Opinion
D053646
7-9-2009
POWAY ROYAL MOBILEHOME OWNERS ASSOCIATION, Plaintiff and Appellant, v. CITY OF POWAY et al., Defendants and Respondents. CITY OF POWAY et al., Plaintiffs and Respondents, v. POWAY ROYAL MOBILEHOME OWNERS ASSOCIATION, Defendant and Appellant.
Not to be Published in Official Reports
The City of Poway (the City) owns the Poway Royal Mobilehome Park (the Park), and has financed the purchase, most recently, through the issuance of bonds in 1995 and a lease and lease-back arrangement with the Poway Redevelopment Agency (Redevelopment Agency). The issue here is whether the City and the Redevelopment Agency exceeded their authority in 2007 and 2008 by adopting an ordinance and resolutions approving the sale of bonds, and an amended lease and lease-back device, to allow the City to save several hundred thousand dollars per year by prepaying the 1995 bonds and taking advantage of lower interest rates. The Poway Royal Mobilehome Owners Association (Owners Association), whose members wish to purchase their spaces, contends the actions are illegal under Californias Community Redevelopment Law (CRL). (Health & Saf. Code, § 33000 et seq.) We disagree and affirm the judgment for the City and the Redevelopment Agency on their validation action, and the separate judgment for them on the Owners Associations reverse validation action.
Further statutory references are to the Health & Safety Code unless otherwise indicated.
FACTUAL AND PROCEDURAL BACKGROUND
In August 1983 the City adopted a resolution (Resolution No. 83-063) that designated a redevelopment "survey area." The resolution stated a study was required to determine whether establishing the boundaries of a redevelopment project, called the Paguay Redevelopment Project, within the survey area was feasible. The resolution directed the planning commission to conduct the study, select property within the survey area to be included in the redevelopment project area, and prepare a preliminary plan for the project. In December 1983 the City adopted a preliminary redevelopment plan, the purpose of which was to eliminate blight within the Paguay project area.
The Park, which has 399 spaces and is situated on approximately 50 acres of land, is in the survey area, and it was presumably originally in the Paguay Redevelopment Project area. In January 1991 the Redevelopment Agency purchased the Park with the intent of stabilizing rents and preserving affordable housing. It financed the purchase through the issuance of bonds, or certificates of participation (COPs), in the amount of $28,300,000 (1991 COPs).
In June 1993 the City adopted an ordinance (Ordinance No. 415) approving and adopting an amendment to the plan for the Paguay Redevelopment Project. As amended, the redevelopment project area now excludes some properties, including the property on which the Park is situated. The Park remains in the survey area.
In 1995 the Redevelopment Agency transferred ownership of the Park to the City. The same year, the City issued refunding COPs in the amount of $31,770,000 (1995 COPs), which prepaid the 1991 COPs and refinanced the Park. In connection with the 1995 COPs, the City leased the Park to the Redevelopment Agency (1995 site lease), and the Redevelopment Agency subleased the Park back to the City (1995 lease). Under the 1995 lease, the City makes annual rental payments to cover the debt service on the 1995 COPs.
Historically, the Park has had annual operating deficits, and it is estimated that a reserve account for the Park will be depleted in a few years. To rectify or ameliorate these problems, the City wishes to refinance the 1995 COPs to take advantage of lower interest rates that would reduce its debt service on the Park by several hundred thousand dollars a year.
On November 27, 2007, the City adopted two resolutions (Resolution Nos. R-07-19 and R-07-083), which authorize the sale of refunding COPs not to exceed $32,000,000 for the prepayment of the 1995 COPs. To accomplish the refinancing of the Park, the resolutions also approve a new site lease under which the City leases the Park to the Redevelopment Agency, and a new lease under which the Redevelopment Agency subleases the Park back to the City, and obligates the City to make annual lease payments to cover the debt service on the refunding COPs.
The Owners Association objects to this plan. On December 7, 2007, it filed a complaint under Code of Civil Procedure section 860 to determine the validity of the Citys resolutions.
At its February 5, 2008 meeting, the City Council approved the retention of new bond counsel and the designation of a new finance team to initiate proceedings for the refunding of the 1995 COPs through the sale of new COPs, if the Owners Associations lawsuit is resolved favorably. At its March 18, 2008 meeting, the City Council approved a resolution (Resolution No. R-08-06), which authorized the execution and delivery of new COPs not to exceed $33,000,000 to refund the 1995 COPs and refinance the Park at a lower interest rate. In the recitals, the resolution stated the Park was within a redevelopment survey area, the Redevelopment Agency "is authorized to acquire and dispose of real property within a survey area or for purposes of redevelopment, by lease or otherwise," and a fundamental purpose of redevelopment "is to expand the supply of low and moderate income housing and to provide an environment for the social, economic, growth and well being of all citizens." The City Council also approved a related resolution (Resolution No. R-08-014) pertaining to the refinancing and required documents. Further, the City Council approved an ordinance (Ordinance No. 673), which approved amendments to the 1995 site lease and 1995 lease to extend the lease terms and adjust payment, rather than using new leases as originally contemplated.
