1

Filed 5/13/22 City of Fresno v. Dept. of Finance CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

----

CITY OF FRESNO et al.,

Plaintiffs and Respondents,

v.

DEPARTMENT OF FINANCE et al.,

Defendants and Appellants.

C091324

(Super. Ct. No. 34-2015-

80002174CUWMGDS)

California laws dissolving redevelopment agencies (RDAs) and providing for their 

winding-down also provided that loans from a city to its former RDA were 
2

unenforceable. (Health & Saf. Code, § 34171, subd. (d)(2).)1 But some loans to a former 

RDA may be reinstated and paid if they were “loans for money” with a “required 

repayment schedule.” (§ 34191.4, subd. (b)(2)(A).)

In this case, the Department of Finance (Finance) disapproved reinstatement of 

13 loans from the City of Fresno (Fresno) to its former RDA.

2 However, the trial court 

granted Fresno’s petition for writ of mandate, finding the loans could be reinstated under 

section 34191.4, subdivision (b).3

Finance now contends the loans cannot be reinstated because (1) the loans were 

not “loans for money,” and (2) there was no “required repayment schedule” for the loans. 

Considering first whether there was a “required repayment schedule” for the disputed 

loans, we conclude the record supports a determination there was no such schedule. 

Accordingly, we conclude the trial court erred by finding the loans could be reinstated 

under 34191.4, subdivision (b).

We will reverse the judgment.

BACKGROUND

A

Before June 2011, the Community Redevelopment Law (§ 33000, et seq.) 

authorized RDAs to remediate urban decay and revitalize blighted communities. 

(California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 246 

(Matosantos).) To finance their activities, RDAs relied on “tax increment” financing --

1 Undesignated statutory references are to the Health and Safety Code.

2 Other loans were also disputed but are not at issue in this appeal.

3 We will refer to the appellants collectively as Finance and to the respondents 

collectively as Fresno.
3

tax revenue attributed to the increased value of property in the redevelopment project 

area. (Ibid.)

In June 2011, the Legislature passed Assembly Bill No. 26 (2011-2012 1st Ex. 

Sess.) (Assembly Bill XI 26), which dissolved RDAs and turned over the winding-down 

process to successor agencies. (Matosantos, supra, 53 Cal.4th at pp. 250-251.) The 

Legislature later adopted additional relevant provisions. (Stats. 2012, ch. 26, § 6 

(Assembly Bill No. 1484 (2011-2012 Reg. Sess.).) We will refer to the legislation 

dissolving RDAs, collectively, as the “Dissolution Law.”4

The Dissolution Law generally made agreements between an RDA and its 

sponsoring agency (here, the city that created the former RDA) unenforceable. However, 

in some instances, an oversight board for a successor agency could reinstate such loans. 

Section 34191.4, subdivision (b)(1), which provides for approval of loans from the 

sponsoring agency to the RDA, states, in part: “[U]pon application by the successor 

agency and approval by the oversight board, loan agreements entered into between the 

[RDA and the sponsoring agency] shall be deemed to be enforceable obligations provided 

that the oversight board makes a finding that the loan was for legitimate redevelopment 

purposes.” Section 34191.4, subdivision (b)(2)(A) provides that “loan agreements” 

include “[l]oans for money . . . where the former redevelopment agency was obligated 

to repay the money it received pursuant to a required repayment schedule.” (Italics 

added.)

B

As did the parties and the trial court, we will limit our analysis to two of the loans, 

with the understanding those two loans are representative of the remaining 11 loans. 

The analyzed loans were labeled “Loans 3 and 4” or, collectively, the “Central 

4 For a summary of the Dissolution Law, see Matosantos, supra, 53 Cal.4th at pp. 250-

251 and City of Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 494.
4

Business District Loans,” during these proceedings. Loan 3 was for $192,100 in 

January 1996, and Loan 4 was for $246,700, disbursed in two payments of $200,000 

and $46,700, in October 1996 and January 1997, respectively. The combined total 

of all the loans from Fresno to the former RDA identified in this litigation was more 

than $6 million, but, as noted, we will limit our analysis to Loans 3 and 4.

