Court Opinion

ID: 9387095
Source: CourtListenerOpinion
Date Created: 2023-04-14 18:02:15.804146+00
Date Added: 2024-06-11T17:18:11.306540
License: Public Domain

Filed 4/14/23 City of Chula Vista v. Stephenshaw 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                                           NOT TO BE PUBLISHED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 This opinion has not been certified for publication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 CHULA VISTA et al.,                                                                   C094237

                    Plaintiffs and Appellants,                                         (Super. Ct. No.
                                                                                 34-2019-80003123-CU-WM-
           v.                                                                              GDS)

 JOE STEPHENSHAW, as Director, etc., et al.,

                    Defendants and Respondents.

         This dispute arises out of the 2011 legislation that dissolved California’s
redevelopment agencies and created a process for winding down their affairs. Here, the
Department of Finance (Department) determined that certain reimbursement agreements
between the City of Chula Vista (City) and its former redevelopment agency (Agency)
were not “enforceable obligations” under the redevelopment dissolution laws. Thus,
despite having approved payment under the agreements on prior “recognized obligation
payment schedules” (ROPS), the Department denied payment authorization on the fiscal
year 2018-2019 and 2019-2020 ROPS.

                                                             1
       The City and the Chula Vista Redevelopment Successor Agency (Successor
Agency) (together, plaintiffs) filed this action seeking to compel the Department to
recognize the reimbursement agreements as enforceable obligations and approve the use
of property tax revenues for such items on all current and future ROPS.1 The trial court
denied the petition and entered judgment in favor of the Department.
       On appeal, plaintiffs argue that the Department erred in rejecting the items as
enforceable obligations under section 34171, subdivision (d)(2) of the Health and Safety
Code.2 Alternatively, plaintiffs contend the Department should be estopped from
denying the items based on its prior approvals. We conclude that some of the disputed
items are enforceable obligations. Thus, we reverse the judgment in part, and remand
with directions.
                                LEGAL BACKGROUND
       After World War II, the Legislature passed legislation authorizing the formation of
community redevelopment agencies. (California Redevelopment Assn. v. Matosantos
(2011) 53 Cal.4th 231, 245 (Matosantos).) The intent of the “Community
Redevelopment Law” (§ 33000 et seq.), as it came to be known, was to help local
governments revitalize blighted communities and increase the supply of affordable
housing. (Matosantos, supra, at pp. 245-246; Marek v. Napa Community Redevelopment
Agency (1988) 46 Cal.3d 1070, 1082.) To this end, the Community Redevelopment Law
endowed redevelopment agencies with “broad powers to acquire property through
purchase and condemnation [citation] and to ‘[make] and execute contracts and other

1      We have substituted Joe Stephenshaw, in his capacity as the Director of the
Department, in place of his predecessor, Keely Bosler. Tracy M. Drager, in her capacity
as the San Diego County Auditor and Controller, also is a named defendant in this action,
but takes no position on appeal.
2      Undesignated statutory references are to the Health and Safety Code.

                                             2
instruments necessary’ to complete redevelopment projects [citation].” (Marek, supra, at
p. 1082.)
       Redevelopment agencies could not levy taxes to finance their activities. Instead,
they relied on tax increment financing. Under this funding method, “[t]ax revenues
available for local agencies from land within a redevelopment area are frozen as of the
date a redevelopment plan is adopted, and any tax revenues generated by an increase in
property values after adoption of the plan—the tax increment—are paid to the
redevelopment agency for use in financing the redevelopment project.” (City of Cerritos
v. Cerritos Taxpayers Assn. (2010) 183 Cal.App.4th 1417, 1424.) Over time, the tax
increment financing system became a source of contention because of the financial
advantage it provided to redevelopment agencies and their sponsoring entities relative to
school districts and other local agencies. (Matosantos, supra, 53 Cal.4th at p. 248; City
of Montclair v. Cohen (2018) 20 Cal.App.5th 238, 243.)
       Consequently, in June of 2011, amidst a state fiscal emergency, the Legislature
enacted legislation (Assem. Bill No. 26 (2011-2012 1st Ex. Sess., ch. 5)) to dissolve
redevelopment agencies and create a process for the wind down of their affairs.
(Matosantos, supra, 53 Cal.4th at p. 241.) The California Supreme Court upheld the
legislation and it went into full effect on February 1, 2012. (Id. at p. 275.) The
Legislature subsequently adopted additional legislation—Assembly Bill No. 1484 (2011-
2012 Reg. Sess., eff. June 27, 2012), Assembly Bill No. 471 (2013-2014 Reg. Sess., eff.
Feb. 18, 2014), and Senate Bill No. 107 (2015-2016 Reg. Sess., eff. Sept. 22, 2015)—to
clarify or modify the dissolution and wind down process. (See, e.g., Cuenca v. Cohen
(2017) 8 Cal.App.5th 200, 211 (Cuenca); City of Grass Valley v. Cohen (2017) 17
Cal.App.5th 567, 574, 580-581.) Taken together, we shall refer to these laws as the
“Dissolution Law.”
       A primary purpose of the Dissolution Law was to dissolve redevelopment
agencies, eliminate tax increment financing, and redirect, to the maximum extent

