City brought a petition for a writ of mandate, seeking an order to require the Department of Finance (DOF) to approve expenditures for an interchange and roadway under-crossing that had been approved by the city’s redevelopment agency prior to the redevelopment agency’s dissolution. The Superior Court denied the petition. City appealed.
The Court of Appeal held that:
- City’s planned expenditures were not an “enforceable obligation” under redevelopment agency dissolution law;
- DOF’s disapproval of expenditures did not violate the covenant of good faith; and
- DOF’s disapproval of expenditures did not result in an unconstitutional impairment of city’s contract rights.
City’s planned expenditures for an interchange and roadway under-crossing that had been approved by the city’s redevelopment agency prior to the redevelopment agency’s dissolution were not “payments required under the indenture” and thus were not an “enforceable obligation” under the redevelopment agency dissolution law, even if city’s failure to use its bond proceeds for the roadway project would result in the bond losing tax-exempt status and the interest rate on the bonds being increased, where nothing in the language of the first supplement to indenture required that the roadway project actually be funded or constructed, absent evidence of whether the indenture itself contained such a requirement.
The provision of the redevelopment agency dissolution law requiring a redevelopment agency, until a successor agency is authorized, to preserve the tax-exempt status of interest payable on outstanding agency bonds did not preclude the Department of Finance (DOF) from disapproving items on a recognized obligation payment schedules (ROPS) submitted by a redevelopment agency’s successor agency.
Department of Finance’s (DOF) disapproval from city’s recognized obligation payment schedules (ROPS) of expenditures for an interchange and roadway under-crossing that had been approved by the city’s redevelopment agency prior to the redevelopment agency’s dissolution did not violate the covenant of good faith in the first supplement to indenture, even if the failure to use bond proceeds to fund the roadway project would result in the loss of tax-exempt status and defeasance of the bonds, where those two potential consequences were expressly provided for in the supplement.
Department of Finance’s (DOF) disapproval from city’s recognized obligation payment schedules (ROPS) of expenditures for a bond-funded interchange and roadway under-crossing that had been approved by the city’s redevelopment agency prior to the redevelopment agency’s dissolution did not result in an unconstitutional impairment of city’s contract rights in impairing the security of the bonds, where city was not a bondholder, absent evidence of a “present, specific and substantial impairment.”