Writ of Mandate Opening Brief - Draft 6-Ben Edits

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UCI SCHOOL OF LAW

COMMUNITY & ECONOMIC DEVELOPMENT CLINIC
Carrie Hempel; State Bar No. 126713
Robert Solomon; State Bar No. 280022
401 E. Peltason Dr. Suite 1000
Irvine, CA 92697
Telephone: (949) 824-0975
Attorneys for Petitioner and Plaintiff, Gerald Peebler
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SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SACRAMENTO
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GERALD PEEBLER, et al.

Petitioner and Plaintiff,
vs.
STATE OF CALIFORNIA DEPARMENT OF
FINANCE; ANA J. MATOSANTOS, in her
official capacity as Director of the State of
California Department of Finance; JAN
GRIMES, in her official capacity as the
Auditor-Controller of the County of Orange;
and CITY OF SANTA ANA AS SUCCESSOR
AGENCY FOR THE FORMER
COMMUNITY REDEVELOPMENT
AGENCY OF THE CITY OF SANTA ANA,
Case No. 34-2012-80001172

MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF PETITION
FOR WRIT OF MANDATE
Respondents and Defendants.
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE
TABLE OF CONTENTS
INTRODUCTION ....................................................................................................................... iii3
STATEMENT OF FACTS ............................................................................................................ 13
I.
REDEVELOPMENT AGENCIES AND FINANCING FROM PROPERTY

TAX REVENUE ................................................................................................... 23
II.
THE 1984 PEEBLER SETTLEMENT .................................................................. 25
III.
THE RDAs PARTIAL PERFORMANCE UNDER THE PEEBLER

SETTLEMENT...................................................................................................... 57
IV.
THE PEEBLER SETTLEMENT FUNDS AT STAKE....................................... 810
V.
THE DISSOLUTION OF REDEVELOPMENT AGENCIES ............................912
VI.
THE DOFS DISAPPROVAL OF THE PEEBLER SETTLEMENTS

INCLUSION IN THE CITYS ROPS ..............................................................1013
VII.
PROCEDURAL HISTORY .............................................................................. 1215
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ARGUMENT .............................................................................................................................1316
I.
THE PEEBLER SETTLEMENT IS AN ENFORCEABLE OBLIGATION

PROPERLY INCLUDED IN THE ROPS. ....................................................... 1416
II.
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THE CITY AND MR. PEEBLER ENTERED INTO A BINDING

CONTRACT AND THE CITY IS OBLIGATED TO PERFORM UNDER
THE AGREEMENT. ......................................................................................... 1619
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A.
The Parties Created a Clear and Binding Contract That Obligates the
RDA to Set Aside Additional Tax Revenue for Low-Income Housing
and to Spend Additional Tax Revenue on Improvements in the
Corridor.................................................................................................. 1619
B.
If the Parties Intent Under the Peebler Settlement is Ambiguous,

Extrinsic Evidence Demonstrates Their Intent to Enter Into a Definite,
Contingency-Free Contract. ................................................................... 1921
C.
Even If This Court Were to Find that the Peebler Settlement is

Contingent on the Continued Existence of Tax Increment Financing,
the Funds Collected Prior to the Passage of the Dissolution Act That
Have Not Been Utilized Are a Part of the Legally Enforceable
Obligation. .............................................................................................2630
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III.
THE DOFS INTERPRETATION OF THE DISSOLUTION ACT

UNCONSTITUTIONALLY IMPAIRS PETITIONERS CONTRACT BY
RENDERING THE SETTLEMENT AGREEMENT UNENFORCEABLE... 2731
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MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE
THE DOFS INTERPRETATION OF THE DISSOLUTION ACT

CONSTITUTES AN UNCONSTITUTIONAL TAKING BY DEPRIVING
MR. PEEBLER OF THE VALUE OF HIS SETTLEMENT. ...........................3336
CONCLUSION..........................................................................................................................3336
IV.
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TABLE OF AUTHORITIES
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STATE CASES
Allen v. Board of Administration
(1983) 34 Cal.3d 114....2627
Baiza v. Southgate Recreation & Park Dist.
(1976) 59 Cal.App.3d 669.13
Board of Administration v. Wilson
(1997) 52 Cal.App.4th 1109................................................29, 30
California Assn for Health Services at Home v. Dept. of Health Services
(2007) 148 Cal.App.4th 696....13, 14
Cal. Redevelopment Assn v. Matosantos
(2011) 53 Cal.4th 231....1, 10, 14, 16
California Teachers Assn. v. Cory
(1984) 155 Cal.App.3d 494.29, 30
City of Dinuba v. County of Tulare
(2007) 41 Cal.4th 859....13
County of Solano v. Vallejo Redevelopment Agency
(1999) 75 Cal. App. 4th 1262....15
Delta Dynamics, Inc. v. Arioto
(1993) 69 Cal.2d 525.18
Donlan v. Weaver
(1981) 118 Cal.App.3d 675...29
Ersa Grae Corp. v. Fluor Corp.
(1991) 1 Cal.App.4th 613..17
Marshall & Co. v. Weisel
(1966) 242 Cal.App.2d 191, 196...16
Mendly v. County of Los Angeles
(1994) 23 Cal.App.4th 1193..............................................27
Monks v. City of Rancho Palos Verdes
(2008) 167 Cal. App. 4th 26331
Peebler, et al. v. City of Santa Ana
(Super. Ct. Orange County, 1982, No. 38 58 59)....3
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Comment [A1]: Page numbers subject to change.
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Save the Plastic Bag Coalition v. City of Manhattan Beach