On March 19, 2008, the City and the Redevelopment Agency filed an action under Code of Civil Procedure section 860 against all interested persons to validate those actions. In May 2008 the Owners Association filed a supplemental complaint to address the Citys March 18 actions. The parties stipulated to the consolidation of their cases for trial.
On August 22, 2008, the court issued a tentative ruling in favor of the City and the Redevelopment Agency in both cases. In accordance with its tentative ruling, the court entered judgment for the City and the Redevelopment Agency on its validation action, and entered a separate judgment for them on the Owners Associations reverse validation action.
DISCUSSION
I
Validation Actions/Standard of Review
"The validation statutes, [Code of Civil Procedure] sections 860 through 870, authorize a public agency to bring an action to validate certain matters." (McLeod v. Vista Unified School District (2008) 158 Cal.App.4th 1156, 1165 (McLeod ).) "`Generally speaking, validation actions are designed to provide expedient, uniform procedures by which public agencies can obtain binding judgment as to the validity of public financing commitments such as "bonds, warrants, contracts, obligations or evidence of indebtedness . . . ." [Citations.] "`Assurance as to the legality of the proceedings surrounding the issuance of municipal bonds is essential before underwriters will purchase bonds for resale to the public."" (Poway Royal Mobilehome Owners Assoc. v. City of Poway (2007) 149 Cal.App.4th 1460, 1478-1479.) "`A validating proceeding differs from a traditional action challenging a public agencys decision because it is an in rem action whose effect is binding on the agency and on all other persons. [Citation.] Validation actions are `forever binding and conclusive. ([Code of Civ. Proc.] § 870.)" (McLeod, supra, at p. 1166.)
"If the public agency does not bring a validation action, `any interested person may bring an action within the time [60 days] and in the court specified by [Code of Civ. Proc.] [s]ection 860 to determine the validity of such matter. ([Code of Civ. Proc.,] § 863.) A validation action by an interested person is called a `"reverse validation action." [Citation.] `Under the statutory scheme, "an agency may indirectly but effectively `validate its action by doing nothing to validate it; unless an `interested person brings an action of his own under section 863 within the 60-day period, the agencys action will become immune from attack whether it is legally valid or not."" (McLeod, supra, 158 Cal.App.4th at p. 1166.) "`The scope of judicial review of a legislative type activity is limited to an examination of the record before the authorized decision makers to test for sufficiency with legal requirements. [Citation.] A substantial evidence review is limited to the record before the . . . city council; it is an examination of the proceedings before the entit[y] to determine if [its] actions were arbitrary, capricious, or entirely lacking in evidentiary support. The trial court reviews the decision-making process of the administrative agency and does not conduct its own evidentiary hearing . . . . [Citation.] [¶] On appeal, we apply the same standard of review. We examine the administrative record to determine whether substantial evidence supports the trial courts findings." (Poway Royal Mobilehome Owners Assoc. v. City of Poway, supra, 149 Cal.App.4th at p. 1479.)
II
Redevelopment/Lease Transactions
A
The Owners Association contends the new or amended lease and lease-back arrangement the City and the Redevelopment Agency approved in 2007 and 2008 to achieve repayment of the 1995 COPs and the restructuring of debt for the Park violates the CRL. We disagree.
"The CRL authorizes the formation of redevelopment agencies and empowers them to adopt redevelopment plans. [Citations.] The purpose of the CRL is to `promote the sound development and redevelopment of blighted areas and the general welfare of the inhabitants of the communities in which they exist by remedying such injurious conditions." (Community Development Comn of City of Oxnard v. County of Ventura (2007) 152 Cal.App.4th 1470, 1478.) A blighted area is one that is "predominantly urbanized" and the combination of specified conditions "is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extant that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment." (§§ 33030, subd. (b)(1), 33031.)
"A further `fundamental purpose of redevelopment is to expand housing opportunities for persons of limited means and employment opportunities for jobless, underemployed, and low income persons, as well as to provide an improved civic environment." (11 Miller & Starr, Cal. Real Estate (3d. ed. 2004) Community Development, § 30B:1, p. 4 (hereafter Miller & Starr).)
