City of Big Bear Lake v. Cohen

The Dissolution Law directed redevelopment agencies to continue making payments on enforceable obligations, but prohibited those agencies from incurring additional obligations, freezing all such activities. the day before the Dissolution Law was signed by Governor Brown and became effective, City of Big Bear Lake and its former redevelopment agency, knowing about the imminent change of law and the Legislature’s intent, signed the Cooperation Agreement, under which, the City agreed to transfer to City of Big Bear Lake $23.5 million and the city agreed to undertake specified public improvements. Also on that day, the City entered into an agreement with Matich Corporation for street and drainage improvements for about $2.5 million. The city also had a 2006 agreement with Wireless Consulting – Joseph A. Cylwik (also referred to as Cylwik Property Management) to provide engineering services on an as-needed basis. Under this contract, Cylwik Property Management provided services related to the Matich Corporation project. In this case, the issues presented centered on: (1) whether the Matich and Cylwik contracts (the contested transactions) did not create enforceable obligations of the former redevelopment agency; (2) whether the Dissolution Law’s invalidation of sponsor agreements (agreements between a city and its former redevelopment agency) did not violate the California Constitution; and (3) whether it was irrelevant that City of Big Bear Lake claimed it no longer possessed the funds it received from the former redevelopment agency. The Court of Appeal affirmed the trial court with respect to these issues, and concluded the statutory remedy of offsetting City of Big Bear Lake’s sales, use, and property taxes to capture a $2.6 million was unconstitutional. Therefore, the Court modified the trial court’s judgment to the extent it found the proposed sales, use, and property tax offsets constitutional. View "City of Big Bear Lake v. Cohen" on Justia Law