidance to calculate the Txue-Up Paynnent, and conclude that the use of Column E does not confor~x~ ~,vith the met~todology prescribed in Health &Safety Code § 341$3.S(b}(2}(A) to (awfully calculate the amount of tl~e "Irne-Up Pay~~erzt; and iii PBTI'I'ION FOR WRIT OF MANllATE A~iD COMPLAiN'I' FOR ZNJUNC'I'IVE AND DEC~,A,R4TORX RELIEF ---PAGE BREAK--- I B. Direct the Auditor-Controller to recalculate the "Tzue-(1p Payment" 2 and reeo~nize tk~e various adjustknents that must be ~x~ade for the I~ousin~ obligation, the 3 January 2012 payments and the payrix~enfis made from resexves. 4 G For cosfis of suit herein incurred; and 5 D. For such fur~hcr relief as the Court deems just and proper. 6 7 Second Claftn for Relzef $ (Writ of Mandate Directed to Rcspandent and 9 Defendant .~1.uditor-Controller 12obert R. 10 44. Petitioners an~i ~'IairttiFfs hereby re-allege paragraphs 1-39, and incorporafie there 11 bsl xef~rence as if fu11y sit forth herein. I2 Respondent and Defendant Robert R. Campbell acting in his capacity as the 13 Auditox-Controller of the County of Contra Cos~~ abused his discretzon by relying upon 14 1~nowingly erroneous calcuiatians promulgated by the DOF to calculate the amount of the 1 S True-Up Payment, and by sending a demand for payment based upon a calculation he 16 knew to be contxa~y to law. 17 4b. The ~.uditor-Controller abused his ~discretiorz. In the absence of a writ, the I8 Successor Agency wili be required to ~na~Ce erroneous payments it does not owe and i9 thereby dama;e its ability to or pay lcgitiFnate obligations in the future. 20 47. There is nQ adequate xe~nedy at Iaw to protect the Successor Agency other than 2I the issuance of a Writ o£Mandate. 22 WHEREFaR~, the Petitioners and Plaintiffs pray for Judgment as follows: ~3 That the Court issue a Writ of Mandate directing Respondent and 24 Defendant nabe~-t R. Caanpbell to recaIcuiate the True-Up Payment taking into 25 consideration the First RODS items addressed in Paragraphs 29-33; 2b For costs of suit herezn incurred; and 27 C. Tor such further r~Iief as th.e Court deems just and proper•, 28 /il P~TITXON FO1Z WRIT OF MANI7A'fE AND FOR INJUNCTIVE AND D~C~,AI2ATORY RELIEF' ---PAGE BREAK--- 9 Id 11 12 I3 14 1S 16 20 21 22 23 24 25 26 27 28 Thif•d ClaiYn for Relief (Vioiatioz~ of health &Safety Cade § 34173~e)j 48. Petitiozzers and Plaintiffs hereby re-allege paragraphs I-39, and incorporate there by reference as if fully set forth hexein. 49. Respondents and Defendants Failed. to proceed as required by Iaw impos~n~ liability on tk~e Successor A;cncy in excess of the statutory limitations of liability without zrzaking a corresponding distri6utzon ofproperty tax revenues ~o ensure its paynnent. ~'ursuant to Health &Safety Code § 34173{e}, the Successor agency's liability is limzted to "the extent of the total sung of pra~erty tax revenues it receives... and the value of assets transferred to it as a successor agency for a dissolved redevelopment age~acy.~' VdH~RE~'ORE, the Pefiitioners and k'lainliffs pray for jud~znez~t as faliows: That the Coux~ issue a 'grit of ivlar~date directing Respondents and Defendants Auditor-Controller and DOS to authorize a distribution of property tax revenue to the Petitioner arzd Plaintiff Successor agency in an at~:aou~t corresponding to any liability irriposed on the Successor Agency; B. For costs of suit herein incurred; and C. for such further relze~ as the Court deems just and proper. Fourth Claim foN Relief (Violation of Article XZXI, § 24{h), o~ the California Constitution) 50. Petitioners and Plaintiffs hereby re-allege paragraphs 1-49, and incorporate tk~em by reference as if fully set Earth herein. 51. Article XIII, § 24(b} of the California Constitution. ptaces restrietiaz~s on the manner in which local tax revenues inay be distributed and utilized. Specifically, Article XIII, § 24(b}provides that, "The Legislature znay not reallocate, transfer, borz-ow, a~pYapriate, restrict the use of, ar otherwise use the proceeds of any ta~c unposed ar levied by a local gaverninent solely for the local government's purposes." The sales arzd use tax penalty to be imposed upon the City pursuant to Health &Safety Code § 34I83.S(b}{2)(C) 18 PETITION 1~OR. WRIT QF MAlVl:3ATE ANL} COMPLAINT I'OR 1t~IJUNCTiV~ AND DECLARATOR`! RELIEF ---PAGE BREAK--- 1 2 3~ S d 7 8 9 10 lI 12 13 14 15 I6 I7 18 19 20 z~ 22 23 24 25 2b 27 28 violates this constitutional provision. First, the tax penalty "restricts the use off' the Bradley-Burns sales and uses tapes to penalties, z•ather Haan fc~r local purposes as directed and deeerznined by the City. ~1nd, the tax penalty impermissibly "otherwise uses" the City's allocation of the Bradley-Burns sales aid uses taxes for penalty purposes and not for the intended "local goverrz~nent's purpose." 'UVHERE~ORE, the Petitioners and Plaintiffs pray for judgan~n.t as follows: A. That the Caurt declare that Section 34183.5{ta)(2}(C) of the Health & Safety Code violates Article XIII, § 24(b) of the California Constitution, and is in~ualid on j that basis; For costs of suit herein incurz~cd; and C. Far such further relief as the Court deems just and ~ro~er. Fifth Clazrn fog Relief (Violation of Article XITI, § 2~.5 subsections (a)tl){A) and of the California Coz~stitut~an} 52. Petitioners and ~'laintiffs hereby re-aflege paragraphs 1-39, aid ~nco~rparate them by reference as i! fu1l~ set forth herein. 53. Article XIII, § 25.5(a){1)(A) of the California Constitution prohibits the Iebislatu~e from reducing tae total property taxes that are distributed within a county ar altering the fro rata shaees of the Local taxing agencies. Additionally, Article XTTT, ~ 25.5(x)(2) of the California Gonstituti4n prohibits the Legislature frown changing "the method of distributing revenues derived under the Bradley-Burns Unifarxn Sales and Use Tax Law as ghat la~v read an November 3, 2004." Article XIII, § 25.5(x)(3} of the Calz~ornia Constitution further prohibits the legislature from reallocating property taxes between cities, counties and special districts ~vi~tzaut a t~vvo-thirds vote of the legislature concurring in the change. 1484 was not approved by a two-tk~irds vote of the legislature, yet it unlawfully to iznp4se a penalty payment which rx~ou~d reallocate and reduce the pro rata shaxes of property taxes that axe distributed to local taxing P~TI'~ION FOR WRIT OX' MANDATE AND COMPLAINT FOR ]N3UNCTIVE AND DECLARATORY RELIEr ---PAGE BREAK--- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 ~5 16 17 I8 I9 20 2l 23 2S 26 z7 28 agencies. Ivl~reaver, withholdinb the Bradley-Burns Saes and Use Tax revenue as punishment for n.at making the T~ze-Up ~'ayrnent is an alteration of the ~nethad for distributing local sags and use tax. In addition, if the pez~atty payment to be paid by the City is allowed to stand, a percentage share a~ the penalty wiii be distributed to the Contra Costa Unified School District, for example, and special districts; such as the $ay Area flir Quality Management District, thereby reducing the cui~nulative percentage shares received f by cities, cauntzes and special districts. Such reat~ocatian is ~zot cor~st~tutionaI~y permitted ~ ~vithout a tvvo-thirds vote of the legislature. WHEREFORE, the Petzt~oners and Plaznt~~fs pray for judgtx~ent as faltows: A. That the Court declare ghat Section 34183.5{b) of th.e HeaItI1 & Sa#'ety Code violates Areicle XIII, § 25.5{a}{I)(A}, XITI, § 25.5{a)(2} azad .