City of Santa Maria v. Cohen
Annotate this CaseAs successor to the former Redevelopment Agency of the City of Santa Maria, the City of Santa Maria owned parking facilities that were acquired and/or constructed with the proceeds of certain bonded indebtedness dating back to 1984. The city leased the parking facilities from the city as successor. The bonded indebtedness was most recently refinanced with bonds issued in 2003. In May 2012, the city as successor sought approval from the California Department of Finance to make payments due on the 2003 bonds from the redevelopment property tax trust fund (the fund). The department concluded that subdivision (a)(2)(B) of section 34183 applied because the bonds at issue “did not have tax increments pledged and therefore, must be paid with other funding sources.” The city and the city as successor sought a writ of mandamus to challenge the department’s determination that the fund could not be used for the bond payments. The trial court agreed with the department that because tax increment revenues were not expressly pledged to satisfy the bond payments, the city as successor was not entitled to use the fund to make the bond payments under subdivision (a)(2)(B) of section 34183. The trial court further concluded, however, that to the extent the city’s lease payments for the parking facilities are insufficient to cover the bond payments, the city as successor was entitled to use the fund to make the bond payments under subdivision (a)(2)(C) of section 34183, which allowed the fund to be used for “[p]ayments scheduled for other debts and obligations listed in the Recognized Obligation Payment Schedule that are required to be paid from former tax increment revenue.” The Court of Appeal concluded subdivision (a)(2)(C) of the statute did not apply to payments scheduled to be made on revenue bonds, and the trial court erred in concluding otherwise. Accordingly, the Court reversed and remanded with directions to enter judgment in favor of the department.
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