(2011) 52 Cal.4th 155, 16513
Sonoma County Org. of Public Employees v. County of Sonoma
(1979) 23 Cal. 3d 296........................................28, 29, 30
Redevelopment Agency v. County of San Bernardino
(1978) 21 Cal.3d 255.....21
Reigelsperger v. Siller
(2007) 40 Cal.4th 574....16
United Firefighters of Los Angeles City v. City of Los Angeles
(1989) 210 Cal.App.3d 1095.............................................................................................30
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FEDERAL CASES
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Allied Structural Steel Co. v. Spannaus
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(1978) 438 U.S. 234 ........................................................27, 29

Chicago B. & Q.R. Co. v. Chicago
(1897) 166 U.S. 226...31
Home Bldg. & Loan Ass'n v. Blaisdell
(1934) 290 U.S. 398.26, 28
U.S. Trust Co. of New York v. New Jersey
(1977) 431 U.S. 1...27, 28, 30
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STATUTES
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AB1X 26.passim
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AB 1484...9
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Code of Civil Procedure
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1085(a).13
1086.16
1556.16
1565.16
1596.16
1605.17
Health and Safety Code
1(j) ..27
16.. ..17
33334.64, 25
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33334.6, subdivision (c)..25

34167, subdivision (a).....27
34171, subdivision (d)..9
34171, subdivision (d)(1)....14
34171, subdivision (d)(1)(D)10, 15
34171, subdivision (d)(G)(2) .....27
341739
34173, subdivision (g)..9
34175, subdivision (a).....15
34176, subdivision (a) ....25
341779
34177.310
34178, subdivision (b)(1) ...27
34179....9
34180....9
34183.12, 15
34183, subdivision (a).9, 15
CONSTITUTIONAL PROVISIONS
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California Constitution
Article I, 9...26
Article I, 19.31
United States Constitution
Article I, 10.....26
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OTHER AUTHORITIES
Coomes, Jr., Joseph E. et al., Redevelopment in California (4th ed. 2009)..21
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INTRODUCTION
In 1982, the City of Santa Ana (City) adopted a Redevelopment Plan (Plan) for the
South Main Street Redevelopment Project Area (Project Area). Gerald Peebler, a longtime
property owner in the City of Santa Anas South Main Street Commercial Corridor (Corridor),
filed suit to contest the Plan, which he believed neglected the needs of businesses and low- and
moderate-income residents within the Corridor. In 1984, Mr. Peebler negotiated a settlement with
the City. Pursuant to the terms of Mr. Peeblers settlement, the Community Redevelopment Agency
of the City of Santa Ana (RDA) set aside $64 million for low- and moderate-income housing and
$45 million for the Corridor from property tax revenues raised from 1984 to 2011. As of this date,
the RDA has only spent two-thirds of the money raised on public improvements in the Corridor.
The California Department of Finance (DOF) has adopted a position, unsupported by law,
that has abrogated Petitioners longstanding contract rights and effectuated the misappropriation of
millions of dollars in additional tax revenues. The 1984 Peebler Settlement (Peebler Settlement
or Settlement) is an enforceable obligation as defined by Assembly Bill x1 26 and Assembly Bill
1484 (collectively, the Dissolution Act). First, the Dissolution Act classifies preexisting legally
binding agreements and stipulated judgments, like the Peebler Settlement, as enforceable
obligations. The Peebler Settlements plain language pledges 40 percent of additional tax revenues
collected in the Santa Anas South Main Redevelopment Project Area (Project Area) for public
improvements and low- and moderate-income housing, regardless of whether such funds are labeled
tax increment. Second, even if this Court finds such language ambiguous, extrinsic evidence of
party negotiations and subsequent performance demonstrates the parties intent that additional tax
revenues continue to be spent as the Settlement dictates. Third, even if the DOFs interpretation
does not violate the Dissolution Act, it violates Petitioners rights under the impairment of contract
and takings clauses of the California and United States Constitutions by rendering the Settlement
provisions he bargained for unenforceable. For these reasons, Petitioner requests that this Court
issue a writ of mandate compelling the DOF to recognize the Peebler Settlement as an enforceable
obligation.
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-1MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE
STATEMENT OF FACTS
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I.
REDEVELOPMENT AGENCIES AND FINANCING FROM PROPERTY TAX