                                             3
possible, the revenues and assets of the former redevelopment agencies to local
governments to help fund core governmental services. (Cuenca, supra, 8 Cal.App.5th at
p. 207; City of Montclair v. Cohen, supra, 20 Cal.App.5th at p. 251.) However, the
Dissolution Law also seeks to ensure that the former redevelopment agencies’ existing
enforceable obligations would be honored. (Cuenca, at p. 207; §§ 34167, subd. (a),
34169, subds. (a) & (b), 34177, subds. (a) & (c).) Thus, as part of the wind down
process, the Dissolution Law established “successor agencies” and empowered them to
“ ‘[c]ontinue to make payments due for enforceable obligations,’ ” as defined in the
Dissolution Law. (County of Monterey v. Bosler (2020) 57 Cal.App.5th 466, 472;
§§ 34177, subd. (a), 34171, subd. (d)(1).)
       “To obtain funds to make payments required by enforceable obligations, a
successor agency must periodically prepare [ROPS] setting forth the minimum payment
amounts for each enforceable obligation and identify one or more sources of payment,
and submit the ROPS to the oversight board for approval. [Citations.] Following the
oversight board’s approval, the successor agency must submit the ROPS to the
Department for its approval. [Citation.] The Department then makes ‘its determination
of the enforceable obligations and the amounts and funding sources of the enforceable
obligations.’ [Citation.]” (County of Monterey v. Bosler, supra, 57 Cal.App.5th at p.
472, fn. omitted; §§ 34177, subd. (a), 34179, subd. (h).) The Department’s approval of
an item in a ROPS allows the successor agency to receive funds from the Redevelopment
Property Tax Trust Fund to pay the item. (§§ 34182, 34183.)
                  FACTUAL AND PROCEDURAL BACKGROUND
       In this appeal, plaintiffs challenge the Department’s determination that certain
items listed on the Successor Agency’s ROPS are not “enforceable obligations” under the
Dissolution Law. The items in question relate to amounts that the Agency purportedly
owed to the City under a lease financing structure for redevelopment projects. In general,
the lease financing structure worked as follows: the City would lease an asset that it

                                             4
owned to a finance entity, which would in turn lease the asset back to the City through a
sublease. The finance entity would then sell fractional interests in the underlying
sublease payments, known as “certificates of participation,” to investors. The funds from
the sale of the certificates would be used to finance (or refinance) the redevelopment
project. In exchange, the Agency promised to reimburse the City for the lease payments
used to pay the certificates. In essence, the City borrowed funds from investors to
finance the redevelopment project, and the Agency promised to reimburse the City for
repaying the investors.
       The specific focus of this appeal is the Department’s denial of funding for items 6,
7, and 9 on the ROPS covering the periods from July 1, 2018, to June 30, 2019 (ROPS
18-19), and July 1, 2019, to June 30, 2020 (ROPS 19-20). These items involve requests
for funding to reimburse the City for lease payments it made in connection with several
series of certificates of participation, discussed in more detail below.
       A.     Agreements related to ROPS item 9
       ROPS item 9 relates to a series of certificates of participation issued to finance (or
refinance) the construction of redevelopment projects within the Town Centre II
redevelopment project area. As we explain below, the original series of certificates were
issued in 1987. They were subsequently refunded (refinanced) in 1993, and then
refunded (refinanced) again in 2003.
              1.     1987 certificates of participation
       On September 1, 1987, the City, the Agency, and the First Interstate Bank of
California (as trustee) entered into two trust agreements to issue certificates of
participation to finance/refinance public parking improvements. Under the agreements,
the trustee agreed to prepare, execute, and deliver $9,835,000 in “series A” certificates
(the 1987-A Certificates) and $6,600,000 in “series B” certificates (the 1987-B
Certificates, and, collectively, the 1987 Certificates). Each certificate represented an
undivided fractional interest in the lease payments to be paid by the City under a lease

