1

Filed 5/6/22 City of Oakland v. Department 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NOT TO BE PUBLISHED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 This opinion has not been certified for publication 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 OAKLAND et al.,

Plaintiffs and Appellants,

v.

DEPARTMENT OF FINANCE et al.,

Defendants and Respondents.

C090832

(Super. Ct. No. 34-2018-

80003024-CU-WM-GDS)

More than a decade after California dissolved its redevelopment agencies 

(RDA’s), we continue to grapple with questions regarding the former RDA’s continuing 

obligations. (Cuenca v. Cohen (2017) 8 Cal.App.5th 200, 207 (Cuenca); County of 

Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 44.) In dissolving the RDA’s, the 

Legislature recognized that some agreements and loans made in connection with 

redevelopment projects would require continued funding. (Cuenca, at p. 207; Health & 

Saf. Code, § 34191.4, subd. (b)(2)(C)(i).)1 As part of the Dissolution Law, the 

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

the panoply of statutes in the Health and Safety Code that govern payment of enforceable 

obligations incurred by the now-dissolved RDA’s as the Dissolution Law.
2

Legislature specified that enforceable obligations may be paid only under the oversight of 

the Department of Finance (DOF) and State Controller. (City of Emeryville v. Cohen

(2015) 233 Cal.App.4th 293, 298-299 (City of Emeryville).) As relevant to this case, the 

primary manner in which DOF exercises its continuing oversight of payment of 

enforceable obligations of the former RDA’s is by review of the recognized obligation 

payment schedule (ROPS).

This appeal focuses on two items that DOF rejected in reviewing ROPS submitted 

by the Successor Agency to the Oakland Redevelopment Agency (Successor Agency). 

The first involves item 426 in which a loan between the City of Oakland (City) and its 

former RDA to fund the West Oakland Projects Initiative was reinstated by resolution of 

the Successor Agency. The second was item 370, which relates to staffing costs required 

to ensure completion of several housing projects. After unsuccessful meet and confer 

efforts with DOF, the City and the Successor Agency sought a writ of traditional mandate

in superior court to compel DOF to pay various ROPS items denied by DOF. The trial 

court heard the matter and issued a ruling agreeing with DOF’s conclusion that none of 

the items for which the City and Successor Agency sought approval were enforceable 

obligations. The City and the Successor Agency timely appealed from the judgment.

2

On appeal, appellants limit their focus to the denials of ROPS items 370 and 426. 

Appellants contend (1) the loan between the City and the Successor Agency relating to 

the West Oakland Projects Initiative constitutes an enforceable obligation under the 

Dissolution Law, (2) DOF lacked authority to deny funding for the West Oakland

Projects Initiative on a ROPS after DOF approved the loan as an enforceable obligation, 

and (3) staffing costs required while the Successor Agency ensures completion of

2 Defendants in the trial court were DOF and then-director of DOF, Michael Cohen. 

On appeal, the Attorney General appears to have filed briefing only on behalf of DOF.
3

construction for various housing assets continue to be enforceable obligations of the 

Successor Agency.

We conclude that neither the cooperation agreement nor the funding agreement on 

which appellants rely constitute a loan that can be considered an enforceable obligation 

under the Dissolution Law. Whether considered singly or together, the cooperation and 

funding agreements lack the hallmarks of an actual loan but rather represent agreements

to agree. Nothing in the Dissolution Law prevented DOF from reviewing the purported 

loan on appellants’ 2016-2017 ROPS just because DOF declined to previously review the 

Successor Agency’s passage of a resolution purporting to reinstate the “loan.” As to the 

staffing costs, we conclude that under the Dissolution Law, the transfer of housing assets 

to the City meant that all related obligations also passed to the City. Thus, the Successor 

Agency could no longer claim staffing costs as an enforceable obligation. Accordingly, 

we affirm.

BACKGROUND

Dissolution of California’s Redevelopment Agencies

This court has previously explained that “[i]n the midst of California’s fiscal 

emergency in 2011, the Legislature enacted two measures that implemented the 

dissolution of the roughly 400 redevelopment agencies then in existence. (Assem. Bill 

[No.] 26 [(2011-2012 1st Ex. Sess.) enacted by Stats. 2011, 1st Ex. Sess. 2011-2012, 

chs. 5-6 (Assembly Bill 1X 26)] & Assem. Bill No. 27 (2011-2012 1st Ex. Sess.) enacted 

by Stats. 2011, 1st Ex. Sess. 2011-2012, chs. 5-6 (Assembly Bill 1X 27); see generally 

[California Redevelopment Assn. v. Matosantos (2011)] 53 Cal.4th [231,] 241, 245-246 

[(Matosantos I)].) Assembly Bill 1X 26 required the redevelopment agencies to conclude 

their activities and dissolve. (Matosantos I, at p. 241.) Although Assembly Bill 1X 27 

would have allowed redevelopment agencies to continue if they paid into funds 

benefitting schools and special districts, the California Supreme Court struck down this 

alternative as conflicting with the California Constitution’s prohibition on requiring such 
4

payments. (Matosantos I, at p. 242; Cal. Const., art. XIII, § 25.5.) After Matosantos I, 

redevelopment agencies had no option but to wind down and dissolve. (City of 

Emeryville, supra, 233 Cal.App.4th at p. 298.)

“Winding down California’s redevelopment agencies and their projects proved to 

be no simple task. A year after enacting Assembly Bill 1X 26, the Legislature passed 

Assembly Bill [No.] 1484 [(2011-2012 Reg. Sess.)] to clarify and tighten restrictions on 

the funds from redevelopment projects. (Stats. 2012, ch. 26, §§ 6-35.) In addition to 

winding down the redevelopment agencies, the Legislature also eliminated the tax 

increment. Subdivision (a) of section 34189 provides in pertinent part: ‘all provisions of 

the Community Redevelopment Law that depend on the allocation of tax increment to 

redevelopment agencies, including, but not limited to, Sections 33445, 33640, 33641, and 

33645, and subdivision (b) of Section 33670, shall be inoperative.’

