Client Successes Sep 28, 2016

BB&K Successful in Post-Redevelopment Case for City Client

Partners Victor L. Wolf, Iris P. Yang and Danielle G. Sakai Represent City of Fontana

Best Best & Krieger LLP partners Victor L. Wolf, Iris P. Yang and Danielle G. Sakai successfully represented the City of Fontana in challenging the California Department of Finance’s refusal to approve payments owed under a long-standing Owner Participation Agreement following the dismantling of redevelopment agencies. The decision, handed down in August, preserved the City’s ability to receive settlement payments under the OPA amounting to an estimated $50-$70 million over the next 15 years.

The legislation that dissolved redevelopment agencies in 2012 requires successor agencies to periodically file a Recognized Obligation Payment Schedule listing payments that are owed on the obligations that the successor agencies inherited from the dissolved redevelopment agencies. The ROPS must be approved by the successor agency’s oversight board and, ultimately, by the Department of Finance. The DOF disapproved the payments to the developer due under the OPA, preventing the developer from making settlement payments due to the City, on the grounds that the OPA violated public policy and other provisions of the Dissolution Law.

The OPA and its amendments were previously validated by the San Bernardino County Superior Court in four separate judgments pursuant to Code of Civil Procedure Sections 860, et seq. Despite these judgments and despite approving the OPA payments on seven previous ROPS, the DOF suddenly changed course. Following the precedent set in the recent ruling that Victor and Danielle secured in Macy v. City of Fontana 244 Cal.App.4th 1421 (2016), the trial court found that, because the OPA had been validated, it could not be challenged based upon the later-enacted Dissolution Law. As a result, the court held that the OPA constitutes an enforceable obligation and the DOF abused its discretion in refusing to approve the OPA payments.

The case is City of Fontana v. Michael Cohen, Director of Department of Finance, Sacramento County Superior Court Case No. 34-2015-80002138.

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