REVENUE
In the 1940s, the Legislature authorized the formation of community redevelopment
agencies to help local governments revitalize communities suffering from blight. (Cal.
Redevelopment Assn v. Matosantos (2011) 53 Cal.4th 231, 245-46.) The Legislature gave
redevelopment agencies the powers to acquire land, including using the power of eminent domain;
clear land to construct and enhance infrastructure; and make a variety of public improvements. (Id.
at 246.) Exercising these powers, redevelopment agencies became a principal instrument of
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economic development. (Ibid.)
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To finance their work on behalf of blighted communities, redevelopment agencies relied on
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a funding method known as tax increment financing. (Id.) Under this system, taxing entities
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allocated tax revenue from increases in property value in a redevelopment project area to
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redevelopment agencies in recognition of their contribution to the propertys increase in value. (Id.
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at 246-47.) A redevelopment agency could receive only the annual portion of these property tax
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revenues that did not exceed its total indebtedness, less its revenue on hand. (Id. at 247.)
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The Community Redevelopment Agency of the City of Santa Ana (RDA) operated from
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1973 until 2012. (Five-Year Implementation Plan (20102015), (Exhibit A at 9).) During the
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period from 1973 to 1989, the RDA adopted six redevelopment project areas. (Exhibit A at 9.) It
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established the Central City Redevelopment Project Area in 1973. (Id. at 11.) The RDAs 1982
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Redevelopment Plan established four project areas: Inter-City, North Harbor, South Harbor, and
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South Main Redevelopment Project Areas. (Id.) In 1989, it established the Bristol Redevelopment
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Project Area. (Id.) In 2004, the RDA merged these six project areas into one merged project area.
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(Id. at 9.) Each project area covers approximately 4001,500 acres of land. (Id. at 1217.)
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Of the six project areas, the South Main Redevelopment Project Area is the largest,
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encompassing approximately 1,500 acres of land. (Id. at 16.) The South Project Area is comprised
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of (1) a relatively large area of new manufacturing and light industrial uses along the southeastern
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boundary of the City and (2) the narrow South Main Corridor. (Id.) The South Main Corridor
Comment [A2]: I dont think we should truncate

this instance of the term to Project Area given the
context.
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spans Main Street North of Warner Avenue and on First Street. (Resolution No. 84-2, Exhibit B
at 4.) On South Main Street, the distance from Warner Avenue to First Street is approximately two
miles. (Google Maps, (Exhibit C).) The RDAs primary focus for Project Area has been on the
needed revitalization of the commercial corridors through street improvements, rehabilitation
programs and assisting in private development that will eliminate obsolete and incompatible uses.
(Exhibit A at 16.)
II.
THE 1984 PEEBLER SETTLEMENT

