Macy v. City of Fontana

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In 2011, the California Legislature adopted legislation which dissolved the redevelopment agencies (RA's) that had been formed by municipalities throughout the state under the provisions of the Community Redevelopment Law (CRL). Before their dissolution, the operations of RA's were funded by way of so-called "tax increment" financing. Shortly before the Legislature dissolved RA's, plaintiffs-appellants Virginia Macy, a low-income resident of the city; Libreria Del Pueblo, Inc.; and California Partnership filed a petition for a writ of mandate against the Fontana Redevelopment Agency alleging the agency failed to provide the low- and moderate-income housing required under the CRL. Plaintiffs asked for relief in the form of the payment of $27 million into the agency's low- and moderate-income housing fund (LMIHF). AB 26 created successor agencies that were given responsibility over certain obligations of each dissolved RA. Importantly, under the dissolution legislation, the liability of successor agencies was limited to the value of the assets those agencies received from their respective predecessor RA's. After enactment of AB 26, plaintiffs amended their petition and added defendant and respondent City of Fontana (the city), initially in its role as the successor agency provided by AB 26, and later also in its separate capacity as a municipal corporation. In its capacity as a municipal corporation, the city filed a demurrer to the petition, arguing that under AB 26 only a successor agency may be held liable for the preexisting obligations of an RA. The trial court sustained the demurrer without leave to amend. Plaintiffs appealed, but the Court of Appeal affirmed: the low- and moderate-income housing were never the liabilities of municipalities and their general funds. "An extension of RA statutory liabilities to municipalities and their general funds would require a very clear expression of the Legislature's intention to depart from the historical treatment of low- and moderate-income housing obligations; no such expression appears in AB 26 or later amendments to the dissolution legislation." View "Macy v. City of Fontana" on Justia Law