                                              5
agreement by and between the City and Agency dated September 1, 1987 (the 1987-A
Lease), and a first amendment to lease agreement also dated September 1, 1987 (the
1987-B Lease).
       In connection with the 1987 Certificates, the City and the Agency also entered into
a cooperation and reimbursement agreement dated September 15, 1987 (the 1987
Reimbursement Agreement). The 1987 Reimbursement Agreement obligated the Agency
to (1) pay the City $1,077,000 in consideration for two parcels of real property conveyed
by the City to the Agency; (2) reimburse the City $1.3 million in consideration for the
City agreeing to pay a portion of the 1987-B Lease payments; and (3) reimburse the City
for any amounts paid by the City under the 1987-A Lease.
       Section 6, subdivision (g) of the 1987 Reimbursement Agreement provides:
“Agency agrees to pay and reimburse City for all amounts due to City pursuant to this
[agreement] to the extent that property tax increments attributable to the Town Centre II
Redevelopment Project are available to Agency for such purpose . . . ; provided,
however, that the Agency shall have the sole and exclusive right to pledge any such
sources of funds to the repayment of other indebtedness heretofore or hereafter incurred
by Agency in carrying out the Town Centre II Redevelopment Plan. In the event of any
such pledge, the Agency’s obligations hereunder shall be subordinate to the indebtedness
which is secured by such pledge.”
       Due to a drafting error, the 1987 Reimbursement Agreement includes two sections
numbered “6.” The second section 6 provides: “Although City and Agency recognize
that reimbursement of City will take several years and that reimbursement may be made
on an irregular basis over a period of time due to the necessity to use tax increment funds
to complete other projects within the Project Area, it is the express intent of the parties
that the City shall be entitled to reimbursement of all amounts due to City pursuant to this
Agreement . . . in order to make the City whole as soon as practically possible.”

                                              6
              2.     1993 certificates of participation
       On February 1, 1993, the City, the Agency, and the First Interstate Bank of
California (as trustee) entered into a trust agreement to refinance the City’s obligations
under the 1987-A Lease and associated certificates via the sale of $11,285,000 in new
certificates of participation (the 1993-A Certificates). The 1993-A Certificates were
secured by lease payments due from the City under a second amendment to lease
agreement, dated February 1, 1993 (the 1993-A Lease).
       In conjunction with the 1993-A Certificates, the City and the Agency also entered
into a first amendment to cooperation and reimbursement agreement (the 1993
Reimbursement Agreement), which amended the 1987 Reimbursement Agreement to
replace references to the 1987-A documents with references to the corresponding 1993-A
refinancing documents. The terms and conditions of the 1987 Reimbursement
Agreement were otherwise unchanged.
       On December 1, 1993, the City, the Agency, and the First Interstate Bank of
California (as trustee) entered into another trust agreement to issue $3,115,000 in
certificates to fund phase two of the Town Centre II improvements (the 1993-B
Certificates). The 1993-B Certificates were secured by the lease payments due from the
City under a lease agreement dated December 1, 1993 (the 1993-B Lease). There is no
evidence of any reimbursement agreement related to the 1993-B Certificates.
              3.     2003 certificates of participation
       On June 1, 2003, the City, the Chula Vista Public Financing Authority (a joint
powers authority), and the U.S. Bank National Association (as trustee) entered into a trust
agreement to sell $11,320,000 in certificates of participation (the 2003 Certificates) for
the purpose of (1) prepaying the 1993-A Lease and the 1993-B Lease; (2) refinancing the
unpaid amounts on the 1993-A Certificates and the 1993-B Certificates; and (3)
prepaying a 1997 equipment lease. The 2003 Certificates were secured by lease
payments due from the City under a lease/purchase agreement by and between the City