“Although the Legislature eliminated California’s redevelopment agencies, it 

provided for the continuing validity of enforceable obligations previously created by the 

redevelopment agencies. . . . (§ 34171, subd. (d)(1)(D).) To ensure that claimed 

enforceable obligations met the criteria set forth in the Dissolution Law, the Legislature 

provided that ‘[e]ach oversight board . . . has a fiduciary duty towards “holders of 

enforceable obligations and the taxing entities that benefit from distributions of property 

tax” (§ 34179, subd. (i)) to carry out its duties, which include the duty to review specified 

actions by the successor agencies, including “[e]stablishment of the Recognized 

Obligation Payment Schedule.” (§ 34180, subd. (g).) The recognized obligation 

payment schedule (ROPS) is “the document setting forth the minimum payment amounts 

and due dates of payments required by enforceable obligations for each six-month fiscal 

period . . . .” (§ 34171, subd. (h).) The successor agency has a duty to “[c]ontinue to 

make payments due for enforceable obligations.” (§ 34177, subd. (a).) Thus, to help 

ensure the orderly windup and dissolution of the redevelopment agencies, the ROPS lists 

what remaining enforceable obligations exist.
5

“ ‘To ensure each ROPS is accurate, both the [DOF] and the . . . State Controller 

. . . have the authority to require documentation of purported enforceable obligations, and 

they and any “taxing entity” have authority to sue “to prevent a violation under this part

. . . .” (§ 34177, subd. (a)(2).) The [DOF] also has authority to “review an oversight 

board action taken pursuant to” Assembly Bill 1X 26. (§ 34179, subd. (h).)’ (City of 

Emeryville, supra, 233 Cal.App.4th at pp. 298-299.)

“Under the Dissolution Law, successor agencies could either retain responsibility 

for the ‘housing functions’ previously performed by the redevelopment agencies, or 

transfer the responsibility to a ‘ “housing successor.” ’ (§ 34176, subd. (a)(1) & (3).) If a 

successor agency transferred responsibility to a housing successor, the housing successor 

assumed ‘all rights, powers, duties, obligations, and housing assets,’ except for ‘any 

amounts on deposit in the [Housing Fund] and enforceable obligations retained by the 

successor agency.’ (Id., subd. (a)(1).) DOF is charged with responsibility to review 

whether a ‘transferred asset is deemed not to be a housing asset,’ in which case it must be 

returned for allocation to the taxing entities. (Id., subd. (a)(2).)

“Under section 34177, ‘Successor agencies are required to [¶] . . . [¶] (d) Remit 

unencumbered balances of redevelopment agency funds to the county auditor-controller 

for distribution to the taxing entities, including, but not limited to, the unencumbered 

balance of the [Housing Fund] of a former redevelopment agency.’ The Dissolution Law 

requires successor agencies to retain licensed accountants ‘to conduct a due diligence 

review to determine the unobligated balances available for transfer to taxing entities’ that 

are (1) held in the Housing Fund, and (2) former redevelopment agency assets held by the 

successor agency in any other form or fund. (§ 34179.5, subds. (a), (c)(1)-(5).) The 

successor agency must review and approve each due diligence review, followed by 

review and approval by DOF. (§ 34179.6.) Under section 34179.6, DOF has the 

prerogative to adjust the amounts deemed unencumbered. (§ 34179.6, subds. (c) & (d).) 

The successor agencies then remit the unencumbered moneys to the county auditor-
6

controller, who transfers the moneys to the taxing entities. (§ 34179.6, subd. (f).)” 

(Cuenca, supra, 8 Cal.App.5th at pp. 210-212.)

West Oakland Projects Initiative Loan (Item 426)

As pertinent to the West Oakland Projects Initiative, the City committed $2.69 

million in funds to its former RDA under a 2004 cooperation agreement that was 

confirmed in a 2011 funding agreement to pay third parties for construction of 

redevelopment infrastructure projects in West Oakland. The City self-financed the 

infrastructure costs from its general purpose funds with the understanding its RDA would 

use redevelopment funds to reimburse the City for its costs. Projects planned under the 

West Oakland Projects Initiative included a teen center, a streetscape project, as well as 

additional capital improvements aimed at existing physical blight.

The Dissolution Law originally “provided (with exceptions) that agreements 

between a City and its RDA are not enforceable. ([§ 34171, subd. (d)(2);] [a]dded by 

Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5, § 7.) Assembly Bill No. 1484 (2011-2012 

Reg. Sess.) did not change section 34171, subdivision (d)(2) in any way. But it did add 

section 34179.5, which in part provided for the [due diligence review], and section 

34179.6, which described the procedures following such review. (See Stats. 2012, ch. 26, 

§§ 17-18.) [¶] Section 34179.5, subdivision (b)(2) provides in part: ‘ “Enforceable 

obligation” includes any of the items listed in subdivision (d) of Section 34171 [and] 

contracts detailing specific work to be performed that were entered into by the former 

[RDA] prior to June 28, 2011, with a third party that is other than the city . . . that created 

the former [RDA.]’ (Italics added; see Stats. 2012, ch. 26, § 17.)” (City of Grass Valley 

v. Cohen (2017) 17 Cal.App.5th 567, 585 (Grass Valley); see City of Brentwood v. 

Campbell (2015) 237 Cal.App.4th 488, 495 (Brentwood I).) 

In September 2015, the Legislature amended the Dissolution Law to allow for 

reinstatement of some agreements between cities and their former RDA’s. (§ 34191.4, 

subd. (b)(1)-(2).) “Under section 34191.4, subdivision (b)(1), ‘loan agreements’ between 
7

an RDA and city ‘shall be deemed to be enforceable obligations provided that the 

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

purposes.’ . . . [¶] However, ‘loan agreement’ is defined by this section to include ‘[a]n 

agreement between the former redevelopment agency and the city . . . under which the 

city . . . contracted with a third party on behalf of the former redevelopment agency for 

the development of infrastructure in connection with a redevelopment project as 

identified in a redevelopment project plan and the former redevelopment agency was 

obligated to reimburse the city . . . for the payments made by the city . . . to the third 

party.’ (§ 34191.4, subd. (b)(2)(C)(i), italics added.)” (City of Brentwood v. Department 

of Finance (2020) 54 Cal.App.5th 418, 429 (Brentwood II).) Section 34191’s provision 

that allowed reinstatement of city/former RDA agreements was made retroactive to 

“actions occurring on or after June 28, 2011.” (§ 34191.4, subd. (d).)

As pertinent to this appeal, the City and its RDA entered into a funding agreement

relating to various redevelopment projects – including West Oakland redevelopment 

projects – on March 3, 2011. An exhibit to the funding agreement listed more than 200 

RDA projects totaling more than half a billion dollars. 

In July 2013, the Successor Agency’s oversight board made a finding that the loan 

between the City and its former RDA for the West Oakland Projects Initiative totaled 

$2.69 million and was for legitimate redevelopment purposes “to alleviate physical and 

economic blight conditions in the West Oakland Redevelopment Project Area.” In 

support of the finding, the Successor Agency’s oversight board received a staff report that 

detailed the projects encompassed within the West Oakland Projects Initiative. 