The Peebler Settlement resulted from a series of negotiations between the parties in Peebler,
et al. v. City of Santa Ana (Super. Ct. Orange County, 1982, No. 38 58 59). (See Declaration of C.
Robert Ferguson In Support of Petition For Writ of Mandate, filed concurrently with this Petition,
Ferguson Decl. 1122.) On July 6, 1982, the City of Santa Ana (City) adopted the
Redevelopment Plan for the South Main Street Redevelopment Project Area (Plan). (See Plan,
(Exhibit D) at 1.) Soon after the Plans adoption, Gerald Peebler and John Albert, property owners
in the South Main Corridor (Corridor), filed a lawsuit against the City and the RDA, challenging
the Plans validity. (Peebler Complaint, (Exhibit E).)
According to Robert Ferguson, the attorney for the plaintiffs in Peebler, the case had
significant merit and, if it had not been settled, its litigation would likely have caused the RDA to
lose hundreds of millions of dollars in redevelopment financing. (Ferguson Decl. 811.) As a
result, the City and RDA desired to settle the matter quickly and their attorneys informed Mr.
Ferguson they were willing to make significant concessions in order to do so. (Id. 11.) During
settlement negotiations, the City and RDA initially offered the following: (1) neighborhood
residential property would be incorporated into a neighborhood integrity program; (2) 30 percent of
the tax increment collected in the South Main Redevelopment Project Area (Project Area) would
be used for low- and moderate-income housing; (3) Mr. Peeblers and Mr. Alberts properties
would be exempt from eminent domain; and (4) the City and RDA would pay reasonable attorneys
fees. (See id. 13.)
The plaintiffs rejected this initial offer. (See id. 15.) The plaintiffs wanted any additional
tax funds raised in the Project Area to be spent improving the Corridor. (See id. 1617;
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Declaration of Gerald Peebler In Support of Petition For Writ of Mandate, filed concurrently with
this Petition, Peebler Decl. 8.) They were particularly adamant that these funds should be spent
only on projects that benefitted Corridor businesses. (See Peebler Decl. 5, 8; Ferguson Decl.
17.) They had specific demands, and insisted that the Settlement provide for additional parking in
the Corridor and bar the creation of a center divider on South Main Street. (See Peebler Decl. 5;
Ferguson Decl1. 17.)
The plaintiffs agreed with the inclusion of the housing set-aside provision in the initial offer.
(See Ferguson Decl. 20.) The plaintiffs wanted to ensure that additional tax funds raised in the
Project Area also benefitted low- and moderate-income residents throughout the City. (See id.
2021.) Over the course of settlement negotiations, the City and RDA accepted the plaintiffs
request that an additional 20 percent of the funds be allocated to improve South Main Street and
reduced their initial offer of a 30 percent housing set-aside to 20 percent. (See id. 22.) The
plaintiffs accepted the defendants revised offer. (See Exhibit B at 4.)
The plaintiffs provided substantial consideration in the Ssettlement, as they stipulated to the
Court entering a judgment validating the Redevelopment Plan. (Settlement Agreement, Exhibit F at
1.) In return, the Settlement provided that [t]he Redevelopment Agency and any and all
successors thereto are lawfully obligated to carry out and accomplish the terms of Resolution No.
84-2, which is included in the Settlement by reference. (Id. 5 (Italics added).) The Settlement
obligated the City and RDA in three ways that directly affected the plaintiffs. First, the RDA
committed to spend [t]wenty percent (20%) of the tax increments or tax increments generated or
related revenues, or moneys repayable from tax increments from the project area on public
improvements in the Corridor. (Exhibit B at 4 (Italics added).) Second, the RDA promised to set
aside 20 percent of the same for low- and moderate-income housing. (Id.) Third, the RDA agreed
to waive its right of eminent domain with respect to the plaintiffs properties, and to all residential
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properties in the Project Area, through the duration of the Plan or any amendment or extension to
it.1 (Id. at 23.)
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The parties to the agreement also negotiated a date by which this specific allocation of a
portion of the property tax revenue would end. (See id. at 4.) Resolution No. 84-2 entitl[es] the
Agency to the receipt of all taxes to be allocated to the Agency pursuant to the terms of the Plan.
(Id.) The Plan was originally effective for 30 years from the date of its adoption, or through July 6,
2012. (See Exhibit D at 30 800.) The City later extended the Plans duration with a series of four
amendments. (See Santa Ana Main Street Redevelopment Plan Limits Spreadsheet, (Exhibit G).)
The latest of these amendments, adopted in 2007, extended the Plan until July 6, 2025. (Ordinance
No. NS-2751, (Exhibit H at 1).) The same amendment also authorized the RDA to collect tax
increment revenue through July 6, 2035 to repay indebtedness incurred under the Plan. (Id.)
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The Peebler Settlement involved the collection and use of tax increments because, at the
time, these funds were the RDAs sole source of income and the only option for funds to support
public improvements and housing. (Ferguson Decl. 25.) The plaintiffs and their attorney
reasonably expected that such funds would exist throughout the Plans duration, especially since tax
increment income projections well in excess of 25 years were typically used to establish the
economic feasibility of a project area under Health and Safety Code section 33352(e). (Ferguson
Decl. 2627; see also Declaration of Greg Soo-Hoo In Support of Petition For Writ of Mandate,
filed concurrently with this Petition, Soo-Hoo Decl. 25, 3133.) The plaintiffs would not have
agreed to a settlement that did not effectively guarantee funding for its provisions or allowed the
RDA to shirk its responsibilities under the agreement. (See Ferguson Decl. 2931.)
III.
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THE RDAS PARTIAL PERFORMANCE UNDER THE PEEBLER SETTLEMENT