                                              7
and the Chula Vista Public Financing Authority dated June 1, 2003 (the 2003 Lease).
There was no reimbursement agreement or amendment to an existing reimbursement
agreement associated with the 2003 Certificates.
       B.     Agreements related to ROPS items 6 and 7
       ROPS items 6 and 7 relate to a series of certificates of participation issued to
refinance previously-issued certificates that financed the construction of two projects
within the Bayfront/Town Centre I and Towne Centre II redevelopment project areas.
       On July 1, 1996, the City, the Association of Bay Area Governments Finance
Corporation (ABAG), and the First Trust National Association (as trustee) entered into a
trust agreement to issue $4,315,000 in certificates of participation (the 1996 Certificates),
secured by lease payments from the City under a lease agreement by and between the
City and the ABAG dated July 1, 1996 (the 1996 Lease).
       In conjunction with the 1996 Certificates, the City and the Agency entered into a
pair of reimbursement agreements under which the Agency agreed to reimburse the City
for its lease payments under the 1996 Lease (collectively, the 1996 Reimbursement
Agreements). Like the other reimbursement agreements, the 1996 Reimbursement
Agreements make the Agency’s reimbursement obligation contingent on the availability
of tax increment revenues not otherwise “heretofore or hereafter” pledged.
       C.     Contract performance history
       Consistent with the parties’ agreements, the City made payments required under
the various leases and recorded those payments as debts owed by the Agency to the City.
According to the City, during the period from 1996 to 2003, the City paid a total of
$3,331,603.22 in connection with the 1996 Certificates, consisting of $2,913,310.48 for
the Bayfront/Town Centre I project (ROPS item 6) and $418,292.74 for the Towne
Centre II project (ROPS item 7). In addition, during the period from 1999 to 2007, the
City paid a total of $12,740,251.19 in connection with the 1993 and 2003 certificates

                                              8
(ROPS item 9), consisting of $1,975,072.53 for the 1993-A Certificates, $7,139,760.64
for the 1993-B Certificates, and $3,625,418.02 for the 2003 Certificates.
       Prior to dissolution, the Agency partially repaid some of the outstanding
indebtedness owed to the City for its payments on the certificates. All told, the Agency
repaid $500,000 (in principal and interest) in connection with the 1996 Certificates
(ROPS item 6) and $11,630,000 (in principal and interest) in connection with the 1993
and 2003 certificates (ROPS item 9).3
       D.     The Department’s ROPS determinations
       The Successor Agency included requests for funding for repayment of the City’s
lease payments (as ROPS items 6, 7, and 9) on almost every ROPS since the Dissolution
Law took effect.4 The Department approved those funding requests, without comment,
through ROPS 16-17 (covering July 1, 2016, to June 30, 2017).
       However, when the Successor Agency again requested funding for items 6, 7, and
9 on ROPS 17-18, the Department denied the requests. The Department explained that it
was unable to verify the specific amounts owed and therefore denied the items on that
basis. The Department also claimed that because the predissolution repayments were
contingent on available tax increment revenues, and not made in accordance with a set
repayment schedule, it could not verify that any amounts were owed. Notwithstanding

3       Plaintiffs contend the City received reimbursements related to ROPS item 6 for
fiscal years 1996-1997 ($63,362.08) and 1997-1998 ($436,637.92). However, the
payments were posted to the City’s general ledger in 2010 and 2011. It is somewhat
unclear, therefore, whether the payments were made in 2010 and 2011 and retroactively
applied to fiscal years 1996-1997 and 1997-1998, or if the payments were made in fiscal
years 1996-1997 and 1997-1998 and belatedly posted to the general ledger in 2010 and
2011. This same issue exists with respect to the repayments related to ROPS item 9, all
of which were posted to the general ledger in 2010 and 2011.
4      The Successor Agency did not expressly request funding for payments related to
the 2003 Certificates until ROPS 18-19.