The Successor Agency found that the loan constituted an enforceable obligation of 

the Successor Agency to the City and that terms of the loan conformed with section 

34194.4, subdivision (b). Based on these findings, the Successor Agency oversight board 

passed resolution No. 2013-16 (Resolution) to recognize the loan indebtedness of the 

Successor Agency as an enforceable obligation under section 34194.4, subdivision (b). 
8

In pertinent part, the Resolution stated that “redevelopment funds totaling $2.69 million 

were committed by the former Redevelopment Agency, starting in 2008, to pay for 

certain public improvements and grants to private entities in the West Oakland 

Redevelopment Project Area, as more particularly set forth in the staff report 

accompanying this Resolution, via a Cooperation Agreement entered into between the 

City of Oakland and the Redevelopment Agency in 2004 and a Funding Agreement 

between the City and the Redevelopment Agency entered into in 2011 . . . .”

The staff report recommending the adoption of the Resolution enumerated the 

projects comprising the $2.69 million indebtedness to be deemed an enforceable 

obligation under the Dissolution Law. None of the third party contracts predated the 

2004 cooperation agreement. Two third party contracts predated the 2011 funding 

agreement, but the remaining 15 third party contracts postdated both the cooperation 

agreement and the funding agreement.

On July 30, 2013, the Successor Agency transmitted the Resolution to DOF along 

with a description of the loan. The Successor Agency noted that “[t]his loan originated in 

2008 and is payable over a three-year period commencing in 2014.” The information 

transmitted to DOF also included a repayment schedule and explanation for the method 

of repayment if the amount of real property tax trust funds available were insufficient to 

make full payment.

On August 1, 2013, DOF acknowledged receipt of the Resolution and informed 

the Successor Agency: “Pursuant to [section] 34179[, subdivision ](h) the Department of 

Finance (Finance) may request a review of Oversight Board actions submitted to Finance. 

This email serves as notice that Finance is not initiating a review of . . . Resolution No. 

2013-016. [¶] However, the repayments of this loan is subject to Finance’s review and 

approval on a subsequent Recognized Obligation Payment Schedule before they can be 

considered enforceable.”
9

In September 2013, the City submitted a ROPS for 2013 to the first half of 2014. 

After a meet and confer, DOF denied item 426 – relating to repayment of the West 

Oakland Projects Initiative loan under the Resolution. DOF acknowledged that “the 

Agency may place loan agreements between the former redevelopment agency and 

sponsoring entity on the ROPS as an enforceable obligation, provided the oversight board 

makes a finding that the loan was for legitimate redevelopment purposes pursuant to 

[section] 34191.4[, subdivision ](b) (1).” However, DOF denied payment of the loan 

under the Resolution because the Dissolution Law “specifie[d] loan or deferral 

repayments shall not be made prior to the 2013-14 fiscal year.” Thus, DOF advised that 

“the Agency must wait until the ROPS residual pass-through distributions are known for 

fiscal year 2013-14 before requesting funding for this obligation. Therefore, this item is 

not eligible for funding at this time.” (Italics added.)

The Successor Agency determined that the tax increment was sufficient and 

requested repayment of the loan as item 426 on ROPS for the fiscal year 2016 to 2017. 

In May 2016, DOF denied payment of item 426. DOF reasoned that the RDA had lacked 

power to create any obligation after June 27, 2011, and the item related to contracts 

entered after that date. DOF stated: “During the Meet and Confer process, the Agency 

provided a summary of actual expenditures. The summary shows that expenditures 

incurred by the City started in fiscal year 2011-12, which were in accordance with the list 

of projects in the First Amendment to Funding Agreement dated March 25, 2011, 

between the City and the former RDA. Additionally, documents provided by the Agency 

indicated that contracts entered into by the City were after June 27, 2011. As such, the 

outstanding balance as of June 27, 2011, was $0 for the loan agreement approved by the 

Oversight Board (OB) in OB Resolution 2013-16.”

Successor Agency Staffing Costs (Item 370)

The Successor Agency transferred housing assets to the City that were listed on a 

housing assets transform form that was – in the portion pertinent to this appeal –
10

approved by DOF. Although the housing assets were transferred to the City, the 

Successor Agency retained various housing obligations related to approximately six loan 

agreements related to uncompleted housing projects. These loan agreements are for the 

1574-1590 7th Street affordable housing site; 3701 Martin Luther King, Jr., Way 

affordable housing site; 3829 Martin Luther King, Jr., Way affordable housing site; 715 

Campbell Street affordable housing site; 1672 7th Street affordable housing site; and 

1666 7th Street affordable housing site. These contractual obligations required the 

Successor Agency to submit a predevelopment schedule; secure all necessary financial 

commitments; satisfy all bond and insurance requirements; obtain all necessary permits, 

licenses, and environmental reviews; and diligently pursue construction under the City 

issued occupancy certificates for the project.

Based on the Successor Agency’s obligations to complete the housing projects, it 

sought funding for staff costs. It appears that DOF approved these staffing costs on 

ROPS I and II. It then appears that DOF rejected the staffing costs in ROPS III. In a 

meet and confer process, the Successor Agency explained that the Dissolution Law 

“provides that the cost of employees performing direct project management work on 

enforceable obligations are considered part of the cost of those obligations, and are not 

administrative expenses.” DOF was persuaded and noted that “the Agency provided a 

breakdown of staff costs incurred during the ROPS III period for each position by task 

for each project. The ROPS III staff costs totaled $849,314 and the Agency estimates the 

ROPS 13-14A staff costs will be $870,142. Therefore, Finance is approving Item 370 in 

the amounts of $849,314 and $870,142 for ROPS III and ROPS 13-14A, respectively.”
11

DOF continued to approve item 370 on subsequent ROPS. However, in May 

2016, DOF denied payment of item 370.3 DOF reasoned: “It is our understanding these 

costs are related to housing obligations approved for transfer on the Housing Asset 

Transfer (HAT) form (i.e., real property, encumbrances, and/or loan receivables) to the 

Housing Successor Entity. Pursuant to [Health and Safety Code] section 34176[, 

subdivision] (a)(1), the Agency may retain enforceable obligations related to housing 

assets transferred to the Housing Successor Entity. However, there are no contractual 

agreements obligating the Agency to perform project management on these housing 

assets. Therefore, because the housing assets have been transferred, related project 

management costs are the obligation of the Housing Successor Entity, not the Agency.”

Petition for Writ of Mandate

In December 2018, the City filed a petition for writ of mandate to compel DOF to 

reverse its denials of several ROPS items. DOF filed opposition. The trial court heard 

the matter and denied the petition. 