In the years following the Peebler Settlement, the RDA collected tax increment from the
Project Area and used it to partially perform its obligations pursuant to the Settlement. RDA
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The Settlement also exempted from eminent domain all property which fronts on First Street and that portion of
South Main Street between First Street at the north and south to Warner Avenue through December 31, 1988. (Exhibit
B at 3.)
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employees who worked on projects in the Corridor, acting in the scope of their employment,
believed the Peebler Settlement was a legally binding obligation to use additional tax revenues to
improve the area. (See Declaration of Vicki Uehli In Support of Petition For Writ of Mandate, filed
concurrently with this Petition, Uehli Decl. 5; Declaration of Cynthia Nelson In Support of
Petition For Writ of Mandate, filed concurrently with this Petition, Nelson Decl. 6.) From 1984
Formatted: Not Highlight
to 2011, the RDA spent approximately $29 million on public improvements in the Corridor in
accordance with the Settlement. (Declaration of Susan Gorospe In Support of Petition For Writ of
Mandate, filed concurrently with this Petition, Gorospe Decl. .) These projects included: a
faade reconstruction rebate program; improving sidewalks by adding decorative stamped concrete,
lighting, curbs, and gutters; installing traffic signals; realigning McFadden Street; and placing a
historical archway sign on South Main Street. (Uehli Decl. 9; Nelson Decl. 9.) The RDA also
used Settlement funds to build parking lots on Main Street, specifically addressing concerns raised
by the Peebler plaintiffs about inadequate parking in the area. (See Uehli Decl. 9; Peebler Decl.
5.) Without Peebler Settlement funds, the RDA would not have been able to finance many of these
public improvement projects in the Corridor. (Uehli Decl. 11.)
RDA employees understood the Peebler Settlement bound their redevelopment spending
capabilities. (Nelson Decl. . 10.) Employees believed if they wanted to spend Settlement funds
outside the Corridor, they needed Mr. Peebler and Mr. Albert to amend the Agreement. (Nelson
Decl. 10.) In fact, in 2009, RDA Executive Director Cindy Nelson and City Manager David
Ream met with Mr. Peebler and his son to discuss spending Settlement funds in project areas not
included in the original Ssettlement. (Nelson Decl. 12; see also Peebler Decl. 1013.) Mr.
Peebler did not approve this request, as he wanted to be sure that funds collected under the
Settlement actually benefitted businesses within the Corridor. (See Peebler Decl. 13.) The RDA
did not expend funds for the proposed project. (See Nelson Decl. 14.)
In 2010, Ms. Nelson and Mr. Ream suggested that Joe Adams, President of the Discovery
Science Center, a museum in Santa Ana, contact Mr. Peebler about using Settlement funds to build
a new parking lot for the museum. (Declaration of Joe Adams In Support of Petition For Writ of
Mandate, filed concurrently with this Petition, Adams Decl. 45; see also Nelson Decl. 13.)
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In order to convince Mr. Peebler to release Settlement funds, Mr. Adams considered a variety of
actions the Discovery Science Center could take to benefit the Corridor. (See Adams Decl. 6, 8.)
These included: advertising for and directing traffic to Corridor businesses, providing free
admission to children of Corridor residents and business owners, and helping business owners
create a museum devoted to the Corridors history. (Adams Decl. 6.) Negotiations to amend the
Settlement ultimately failed because Mr. Adams was not able to offer anything that would benefit
the Corridor as much as public improvements made under the Peebler Settlement could. (Adams
Decl. 89.) Again, the RDA, understanding that it was bound by the Peebler Settlement, did not
release funds for the museum parking lot. (See Adams Decl. 9.)
Beginning in 1984, also in accordance with the Peebler Settlement, the RDA created a
separate fund, the Low and Moderate Income Housing Fund (LMIHF). Each year, the RDA
deposited 20 percent of the additional property tax revenues collected as a result of development in
the project area into the LMIHF. (Declaration of Shelly Landry-Bayle In Support of Petition For
Writ of Mandate, filed concurrently with this Petition, Landry-Bayle Decl. .) This housing setaside was to be used solely for low- and moderate-income housing projects throughout the City.
(Landry-Bayle Decl. .) The RDA employees who worked on the affordable housing projects at the
City level understood that the Peebler Settlement was a legally binding obligation, requiring that the
LMIHF be used solely for low- and moderate-income housing developments. (Landry-Bayle Decl.
.) From 1986 to 2011, the RDA expended money from the LMIHF to fund approximately 1,329
low-and moderate-income housing units the City. Such expenditures include the construction of
units and the facilitation of acquisitions, including existing units targeted for rehabilitation.
(Landry-Bayle Decl. .) The use of Peebler Settlement funds to provide low-and moderate-income
housing addressed concerns raised by the Peebler plaintiffs regarding the displacement of a
significant number of low- income residents in the South Main Redevelopment Project Area.
(Ferguson Decl. 9, 20.) Without the LMIHF, the RDA would not have been able to complete
many of the low and moderate income housing units throughout the City. (Landry-Bayle Decl. .)
Between July 2009 and March 2011, the RDA entered into four agreements with third party
developers. (Recognized Obligation Payment Schedules (ROPS)ROPS III, (Exhibit K at 45);
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Landry-Bayle Decl. .) The four housing projects are the following: (1) Vista Del Rio Housing
Partners LP rental family housing units; (2) Habitat for Humanity single family units; (3) Santa Ana
Station District family housing; and (4) the WBB Project. Construction on these four projects
commenced in 2012, but the construction on these projects is currently on hold. According to City
employees, these projects are not suspended due to the passage of the Dissolution Act. Instead,
these projects are incomplete due to the lack of cash sources apart from the Redevelopment
Property Tax Trust Funds (RPTTF)RPTTF. (Landry-Bayle Decl. .)
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The refusal of the DOF to recognize the Settlement Agreement as an enforceable obligation
has prevented the City as Successor Agency from entering into agreements to implement the intent
of the Agreement. In early 2011, recognizing the success of previous faade improvement
programs, the RDA decided to undertake a ten-year faade enhancement program for the Corridor.
(Uehli Decl. 13; see also faade improvement before/after photos, (Exhibit I).) The City solicited
proposals for the project, interviewed and scored applicants, and on June 21, 2011, recommended
that the RDA enter into a contract with ABACUS Project Management, Inc. (See Uehli Decl. 14;
Formatted: Font: Not Italic
ABACUS Approval, (Exhibit J).) The RDA drafted a contract to engage ABACUS, which it was
prepared to execute, but the City could not move forward with the project because of the passage of
the Dissolution Act and the DOFs refusal to approve the Citys Recognized Obligation Payment
Schedules (ROPS)ROPS. (See Uehli Decl. 15.) The City will not be able to start this faade
enhancement project, which would significantly benefit business owners in the Corridor, until the
DOF approves the Settlements inclusion in the Citys ROPS. (See Uehli Decl. 1516.)
IV.
THE PEEBLER SETTLEMENT FUNDS AT STAKE

