BRENTWOOD, CA – On June 9, 2015, the Brentwood City Council and Successor Agency Board (“Brentwood”) unanimously voted to appeal to the California Supreme Court a recent Court of Appeal decision regarding the former Redevelopment Agency for the City of Brentwood (“RDA”).
The Appellate Court decision was the latest development in a dispute between Brentwood and the State of California over actions that RDA and City took as far back as 2007 regarding various City improvements. In 2012 the State demanded that Brentwood return approximately $20 million of funds that were validly used to construct the improvements, and rather than return to the State money that had been legitimately spent (and that Brentwood maintains that it does not owe), a lawsuit was filed in July, 2013 challenging the constitutionality of the State’s demand.
This past May an Appellate Court held that the State’s demand was not unconstitutional and was permitted by the law governing the dissolution of redevelopment agencies.
Brentwood is very disappointed with the Court’s ruling, but remains confident that it was acting within the rules set by the State prior to and during the dissolution of the RDA and that it has had to respond to a State that changed the rules of the game in midstream.
Brentwood believes that its actions were protected by the California Constitution, and that it has a strong legal basis for its position.
Many California cities have been negatively impacted by the State’s decisions on Redevelopment and Brentwood’s position in this matter has been strongly supported by the League of California Cities, an organization that represents over 400 cities.
To continue to protect the City’s taxpayers, the City Council unanimously decided to appeal this ruling to the California Supreme Court.
Background
Before redevelopment agencies were dissolved as part of the Governor’s proposal to balance the State’s budget, the RDA made several payments to the City of Brentwood to fund five public improvement projects. These projects were part of the RDA and City’s long range planning to redevelop the downtown area and included refurbishing and widening sidewalks to make them more pedestrian friendly; installing new utilities; planting trees; and restoring a City park. The projects were a success, and since their completion, business development and public involvement in the downtown has improved.
Despite agreeing that these RDA transfers were legitimate, the State interpreted the law governing redevelopment dissolution to permit it to reverse these transactions years after they were made. On that basis, the State demanded the return of approximately $20 million of these funds—funds that were validly used to construct longstanding redevelopment projects and that had already been paid to contractors for work performed on those projects.
Rather than face the significant financial burdens associated with returning to the State money that had already been legitimately spent (and that Brentwood strongly believed it did not owe), in July 2013, a lawsuit was filed by the City and the Successor Agency to the RDA (collectively, “Brentwood”) that challenged the constitutionality of the State’s demand.
The Trial Court initially issued a tentative ruling in favor of Brentwood, and concluded that the State’s demand was unconstitutional. However, on April 2, 2014, the Trial Court reversed its tentative ruling and issued its final decision, which held that the State’s demand was not unconstitutional.
Brentwood appealed the Trial Court’s ruling to the Third District Court of Appeal. In that appeal the League of California Cities supported Brentwood, argued that the State’s demand was unconstitutional and described the substantial financial hardships that cities across California would incur if the Court ruled in the State’s favor. On May 29, 2015, the Appellate Court issued a decision affirming the Trial Court’s ruling. The Court held that the State’s demand was not unconstitutional and was permitted by the law governing the dissolution of redevelopment agencies.