Regarding item 426, the trial court rejected the loan between the City and the 

Successor Agency as an enforceable obligation. The trial court noted the 2004 

cooperation agreement but concluded that, “[s]ubject to caveats, the Cooperation 

Agreement required [the redevelopment agency] to repay the City, but not on any specific 

timeline. The Cooperation Agreement did not obligate the City to fund or assist with any 

specific project.” As to the 2011 funding agreement, the trial court found that “[t]he 

Funding Agreement incorporated the Cooperation Agreement by reference and 

authorized the City to carry out numerous redevelopment projects subject to [the RDA’s] 

reimbursement of costs incurred. [The RDA] was specifically required to ‘advance’ $258 

3

In reporting the results of its review of the 2016-2017 ROPS, DOF denied and 

reduced several items on the ROPS. At this point, however, only items 370 and 426 

remain in contention. We limit our review to these two items.
12

million by June 30, 2011 ‘to partially fund the Projects.’ To the extent additional funding 

might be required in the future, [the RDA] would provide it from its available tax 

revenues, but not on any . . . timeline. The City was required to provide [the RDA] with 

quarterly reports of progress made on the projects, and [the RDA] would make additional 

payments ‘upon the request of the City or as scheduled by the City, and as otherwise 

necessary[.]’ The City did not contract with any third parties to begin construction until 

after [Assembly Bill No. IX] 26 [(2011-2012 1st Ex. Sess.)] went into effect. 

Nonetheless, by January 2012, the City had incurred the $2.69 million pursuant to thirdparty construction contracts.”

The trial court rejected the proposition that the loan in item 426 constituted an 

enforceable obligation because, under the “definitions in [section] 34191.4[, 

subdivision ](b)(2), neither the Cooperation Agreement nor the Funding Agreement 

qualifies as a loan. Neither conforms to subd[ivision] (b)(2)(A) because neither 

agreement involved a transfer of money to [the RDA]. The Cooperation Agreement 

provided a framework under which the City could assist [the RDA] with redevelopment, 

but it did not effectuate any concrete transaction. Moreover, the only transfer specifically 

required under the Funding Agreement was the $258 million transfer from [the RDA] to 

the City. Additionally, the agreements do not conform to subd[ivision] (b)(2)(A) because 

neither contains a ‘required payment schedule.’ [The Successor Agency] purported to 

impose a repayment schedule when it passed . . . Resolution 2013-016. But [section]

34191.4[, subdivision ](b)(2)(A) describes loans with repayment schedules, not 

resolutions with such schedules.” The trial court further reasoned, “Nor do the 

Cooperation Agreement and Funding Agreement constitute a loan under subd[ivision]

(b)(2)(C). That subdivision defines loan as a sponsor agreement ‘under which the 

[sponsor] city . . . contracted with a third party on behalf of the former . . . [RDA] . . . for 

the development of infrastructure.’ ”
13

As to staffing costs, the trial court determined that the item could not be 

considered an enforceable obligation. The trial court reasoned, “Enforceable obligations 

under [section] 34171[, subdivision ](d) are limited to RDA[’s] former obligations, not 

their sponsor entities’ obligations. (See Cuenca v. Cohen (2017) 8 Cal.App.5th 200, 

211.) Whether or not redevelopment employees since 1983 have continued to receive the

same pension benefits as those provided under the earlier contract between [the RDA]

and CalPERS, only the City has been contractually obligated to fund redevelopment 

employees’ pensions for the past 36 years. Moreover, only the City is a ‘contracting 

agency’ under the California Public Employees’ Retirement Law. (See Gov[.] Code[,]

§§ 20022, 20460, 20532, 20806.) As a result, only the City has ‘legally enforceable’

payment obligations in connection with redevelopment employees’ pensions. (See . . .

§ 34171[, subdivision ](d)(1)(C).) Thus, DOF was not required to treat the City’s 

pension obligations as [the Successor Agency’s] enforceable obligations.” (Fn. omitted.)

The trial court denied the writ petition and entered a judgment in favor of DOF. 

The City and the Successor Agency timely filed a notice of appeal.

DISCUSSION

I

Principles of Review

In this case, we are presented with questions of statutory interpretation under the 

Dissolution Law. “The fundamental objective of statutory interpretation is to determine 

the Legislature’s intent.” (County of San Bernardino v. Cohen (2015) 242 Cal.App.4th 

803, 816.) “ ‘ “[W]here the issue is one of statutory construction or contract 

interpretation, and the evidence is not in dispute, the de novo standard of review applies 

[citation].” ’ (City of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430, 1438-1439; see 

People v. International Fidelity Ins. Co. (2010) 185 Cal.App.4th 1391, 1395.) Writ of 

mandate ordinarily reviews administrative actions for abuse of discretion, but [w]here the 

question is whether the Department correctly interpreted the statute and the relevant 
14

agreements, which is subject to de novo review without according deference to the 

Department. ([City of] Tracy[v. Cohen (2016)] 3 Cal.App.5th [852,] 860; but see 

Brentwood I, supra, 237 Cal.App.4th at p. 500 [interpretation is ultimately de novo but 

‘ “ ‘ “weak deference” ’ ” ’ is accorded to agency’s interpretation of its governing statutes 

where its expertise gives it superior qualifications to do so].)” (Brentwood II, supra, 54 

Cal.App.5th at p. 428.)

In reviewing the purported loan agreement for the West Oakland Projects

Initiative, we apply well-settled principles of contract interpretation. “ ‘The fundamental 

rules of contract interpretation are based on the premise that the interpretation of a 

contract must give effect to the “mutual intention” of the parties. “Under statutory rules 

of contract interpretation, the mutual intention of the parties at the time the contract is 

formed governs interpretation. (Civ. Code, § 1636.) Such intent is to be inferred, if 

possible, solely from the written provisions of the contract. (Id., § 1639.) The ‘clear and 

explicit’ meaning of these provisions, interpreted in their ‘ordinary and popular sense,’ 

unless ‘used by the parties in a technical sense or a special meaning is given to them by 

usage’ (id., § 1644), controls judicial interpretation. (Id., § 1638.)” ’ ” (E.M.M.I. Inc. v. 

Zurich American Ins. Co. (2004) 32 Cal.4th 465, 470, quoting Waller v. Truck Ins. 

Exchange, Inc. (1995) 11 Cal.4th 1, 18.)

II

West Oakland Projects Initiative Financing (Item 426)

Appellants argue that DOF erroneously denied item 426 on the ROPS because that 

item constituted an enforceable obligation in the form of a valid loan agreement between 

the City and its former RDA. As part of its argument, appellants assert that DOF’s 

failure to review the Resolution when first presented with the Successor Agency’s action 

effectively insulated the loan from subsequent ROPS reviews. We are not persuaded.
15

A.

The Cooperation and Funding Agreements

Appellants argue that we should read the 2004 cooperation agreement and the 

2011 funding agreement together as comprising the loan it believes to be an enforceable 

obligation under the Dissolution Law.