From 1984 to 2011, the RDA allocated approximately $45 million for utilization in the
Corridor in compliance with the Settlement. (Gorospe Decl. .) In May 2010, the RDA borrowed
$6.3 million from the $17.5 million in the Corridor fund to help pay its mandatory contribution to
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the county Supplemental Educational Revenue Augmentation Fund (SERAF).2 (See Gorospe
Decl. .) The RDA was to repay this SERAF loan back into the Corridor fund in annual
installments over the next nine years. 3 (Gorospe Decl. .) The Citys outside consultants projected
that the RDA would receive $82 million in additional property tax revenues from the Project Area
from 2011 to 2035. (Soo-Hoo Decl. 38, Exhibit D; see also Gorospe Decl. .)
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From 1984 to 2011, the County collected a total of $64,397,163.00 for low and moderate
income housing developments in compliance with the Peebler Settlement, as well as from the
settlement agreements for the Bristol, South Harbor, North Harbor and Inter-City project areas.4
(Finance and Management Services Spreadsheet, (Exhibit L); Landry-Bayle Decl. .)
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The affordable housing database list consists of approximately thirty low and moderate
income housing projects, attached as Exhibit N. (Landry-Bayle Decl. .) The majority of the
projects listed were never owned by the RDA, but instead owned by a third party developer.
(Landry-Bayle Decl. .) Although the City states that it is not easy to ascertain which projects were
initially owned by the RDA, any such projects were governed by a Disposition and Development
Agreement (DDA) so that ownership of any such property transferred, or will transfer, from the
RDA Redevelopment Agency to a third party developer. (Landry-Bayle Decl. .)
V.
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THE DISSOLUTION OF REDEVELOPMENT AGENCIES

In June 2011, the Legislature passed AB x1 26, which dissolved California redevelopment
agencies and established successor agencies to wind down their affairs. (California Redevelopment
Assn. v. Matosantos, supra, 53 Cal.4th 231, 250.) The California Supreme Court upheld AB x1 26
on December 29, 2011, and the laws provisions went into full effect on February 1, 2012.
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Under Health and Safety Code section 33690, the RDA was required to make its 2009-2010 county SERAF fund
payment before May 10, 2010.
3
In borrowing this money from the Corridor fund, the RDA deviated from its previous practice of requesting the
Peebler plaintiffs permission to spend funds outside of the parameters dictated by the Settlement. Assuming arguendo
that the RDA was entitled to use Corridor funds for this purpose, the RDA consistently evidenced its intent to repay the
$6.3 million it borrowed from the Fund and treated the loan amount as a Corridor fund asset. (See, e.g., Exhibit A at
35.)
4
The County of Orange serves as the collection agency for the taxes collected pursuant to the tax increment laws and
also maintains the collected funds.
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Comment [A3]: Housing People Iris made this

