COSTA MESA, Calif., February 14, 2013 – Two noteworthy redevelopment dissolution cases litigated successfully by attorneys at Rutan & Tucker, LLP, one of California’s largest full-service public agency and business law firms, were highlighted in a recent bulletin published by the League of California Cities, an association of California city officials.
The League congratulated the Rutan attorneys for their achievements in the cited cases, believing they demonstrate that litigation can offer a path to a successful reversal of adverse administrative decisions made by the State of California Department of Finance. In the first case cited by the League, Rutan partners Jeffrey Melching and Dan Slater and associate Jennifer Farrell obtained a quick change of position by the California Attorney General’s office in response to a temporary restraining order application filed on behalf of their client the City of Duarte that sought an immediate reversal of a Department of Finance ruling that would have required the city to turn over $1.2 million in former redevelopment agency (RDA) funds. The money was designated for Andres Duarte Terrace II, a 43-unit building to be constructed by a non-profit housing developer for low-income senior citizens. The victory also had the effect of keeping another $7.7 million in HUD funding from being lost, which would have resulted in the cessation of the project.
“We believe the outcome is particularly noteworthy because prevailing against the State on an RDA dissolution matter at the temporary restraining order phase of litigation has proven hard to come by on a statewide basis,” said Slater. “Needless to say the city and the developer of the project are thrilled. Ultimately the real winners are the low income senior citizens who will now have greater availability to high quality affordable apartments in Duarte.”
In the second cited case, Rutan partners Bill Ihrke and Hans Van Ligten, who chairs the firm’s Government & Regulatory Law section, obtained a ruling on behalf of their client CRFL Family Apartments. The ruling, potentially the first of its kind in Superior Court, obligates the State of California Department of Finance to recognize a $14.2 million contract for an affordable housing development in Oxnard. The attorneys believe this successful challenge to an adverse funding decision made by the Department of Finance may be the first of dozens to come from private parties, local governments, and others following the dissolution of redevelopment agencies.
According to Ihrke, a key determination by the court was that the rights to the $14.2 million funding from the former redevelopment agency, along with the obligation to build the affordable units, were transferred to Rutan’s client, a single purpose developer, without creating a “new” enforceable obligation. Ihrke cited the ruling that states: “The relevant inquiry here, therefore, is not whether the Successor Agency ‘executed’ or was required to execute an assignment and assumption agreement, but whether the Agency – in consenting to the assignment – created a new enforceable obligation. The Court is persuaded that it did not.”
Ihrke stated the ruling is particularly important because several sources of financing for the affordable housing project, including tax credits and multi-family housing revenue bonds, each of which had been independently approved by two different State agencies, were at risk of being lost if the State Department of Finance’s disapproval of the project had not been reversed.
About the League of California Cities
Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials. More information is available at http://www.cacities.org/
About Rutan & Tucker LLP
Rutan & Tucker is California’s largest full-service law firm headquartered in Orange County, California with offices in Costa Mesa and Palo Alto. Primary practice areas include business and real estate litigation, corporate and securities law, labor and employment law, intellectual property, real estate, municipal and government agency law, land use law, bankruptcy, condemnation and property valuation, environmental law, and taxation and estate planning. Detailed information about the firm is available at www.rutan.com.