~.rtzc~e XITI, § 25.5(a}{3), of the California and is invalid on that basis; B. For costs of suit herein incurz~ed; and C. Far such relief as the Court deems just and proper. Claim fog Relief (Vzalation of Article XISI, § 25.5{a}(7}, of the California Constitution) 54. Petitioners and PIaintiffs ~exeby re-allege paragraphs 1-39, and iz~corparate ehem by r~fecenee as if fully set forth herein. SS. Article XIII, § 25.5(a)(7) o~'the California Constitution prohibits the State from or redirecting a redevelopment agency's tai increinen~ revenues, directly ox indirectly, for the benefit of the state Qr the benefit of Local agencies other than the redevelopment agency zes~i£ The Final Tax Increment Distribution distributed by the Auditor-Controller in Dece~x~.ber 201 I (i.e. prior to the dissolution o£the RSA and prior to the est~blishznent o~ the Redevelopment Property Tax 'rust Fund) was "tax inereznent„ and therefore subject to tie constitutional prohzbitions on tl~e state directly ox indirectly redzrect~ng or redistributing zt for the benefit off' other local agencies other than the redevelopment agency. (Matasantos, 53 Cal.4th at 274,) AB 1484, the DOS Guidance, PETITION FOR WRIT 4~ MANAATE ,A.ND G~A4PI.,AINT 1 OR INJUNCTIVE AND D~CLATtAT4RY R~L1~F ---PAGE BREAK--- 1 z 3 4 5 6 7 9 10 lI 12 13 I4 I5 16 17 ~8 19 20 21 22 23 24 ZS 2b 27 ~g and the Auditor-controller attempt to irnpennissibly and unconstitutionally redirect and redistribute the Final Tax Incxe~ner~t Distxibution by requiring residual arnauz~ts of it to be paid, in the form ofthe True-Up Pay~x~ent, to other local taxing agencies. WHEREFOT2E, the Petitioners and Plainti:~fs pxay ~'ox judgm.ent as follows: That the Court declare that methodology used to calculate the True- U~p Payment due pursuant to Section 34183.5{b} of the Health &Safety Code violates Ar~~cle XIII, § 25(a}(7) of the California Constitution ,and is invalid on that basis; B. for of suit herein incurz'~d; and C. for such further relief as the Court deems just anal propar. ~'everzth Claim foN Relic, f' ('Violation of Article Z, § 7, of tl~e California Constitution) S6. Petitioners and Plaintiffs hereby re-allege paragraphs 1 39, and incorporate them ~ by reference as if fizily set forth herezn. S7. article Z, ~ '7 of tk~e Calzfornia Canstitation provides that, "la. person mad not be deprived of life, Iit~ert}~, or property without due process of the law." Under this ~constitutiorzal provision, t~Zere is a right of adequate notice and. an opportunity to be heard at a fair hearing before a person is deprived of a property right. Petitioners and Plaintiffs each have a propc~y interest in ensuring that the cash and assets available to ~~ake payments on their respective obligations are z~ot improperly decreased by an unlawful or izaaccurate tnanetary penaIfiy. 58. Health &Safety Code § 34183.5(b), as added by AB 1484, makes the fines applicable to ~'etitioners and Plaintiffs automatic. In violation of'the Petitioners and ~'Iazn~iffs constitu~ionai due process rights, zt does not provide a procedure or adininistrat~ve process whereby such Petitioners and Plaintiffs may protest or appeal the True-Up Payment nor is there a procedure or administrative process whereby the Successor Agency ar tk~e City naay protest ar appeal ~I~e iznposzti4n of the penalties far non-payment or untimely payment o~'the True-Up Payment. PETITION ~QR 1~/R]T Off^ MANDATE AND COMPLAINT FQR Ai~ID DECLARATORY k2ELI~S' ---PAGE BREAK--- 1 Z 3 4 S 6 7 8 9 i0 11 12 I3 I4 15 lb 17 18 19 1 24 2i 22 23 i 24 ~ 25 26'. 27' 28' WHEREFORE, tk~e Petitioners ai d Plaintiffs pray for judgment as follows: That the Court declare that Section 34183.5(6} ofthe Health &Safety Code violates Article X, § 7, of the Caiifo~nia Constitution,, arzd is invalid on thaf basis; I3. For costs of suit herein incurred; an~.d C. Far such further relied as the Court deems just and proper. Eighth Claire foY Relief {Violation of~lrticle XVI, § lb(b} a~the Califoz~nia Constitution) 59. Petitioners and Plaintiffs hereby re-allege paragraphs 1-39, and incorporate them by reference as if fully set foxth herein. d0. Article XVI, § lb zn~,andates that "aIl tax incxezxzez~t be allocated to az~d when collected shall be paid into a special fund of the redevelo~mene agency to pay the principal of anal znterest on loans, moneys advanced to, or indebtedness (whether funded, refwnded, assumed or otherwise} incurred by the redevelopment agency to finance or refinance, in f whale or in paz~, the redevelopment project." 6I. Artiste XVI, § lb is not a conclusive r~quirezx~ent that tax increix~ent be collected and mandatarily allocated to redevelopment agencies, (11~Iatosantos, 53 Cal.4th at 263- 264.) Nonet~Zeless, once tax zncr~znent is collected and allocated to a redevelopment agency, .Article XVI, § 16, requires that the tax i~creinent be used "to pay the priz~cipai of anal interest on loans, moneys advanced to, or indebtedness (whether fuzzc~ed, refunded, assumed ax otherwise) incurred by the rede~veloprr~ent agency to finance or refinance, izz whole or in part, the redevelopment project" (Icl. at 263-265.) b2. Unt~~ the RDt~, was dzssalved on February 1, 2012, aIi allocations made to it by ttie Audi#or-Controller constituted tax incxern~n~ as defined in Article XVI, § Ib and axe required fio be used only for the redev~lop~ne~t purposes described therein. The RDA was nflt dissolved until February I, 2012 and Maus the Final Tax Inerernent Installment is clearly still pzotected under Article X~li and prohibits the Legzslaeure froix~ zxxandating the use of the ~irzak Ta~c Increztxent Irzstall~nent ~'or any purpose other than those irz Article XVI, § 16. P~TITTON FOR WRIT OF MA1~iDAT~ AND COMPLAINT ~QR AND DECLAR~1TOkZY RELIEF ---PAGE BREAK--- 9 10 11 l2 13 14 15 lb 17' 18 19 za 21 22 23 24 25 26 27 28 WHEREFORE, the Petitzoners and pray for jud~rzze~t as falla~rs: A. That-the Court declare that Section 34],83.5(b) of the Healtkz &Safety Gode violates ,XVI, § 16{b}, of th.e California B, for costs of suit herein incurred; and C. For such fu~;her relzef as the Court deems just and propex. Ninth Claim for Relief (Claztrz for Declaratory Relie#~ 63. The Petitioners and Plaintiffs hereby re-allege paragraphs 1-34, and i~corparat~ them herein by reference as if fully set forth below. 