After the former RDA’s successor agency received a finding of completion under 

section 34179.7, the successor agency’s oversight board adopted resolutions finding that 

the loans from Fresno to the former RDA were enforceable obligations. However, 

Finance determined Loans 3 and 4 were unenforceable, finding the loan documentation 

did not support enforceability under section 34191.4. Fresno filed in the trial court a 

petition for writ of mandate under Code of Civil Procedure section 1085, challenging 

Finance’s denial of reinstatement of the loans.

The trial court considered five documents to determine whether Loans 3 and 4 

were eligible for reinstatement under section 34191.4:

(1) A 1963 agreement between Fresno and the former RDA concerning repayment 

of advances (the 1963 Agreement). This agreement provided that sums, either in money 

or the value of services, Fresno advanced to the former RDA for the Central Business 

District renewal project would be repaid to Fresno. The 1963 Agreement did not actually 

advance money but, instead, provided a framework for advancing and repaying money. 

It required the former RDA each year to furnish to Fresno a promissory note for the 

amount advanced to the former RDA in that fiscal year. It also provided: “All revenues 

received by the [RDA] pursuant to this Agreement shall be paid to City as soon as the 

same shall be received . . . .” “[H]owever, payment upon said note and each of them 

shall not commence until any and all bonded indebtedness of [the RDA] . . . shall have 

been repaid . . . .” The 1963 Agreement provided that each promissory note would bear 

interest at the rate of 4 percent per annum.
5

(2) A Cash Account Report. This report showed transactions in the former RDA’s 

bank account, including deposits and disbursements. It reflected the following three 

deposits, labeled as loan proceeds on the Central Business District project: $192,100 on 

January 26, 1996; $200,000 on October 14, 1996; and $46,700 on January 24, 1997. 

This report was audited as part of the former RDA’s audited financial statements. The 

entries do not state the source of the funds other than “LOAN PROCEEDS.” Fresno 

submitted an additional document purporting to show that the deposits of loan proceeds 

in the Cash Account Report were from Loans 3 and 4, but the trial court did not rely on 

it because Fresno did not explain who prepared the report and when it was prepared. 

The additional document also did not establish Fresno was the source of the funds 

received.

(3) A Reconciliation Statement. This document, identified as for “Tax Year 1997-

98,” reflects seven rows of amounts purporting to show indebtedness based on 

promissory notes. As the trial court noted, however, there is no proof these purported 

promissory notes actually existed because Fresno did not produce promissory notes. The 

Reconciliation Statement also does not identify who holds the promissory notes, to whom 

the former RDA is indebted, or payment terms and interest rates for the promissory notes.

(4) Fiscal Year 1997 and 1998 Budget Reports. The reports reflect receipt of 

“Loan Proceeds” for the Central Business District project matching the amounts for 

Loans 3 and 4. However, as the trial court observed, the budget reports do not identify 

the lender or the terms relating to the loan proceeds.

(5) Financial Statements/Auditor’s Report for fiscal year ending June 30, 1998. 

In this audited report showing advances received from Fresno, two entries appear to be 

consistent with Loans 3 and 4. One entry states: “Central Business District - $192,100 

advance of January 26, 1996, interest rate at 5.49%.” And another entry states: “Central 

Business District - $246,700 advance [of] June 30, 1997, bearing interest at 6.0%.”
6

In a similar report, however, for the fiscal year ending June 30, 1996, the 

statement included the Central Business District advance of January 26, 1996, for 

$192,000 in a list of cash advances to the former RDA from Fresno. At the bottom of the 

list, the report stated: “The above advances are payable on demand and secured by and 

payable from the incremental property tax revenues of the redeveloped properties. 

Payments on the advances and related interest expenditures are based on budgetary 

priorities as approved by the [former RDA].” (Italics added.)

At the end of its analysis of the Financial Statements/Auditor’s Report for fiscal 

year ending June 30, 1998, the trial court wrote: “When combined with the Cash 

Account Report and the Budget Reports, this is strong evidence that it was indeed the 

City that loaned $192,100 and $246,700, in cash, to the RDA on the dates and pursuant to 

the terms listed in the financial statements.” In a footnote, the trial court added: “In 

other words, the financial statements supply the information on the source of the loans 

that was missing from the Cash Account Report, the Reconciliation Statement, and the 

Budget Report.”

