Eminent Domain Report

The parade of lawsuits involved in the redevelopment dissolution process continues to grow.   Here are a few quick updates:

• Five San Diego County cities have sued the state over AB 1484.  Chula Vista, National City, Oceanside, San Marcos and Vista have joined forces to attack the law.
• In Northern California, El Cerrito has also sued, claiming the "true up" payment it purportedly owes ($1,756,794.67) is unlawful.  Read more about the El Cerrito lawsuit in the July 17 El Cerrito Patch article, City Sues State, County Over $1.76 Million "Demand for Payment".  Other cities have also reportedly sued or are planning to sue. 
• The City of Brea is seeking a temporary restraining order against the implementation of AB 1484, claiming that compliance with the City's $15.5 million "true up" payment would risk putting the City in default on certain bond obligations. 
• The League of Cities plans to move ahead with a lawsuit challenging AB 1484.  According to League Executive Director Chris McKenzie: The board of directors of the League took this action because AB 1484 represents a clear and present threat to the ability of cities to meet the public safety and other vital public service needs of the city resident of California. We also strongly believe the sales tax and property tax "claw-back" provisions violate the constitution and are inconsistent with other parts of AB 1484 that declare that redevelopment successor agencies are separate and apart from city governments."
• Hercules, LLC (a subsidiary of Catellus) has sued the State Department of Finance, the City of Hercules and Contra Costa County over the Department of Finance's decision to reject a $53.3 million settlement entered into between Hercules, LLC and the Hercules Redevelopment Agency in 2010.  The City (as successor to the RDA) had listed the agreement as an enforceable obligation on the City's ROPS schedule, and the Oversight Board had approved the agreement as qualifying as enforceable.  However, the Department of Finance rejected the agreement, declaring it unenforceable (and therefore not subject to repayment).  The complaint sums up the lawsuit in a simple sentence:  The State of California’s Department of Finance (DOF) has attempted, by the stroke of its pen, to abrogate contractual rights worth tens of millions of dollars that are held by [Hercules, LLC].  An article in the Hercules Patch, Catellus Sues State Department of Finance, Hercules Over $53.3 Million Settlement Agreement, provides more details.