In July 2004, the City and its RDA entered into a “Cooperation Agreement” in 

which the City agreed to provide the following to its RDA: administrative and staffing 

assistance, advances and transfers necessary to fund the RDA, and accounting services. 

In return, the RDA promised to reimburse the City for “all costs incurred for services 

rendered and payments made by the City” under the cooperation agreement. The 

cooperation agreement stated no schedule for repayment, no interest rate, and no 

minimum payment for any installment. Instead, the cooperation agreement subordinated 

possible repayment to “any Agency pledge of tax increment revenues for tax allocation 

bonds or other long-term indebtedness of the Agency incurred to carry out a 

redevelopment project.” The cooperation agreement specifies no penalty for 

nonrepayment by the RDA.

On March 3, 2011, the City and its RDA entered into a funding agreement relating 

to various redevelopment projects – including West Oakland redevelopment projects. As 

part of the funding agreement, the City agreed to assume responsibility for “all 

development and construction costs in connection with the Projects, including 

administration . . . .” The funding agreement required the RDA “to make an advance 

lump sum payment to the City in the amount of $258,000,000, no later than June 30, 

2011, to partially fund the Projects” listed in the agreement’s exhibit.4 However, an 

4 Our review of the administrative record does not indicate that the RDA transferred 

$258 million – or any fraction thereof – to the City under the funding agreement. 

Moreover, the City’s appellate brief makes no assertion that the RDA transferred any 

funds as required by the funding agreement.
16

exhibit to the funding agreement listed budgets for more than 200 RDA projects totaling 

more than half a billion dollars. In listing budgets, the exhibit to the funding agreement 

did not identify any third parties who would carry out the projects.

The funding agreement further specified: “All payments due to be made by the 

Agency to the City under this Agreement shall be made by the Agency upon request of 

the City or as scheduled by the City, and as otherwise necessary to reimburse the City for 

the cost to the City of performing its obligations hereunder. The City shall provide the 

Agency with a quarterly report accompanied by evidence reasonably satisfactory to the 

Agency Administrator that the City has progressed in the development and construction 

of the Project for which payment is made by the Agency commensurate with such 

payments and has incurred costs or obligations to make payments equal to or greater than 

such amount.”

The only repayment schedule for the purported loan involving the West Oakland

Projects Initiative can be found in the staff report for the Resolution and the exhibit 

attached to the Resolution. These “loan” repayment terms were based on statutory 

requirements for loans repayments in the Dissolution Law that were enacted after the 

cooperation and funding agreements. (See § 34191.4, subd. (b)(3).) The staff report 

stated, “Adoption of this [resolution] will approve the West Oakland loan, as well as its 

repayment terms and schedule. Under the loan repayment schedule, funds will be repaid 

to the City totaling $2.69 million over a scheduled term of three years with interest, of 

which 20 percent – or $537,907, plus interest – will be set aside for affordable housing.”

After June 28, 2011, the City entered into more than a dozen contracts with third 

parties totaling more than $800,000 to advance the West Oakland Projects Initiative. To 

this amount, the City added loans made in 2008 and 2010. Thus, the City calculated the 

sum total for the West Oakland Projects Initiative as $2,689,534.51.
17

B.

City-agency Loans as Enforceable Agreements

Under the Dissolution Law, a loan between the City and its former RDA may

become an enforceable obligation when the successor agency reinstates the loan. To this 

end, section 34191.4, subdivision (b) provides that – with exception not applicable here –

that “upon application by the successor agency and approval by the oversight board, loan 

agreements entered into between the redevelopment agency and the city, county, or city 

and county that created the redevelopment agency shall be deemed to be enforceable 

obligations provided that the oversight board makes a finding that the loan was for 

legitimate redevelopment purposes.” Subdivision (b)(2)(C)(i) provides that “ ‘loan 

agreement’ ” (§ 34191.4, subd. (b)(2)) includes “[a]n agreement between the former 

redevelopment agency and the city, county, or city and county that created the former 

redevelopment agency under which the city, county, or city and county that created the 

former redevelopment agency contracted with a third party on behalf of the former 

redevelopment agency for the development of infrastructure in connection with a 

redevelopment project as identified in a redevelopment project plan and the former 

redevelopment agency was obligated to reimburse the city, county, or city and county 

that created the former redevelopment agency for the payments made by the city, county, 

or city and county to the third party.” (§ 34191.4, subd. (b)(2)(C)(i).)

As this court recently summarized, “Under section 34171, subdivision (d)(2), a 

reimbursement agreement between a city and a former RDA would not be an enforceable 

obligation. The amendment created an exception for a ‘loan agreement’ (§ 34191.4, 

subd. (b)(2)), defined to include an agreement ‘under’ which the city ‘contracted with a 

third party on behalf of the former redevelopment agency for the development of 

infrastructure’ and ‘the former redevelopment agency was obligated to reimburse the city 

. . . for the payments made by the city . . . to the third party.’ (§ 34191.4, subd. 

(b)(2)(C)(i).)” (Brentwood II, supra, 54 Cal.App.5th at p. 422.)
18

Even while providing for the reinstatement of some loans, section 34191.4 does 

not define the term “loan.” This court, however, has addressed the definition of “loan” 

under the Dissolution Law in Grass Valley, supra, 17 Cal.App.5th 567. Grass Valley, as 

in this case, involved a “ ‘Cooperation Agreement’ ” between the City of Grass Valley 

and its former RDA that predated the Dissolution Law. (Id. at p. 575.) The City of Grass 

Valley’s cooperation agreement “explained how the two entities would interact, but 

contained no substantive terms, that is . . . no specific loans or services were identified.” 

(Ibid.) As this Court explained in Grass Valley, “ ‘Typically, a contract involving a loan 

must include the identity of the lender and borrower, the amount of the loan, and the 

terms for repayment in order to be sufficiently definite. [Citation.] Preliminary 

negotiations or agreements for future negotiations—so-called agreements to agree—are 

not enforceable contracts.’ ” (Id. at p. 583, quoting Daniels v. Select Portfolio Servicing, 

Inc. (2016) 246 Cal.App.4th 1150, 1174.) Thus the cooperation agreement in Grass 

Valley was best understood as an umbrella agreement. (Grass Valley, at p. 583.) 