"The designation of a survey area is generally the first step in the adoption of a redevelopment plan. . . . The resolution designating a survey area must contain: (1) a finding that the area requires study to determine if a redevelopment project or projects within the area are feasible; and (2) a description of the boundaries of the area designated." (Miller & Starr, supra, § 30B:9, p. 33, fn. omitted, italics added; §§ 33310-33312.)
"If it is determined that redevelopment is feasible within the survey area, the planning commission may select a project area comprised of all or part of the survey area." (Miller & Starr, supra, § 30B:9, p. 34, italics added; Health & Saf. Code, § 33322.) "The project area must consist of a predominantly urbanized area of the community which is a blighted area, the redevelopment of which is necessary to effectuate the public purposes underlying the [CRL]." (Miller & Starr, supra, § 30B:9, p. 34, italics added; Health & Saf. Code § 33320.1.) The planning agency "shall formulate a preliminary plan for the redevelopment of each selected project area." (§ 33322, italics added.)
B
1
Specifically, the Owners Association contends the Redevelopment Agency lacks power to enter into a lease and lease-back arrangement because the Park is not located in the project area designated as the Paguay Redevelopment Project, and because the Park is not blighted and not subject to redevelopment activities such as "planning, development, replanning, redesign, clearance, reconstruction, or rehabilitation." (§§ 33020, 33021 [further describing redevelopment activities].) Under the plain language of the statutory scheme, however, those are not prerequisites to the contemplated property transactions.
"Among the activities that may be undertaken by a redevelopment agency in carrying out its statutory mandate, few are more central than the acquisition and disposition of property." (Beatty et al., Redevelopment in California (3d ed. 2004) p. 91.) Section 33391, the principal statutory authority for a redevelopment agencys acquisition of property, provides: "Within the survey area or for purposes of redevelopment an agency may: [¶] (a) Purchase, lease, obtain option upon, acquire by gift, grant, bequest, devise, or otherwise, any real or personal property, any interest in property, and any improvements on it, including repurchase of developed property previously owned by the agency. [¶] (b) Acquire real property by eminent domain." (Italics added.)
As a corollary, the CRL gives redevelopment agencies broad power to dispose of property. Section 33430 provides that "[a]n agency may, within the survey area or for purposes of redevelopment, sell, lease, for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber by mortgage, deed of trust, or otherwise, or otherwise dispose of any real or personal property or any interest in property." (Italics added.)
The meaning of a statute presents a question of law we review independently. We must "` give effect to statutes according to the usual, ordinary import of the language employed in framing them." (Russ Bldg. Partnership v. City and County of San Francisco (1988) 44 Cal.3d 839, 847.) "[W]e read the words of the statute according to their `usual, ordinary, and common sense meaning consistent with the statutes apparent purpose . . . ." (Al-Sal Oil Co. v. State Bd. of Equalization (1991) 232 Cal.App.3d 969, 976.) "`When the [statutory] language is clear and unambiguous, there is no need for construction." (Department of Fish & Game v. Anderson-Cottonwood Irrigation Dist. (1992) 8 Cal.App.4th 1554, 1562.)
A commentator has noted: "As the language of [section 33391] makes clear, a redevelopment agencys authority to acquire property is very broad. The geographic limitations on its [acquisition] authority extend explicitly throughout any designated survey areas and, because of the disjunctive `or in section 33391, also to the boundaries of the agencys territorial jurisdiction when employed for purposes of redevelopment." (Beatty et al., Redevelopment in California, supra, p. 91, fn. omitted, italics added.) Another commentator has similarly explained the language of section 33391 establishes "the geographic limitations on the exercise of [authority to acquire property] include not only the areas inside a redevelopment project, but also the abutting . . . area." (Schouten, Clear as Mud: Chapter 98 and Californias Community Redevelopment Law (2007) 38 McGeorge L.Rev. 216, 219.) The same analysis is true of a redevelopment agencys authority to dispose of property. (§ 33430.)
We agree that under the plain language of sections 33391 and 33430 the Redevelopment Agency has the authority to enter into the lease and lease-back arrangement with the City. The site lease and sublease here unquestionably serve a redevelopment purpose, the provision of low-cost housing. Contrary to the Owners Associations position, neither section 33391 nor section 33430 indicates that a redevelopment agencys acquisition or disposition of property in a survey area must be for redevelopment activities to cure blight, such as the "alteration, improvement, modernization, reconstruction, or rehabilitation." (§ 33021, subd. (a).) To the contrary, the statutes provide that a redevelopment agency may acquire or dispose of property "within the survey area or for purposes of redevelopment." (§§ 33430, 33391.) Had the Legislature intended to limit a redevelopment agencys authority of acquisition and disposition to areas of blight included in a redevelopment project area, it could have easily said so. Notably, section 33430, former subdivision (a) originally stated an agency could dispose of property "within the redevelopment area or for purposes of redevelopment," but in 1965 the Legislature amended section 33430, former subdivision (a) to substitute the word "survey" for the word "redevelopment." (Historical and Statutory Notes, 41A Wests Ann. Health & Saf. Code (1999 ed.) foll. § 33430, p. 30.)