                                            9
this denial, the Successor Agency continued to include funding requests for items 6, 7,
and 9 on succeeding ROPS.
          For ROPS 18-19, the Department initially denied funding for items 6, 7, and 9
based on the Agency’s inability to establish the outstanding principal amounts due.
However, based on documents provided during the meet and confer process, the
Department ultimately reversed its position and approved items 6 and 7.5
          For ROPS 19-20, the Department again denied funding for items 6, 7, and 9. The
Department explained that “[a]fter further review,” the agreements underlying these
items do not qualify as enforceable obligations under the Dissolution Law, and funding
should not have been approved for any of the items as part of ROPS 18-19. The
Successor Agency disagreed and filed a meet and confer request. Unpersuaded, in May
2019, the Department issued a final determination letter denying funding for all three
items.
          The Successor Agency again sought funding for items 6, 7, and 9 as part of ROPS
20-21, and the Department again denied those items, referencing its May 2019 denial
letter.
          E.     The trial court proceedings
          Plaintiffs filed a petition for writ of mandate and complaint for declaratory and
injunctive relief (petition) seeking a writ to compel the Department to approve disputed

5       The Department adhered to its position that item 9 was not an “enforceable
obligation” because (1) the 1993 certificates were refunded; and (2) there was no
agreement requiring the Agency to reimburse the City for lease payments made under the
2003 Certificates. The Department explained that item 9 requested funding for lease
payments related to the 1993 certificates made by the City from 1993 through 2007.
Since the 1993 certificates were refinanced (refunded) in 2003, the Department stated it
was “not clear” why the City continued to make lease payments on the 1993 certificates
after that date. It was at this point that the City identified an error which resulted in
payments on the 2003 Certificates being mislabeled as payments on the 1993 certificates.

                                               10
item 9 on ROPS 18-19, and disputed items 6, 7, and 9 on ROPS 19-20; a writ to compel
the auditor-controller to remit sufficient funding to pay those items; a declaration that
items 6, 7, and 9 are enforceable obligations under the Dissolution Law; and an
injunction prohibiting the Department from failing to approve items 6, 7, and 9 in future
ROPS requests. Plaintiffs alleged that the items qualify as enforceable obligations under
sections 34171, 34178, and/or 34191.4 of the Dissolution Law.
       The trial court denied the petition, holding that the underlying agreements did not
qualify as enforceable obligations. The trial court relied primarily on section 34171,
subdivision (d)(2), which generally excludes agreements between a former
redevelopment agency and its sponsoring entity (here, the City) from the definition of
enforceable obligations. (§ 34171, subd. (d)(2).) Although there is an exception to this
rule for an agreement “entered into (A) at the time of issuance, but in no event later than
December 31, 2010, of indebtedness obligations, and (B) solely for the purpose of
securing or repaying those indebtedness obligations” (ibid.), the trial court concluded that
none of the relevant reimbursement agreements met these requirements, either because
they were not contemporaneous agreements (for item 9) or because they were contingent
on tax increment revenues being available (items 6 & 7). The court applied the same
reasoning in concluding that the agreements were not enforceable obligations under
section 34178, subdivision (b)(1). The court similarly rejected plaintiffs’ claim that the
reimbursement agreements were enforceable “loan agreements” under section 34191.4,
subdivision (b)(2). Finally, the court held that the Department was not estopped from
denying items 6, 7, and 9 in ROPS 18-19 and 19-20 based on its earlier approvals.
       Plaintiffs filed a timely notice of appeal.