64. There cuxre~tly exists a dispute befiween the Petitioners and Plaintiffs on one side, anc~ the Respor~der~ts a~.d Defendants the other. The Respondents and Defendants contend that they have used the legal inethodoloby prescribed by Health & SaFety Code ~ 34183.5(b) and accurately calculated the aznount of the True-Up Payix~ent and are permitted to assess pen;aities for its non-~aynnent or late payment. The ]?e~itzoners and Plaintiffs confiend that Respondents arzd Defendants have used a ~nethc~dotogy in contravention off'ehe methodalQgy prescribed by Heatth &Safety Code § 34183.5(b) to i calculate the a~~zount of the True-Up Payment, and have made an inaccurate calculation of ~i the amount, if any, that may be due. The Petitioners and Plaintiffs further contend that the Respondents az~d Defendants should not be permitted to impose unlawful and unconstitutional penalties for non-payrr~ent ox late payment of the True-Up Payment. WHEREFO~, tie ~'etitianers and Plaintiffs pray for judgment as ('ollo~;vs: That t~xe Court declare that Respondents' and l7e:fendants' methodology used to calculate the True-C7p Fayznent is not consistent with the FneC~.odology established by I~eatth &Safety Code § 341$3.5{b); B. That the Court declare that the True-Up Payi~aent calculation made using the unlawful znethndology is void and not enforceable against the ~'etitioners and Plaintiffs; PETITI03~I FOR Wf2IT OF Mt~NI3A`fB Ai~It3 COMPLAINT FOR INJUi~TCTIVE AI D [3ECLARATO~Y RELIEF ---PAGE BREAK--- 1 2 3 4 5 d 7 8 9 10 lI I2 13 14 la 16 17 18 19 za 21 22 23 24 25 26 27 28 C. That the Court declare that tie collection of penalties by Respondents and De~enc~ants is unlawful; D. for costs of snit herezn incurred; and E. For such further relief as the Coin; deeFns just and propex. Tentlz Claitn fog Relief (Injunctive Relied} 6S. The Petitioners and Plaintiffs herby rc-allele paragraphs 1-62, and incorporate them herein by reference as if fully set forth below. 66. The actions of Respondents and Defendants as hereinabove alleged violate Health &Safety Code 34~83.5(b) and 34173{e). These ac~zons also violate the following sections of the Caiifoxnza Article XZZ~, § 24(b); Article XIII, § 25.5(a)(1){A}; Article XIII, § 25.5 subsections article I, ~ 7; azxd tl.rticle XVI, § I6(b). b'7. Unless violations of the Iaw as h~r~in a~legcd are restrained, Pefitianers and Plaintiffs will suffer iz~z~eparable harm and therefore, injunctive relief is necessary to restrarn R~spo~dents and Defendants. ~ Ul iii /H /U IlI /U 24 PETITION POR WRiT QF M~NI~A~'E AI~lTa COMPI.,.~.INT FOR 12~l3ElNCT'iV~ ATlD D~CLARA'S'ORY RELIEF ---PAGE BREAK--- 1 WHERE~'4RE, Petitioners and Plaintiffs pray fflr judgment as (allows; 2 A. That this Court issue injunctive relief prohibiting Respondents and 3 Defendants from utilizing this unlawful methodology and from imposing unlawful 4 penalties; 5 B. For costs of suit herein incurred; and 6 C. For such furCher reIiet as the Court deems just and proper. 7 8 DATED: Ju~y~~l2 MEY~RS, NAVE, RIBACK, SILVER &WILSON 9 10 ' B ~ I / ~ ~ ~B4~AH J. FOX ~ , ~2 Attorneys for Petitior~~.rs az~d Plaintiffs CITY OF EL CERRI'~4-~ND SUCCESSOR I ~ AGENCY TO T~-IE EL CERRITO l~ REDEVELOPMENT AGENCY ~5 tasizsa.a 16 17 1$ I9 24 21 22 23 z~ zs 26 z7 Zs 25 PETITION FOR WRIT OF MANDATE AND COMPLAINT POR INJUNCTIVE AND D~CI.AR4TORY RELIEF ---PAGE BREAK--- ---PAGE BREAK--- O#fic~ of tie Auditor-Con#roller Contra Cosa County Robert R. CampbelE s ~ ~ Elizabeth A. Ver~gin Assisfiant Audiior-Cantraller Auditor-Contro}ler 625 Gaurt Street • ~ Galifarni~ 94553-1282 ' Martinez, ~~ti Phone (925) 646-216'1 Fax (925) 6462849 9, zoz~ TO: Successor Agencies o~for~ner Redevelaptnent Agencies Dear successor +A.gencies: As required by AB I48~, Health and Safety Code, the attached "8emand for payment" represents the Successoz Agency's a~rxzount due to the Office of the Audztor-Contxoller. The C1£~ce of the Auditor-Controller used the Department a£ Finance's `Exhibit 12, Column E" amount, pEus or minus any coz~rectior~s agreed to with the DOF, to determine the "demand for payment" anaaut~#. }?lease make checks payable to "Co~~tza Costa County Auditor-Controller" with'°A~3 1484 True Up" zn the description. Pavaneut should be nnade to the Office of tke Auditor-Controller no later than 3uly 22,X012 at 5:00 p,nn. If you have any quast~ans, please e-mail Jay V~lilverding (Jay.W'ilverdiz~g cr ac.cccounty.us} and me (Bot~.[EMAIL REDACTED]) Sincerely, GG~ Robert Campbell Auditor-Controller EXHIBIT A ---PAGE BREAK--- County of Contra Costa Redevelopment Property Tax Trust Fund 6emand per AS 7Aek EL C~RR170 ~adev. Prop. Tax Trust Fund (RP7TF► Activity Beginning Balance 0.00 Oisribuled to Successor Agencies December 2011 Secured Property Fax Increment 2,613,147.31 Unsecured Property Tax Increment 0.00 Supplemental Property Tax Increment 4,299.88 Uni!ary 33,335,48 Total 2,710,782.67 Tot21 Disir~buted to Successor Agencies December 20t 1 2,714,762.67 H&S Code 34183 aislributions Admin. Fees to CaunN Auditor~onlrotler. S82557 0.00 ABXi-26 0.00 Total Admin. Fees Ogo- P s of Total Pass Throughs 0.00 ObligaCwns Approved per DOF Exhibit 12 Less: Pass-Thru Estimates on Approved BOPS Less: SA Fees on Approved RODS ROPS Payable Successor Agency Admin. Cost Allowance SCO Invoices for Audit and Oversight H&S Code 34S 83 DisE Totals 953,988.00 0.00 250,00.00 703,988.00 250,000.OQ 953,988.00 Demand Amount Due July 72, 2012 1,756,78Q.B7 ---PAGE BREAK--- c t i ~ ---PAGE BREAK--- Yx~ o1rY aw EL CER~~ITCI 9, 2~~2 Ana Matasantos, Fixzance Director Ivlark Hill, Program Budget Manager California Department of Finance redevelapmenf administration@do£ca,gav John Chian;, Controller T. Austin California State Controller's Office [EMAIL REDACTED] Robert Campbeli, Auditox-Cantxoltex Office of the Auditor-Controller of the Cp~nty of Conga Costa bcamp@ac,occounty.us Re: A$ 1484 "True Up"Payment Due Under HSC 34I83.S Ladies and Gentlemen: The Sucaessar A~enc~ to the El Cerrito Redevelopment Agency and the City of Cerri#o (tlie "Successor Agency" and "Sponsoxing Community") wzsh to meet and confer with the DapartmenY of Finance {the Yo discuss the payment due on July 12, 2012 under Health and Safety Code Section 34183.5 (the "34183.5 Payment"). The Successoz Agenoy and Sponsoring Community also request that the DOS notify the Auditor-Cantxoller of the County of Contxa Costa and the State Cantroiler's Office that no payment is dus and no penalties or sates tax offsets should be assessed during the pendency o~ these discussions. ~eeause serious concerns were raised while AB 1484 was before the Senate Committee ort fhe Budget and Fiscal Review ott June 26-27, 2012 regarding the processes far