“Grass Valley’s umbrella agreement . . . ‘permitted the City to “advance or 

expend” funds to the RDA or on its behalf, required periodic statements to the RDA of 

costs incurred by the City and required the RDA to use available funds to reimburse the 

City for all costs incurred. But the 1986 agreement did not reference any specific extant 

or anticipated projects, nor any “loan agreements” between the RDA and the City, as 

contemplated by section 34171, subdivision (d)(2).’ (Grass Valley, supra, 17 

Cal.App.5th at p. 583.) We held that the 1986 agreement was a ‘ “so-called agreement[] 

to agree . . . not [an] enforceable contract[].” ’ (Ibid.; see Daniels v. Select Portfolio 

Servicing, Inc. (2016) 246 Cal.App.4th 1150, 1174.) The ‘1986 agreement created a 

structure for how to treat future agreements, but was not a loan under any definition.’ 

(Grass Valley, supra, 17 Cal.App.5th at p. 583.)” (Brentwood II, supra, 54 Cal.App.5th 

at p. 431.) Thus, the agreement to agree could not be reinstated as an enforceable 

agreement under the Dissolution Law.
19

C.

Agreement to Agree is not a Loan

Neither the cooperation agreement nor the funding agreement in this case 

constitute “loans” for which the section 34191.4 allows reinstatement. The 2004 

cooperation agreement described the projects to be funded only by the broadest of 

brushes: “The City and the Agency have adopted a number of redevelopment projects

within the City of Oakland pursuant to the California Community Redevelopment Law, 

including the Acorn, Broadway/MacArthur/San Pablo, Central City East, Central District, 

Coliseum, Oak Center, Oak Knoll, Oakland Army Base, Stanford/Adeline, and West 

Oakland Redevelopment Projects. The Agency has also established a Low and Moderate 

Income Housing Fund as required by the California Community Redevelopment Law.” 

(Italics added.) No dollar amounts for each of these proposed projects were provided. 

And no third parties who might perform the work were identified. The cooperation 

agreement does not mention any repayment schedule. The 2004 cooperation agreement 

between the City and its former RDA was an agreement to agree, but not a loan.

Likewise, the 2011 funding agreement represented an agreement to agree rather 

than a loan. The 2011 funding agreement references the 2004 cooperation agreement. 

However, as we have explained above, the 2004 cooperation agreement did not provide 

any terms that are typical of a loan, but only set forth a framework for future cooperation 

between the City and its former RDA. In the funding agreement, the City agreed to 

assume responsibility for “all development and construction costs in connection with the 

Projects, including administration . . . .” One critical detail in a loan – the principal, or

total indebtedness to be paid – is nowhere to be found. Instead, the funding agreement 

represents a wish list of items that the City and former RDA hoped to complete. The 

funding agreement refers to budgets for various projects rather than actual costs arising 

out of contracts with third parties. In addition to uncertainty about the total indebtedness, 

the funding agreement lacks specifics about repayment terms. Tellingly, the City would 
20

eventually locate repayment terms in the subsequently enacted Resolution rather than in 

any provision in either the cooperation agreement or the funding agreement. Exhibit A to 

the Resolution is titled “Loan Repayment Schedule” and purports to describe “Loan 

Terms.” The exhibit states that “[t]his loan originated in 2008 and is payable over a 

three-year period commencing in 2014.” (Italics added.) This reference to a 2008 loan is 

a mystery because it cannot refer to the cooperation agreement that was entered into in 

2004 or the funding agreement that was entered into in 2011. In any event, the 

repayment terms are supplied for the first time in the Resolution. Regardless of whether 

the Resolution would have sufficed in itself in supplying all of the terms necessary to 

create a loan, the Dissolution Law allows only the reinstatement of “loan agreements 

entered into between the redevelopment agency and the city.” (§ 34191.4, subd. (b)(1).) 

Subdivision (b)(2)(C)(i) further clarifies that this applies only to loans between the City 

and the former RDA. After the dissolution of the RDA’s no new loans could be created 

as enforceable obligations under section 34191.4. Consequently, the repayment schedule 

in the exhibit to the Resolution does not imbue to the cooperation agreement or the 

funding agreement to retroactively supply a necessary component of what would be 

needed for a loan. 

Thus, we agree with the trial court that the Resolution did not reinstate a loan 

because neither the cooperation agreement nor the funding agreement constitute loans 

within the meaning of the Dissolution Law.

D.

Review of the Resolution on the ROPS

Appellants contend that DOF lacked prerogative to disapprove of item 426 on the 

2016-2017 ROPS because DOF failed to request a review of the Resolution when it had 

the chance to do so in 2013. Appellants rely on section 34179 to argue that the 

Resolution became effective after DOF expressly declined to review the Resolution in 

2013. In pertinent part, subdivision (h) of section 34179 provides: 
21

“(h)(1) The department may review an oversight board action taken pursuant to 

this part. . . . [¶] . . . [¶] 

“(2) An oversight board action submitted in a manner specified by the department 

shall become effective five business days after submission, unless the department 

requests a review of the action. Each oversight board shall designate an official to whom 

the department may make those requests and who shall provide the department with the 

telephone number and e-mail contact information for the purpose of communicating with 

the department pursuant to this subdivision. Except as otherwise provided in this part, in 

the event that the department requests a review of a given oversight board action, it shall 

have 40 days from the date of its request to approve the oversight board action or return it 

to the oversight board for reconsideration and the oversight board action shall not be 

effective until approved by the department. In the event that the department returns the 

oversight board action to the oversight board for reconsideration, the oversight board 

shall resubmit the modified action for department approval and the modified oversight 

board action shall not become effective until approved by the department. If the 

department reviews a Recognized Obligation Payment Schedule, the department may 

eliminate or modify any item on that schedule prior to its approval.” (Italics added.)

Appellants reason that section 34179, subdivision (h)(2)’s provision that an action 

will “become effective” five days after DOF fails to request a review means that DOF is 

thereafter precluded from denying anything in that action by the Successor Agency. We 

do not read “effective” in subdivision (h)(2) to mean “immune from further review” by 

DOF. Although subdivision (h)(2) does not define “effective,” it expressly contemplates 

that DOF reviews a ROPS subsequent to the oversight board’s action – without imposing 

any qualifier relating to whether DOF may have previously reviewed or declined to 

review the original oversight board action. Moreover, subdivision (h)(2) expressly 

provides DOF with authority to “eliminate or modify any item on that schedule prior to 

its approval.” (§ 34179, subd. (h)(2), italics added.) Adopting appellants’ view that 
22

DOF’s failure to initially review an oversight board resolution precludes further review 

would render subdivision (h)(2)’s authorization to deny any item on subsequent ROPS to 

be a mere nullity. “It is a maxim of statutory interpretation that courts should give 

meaning to every word of a statute and should avoid constructions that would render any 

word or provision surplusage.” (Tuolumne Jobs & Small Business Alliance v. Superior 

Court (2014) 59 Cal.4th 1029, 1038.) Instead, we conclude that the Legislature’s express 

provision that DOF may eliminate or modify any item on a ROPS precludes a reading of 

subdivision (h)(2) that permanently cements a successor agency’s action merely though 

failure to initially review a successor board’s action. 