Having found that Fresno successfully established it made Loans 3 and 4 as “cash 

loans” to the former RDA, the trial court proceeded to address whether there was a 

“required repayment schedule.” Even though the 1963 Agreement required that the loans 

to the former RDA be reflected in promissory notes and the interest rates for Loans 3 

and 4 did not match the 4-percent rate stated in the 1963 Agreement, the trial court

looked to the 1963 Agreement to establish the repayment terms. The trial court 

concluded that, because the 1963 Agreement required the former RDA to pay to 

Fresno all tax-increment revenues it received after having satisfied the former RDA’s 

bond indebtedness obligations, the 1963 Agreement provided a “required repayment 

schedule.”

Having analyzed two of the 13 loans, the trial court entered a judgment that 

granted the petition for writ of mandate in part and remanded the matter to [Finance] to 
7

conduct its analysis of the remaining 11 loans in a manner consistent with the trial court’s 

analysis of Loans 3 and 4. Finance filed a notice of appeal, but this court dismissed the 

appeal because it was from an interlocutory remand, not a final judgment. (City of 

Fresno v. Department of Finance (C083084, June 5, 2019) [nonpub. opn.].) Finance 

then conceded that, in applying the trial court’s analysis of Loans 3 and 4 to the 

remaining 11 loans, Finance would be constrained to conclude that all of the loans were 

enforceable obligations under section 34191.4. The trial court entered judgment granting 

the petition for writ of mandate as to all 13 loans.

STANDARD OF REVIEW

“Courts exercise limited review in ordinary mandamus proceedings. They may 

not reweigh the evidence or substitute their judgment for that of the agency. They uphold 

an agency action unless it is arbitrary, capricious, lacking in evidentiary support, or was 

made without due regard for the petitioner’s rights. [Citations.] However, courts must 

ensure that an agency has adequately considered all relevant factors, and has 

demonstrated a rational connection between those factors, the choice made, and the 

purposes of the enabling statute. [Citation.] Because trial and appellate courts perform 

the same function in mandamus actions, an appellate court reviews the agency’s action de 

novo. [Citation.]” (Sequoia Union High School Dist. v. Aurora Charter High School

(2003) 112 Cal.App.4th 185, 195 (Sequoia Union).)

“In a petition for writ of mandate brought pursuant to Code of Civil Procedure 

section 1085 . . . , the petitioner bears the burden of pleading and proving the facts on 

which the claim for relief is based. (Code Civ. Proc., § 1109; Evid. Code, § 500; 

[citations].)” (California Correctional Peace Officers Assn. v. State Personnel Bd.

(1995) 10 Cal.4th 1133, 1153-1154.) Therefore, Fresno bore the burden of pleading and 

proving facts in the trial court to establish Fresno loaned money to the former RDA with 

a required repayment schedule. The trial court’s task in this regard was to determine 

whether substantial evidence supported Finance’s determination. This is just another way 
8

of saying the trial court’s task was, without reweighing the evidence, to determine 

whether Finance’s determination was “lacking in evidentiary support.” (Sequoia Union, 

supra, 112 Cal.App.4th at p. 195.) In other words, a mandamus proceeding is not a 

species of trial de novo in the trial court; instead, it is only a review of an agency’s action 

whether it was “arbitrary, capricious, lacking in evidentiary support, or was made without 

due regard for the petitioner’s rights. (Ibid.)

Fresno asserts Finance denied reinstatement of Loans 3 and 4 based solely on the 

absence of promissory notes to support the loans. With this assertion, Fresno attempts to 

limit Finance’s arguments and our review to whether the loans could be reinstated 

without promissory notes. (See Southern Cal. Edison Co. v. Public Utilities Com. (2000) 

85 Cal.App.4th 1086, 1111 [“We may not affirm an agency’s action on a basis not 

embraced by the agency itself.”].) However, we conclude Fresno’s attempt to thus limit 

Finance’s arguments and our review is unavailing because Finance’s denial of 

reinstatement of the loans was not so limited. While the correspondence between 

Finance and Fresno shows that Finance asked repeatedly for the promissory notes 

supporting Loans 3 and 4, it appears Finance requested the promissory notes because they 

would provide evidence to support reinstatement of the loans, not necessarily that 

promissory notes were the sine qua non of an agreement. Furthermore, the 1963 

Agreement stated the former RDA would provide a promissory note for the cash 

advances received from Fresno each fiscal year, so it is understandable that Finance 

would look for promissory notes as evidence of loans. In the end, Finance denied 

reinstatement of the loans because Loans 3 and 4 did not meet the requirements of 

section 34191.4, subdivision (b) for reinstatement. We will not, therefore, limit our 

review to whether a loan may be reinstated under 34191.4, subdivision (b) without a 

promissory note evidencing the loan.