calculating and collecting the 34I~3.S Payment, the DOF committed that it would work with Spazzsaring Communzties and Successor Agencies to avert assessment of the penalty and offset previsions. We wish to immediately commence that praeess. The ~1 Cerrito Redevelopment Agency (t#ae "RUA" or "Dissolved RDA") was dissolved on February 1, 2012. Prior to dissolution, the RDA received ifs Decembsx 2011 installment of tax increment from the County of Contra Costa {tkte "County") on T7ecember 16, 2Q1 i (the "Last Tax Increment"). Since A.Bx1 26 was stayed at this Time, the RDA deposited the ~,ast Tax Increment into its reserve fvud. The RDA, prior to February 1, 2012, used the proceeds of the Last Tax Increment to pad costs of the RbA authorizes#. under filte Community Redevelopment Law. Altar February . I, 2fl I2, the Successor Agency used the remaining proceeds of the Last Talc Increment to pay costs listed on the E~PS, and later, ROPE, a[I pursuant.tl~3xl 26. t Q89Q ~z~n A~blo Avenue. EI Cerrito, G194530 Cffy Administration • ~ S r o~ 2 s s~~aa •SAX (5 i 4} 2 f 5-4379 EXFIIBIT B ---PAGE BREAK--- Ca~ifornaa Department of Finance AB 1484 "True Up" Payment Due Under HSC 34183.5 July 9, 2412 Page 2 On July 3, 2a12> DOF provzded guidance on the 34183,5 Payment, which DOP refers to as the "7uly True Up Process" (the "Gnidaace"). 'There is au ezx'or and an inconsistency between t4ze Guidance and AB 1484. Health and Safety Code Section 34183.5(b), added by AB 1484, provides as follows: "The amount to be retained by taxing entities,puYSUanF to paragraph of subdtvisiorr of Section 34183 for the January 1, 2012, through June 3a, 2012, period is ~nrmined based on the 12scagnized Obligation Payment ,Schedule approved by the Department of Finance ,pursuant to subdivision of Section 34179 anc7 any amount determined to be owed pursuant to subdivision " emphasis adder j The relevant portion of the Guidance states that: "For purposes of determining the amount of RC'77P that cz successor agency was authorized by Finance to expend for the ,J'a'nuary 2012 Jane 20.12 peYiod, caunly auditor- carrtrollers must use the amounts shown in Column E of the Exhibit 12 document on this wehpage. " Column E o£ Exhibit 12 deals only with a subset of the approved 3anuary through 3une 2012 Recognized Obligation Payment Schedule {t1Ze "First RODS") and does not include all enforceable obligatzoz~s approved by DOF. In particular, Column E includes only tY~e potion of the First ROPS payable from the Redevelopment Property 1'ax Trust Fund (#he "RPTT~"), and fails to recognize that ati~er enforceable obligations were payable from other sources, including the Last Tax Increment. The First ROl'S showed amounts to be paid from the Last Tax Increment as gayabla fxorn ".Fund Balance" rather than from the RPTI'k', because at the #ime the I..ast Tax l'ncrement was received, A~ixl 26 had been sEayed, and the RPTT~ did not exist. To exclude from the approved First ROPS Phase payrrxents for enforceable obligations made from: the Last Tax Tnarement results in double payments by agencies, as further highlighted below. Had the RPT'Z'F system been in effect at the time the Last Tax S~nncrement was paid, fhe distribution waterfall that the T..egisiature directs to be simulated through Section 34183.5(b} tuould ~xst have allowed ail enforceable obligations on the approved First RODS to be paid from amounts distributed under Section 34183{a)(2) before arriving at the residual amount available to taxing amities under the distribution prescribed in Section 34183(a)(4). Unless the entire enforceable obii~ation payment amount shown in the First R4PS is deducted from the Last Tax Increment, the Section 34183.5{b) calculation will overstate the amount of revenues from floe Last Tax Increment available for distribution to the affeoted taxing entities in a x~zat~ner inconsistent with the legislative intent that requires the ase of all enforceable obligations listed on the First ROWS, not juse a portion of them, as the basis for the caloulatzoz►. Since previous DOF guidanca and AB 1484 stated that tftere would be no Rl''S"TF d"zstributior~ on May 16, 2fl 12 to make payments for approved enforceable ohligationS on the First BOPS, as a practical matter, tha only source of funds the Successor Agency had to make their First RODS enf'oxceable obligations payments was the Last Tax ~crement. The new Gu{dance calculation would an effect require the Suecessox Agency to spend the Last Ta~c 7noremen# twice over--once for the approved enforceable obligations listed on the Fixst ~t.C7PS and then again to make the 34183.5 Paymerst. 'This is not consistent with ABxI 26 ar AB 1484. ---PAGE BREAK--- California Department of finance AB 14$4 "True Up" Payment Due Under HSC 34183.5 July 9, 2412 Page 3 Further it is our position that na 34183.5 ~'ayment is due because fhe RPTI'F did not exist until February 1, 2012 and thus there would be na residual from the for the period for which the CAC is required to calculate a residual distribution. under Seotion 34183.5. Ths 34183.5 Payment violates numeroas state Iaws, including Pxaposition IA and Proposition 25. The 34183.5 Payment also violates Proposition 22, since the Last Tax ~crement was "tai increment" at the time it was xecei~ved b~ the RDA and therefore cannot be redirected by the State. Please contact economic Development Managex Lori Trevino at (51Q) 215-4383 ox ltrevino~a,ct.el-csnritaca.us at your earliest aonverzienos to arrange for our conference on this mater. In the meantime, we request your immediate confirmation to us, the Audztor-Controller of the County of Contra Costa, and the State Contxaller's Office that the Successor Agency and Sponsoring Community 34183.5 Payment obligation as suspended and postponed pending the outcome of oar meet and confer discussions with DOP an this matter. Thank you far your prompt attention to our request. Sincerely, Scott Hazxin V City Manager cc: Senator Mark DeSaulnzer, 7th Senate District I~tancy Skinner, 14th Assembly District Senate President pro Tem.Darreil Steinberg Steve Shea, Policy Cansultatzt, Senate President pro Tenn Darrell S#einberg Loni Hancock, 9th Assembly Distxict Jennifer Rockwell, General Counsel, California Department of Finance Sky Woodruff, City Attoz~ey, Meyers Nave Susan Bloch, Legal CounseS, Meyers Nave Jack Nagle, Vega! Counsel, Goldfarb &Lipman ---PAGE BREAK--- ---PAGE BREAK--- ~ry~ a~ry ax EL CERR.IT~ July 12, 2012 Robert Campbell, Auditor-Cantxoller Contra Costa County 625 Caurt Street, Room 103 Martznez, CA 94553-12$2 Re: Paymezat Demand Pursuant to Health &Safety Code § 34J.83.S(b) Dear Mr. Campbell: This letter zespands to your demand dated 7uly 9, 2012 that the EI Ce~r~'ito Successor Agency ("Successor Agency"), pursuant to Health &Safety Code § 34183.5, remit $1.,756,795 to the Contra Costa County Auditor-Controller ("CAC") by July 12, 2012 for deposit into the Property Tax Trost Fund for subsequent distribution to taxing entities. We are sending thzs letter to clearly set forth the Successor Agency's position that, annoy.