The Legislature did provide a manner of cementing the determination that an item 

constitutes an enforceable obligation, but it did not do so in section 34179, subdivision 

(h)(2). Instead, the ability to conclusively determine that an item constitutes an 

enforceable obligation under the Dissolution Law may be found in section 34177.5, 

subdivision (i). Subdivision (i) provides: “If an enforceable obligation provides for an 

irrevocable commitment of revenue and where allocation of such revenues is expected to 

occur over time, the successor agency may petition the department by electronic means 

and in a manner of the department’s choosing to provide written confirmation that its 

determination of such enforceable obligation as approved in a Recognized Obligation 

Payment Schedule is final and conclusive, and reflects the department’s approval of 

subsequent payments made pursuant to the enforceable obligation. The successor agency 

shall provide a copy of the petition to the county auditor-controller at the same time it is 

submitted to the department. The department shall have 100 days from the date of the 

request for a final and conclusive determination to provide written confirmation of 

approval or denial of the request. For any pending final and conclusive determination 

requests submitted prior to June 30, 2015, the department shall have until December 31, 

2015, to provide written confirmation of approval or denial of the request. If the 

confirmation of approval is granted, then the department’s review of such payments in 
23

future Recognized Obligation Payment Schedules shall be limited to confirming that they 

are required by the prior enforceable obligation.” (§ 34177.5, subd. (i), italics added.)

Subdivision (i) of section 34177.5 provides for conclusive determination of an 

item as an enforceable obligation. Moreover, subdivision (i) shows that the Legislature 

expressly specifies how and when an enforceable obligation may not be denied in 

subsequent ROPS reviews. In contrast, subdivision (h)(2) of section 34179 allows for 

denials of items on ROPS reviews without regard for whether DOF previously reviewed 

or failed to review the underlying successor agency action that might have reinstated an 

enforceable obligation. Our conclusion follows this court’s previous guidance in 

Brentwood I, supra, 237 Cal.App.4th 488.

In Brentwood I, this court noted the well-settled rule that “a party cannot assert 

estoppel against a government entity if it would nullify a strong rule of public policy.” 

(Brentwood I, supra, 237 Cal.App.4th at p. 504.) This rule was applied to uphold DOF’s 

decision denying certain items on a ROPS after DOF had allowed payment of these items 

on two previously submitted ROPS. (Id. at pp. 504-505.) As pertinent to this appeal, this 

court further noted that “[i]f [the City of] Brentwood had wanted an ironclad guarantee 

that approval of an enforceable obligation would be ongoing, it had the statutory remedy 

of petitioning the Department for a ‘final and conclusive’ determination of approval for 

subsequent payments for that enforceable obligation. (§ 34177.5, subd. (i).)” (Id. at 

p. 505.) The same result applies in this case, conclusive and final assurance that item 426 

was an enforceable obligation lay in a petition under section 34177.5 rather than in 

failure of DOF to review the initial Successor Agency’s Resolution under section 34179, 

subdivision (h)(2). Accordingly, we agree with the trial court that DOF had the 

prerogative to review and deny item 426 on the ROPS.
24

III

Staffing Costs (Item 370)

Appellants contend that DOF erred in denying the ROPS item corresponding to a 

request of staffing costs arising out of obligations of the Successor Agency to administer

various unfinished housing projects. Appellants reason that that the “funds encumbered 

and amounts owed under those agreements transferred as assets to the City while the 

agreements themselves remained obligations of [the Successor Agency].” Like the trial 

court, we reject the proposition that the Dissolution Law allowed this splitting of the 

assets from the obligations arising under those agreements.

A.

Dissolution Law Requirement to Transfer Housing Assets to the City

Dissolving the former RDA’s involved disposing of numerous types of assets and 

obligations. “Unwinding the redevelopment agencies’ responsibilities to provide lowand moderate-income housing presented a unique challenge, one the Legislature gave the 

cities and counties the option to assume or not.” (City of Montclair v. Cohen (2018) 20 

Cal.App.5th 238, 245 (City of Montclair).) On this point, subdivision (a)(1) of section 

34176 provides: “The city, county, or city and county that authorized the creation of a 

redevelopment agency may elect to retain the housing assets and functions previously 

performed by the redevelopment agency. If a city, county, or city and county elects to 

retain the authority to perform housing functions previously performed by a 

redevelopment agency, all rights, powers, duties, obligations, and housing assets, as 

defined in subdivision (e), excluding any amounts on deposit in the Low and Moderate 

Income Housing Fund and enforceable obligations retained by the successor agency, 

shall be transferred to the city, county, or city and county.” (Italics added.) 

Section 34176, subdivision (a)(2) provided the method by which the housing 

assets would be transferred by the successor agency and reviewed by DOF: “The 

housing successor shall submit to the Department of Finance by August 1, 2012, a list of 
25

all housing assets that contains an explanation of how the assets meet the criteria 

specified in subdivision (e). The Department of Finance shall prescribe the format for the 

submission of the list. The list shall include assets transferred between February 1, 2012,

and the date upon which the list is created. The department shall have up to 30 days from 

the date of receipt of the list to object to any of the assets or transfers of assets identified 

on the list. If the Department of Finance objects to assets on the list, the housing 

successor may request a meet and confer process within five business days of receiving 

the department objection. If the transferred asset is deemed not to be a housing asset as 

defined in subdivision (e), it shall be returned to the successor agency. If a housing asset 

has been previously pledged to pay for bonded indebtedness, the successor agency shall 

maintain control of the asset in order to pay for the bond debt.”

The definition of “housing assets” to which subdivision (a)(2) of section 34176 

refers encompasses more than physical housing structures. Subdivision (e) provides that 

“ ‘housing asset’ ” includes “(1) Any real property, interest in, or restriction on the use of 

real property, whether improved or not, and any personal property provided in residences, 

including furniture and appliances, all housing-related files and loan documents, office 

supplies, software licenses, and mapping programs, that were acquired for low- and 

moderate-income housing purposes, either by purchase or through a loan, in whole or in 

part, with any source of funds,” as well as “(2) Any funds that are encumbered by an 

enforceable obligation to build or acquire low- and moderate-income housing, as defined 

by the Community Redevelopment Law (Part 1 (commencing with Section 33000)) 

unless required in the bond covenants to be used for repayment purposes of the bond.” 

(§ 34176, subd. (e).)

B.