                                              11
                                         DISCUSSION
                                                I
                                      Standard of Review
       The issue in this appeal is whether the Department erred in determining that ROPS
items 6, 7, and 9 are not enforceable obligations. Although we ordinarily review
administrative actions for an abuse of discretion, where, as here, the question is whether
the Department correctly interpreted the governing statutes and relevant agreements, the
de novo standard of review applies. (City of Brentwood v. Department of Finance (2020)
54 Cal.App.5th 418, 428 (Brentwood II).)
       The fundamental objective of statutory interpretation is to ascertain and effectuate
legislative intent. (Brentwood II, supra, 54 Cal.App.5th at p. 428.) To do so, we look
first to the statutory language itself, giving the words their ordinary and usual meaning,
construed in the context of the statute and the overall statutory scheme. (Ibid.; Mejia v.
Reed (2003) 31 Cal.4th 657, 663.) If the statutory language is clear and unambiguous,
there is no need for further construction. (Brentwood II, at p. 428.) If not, the court may
refer to other indicia of legislative intent. (Ibid.)
       In construing the underlying agreements, we apply well-settled rules of contract
interpretation. The fundamental goal is to give effect to the mutual intention of the
parties at the time the contract is formed. (Bank of the West v. Superior Court (1992)
2 Cal.4th 1254, 1264; Civ. Code, § 1636.) “ ‘ “ ‘Such intent is to be inferred, if possible,
solely from the written provisions of the contract. [Citation.]’ ” ’ ” (City of Oakland v.
Department of Finance (2022) 79 Cal.App.5th 431, 444 (Oakland).) The words of a
contract are to be understood in their “ordinary and popular sense” unless “used by the
parties in a technical sense, or unless a special meaning is given to them by usage . . . .”
(Civ. Code, § 1644.) If the contractual language is clear and explicit, it governs. (Civ.
Code, § 1638.)

                                               12
                                                II
                                     ROPS Items 6 and 7
       Plaintiffs argue that the Department erred in determining that the 1996
Reimbursement Agreements underlying ROPS items 6 and 7 did not qualify as
enforceable obligations under section 34171, subdivision (d)(2). We agree.
       For purposes of the Dissolution Law, section 34171, subdivision (d)(2) generally
provides that the term “ ‘enforceable obligation’ ” does not include “any agreements,
contracts, or arrangements between the city, county, or city and county that created the
redevelopment agency and the former redevelopment agency.” (§ 34171, subd. (d)(2);
City of Grass Valley v. Cohen, supra, 17 Cal.App.5th at pp. 585-586.) As we have
previously explained, the exclusion of such agreements reflects legislative concern that
such agreements often were not the product of “arm’s-length negotiations.” (County of
Sonoma v. Cohen (2015) 235 Cal.App.4th 42, 48.)
       The 1996 Reimbursement Agreements are agreements between the Agency and its
sponsoring City. As such, it is undisputed that the agreements are not enforceable
obligations unless they fall within an applicable exception.
       Plaintiffs contend that the 1996 Reimbursement Agreements qualify as
enforceable obligations under the statutory exception for contemporaneous written
agreements set forth in section 34171, subdivision (d)(2), which applies to written
agreements between a city/county and its former redevelopment agency “entered into
(A) at the time of issuance, but in no event later than December 31, 2010, of indebtedness
obligations, and (B) solely for the purpose of securing or repaying those indebtedness
obligations . . . .” (§ 34171, subd. (d)(2).)
       The Department responds that the 1996 Reimbursement Agreements are not
enforceable obligations because they are “contingent” on available tax increment
revenues. The Department claims that a contingent obligation is an “illusory” promise,