$ ot}~er defects: 1) Pursuant #o t1~e California Supreme Court's decision ixx California Redevelopment Association v. Matosantos, no RPT~ existed prior to February 1, 2012, and funds distributed to the former E1 Cerrito Redevelopment Agency ("RDA" or "Dissolved RDA") between 7UIy 1, 2(}l l azid 3anuary 3.1,.2012 are taa~ increment fuads not subject to the provisions o£ ABlx26 ("Dissolution Act"), AB 14$4, ar Sec#~on 341835 regarding the use of funds. Redistribution o£ ta~c increAnent fumds to attzer taming entities violates Proposition 22. 2) Distribution o£ addi#ional funds to taxing entities reallocates property tax among cities, counties, special districts, and school distracts, yet was not approved by a two #herds vote, as required by Article XTII, Section 25.5 of the California Constitutiazz. 3) The methodology ds~relaped by the Department of Finance ("DOF") far calculation of amoturts demanded is inconsistent with Section 34183.5(b), in that ie fans to recognize alI enforceable obligations listed on the approved Recognized Obligations Payments Schedule for th8 period between January 2012 and Tuns 30, 2012 ("First RODS"). 4) Neither the CAC nox the DUF ~s authorized to retroactively disallow payments made by the RDA or t3~.e Successor Agency if those payments were shov~m on the Enforceable Obligation Payment Schedules ("EOPS") prepared by the RDA and the Successor Agency and were made prior t~ the approval of the First RODS. 10890 San Pablo Avenue. Cerrito. CA 94~3Q City Administration • (5 i OJ 2 t 5-43bQ •FAX (S 7 0) 2 } 5-4379 ---PAGE BREAK--- Contra Cosfia County Auditor-Controller Payment Demand Pursuant to Health &Safety Code § 34183.5(b} July 12, 20I2 Page 2 In the specific case of the El Cerrito RDA and Successor Agency, note the following xelevant facts: 1) Consistez~.t with the Successor Agency's position stated above, the Successor Agency dicf not Iist payments made by the RDA from the December 16, 21.1 tax increment distribution on the First R(3PS. OnFy payments zxxade by t~ze Successor Agency were subject to RODS review. 2) The RDA made payments from the December 16, 2011 tax incrazzxent dis4xibution for obligations listed on its E~PS adopted August 15, 20I1 and amended 7anuary 203.2. As stated above, these were allowable payments of enforceable obligations that neither the CAC near DOF may retroactively disallow. 3) Przor to the December 2Qi 1. tax increment distribution, the RI3A had reserves totaling $187,107, only $5,81U of which was in the Low and Moderate Iucame Housvng Fund {"LMIIIF"). These balances were entirely composed of unspent fa~c increment proceeds and LMIH~' sat-aside from FY 2010-11, and interest earnings. 4) None of the December 2U13. tax increment distribution was identified as £und balance or xeserve on the first ROPS. The £unc~ing sowrce for all payments on the First RUB'S was listed as as the fund balance that existed prior to the llecember 20J.1 tax increment I~ad been expe~tded by the Redevelopment Agency prior to its dissolution on February I, 20I2. 5} DOF approved housing loan obligations to Eden Housing and Ohlone Gardens LP, but changed tk~e approved fi~zzding source from. RPI'TF to LMCH.F, implying that mere was an available batan.ce ox reserve in the LNIIHF prior to tt~e December 20I1 tax increment distribution, which was not the case. 6} Payuzents from R~'TTF on the first ROPS approved by D4F total $953,988, including: a. $288,215 Valente Note b. $415,773 SERAF/ERA~' Loan. c. $250,000 Successor Agency Adnninistrative Allowonce 7) Payments for the outstandun~ balances ~'or the approved hosing loan obligations to Eden Housing and Ohlone Gardens LP totaling $781,152 should be added back to the approved uses of on the First RODS. They were not listed for payraeut from the LM7HF because it had no fund balance prior to the December 2fl11 tax increment distribution. Additionally, $40,OQ0 was advanced to Eden Housing puz~suant to the predevelopment loan agreement immediately £oliowing fhe December 2Q11 tax increment disfribuf~on and. therefore should also be included as an approved payment on the first RODS. 8} Other payments mada by the Redevelopment Agency listed on z#s EOPS from -the December 2U11 tax increment are as follows: a. Debt service payments #otaling $433,1 l~ paid on January 1, 212 b. Payroll far ttsree former Redevalopment Agency staff members for payments made subsequent to December 16, 2011 totaling $50,640 ---PAGE BREAK--- Contra Costa, County Auditor-Controller Payment Demand Pursuant to Health &Safety Code § 3~183.5(b) July 12, 2012 Page 3 c. Payments on consulting contxacts nnade subsequent to Decembex J 6, 2011 totaling $3,234 d. Partial payment of $356,000 to the City o£ El Cerrito for the Reder~elo~ment Agency's shaxe of citywide FY11-12 cost recovery, as approved in the Redevelopment Agency Operating Budget adapted on June 6, 2011 e, Partial payment of $400,400 to the El Cerrito Municipal Services Corporation for tt~e FYII-12 obligation under the contract to implement xedevelopment projects dated March 7, 2011 f. Partial payment of $201,1b1 to the City of El Cerrito` £or the FYII-I2 obligation under the contract to implement affordable housing projects dated February 22, 2011. 9) Based on the obligations of the December 16, 2011 ta~~ increment distribution outlined above in items 6, 7 aazd 8, the total First ROPS payable from is $3,219,181. Based on the tax increment distribution amount of $2,710,783, #here is no residual for distribution puxsuant to Health &Safety' Code § 34183.5 and items on the appraved First RODS will need to be deferred until a future RODS due #o insufficient funds. 10) The Successor Agency's current balance in the Redevelopment Obligation Retirement Fund {"RORr") is $748,998. O£ that amount, $4U6,139 is fxom the June 2012 Distribution of ~TTF for debt service .due in December 2012, The remaining $342,850 is December 2(fl l tax increment for payment of items on tt~e First RODS, which the Successor Agenoy intends to disburse once disputes ;regarding those items are resolved. 