comment: on page 8 , last paragraph -- is it really
the County that collects the money for the
affordable housing fund? Since it may be the first
reference, I would say in the text (not the footnote)
that the County of Orange has collected and
maintained the funds to be allocated for affordable
housing purposes under the Peebler settlement.
Im not entirely sure what she means by this. I dont
know whether its the County or not. Could
somebody clarify and/or make the change if you
understand what shes saying?
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(California Redevelopment Assn. v. Matosantos, supra, 53 Cal.4th 231, 276.) In June 2012, the
Legislature passed AB 1484 to amend and clarify certain AB x1 26 provisions. (See AB 1484).
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The statute does not eliminate the former redevelopment agencies existing obligations.
Although tax increment financing no longer exists, auditor-controllers still must collect the excess
property taxes that would have been available to RDAs and deposit the funds in Redevelopment
Property Tax Trust Funds (RPTTF)the RPTTF. (Health & Saf. Code 34172(c).) Successor
agencies must use RPTTF funds to pay for enforceable obligations as defined by Health & Safety
Code section 34171(d). (Health & Saf. Code 34171(d), 34183(a)). To ensure these enforceable
obligations are paid, successor agencies must list them on a series of ROPS, which are subject to the
approval of oversight boards and the DOF. (Health & Saf. Code 34177, 34179, 34180.)
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Nor does the Dissolution Act eliminate all future redevelopment activity. The statute makes
clear that successor agencies retain legal authority to participate in redevelopment activities . . . to
complete any work related to an approved enforceable obligation. (Health & Saf. Code
34173(g).) The Dissolution Act also contains a section clarifying that successor agencies have the
authority to create new enforceable obligations under the authority of the Community
Redevelopment Law . . . [and] begin new redevelopment work . . . in compliance with an
enforceable obligation that existed prior to June 28, 2011. (Health & Saf. Code 34177.3)
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VI.
THE DOFS DISAPPROVAL OF THE PEEBLER SETTLEMENTS INCLUSION IN

THE CITYS ROPS
The City of Santa Ana exercised its option to become the successor agency to the RDA,
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charged with carrying out new and existing redevelopment activity in compliance with the RDAs
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enforceable obligations. The City as Successor Agency determined that the Peebler Settlement is
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an enforceable obligation, since enforceable obligations include [j]udgments or settlements entered
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by a competent court of law. (5/18 City Letter to DOF, (Exhibit N at 56) (quoting
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34171(d)(1)(D)).).
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The City as Successor Agencys first ROPS, for the period of January 1 through June 30,
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2012, included several items that reflected its determination that the Peebler Settlement is an
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enforceable obligation. (See ROPS I, (Exhibit O).) Items 9, 89, and 90 reflect the City at Successor
- 10 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE
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Agencys total outstanding debt and obligation for public improvements in the Corridor. (Id. at 1,
7.) Item 83 recognizes the Citys obligation to repay the funds the RDA borrowed from the
Corridor Fund for its May 2010 SERAF payment. (Id. at 7.) Items 85 and 88 reflect an outstanding
debt and obligation for low- and moderate-income housing, some of which is attributable to the
Settlement. (Id.) On April 10, 2012, the Oversight Board for the Successor Agency of the
Redevelopment Agency of the City of Santa Ana (Oversight Board) approved the Citys first
ROPS, including its recognition of the Citys obligations under the Settlement. On April 18, 2012,
the City submitted its first ROPS to the DOF. (See 5/3 Letter from DOF to Santa Ana, (Exhibit P
at 1.).)
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The DOF has refused to recognize the Peebler Settlement as an enforceable obligation. On
May 3, 2012, the DOF issued a letter to the City in which it objected to certain items on the ROPS,
including several of the Citys obligations under the Peebler Settlement. (See id.) In its comments
concerning rejection of items 9 and 85, the DOF stated that [s]ettlements awarding a percentage of
tax increment are not considered [enforceable obligations] because tax increment is no longer
payable to the redevelopment agencies. (Id. at 13.) The DOF further stated that items 88 and 89
are not enforceable obligations because [the Dissolution Act] does not allow successor agencies to
enter into new contracts. (Id. at 3.)
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Since the DOFs initial decision, both the City and Mr. Peebler have repeatedly asked the
DOF to review its determination that the Peebler Settlement is not an enforceable obligation. On
May 18, 2012, the City sent a letter to the DOF requesting reconsideration and providing
information to assist the DOF in confirming the Settlement as an enforceable obligation. (5-18
letter Santa Ana to DOF, Exhibit N at 56.) The City also continued to include items related to the
Settlement on its second5 and third6 ROPS. (See ROPS II, (Exhibit Q at 1, 7;) and Exhibit K at 2.)
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Items 9, 83, 85, 88, 89, and 90 on the Citys ROPS for the period of July 1 to December 31, 2012.
Items 14, 15, 16, 17, 18, and 22 on the Citys ROPS for the period of January 1 to June 30, 2013.
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The DOF rejected the inclusion of the Settlement on both of these ROPS. (See DOF 5/24
letter, (Exhibit R at 2); 10/19 DOF letter, (Exhibit S at 1).) The DOFs May 24, 2012 letter
responding to ROPS II simply reiterated its previous rationale for finding the Settlement is not an
enforceable obligation. (See Exhibit R at 2.) In its October 19, 2012 letter responding to ROPS III,
the DOF rejected these items on two new grounds: First because the requirement to set aside 20
percent of RDA tax increment for low and moderate income housing purposes no longer existed
[b]ecause there no longer are such taxes allocated to the Agency; and second, because Health and
Safety Code section 33690 (c) does not require SERAF payments from . . . sources [other than
low- and moderate-income housing funds] to be repaid with tax increment distributions. (See
Exhibit S at 1.) Thus, the DOF decided that the repayment of the Corridor SERAF loan is not an
enforceable obligation. (Id.)
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Mr. Peebler, through counsel, has twice attempted to convince the DOF to review its
decision that the Peebler Settlement is not an enforceable obligation. First, on May 25, 2012, Mr.
Peeblers counsel submitted a letter to the DOF in support of the Citys request that the DOF
recognize the Settlement as an enforceable obligation. (See UC Irvine Law Clinics 5/24 letter to
the Department of Finance, (Exhibit T).) Second, on October 26, 2012, Mr. Peeblers counsel wrote
the DOF to attempt to resolve this matter informally. (See 10/26 Clinic letter to DOF, (Exhibit U).)
As of the date of this filing, the DOF has failed to respond to either of these letters.
VII.
PROCEDURAL HISTORY
Under Health and Safety Code section 34183, the Orange County Auditor-Controller
(OCAC) was scheduled to disburse tax increment to successor agencies and to local taxing
entities on June 1, 2012. That same day, Mr. Peebler petitioned the Superior Court for the County
of Orange, pursuant to its inherent authority to enforce its own judgments, to enter a temporary
restraining order (TRO) against the OCAC to prevent the OCAC from transferring the disputed
Project Area funds to other entities. (Orange County Superior Court Case No. 38 58 59, (Exhibit
V).) The court (Brenner, J.) entered a TRO enjoining the OCAC from transferring the disputed
funds until June 18, 2012, and scheduled a preliminary injunction hearing on the matter for June 18,
2012. Exhibit W, OC Temporary Restraining Order, Exhibit W at 2.)
Comment [A4]: Cannot find the final copy of this