                                                13
and therefore the 1996 Reimbursement Agreements were not entered into “ ‘for the
purpose of securing or repaying’ ” the debt. We are not persuaded.
       Had the Legislature intended to exclude agreements containing contingent
repayment obligations, it presumably would have made this intent explicit in the statute.
It did not. Instead, the plain text of the statute requires only that the agreement have been
entered into (1) at the time of issuance of the debt (and prior to Dec. 31, 2010); and
(2) “solely for the purpose of securing or repaying” that debt. (§ 34171, subd. (d)(2).)
The 1996 Reimbursement Agreements meet these requirements because they are
(1) written agreements; (2) entered into at the time the 1996 indebtedness was incurred;
(3) for the purpose of securing or repaying that debt.
       It is true that the timing of the Agency’s reimbursement obligation was contingent
on unpledged tax increment revenues being available, but the Department has failed to
explain why this rendered the repayment obligation illusory. There is no evidence to
suggest that the Agency never would have unpledged tax increment revenues, or that the
Agency could have unpledged tax increment revenues and nevertheless refuse to
reimburse the City. To the contrary, the parties expressly agreed that “[i]f the Agency
has available Tax Increment Revenues and shall fail to repay the City . . . , then the City
. . . shall be entitled to exercise any and all remedies available pursuant to law.” Further,
when the City had unpledged tax increment revenues available, it repaid the City.
       The evidence shows that the City only agreed to make the payments on the
certificates because the Agency promised it would reimburse the City with tax increment
revenues when such revenues became available. In our view, this was the sole purpose of
the 1996 Reimbursement Agreements, and the Department has failed to explain what
other purpose the reimbursement agreements possibly could have served.
       We acknowledge that the Agency had some ability to control the amount of tax
increment revenues available by pledging tax increment revenues to the repayment of
other indebtedness. However, we are not convinced that this discretionary power

                                             14
transformed the Agency’s repayment obligation into an illusory promise. It is well
settled that an implied covenant of good faith and fair dealing will be imposed to limit a
party’s discretion when necessary to protect an agreement that otherwise would be
rendered illusory and unenforceable. (Third Story Music, Inc. v. Waits (1995) 41
Cal.App.4th 798, 808; Locke v. Warner Bros. (1997) 57 Cal.App.4th 354, 367; Pasadena
Live v. City of Pasadena (2004) 114 Cal.App.4th 1089, 1093.) Thus, while the Agency
had the discretion to pledge tax increment revenues to the repayment of other
indebtedness, the implied covenant of good faith and fair dealing obligated the Agency to
exercise that discretion honestly and in good faith. This is enough to avoid finding the
contract unenforceable due to an illusory promise.
       On this record, we conclude the Department abused its discretion in determining
that the 1996 Reimbursement Agreements are not enforceable obligations.
                                              III
                                        ROPS Item 9
       In ROPS item 9 the Successor Agency requested funds to reimburse the City for
lease payments it made in connection with three separate debt instruments: the 1993-A
Certificates, the 1993-B Certificates, and the 2003 Certificates. The Department denied
the request.
       Plaintiffs contend the Department erred in denying funding for ROPS item 9. We
agree in part.
       To qualify for ROPS funding, the Successor Agency must show that there is an
enforceable reimbursement agreement associated with each debt instrument. Plaintiffs
contend the reimbursement agreements underlying ROPS item 9 are enforceable
obligations because they fall within the exception for contemporaneous written
agreements in section 34171, subdivision (d)(2). As we explained in the previous
section, this exception applies to “written agreements entered into . . . at the time of

                                              15
issuance . . . of indebtedness obligations, and . . . solely for the purpose of securing or
repaying those indebtedness obligations . . . .” (§ 34171, subd. (d)(2).)
       The Department and trial court determined that item 9 did not meet the
requirements for the exception because there was no contemporaneous reimbursement
agreement. But it is undisputed that the 1993 Reimbursement Agreement was executed
contemporaneously with the February 1, 1993 trust agreement and associated 1993-A
Certificates. Thus, the 1993 Reimbursement Agreement satisfies the timing component
of the statutory exception.
       We reach a different conclusion regarding the 1993-B Certificates and the 2003
Certificates. As the Department contends, there was no reimbursement agreement (or
amendment to an existing reimbursement agreement) executed contemporaneously with
the 1993-B Certificates or the 2003 Certificates. Additionally, we reject plaintiffs’ claim
that these later debt instruments were somehow “within the scope” of the 1993
Reimbursement Agreement, which, by its terms, applies only to the 1993 series A
refinancing documents (i.e., the 1993-A Lease and the 1993-A Certificates).
Accordingly, the Department did not abuse its discretion in denying reimbursement of the
lease payments made in connection with those debt instruments.
       The Department argues that even if the 1993 Reimbursement Agreement was
entered into contemporaneously with the 1993-A Certificates, it is not an enforceable
obligation because it is a “contingent” agreement, and therefore was not entered “solely
for the purpose of securing or repaying” the underlying indebtedness. This is the same
argument the Department made with respect to ROPS items 6 and 7. Accordingly, we
reject it for the reasons set forth in the preceding section.6