11) 7f the Successor Agency's current balance is need to gay tEte payment demand, the Successor Agency will default on its bong payrnezzts listed on the approved Second ROPS for the period of July 1, 20I2 and December 31, 20I2, and Eae unable to meet funding obligations to third parties relying on the DOF's approval of the First RODS, yin particularly Eden xousing and Ohione Gardens LP. Additionally, the DOF would presumably pwrsae the balance due from the City of Bl Cerrito's General Futzd by withholding payment of its sales tax revenue. The payzusnt demazzd of $1,756,7'95 represents nearly half of the City's General Fund reserves. Conses~uent3y, we are hereby declining to make the payment demanded by you on ruiy 9, 2012, and the Successor Agency expressly reserves any a~ad alI z~gbts, privileges, and defenses available under law and equity. As detailed above, the Successor Agency believes there is a valid basis £or a major change to the Department of F'inance's Column B of Exhibit 12 for our Successor Agency. This change would eithex significantly xeduce or aampletely eliminate tine aznaunt demanded by your office on July 9, 2012 for payment on 7uly I2, 2012. In this regard, we request your assis#ance in. participating in a meet and confer process with the Department of Finance to achieve this equitable result. By this lever, which is being copied #o Mr. Chris Hill at the DOF, we renew our formal xequest for a meet and confer consideration of this matter that was contained in our 7uly 9, 2012 ]etter to the DOF (copy attached). While we appreciate Mr. Hill's discussion with Lori Trevino of Successor Agency staff on 3u1y 10, 2012, #teat discussion. ditd z~ot provide the opportunity for a careful considsxation of the ---PAGE BREAK--- Contra Costa County Audztor-Controller Payment Demand Pursuant to Health &Safety Code § 341$3.5(b) July 12, 2012 Page 4 detailed infozxnation provided above in this Letter. We understand that, in with League of California Cries representatives on July 1l, 2012 the DOF indicated a wilFingness to conduct the kind of review we are ~cequesting and that it world nat seek apglicatzon of penal#~es during the pendency of such review or foilowin~; a review that resulted in an appropriate change i~ its Cotumn E figure. Your coopezation and participation with the Successor Agency and the DOF in this meet and confer process is mosk appreciated. Please £eel free to con#act zne ox Economic Development Managex Loxi Trevuio at (S 10) 215- 383 ar ltrevinolg~ci.el-cenrito.ea:us, if you have any questions regarding the above. Sincerely, Scott Hanin Designated Contact Official El Cerrito Successor Agency ec: Chzis Hill, Catifornia Dapartment of Finance ---PAGE BREAK--- THE CITY EL. GERR.ITL7 July 9, 2U i 2 Ana Matosantos, Finance Director Mark Hi11, Progxazn Budget Manager California Department of Finance redevelopment administxation@dof ca.gov Jahn Chiang, Can~roller T. Austin California Stata Controller's Office [EMAIL REDACTED] Robert Campbelt, Audztor-Contro3ler ~f~ce of the Anditoz•-Controller of the Coun#y of Contxa Costa [EMAIL REDACTED] Re: AB 1.84 "True Up" Payment Due Under HSC 34183.5 Ladies and Gez~tlezx~en: The Successor Agency to the El Cerrito Redevelopment Agency and the City of EI Cerrito (the "Successor Agency" and "Sponsoring Community") wish to meet az~d confer wzt.~. fhe Department of finance (the "DOF") to discuss fhs payment due on 7uly i2, 2012 undez Healt}z and Safety Code Section 34 83.5 (the "34I83.5 Payment"). The Successor Agency and Sponsoring Community also request that fhe DOS notify the Auditor-Cantraller of the County of Contra Costa and t1~e State Controller's 4ffce that zzo payment is dae and no penalties or sales t~ offsets should be assessed during the pendency of these discussions. Because serious concerns were zaised while AB 1484 was before the Senate Committee on the Budget azzd Fiscal Review an June 26-27, 20]2 regarding t1~e processes for calculating and COI~.BCtIrig t}lE 341$3.5 Payrx~ent, tha I70F t~Zat it would work with Sponsoring Communities and Successor Agencies to avert assessment of the p$nalty and offset provisions. We wish to immediately commence that process. The Bl Cezxito Redevelopment Agency (the "RDA" or "Dissolved RDA"} was dissolved on Rebruary 1, 2012. Prior to dissolution, the RDA received its December 2Q11 instatiment of tax incretx►ent from the County of Contra Costa {the "County") on December 16, ZOlI {tF~e "Last Tax Increment"). Since ABxI 26 was stayed at this time, the RDA deposited the Last Tax Increment into its reserve fund. The RDA, prior to February l; 2 12, used the proceeds of the Last Tax Ixxcrenasnt to pay costs of the RDA aut~iorized uzzder the Community Redevelopment Law. After February I, 2012, the Successor Agency used the rer~nainiag proceeds of the Last Tax Increz►~ent to pay costs listed on tl~e EOPS, and later, ROSS, att pursuant ABxI 26. 1 p890 San P~b10 Avenue, E1 Cerrito, CA 9453Q City Administration • (5 t 0) z t ~-4300 • ~f►x ~s a o} z r s-4s~~ ---PAGE BREAK--- California Department of finance AB I~84 "True Up"Payment Due Under HSG 34183.5 Juiy 9, 2012 Page 2 On July 3, 2012, DOF provided guidance on the 34183.5 Payment, which DOF refexs to as the "July True Up Process" {tie "Guidance"}, There is an error and an inconsistency between the Guidance and AB 1484. Heaitk~ and Safety Gode Section 34183.5(b}, added by AB J.484, provides as follows: "The amount to be retained by taxing entities pursuant €o paragraph of subdivision of Section 34183 for the Janucz~y 1, 20X2, through June 3Q, ZO1Z, period is deteYmined based on the IZeco,.~mized Obligation_ Payment Schedule approved by the Department of Finance pursuant to subdivision of Section 34179 urrd any amount determined to be owed pursuant to subdfvision " emphasis added) The zelevant portion of the Gruidance states that: ".for purposes of determining the amount of that a successor agency was authorized by Finance to expend for the .Ianuary 2012-June 2012 period, county auditor- controllers must use the amounts shown in Column E of the Exhibit .12 docurrtent on £~tis ivebpage. „ Column B o£Exhibit 12 deals only with a subset of the approved January through June 2012 Recognized l Obiigafion Payment Schedule {the "First ROWS"} and does not include a71 enforceable obligations 1 approved by DOF. Ixz paz-ticular, Column E includes only the portion of the First R4PS payable from tl~e Redevelopment Froperty Tax Trust fund (tha and fails to recognize that otkzex enforceable vbligatzons were payable from other sources, including the Last Taa~ Increment. The first RODS showed amounts to be paid from the Last Tax Increment as payable from "fund Balance" rather than from the RPT"TF, because at the time the Last Tax Ti~crement was received, ABxI 26 had been stayed, and the RPT"I'F did not eacist, To exclude from the approved First RODS those payments for enfoxceable obligations made fra~n the Last Tax Increment results in double payments by agencies, as fuz~ther highlighted. belflw. Had the system been in effect at the time floe Lash Tax Increment was paid, the distxibutzon waterfall that Abe Legislature directs to be simulated through Section► 34183.5(b) would first have allowed all enforceable obligations on the approved Fixst BOPS to be paid fronx aznowuts distributed