Fresno notes that Finance denied reinstatement of Loans 3 and 4, which did not 

have promissory notes, but approved reinstatement of other loans that were evidenced by
9

promissory notes. We will not conclude from this circumstance that Finance must be 

limited on judicial review to whether a loan may be reinstated even though it was not 

supported by a promissory note. Finance has authority to ensure compliance with 

section 34191.4, subdivision (b) for each loan. (§ 34179, subd. (h).) Thus, it was 

justified in treating each loan separately, considering the differing evidence provided by 

Fresno for the loans.

DISCUSSION

Finance contends Fresno did not establish that Loans 3 and 4 were for money and 

that the former RDA was obligated to pay on a schedule. We will proceed directly to 

whether the former RDA was obligated to repay Fresno “pursuant to a required 

repayment schedule.” (§ 34191.4, subd. (b)(2)(A).)

Fresno’s argument regarding a required repayment schedule depends entirely on 

whether Loans 3 and 4 were made under the 1963 Agreement. According to Fresno, the 

1963 Agreement provided that “revenues received by the [former RDA] pursuant to this 

Agreement shall be paid to the City as soon as the same shall be received” by the former 

RDA, but that “payment upon said note and each of them shall not commence until any 

and all bond indebtedness of the Agency . . . shall have been repaid.” Thus, the former 

RDA was obligated, under the 1963 Agreement, to use all of its revenue to pay its bonded

indebtedness then to repay the loans. The trial court also relied on this provision of the 

1963 Agreement to conclude Loans 3 and 4 had a required repayment schedule.

Even if we were to assume that the 1963 Agreement established a “schedule” for 

repayment -- a question that seems debatable -- the repayment schedule would only assist 

Fresno in this case if Loans 3 and 4 were made under the 1963 Agreement. If Loans 3 

and 4 were not made under the 1963 Agreement, there was no required repayment 

schedule.

There is some evidence to support Fresno’s contention that Loans 3 and 4 were 

made under the 1963 Agreement. For example, the 1963 Agreement referred to the 
10

Central Business District renewal project and stated that the former RDA would become 

indebted to Fresno for “any and all sums which are advanced by the City in furtherance 

of the development of the [Central Business District renewal project] whether such sums 

be advanced by way of cash or the performance of services and the furnishing of 

materials.” Fresno claims the explicit reference to the Central Business District renewal 

project in the transfers for Loans 3 and 4 is sufficient evidence that the loans were, in 

fact, made under the 1963 Agreement. According to this assertion, even though there are 

no loan documents specifically referencing Loans 3 and 4, those loans were made for the 

Central Business District renewal project, and the 1963 Agreement also referred to loans 

made for the Central Business District renewal project.

But under our standard of review, we do not review the record for sufficient 

evidence to support the petitioner’s factual assertions; instead, we review the record 

for sufficient evidence to support the Agency’s decision. (Sequoia Union, supra, 

112 Cal.App.4th at p. 195.) Such a distinction makes a difference here, because although 

there is evidence that Loans 3 and 4 were made under the 1963 Agreement, there is also 

evidence that Loans 3 and 4 were not made under the 1963 Agreement.

The following evidence would support a fact-finder in concluding that Loans 3 

and 4 were not made under the 1963 Agreement. The 1963 Agreement was executed 33 

years before Loans 3 and 4. There is no document stating that Loans 3 and 4 were made 

under the 1963 Agreement. The 1963 Agreement provided for a 4 percent interest rate, 

but Loans 3 and 4 had interest rates of 5.49 and 6 percent, respectively. The financial 

statement and audit report for the fiscal year ending June 30, 1996 indicated that the cash 

advances on that statement (including Loan 3) were payable “on demand,” “based on 

budgetary priority as approved by the [former RDA],” which is not only inconsistent with 

a “schedule” of repayment, but is also inconsistent with the requirement of the 1963 