6     In addition to focusing on the contingent nature of the agreement, the Department
suggests the agreement was not issued “solely” to secure or repay the indebtedness
because it was a “complex arrangement involving a sale of property other than a

                                              16
       In sum, we conclude the trial court abused its discretion in concluding that none of
the reimbursement agreements underlying ROPS item 9 are enforceable obligations.
Payments made by the City under the 1993-A Lease and the 1993-A Certificates are
covered by an enforceable reimbursement agreement.
                                              IV
                                           Estoppel
       In the alternative, plaintiffs argue that the trial court erred in concluding the
Department is not estopped from denying ROPS items 6, 7, and 9 due to its approval of
those items in prior ROPS. This contention lacks merit.
       “Generally, four elements must be present for the doctrine of equitable estoppel to
apply. First, the party to be estopped must have been aware of the facts. Second, that
party must either intend that its act or omission be acted upon, or must so act that the
party asserting estoppel has a right to believe it was intended. Third, the party asserting
estoppel must be unaware of the true facts. Fourth, the party asserting estoppel must rely
on the other party’s conduct, to its detriment. [Citation.]” (Lusardi Construction Co. v.
Aubry (1992) 1 Cal.4th 976, 994.) “Although estoppel is generally a question of fact,
where the facts are undisputed and only one reasonable conclusion can be drawn from
them, whether estoppel applies is a question of law. [Citations.]” (Feduniak v.
California Coastal Com. (2007) 148 Cal.App.4th 1346, 1360.)
       Here, the trial court found no basis for estoppel against the Department. We
agree. Plaintiffs cannot show that they reasonably relied on the Department’s past ROPS
approvals because the relevant transactions occurred years before the Department’s

leasehold, made on separate payments terms.” This argument is deemed forfeited
because it is insufficiently developed and supported by adequate citations to record. We
are not required to search the record to ascertain whether it contains support for plaintiffs’
contentions. (Salas v. Department of Transportation (2011) 198 Cal.App.4th 1058,
1074.)

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ROPS determinations. Additionally, the Department’s ROPS determination letters
expressly warned plaintiffs that past approval of an item would not prevent the
Department from revisiting that item on future ROPS. Thus, plaintiffs cannot show that
they detrimentally relied on the Department’s prior ROPS determinations. (City of
Brentwood v. Campbell (2015) 237 Cal.App.4th 488, 504-505.)
       In any event, “ ‘a party cannot assert estoppel against a government entity if it
would nullify a strong rule of public policy.’ ” (Oakland, supra, 79 Cal.App.5th at p.
451; accord, Lusardi Construction Co. v. Aubry, supra, 1 Cal.4th at p. 994.) That rule
applies here to prevent plaintiffs from asserting estoppel based on the Department’s
previous ROPS determinations. (City of Galt v. Cohen (2017) 12 Cal.App.5th 367, 385;
accord, Legal Aid Society of San Mateo County v. Department of Finance (2020) 59
Cal.App.5th 166, 191, fn. 12; Oakland, at p. 451.)
                                       DISPOSITION
       The judgment is reversed in part and affirmed in part, and the matter is remanded
to the trial court with directions to issue a judicial declaration that the repayment
obligations to the City embodied in the 1993 Reimbursement Agreement and the 1996
Reimbursement Agreements are enforceable obligations of the former redevelopment
agency for purposes of the ROPS; and to issue a petition for writ of mandate compelling
the Department to approve items 6, 7, and 9 on ROPS 18-19 and 19-20 to the extent those
items seek funding for reimbursement payments under the 1993 Reimbursement
Agreement and the 1996 Reimbursement Agreements; and to grant such other relief as

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may be appropriate, consistent with the views expressed in this opinion. Costs on appeal
are awarded to the plaintiffs. (Cal. Rules of Court, rule 8.278(a)(1).)

                                                        KRAUSE             , J.

We concur:

   MAURO                    , Acting P. J.

   BOULWARE EURIE , J.

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