under Section 34183(a)(2) before arriving at the residua( amount available to taxing entities under the distribution prescribed in Section 34183(a)(4). Unless the sntize enforceab3.e obligation payment amount shown in the First RC?PS is deducted from the Last Tax Increment, the Section 341$3.5(b}calculation will overstate the az~ount of revenues fra~n the Last Tax Increment. available for to the affected taxi2zg entities in a manner inconsistent with the Legislative intent that requires the use of all enforceable obligations listed on the First ROPS, not just a portion of them, as tl~a basis for the calculation. Since previous DOS guidance and AB 1484 stated that there would be no RPTT~ distribution on May 15, 2012 to make payments for appxovad enforceable obligations on the First ROPS, as a practical matter, the only source of fiends the Successor Agency dad to make their First RODS enforceable obligations payments was the Last Tax increment. Th.e new Guidance calaulatzo~z would zn effect re~uixe the Successor Agency to spettd the Last Tax ~icreuzent ervice over—once for the approved ezxfarceable obligations listed on the First ROFS and then again to make the 341.83.5 Payment. This is not caxasistent with ABx126 or AB 1484. ---PAGE BREAK--- California Department of Finance .A.B 1.484 "True Up" Payment Due Under HSC 34183.5 July 9, 2012 Page 3 further it is our position that no 34183.5 Payment is die beoause the R~'TT'F dial not exist until February 1, 2012 and thus there would be na residual from the RP'~'k' for the period for which the CAC is squired to calculate a residual distribution under Section 34183.5. Tha 34183.5 Payment viola#es numerous stata Taws, including Proposition lA and Proposition 25. The 34183.5 Payment also violates T?roposition 22, si~zzce the Last Tax Increment was "tax increment" of the tithe z~ was zeceived by the RDA and therefore oannot be rect~atected by the State. Please contact Economic Development Managez Lori Trevino at {514) 215-4383 or ltrevino(a)ci.el-cerrito.ca.us at your earliest convenience to arrange for our conference on this matter. In ~3ae meantime, we request your immediate confumation to us, tie Auditor-Controller of the County of Contra Costa, and the State Controller's Office that the Successor Agency and Sponsoring Caznmunity 34183.5 Payment obligation is suspended and postponed pending the outcome of our meet and confer discussions with DOF an. this matter. Thank you for your pxompt attention to our request. Sincerely, , r- s~o~ xa~~ City Mazxager cc: Senator Mark DeSaulnier, 7th Senate 3~istrict Nancy Skinner, I4th Assembly District Senate President pxo Tem Darrell Steinberg Steve Shea, Policy Consultant, Senate President pro Tern Darrell Steinberg Toni Hancock, 9th Assembly District Jennifer Rockwell, General Counsel, California Depart~zent of Finance Sky VJoodruf~ Gzty At#a~zaey, Meyers Nave Susan Bloch, Legal Counsel, Meyers Nave lack Nagle, Legal Counsel, Goldfarb & T.ipman ---PAGE BREAK--- p w~ ---PAGE BREAK--- ABx 1 26 — Redevelopment VIt~LCOME TD THE CAL~f4(tNlA Home ABx9 26 Redevetaprrrent Page 1 of 4 A~i~~ 26 Redevelopment Agency Dissolution JULY TRUE-UP PROCESS an June 27, 2012 the Governor signed AB 1484, which imposes important new tasks an county auditor-controlkers and successor agencies. Health and Safety Code (HSC) section 34183.5 subdivision as added by AB 148 clarifies that property tax distributed to redevelopment agencies in December 2011 or January 2012 should have been subject to distribution through the AB x1 26 mechanism. to part due to confusion about the Supreme GourYs order regarding the changes in deadlines under AB x1 26, Finance believes very few, if any, counties correctly adjusted the June 1 property tax payments to successor agencies to capture the amount of funds owed to taxing en#hiss for the January through June period. To accomplish the correct distribution of funds anticipated in AB x1 26 and as clarified in AB 4484, fhe following steps are now required: No later than July 9, 207 2, county auditor-controllers are required to notify each successor agency o#the "residual" amount it still owes to affected taxing entities (ATEs), if anything, pursuant to HSC section 34183 for the period covered by the January 2Q12 to June 2012 BOPS, after the payment of property tax-funded enforceable obligations ant{ agency administrative costs that were approved by finance. if the county audtor-con#roller applied any amounts owed to A7Es for the January to June 2p12 RAPS to fund enforceable obligations on the July thraugh C3ecember 2012 BOPS, this was incorrect. The amounts owed AT~s for the January to June 2012 RODS should be recomputed wi#hout any such deductions. AB 148 also provides that the county auditor-controller must not withhatd any distribution to A"~Es or successor agencies based an disputes or for any other reason, unless ordered to do so by a court. Thus, in the absence of a court order, any amo+ants held by caun#ies that are owed to AT~s or successor agencies for either the January through June period or the July through Qecembe~ period must be diskribu#ed imrr~edia#ely. Notice naed not be sent fo a successor agency if the county auditor-controller determines the successor agency does not owe any monies to the ATEs pursuant to HSC section 34183 for the January 2012 to June 20'f2 ROPS. County auditor-controllers are asked to provide Finance with not'sce #hat they have provided the required notice #o each successor agency the# owes an amoun# to the ATEs. The Finance notification shouEd be sent to the redeveEopment adminis#ration@dof,ca.gov e-mail address no later than July 3, 2012.7he notice should state as follows: "The xxx County Auditor-Controller's Office hereby affirms it has provided the successor agencies listed below with the notification required by Health and Safety Code section 34483.5 A #ist of those successor agencies to which bi{lings were sent and the amounts of those billings should be part of the notice to finance. For purposes of determining the tote! amount of property tax available to a successor agency for fhe January 2Q92-June 2412 ROPE, the county auditor-controller should include all property tax increrrtent remitted to the former RDA for the fall nt 2Q11 property tax distributipns. Typically, these took place in December 2411 or January 2Q12, but would also include any allocations sap to that ftrne made during fiscal year 2011-12. for purposes of de#ermining the amount of RP7TF that a successor agency was authorized by Finance to expend for the January 2Q12-.tune 2012 period, county auditor-controllers must use the amounts shown in EXHIBIT D http J/www.dal.ca.gov/assembly_bills_26-2~/view.php 7/5/2012 ---PAGE BREAK--- ~-1Bx1 26 — Rede~relopment Page 2 of 4 Column E of fhe Exhibit 12 document on this