Agreement that “revenues received by the [former RDA] pursuant to this Agreement 

shall be paid to [the] City as soon as the same shall be received,” subject only to “any and 
11

all bonded indebtedness of the Agency . . . .” Fresno did not produce evidence showing 

that the former RDA made payments on Loans 3 and 4 as soon as it received revenue not 

required to satisfy its bond indebtedness obligations. And Fresno failed to produce 

promissory notes supporting Loans 3 and 4, even though the 1963 Agreement required 

the former RDA to deliver to Fresno a promissory note for loans made during each fiscal 

year. With all these deviations from the 1963 Agreement, a factfinder would be justified 

in concluding that Loans 3 and 4 were made under an agreement or multiple agreements 

independent of the 1963 Agreement. Indeed, Fresno makes no argument that it could not 

have loaned money to the former RDA under an agreement other than the 1963 

Agreement.

Another way of describing the state of the record is that the evidence does not 

show, as a matter of law, that Loans 3 and 4 were made under the 1963 Agreement. 

Therefore, we cannot say Finance’s denial of reinstatement of Loans 3 and 4 was lacking 

in evidentiary support. On the other hand, we can say Fresno failed to carry its burden of 

establishing that Finance’s determinations were lacking in evidentiary support. (Sequoia 

Union, supra, 112 Cal.App.4th at p. 195.)

Fresno makes several arguments that the deviations from the 1963 Agreement 

do not preclude a finding that Loans 3 and 4 were made under the 1963 Agreement. 

For the most part, these arguments lack merit because they do not recognize 

that Fresno bore the burden of showing that Finance’s decision lacked evidentiary 

support. (Sequoia Union, supra, 112 Cal.App.4th at p. 195.) We address each argument

in turn.

Fresno argues the former RDA’s failure to perform on Loans 3 and 4 consistent 

with the requirements of the 1963 Agreement is insignificant because, in Fresno’s words, 

“failure to perform nonmaterial terms of an agreement is not a breach and does not 

invalidate the contract.” This argument, however, misses the point that the 

inconsistencies between the 1963 Agreement and Loans 3 and 4 constitute substantial 
12

evidence Loans 3 and 4 were not made under the 1963 Agreement. It is not a question of 

breach or invalidation of a contract.

Fresno also argues: “[T]he fact that the Successor Agency [Fresno] could not 

locate any statements or promissory notes for [Loans 3 and 4], made decades ago, does 

not mean that they did not exist at one time. [Finance] cannot use the absence of 

evidence to infer that it never existed. Nor were promissory notes required to finalize 

the Agreement. Indeed, the 1963 Agreement does not condition the [former] RDA’s 

indebtedness on a promissory note.” Contrary to Fresno’s argument, the absence 

of statements and promissory notes supports a conclusion Loans 3 and 4 were not 

made under the 1963 Agreement. Fresno had the burden to produce evidence to the 

contrary.

Fresno further argues there was some evidence from which it can be inferred the 

former RDA complied with the required repayment schedule in the 1963 Agreement. 

But Fresno bore the burden of establishing that fact. And, even if it is true the former 

RDA complied with the repayment provisions of the 1963 Agreement, there is other 

evidence Loans 3 and 4 were not made under the 1963 Agreement -- for example, the 

inconsistent interest rates, the inconsistent repayment requirements, and the absence of 

promissory notes.

Fresno additionally argues the difference in the stated interest rates is irrelevant 

because the Dissolution Law provides for an interest rate of 3 percent on reinstatement of 

a loan between a sponsoring agency and its former RDA. (See § 34191.4, subd. (b)(3).) 

This argument also misses the legal point, which is that the difference in the interest rates

in the 1963 Agreement and the audited financial statements with respect to Loans 3 and 4

is evidence that Loans 3 and 4 were not made under the 1963 Agreement. 

Indeed, there is no evidence in this record that Fresno and the former RDA had the 

1963 Agreement in mind when they entered into Loans 3 and 4.
13

We therefore conclude Finance’s determination that Loans 3 and 4 could 

not be reinstated under 34191.4, subdivision (b) was not lacking in evidentiary support.

DISPOSITION

The judgment is reversed, and the matter is remanded with directions to enter 

judgment denying the petition for writ of mandate. Appellants are awarded their costs on 

appeal. (Cal. Rules of Court, rule 8.278(a).)

 /S/

MAURO, J.

We concur:

 /S/

HULL, Acting P. J.

 /S/

DUARTE, J.