Transfer of Housing Assets to the City

In August 2012, the City submitted a housing assets transfer form to DOF to 

reflect a transfer of housing assets from the Successor Agency to the City. Subsequently, 
26

the City submitted ROPS III for January through June 2013 that included item 370 for 

staffing costs of $849,314. DOF initially denied item 370 because “[i]t was unclear why 

staff would be working on a project for which the [Successor] Agency was not requesting 

funding.” A meet and confer process provided additional information that resulted in 

DOF approving the staffing costs. DOF then approved item 370 on several subsequent 

ROPS.

DOF, however, denied item 370 on the 2018-2019 ROPS. In rejecting the item on 

the 2018-2019 ROPS, DOF explained: “It is our understanding that these [staffing] costs 

are related to housing obligations approved for transfer on the Housing Asset Transfer 

(HAT) form (i.e., real property, encumbrances, and/or loan receivables) to the Housing 

Successor Entity. Pursuant to . . . section 34176[, subdivision ](a)(1), the [Successor] 

Agency may retain enforceable obligations related to housing assets transferred to the 

Housing Successor Entity. However, there are no contractual agreements obligating the 

Agency to perform project management on these housing assets. Therefore, because the 

housing assets have been transferred, related project management costs are the obligation 

of the Housing Successor Entity, not the Agency.”

The trial court agreed with DOF’s denial of item 370 and found: “When it 

assumed [the RDA’s] housing functions and submitted its housing asset list to DOF in 

2012, the City identified several assets associated with certain preexisting, written loan 

agreements in which [the RDA] had been the lender. The loan agreements were executed 

between 2000 and 2004. Under these agreements, [the RDA] promised to provide loans 

to borrowers seeking to acquire affordable housing sites. The agreements contemplate 

ongoing lender monitoring of borrower activities. Provisions in the agreements, for 

example, require the borrowers to submit various documents for lender review. There are 

other ‘project management’ duties that the lender must perform as well. [¶] Although 

the properties acquired under the loan agreements are listed on the City’s housing asset 
27

list, [the Successor Agency] purports to retain the lender-monitoring and other projectmanagement duties under the agreements.” (Fn. omitted.)

“Given that the City acquired significant assets inherent in the loan agreements—

including the right to receive loan repayments—[the Successor Agency] could not have 

retained the full loan agreements after DOF approved the City’s housing asset list. . . . 

[¶] The court concludes that [section] 34176[, subdivision ](a)(1) did not authorize [the 

Successor Agency] to retain as its own enforceable obligations loan agreements whose 

benefits were transferred to the City. As a result, [the Successor Agency] was not 

entitled to property tax revenues to pay staff performing project management under these 

agreements. [¶] The fact that DOF approved Item 370 more than once before denying it 

on [the Successor Agency’s] ROPS 18-19 is irrelevant. The strong public policy of 

providing taxing authorities with RDA[’s] former tax increment revenues authorizes DOF 

to reconsider its prior ROPS determinations. (See City of Galt [v. Cohen (2017) 12 

Cal.App.5th 367,] 385.)”

The trial court further reasoned that “Section 34176, subd[ivision] (a)(2) also 

undermines [the City’s] notion that a successor agency may possess housing assets for an 

extended period after the assets have been approved for transfer to a different entity. 

That subdivision imposed a deadline of [August 1, 2012,] for housing successors to 

submit their acquired housing asset lists to DOF, followed by 30 days in which DOF 

could object. Why set these deadlines if the Legislature intended for successor agencies 

to hold the assets only to transfer them to housing successors at any time in the future?”

C.

Unity of Assets and Obligations

Under the Dissolution Law, the staffing costs in item 370 transferred to the City 

along with the transfer of the cooperation and funding agreements to the City. Section 

34176, subdivision (a)(1) allows the City to retain “the housing assets and functions

previously performed by the redevelopment agency.” (§ 34176, subd (a)(1), italics 
28

added.) Subdivision (a)(1) expressly disallows the splitting of the housing assets from 

their related obligations. Subdivision (a)(1) plainly states that “all rights, powers, duties, 

obligations, and housing assets . . . shall be transferred to the city . . . .” (Ibid.)

Administrative duties required under the cooperation and funding agreements were 

therefore transferred to the City as a matter of statutory mandate under section 34176, 

subdivision (a)(1).

Appellants argue that “the housing related agreements are enforceable obligations 

and were therefore retained by [the Successor Agency].” In so arguing, appellants 

acknowledge that “[b]oth DOF and the trial court are correct that assets related to the 

Housing Related Agreements were transferred to the City.” But appellants protest that 

requiring the City to assume contractual obligations of the Successor Agency would 

unconstitutionally impair the rights of the third parties under those contracts. We 

disagree. Denying repayment of the Successor Agency’s staffing costs on a ROPS does 

not substitute the parties to a contract. There is a fundamental difference between 

impairing a contract between parties and seeking funding from another source for 

administrative costs incurred by the Successor Agency. 

Appellants point out that the Successor Agency has continued to diligently pursue 

the completion of the agreements that were transferred. As appellants point out, “once 

complete, no more staffing costs will be required . . . .” Thus, appellants reason that 

continued payment of staffing costs aligns with the Dissolution Law’s intent to wind 

down the affairs of the former RDA’s.

In City of Montclair, this court noted that the housing authorities presented 

compelling policy reasons for why they should be compensated their administrative costs. 

(City of Montclair, supra, 20 Cal.App.5th at p. 250.) These policy reasons included the 

fact that the housing authorities “did not volunteer for the job” of assuming additional 

housing functions, that the responsibilities were “enormous and expensive,” and that 

housing authorities are chronically underfunded. (Ibid.) Even so, we noted the well-
29

settled rule that the prerogative to set public policy belongs to the Legislature. (Id. at 

p. 256.) City of Montclair held that “[t]he Legislature determined that cities and counties 

should not recoup the cost of their administrative expenses if they elect to assume the 

housing functions of their former redevelopment agencies pursuant to section 34176.” 

(Id. at p. 253.) We hew to that conclusion. 

We conclude that the City lacked the ability to separate the housing assets from 

their staffing obligations based on the language of section 34176, subdivision (a)(1) that

prevents the separation of assets and obligations between the City and its Successor 

Agency.5 Thus, the Successor Agency, by law, is not entitled to claim its staffing costs 

related to housing assets that had been previously transferred to the City.

DISPOSITION

The judgment is affirmed. The Department of Finance shall recover its costs on 

appeal. (Cal. Rules of Court, rule 8.278(a)(1) & (2).)

 

HOCH, J.

We concur:

 

HULL, Acting P. J.

 

KRAUSE, J.

5 Given our conclusion, we do not need to resolve the scope of the cooperation and 

funding agreements. The terms of these agreements cannot supersede the statutory 

scheme comprising the Dissolution Law.