webpage. These amounts must be considEred final determinations as provided in AB T484. CounFy audikor-conEroElers should reflect in their calculations those N5C section 34 83 paymenks that were listed on the January 2012 to June 2012 RODS approved by finance. County auditor- controllers also should re€lect in their calcaEations any NSC section 34183 payments that the auditor-controller made on behalf of a successor agency, but which were not listed an the Ft~PS, during the per"sad covered by the January 2012 to June 2Al2 RODS. Coun#y auditor-controllers should use the special July prQCess to distribute to the AT~s those HSC section 34183 (1 } payments that were included an the Finance-approved January 2012 to June 20'12 FLOPS, but which were not remi~tsd by the successor agency to the ATEs. Counfycuditor-controllers should not, however, use the July process to distribute to the ATEs any HSC section 3483 payments currently owed to the successor agencies #hat were not included on the Finance-approved Janaary 2012 to June 2012 ROPS. AB 1484 provides for an ad}"ustment to be made in the next f2~PS distribution process in January 2013 to account for these particular unpaid payments. No later than July 42, 2012, each successor agency is required to remit to the county auditor-cantralEer the total amount specified in the above notification. Successor agencies must make the remittances in the form and manner specified by fhe county auditor-controller. If a successor agency fa91s to remit the required amount, county auditor-controllers should notify Finance by Juty 93, 2012. This notification shauEd be sent to the redevelopment admtnistraf[[EMAIL REDACTED] e-malt address. The notification should state the amount the successor agency was required to rerrtit, anti the amount actually remitted. One comprehensive notification should be provided from each county; in counties where multiple successor agencies fail to remit the required amount, please do not send a separate e-mail for each non-compliant successor agency. The required notification should have the following title in the e-mail sabject line: XXX County — iVotification of Successor Ageney failures to Remit ff aU cif a county`s successor agencies make the required remittances, a notice to that effect shouEd 6e sent to the [EMAIL REDACTED] e-mail address with the following title in the e» mail subject line: KXX County — Notification of Compliance With AB 1484 Retr~itfances No later than July 16, 2072, the county auditor-controller is required to pay to each ATE the amounts owed from funds tha# were remitted by the successor agencies. By July 26, 2072, the counEy audi#ar-controller is asked to notify Finance of the amounts provided to the AT~s. For purposes of this notification, county auditor-controllers should use the following excel spreadsheet form: Redevelopment Fursds AtEocation Reporting Farm (.xis. MB)The completed Excel spreadsheet form should be sent to the redeveEopment [EMAIL REDACTED] e-rrzail address, and should have the following #itle in the e-mail subject tine: XXX County July 2012 Reporting Form The Excel spreadsheet form should be submitted to Finance in Excel format — scanned pdf. copies, or copies provided in any form other than an Excel spreadsheet-are not acceptable. http://www.do£.ca.gov/assembly_bills_26-27/view.php 7/5/2012 ---PAGE BREAK--- ABx 1 2fi Redevelopment Page 3 of 4 The Exce[ spreadshEet form contains two tabs, respectively titled "Jan-June BOPS" and "July-Dec ROPS". Both tabs should be completed in accordance with the instructions contained therein. Improperly cample#ed spreadsheet forms will be returned. County auditor-controllers must not change the formulas in the spreadsheet form. Furthermore, county auditor-controllers must not lock cells, hide cells or columns, or otherwise make any changes to the spreadsheet form that would inhibit Finance's abiliFy to view the in#orrraation in a givEn cell or Column. Improperly modified spreadsheet forms must be corrected. There are signiflcan# penalties than can be applied if county auditor-controllers fail to periarm or successor agencies fail to pay required amounts under H5C section 34183.5. The deadlines provided in the faw are not discretionary snd are needed to remedy the state and local government cash situations. CONTACT 1NFt)RMATtC7N; To con#act the staff who are reviewing recognized obligation payment schedules and other aspects of implementa#tan of ABx1 26 and AB 1484, please e-mail: email redevelopment administrafion{?dof.ca.gov Or call (916) 445-1546 Persons wishing tv report actions taken by Successor Agencies, such as questionable payments or asset transfers, are encouraged to send an e-mail with pertinent details to the fallowing address: email r~devefopment hotlineCa~dof.ca.aov DEPARTMENT OF FINANCE AND STATE CONTROLLER UV~RLAPPING R~SPt?NSIBELITlES: Department of FinaRCe and the State Controller have some overlapping responsibikities and authorities under this statute. We intend #o exercise them jointly to the extent possible. Bath Controller and Finance staff will be reviewing enforceak~le obligation schedules and jointly determining which iEems to review in more detail and make objections to. To the extent we are able to agree, we wifi provide joint determinations. But both agencies reserve the right to take independent actions. Agancies should expect to be contacted by phone and e-rr►ail for more information and to answer questions front Finance and Controller employees. We expect that field audits may be necessary in some cases. The State Controller is authorized to recover its costs for activities under this s#atute from redevelopment property tax. it is our intent to fund their work from this source. BOND QUESTIONS: We are aware of some questions that have been raised by many in the financial community with regard to redevelopment agency bonds. The document I'snked to below provides Department of Finance views on the content of ABx1 26 that applies to these issues. While we cannot answer every specific question in this document, we wilt endeavor to provide guidance if provided with sufficient information. Please fonrvard your questions to the e-mail and phone numbers noted above. COMMON DISSOLUTION QUESTIONS: We are aEso aware of several questions that E~ave been asked with regard to specific dissolution issues not directly related to bonds. The document linked below has questions and answers to common issues. While we cannot answer every specific question in this docurrtent, we will endeavor to provide guidance if provided with sufficient information. Please forward your questions to the e-matt and phone numbers noted above, WEBPAGE 1.lNKS: RbPS Review l.ett~rs (ss~ed b„y Finance (as of 6/1/201.2 at 10:OOam} Q & A regardinq Recognized 4bligation Payment Schedules (.pdf,