In its opening brief, the Owners Association erroneously states section "33391 allows for a redevelopment agency to lease from others real property within a survey area for purposes of redevelopment." It omitted the word "or" between the words "area" and "for."
We cannot adopt the position the Owners Association urges without rewriting sections 33391 and 33340, which we decline to do. "We may not, under the guise of construction, rewrite the law or give the words an effect different from the plain and direct import of the terms used." (California Fed. Savings & Loan Assn. v. City of Los Angeles (1995) 11 Cal.4th 342, 349.)
2
Alternatively, the Owners Association contends the Park is no longer in the survey area. It asserts the Citys 1983 designation of the survey area shows the boundaries of that area were preliminary and subject to change. The Owners Association asserts the Citys 1993 Ordinance No. 415 "changed the survey area by designating exclusion areas on the survey map."
That ordinance, however, clearly amended only the project area for the Paguay Redevelopment Project. It is entitled "An Ordinance of the City Council of Poway Approving and Adopting an Amendment to the Redevelopment Plan for the Paguay Redevelopment Project and Adopting a Statement of Overriding Considerations." (Some capitalization omitted.) The ordinance speaks of the redevelopment plan for the project area, and the map for the project area; it does not even mention the "survey area." The ordinance does state that one of the purposes of the redevelopment was the "improvement and expansion of the communitys supply of housing (both inside or outside the Project Area), including opportunities for very low, lower and moderate-income households," which could include property inside the survey area but outside the project area, such as the Park. The trial court pointed out in its ruling that there is no evidence Ordinance No. 415 amended the survey area, but the Owners Association persists in that argument.
In the Owners Associations apparent view, the survey area and the project area are necessarily coterminous. That is incorrect, however, as a project area must include all or part of the property in a survey area. (Miller & Starr,supra, § 30B:9, p. 34; § 33322.) The property on which the Park is situated is within an exclusion area of the project area, but it remains in the survey area. The time within which to challenge the survey area boundaries expired long ago.
C
Additionally, the Owners Association contends that even if the Redevelopment Agency is authorized to enter into a lease and lease-back arrangement, the City lacks such authority. The Owners Association relies on section 33220, which provides in part: "For the purpose of aiding and co-operating in the planning, undertaking, construction, or operation of redevelopment projects located within the area in which it is authorized to act, any public body . . . may: [¶] (a) Dedicate, sell, convey, or lease any of its property to a redevelopment agency." The Owners Association asserts this provision prohibits a city from leasing property to a redevelopment agency for any purpose other than curing blight through redevelopment activities. Again, we disagree with the Owners Association.
The trial court relied on Government Code section 37350, which provides that a "city may purchase, lease, receive, hold, and enjoy real and personal property, and control and dispose of it for the common benefit." We agree this statute authorizes the City to undertake the contemplated property transactions, as the expansion of the supply of affordable housing is undisputedly for the common benefit. (See also Gov. Code, § 37380, subd. (a) [citys authority to lease property].)
The Owners Association asserts Government Code section 37350 is inapplicable because it is a general statute, whereas Health and Safety Code section 33220, subdivision (a) is a specific statute. "`The principle that a specific statute prevails over a general one applies only when the two sections cannot be reconciled." (People v. Baniqued (2000) 85 Cal.App.4th 13, 29; Code Civ. Proc., § 1859.) Here, the two statutes can be reconciled. Health and Safety Code section 33220, subdivision (a) applies exclusively to redevelopment projects, and Government Code section 37350 broadly applies to other situations where the public good is involved. Under the Owner Associations theory, a city could never lease property within a survey area to or from a redevelopment agency, no matter how laudatory the public purpose, unless the portion of the survey area in question was also within a project area. Health and Safety Code section 33220, subdivision (a) does not suggest the Legislature intended to tie a citys hands in that manner.
We conclude the courts findings are supported by substantial evidence in the administrative record.
DISPOSITION
The judgments are affirmed. The City and the Redevelopment Agency are entitled to costs on appeal.
WE CONCUR:
BENKE, J.
McINTYRE, J.