in the VPN or file.
Comment [A5]: Having reviewed the 6/7/2012
Sacramento Writ and its Exhibit L, I think this is the
signed TRO document: (but its not signed by the
judge?):
Z:\CED\Cases-Projects\SAMA-Peebler\2. Summer
2012\Santa Ana Superior\Signed TRO.pdf
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On June 7, 2012, Mr. Peebler initiated this suit by filing in Sacramento his Petition for Writ
of Mandate and Verified Complaint for Declaratory and Injunctive Relief to compel Respondents to
recognize the Judgment as an enforceable obligation. (Petition for Writ, Exhibit X at 10 (Exhibit
X).)
On June 11, 2012, Mr. Peebler filed an Ex Parte Application for a TRO in Sacramento.
(Exhibit Y, Ex Parte Application for TRO.) On June 14, 2012, this Court heard arguments and
denied the Application for a TRO. (Exhibit Z, Transcript of Hearing for Ex Parte Application,
Exhibit Z.)
After Mr. Peebler filed his Petition for Writ of Mandate and Ex Parte Application for a TRO
in Sacramento, he withdrew his ex parte application for a TRO in Orange County and took the June
18th hearing off of the calendar due to this Courts denial of the TRO. The TRO that was earlier
issued by the Orange County Superior Court expired on June 18, 2012.
As of the date of this filing, the OCAC has allocated no funds from the Redevelopment
Property Tax Trust FundRPTTF to the City as Successor Agency for use in compliance with any of
the enforceable obligations related to the Peebler Settlement listed on its ROPS, even though DOF
has approved many of these obligations.
ARGUMENT
The Court should issue a writ of mandate compelling the DOF to recognize the Peebler
Settlement as a preexisting enforceable obligation. This would allow the City as Successor Agency
to fulfill the Settlements requirements by utilizing 20 percent of the increased tax revenue from the
Project Area for public improvements in the Corridor and setting aside 20 percent of the same
revenue for low- and moderate-income housing development through the end of 2035.
A writ of mandate will issue when three requirements are met. First, the petitioner must
have a beneficial interest in the performance of the respondents alleged duty. (Save the Plastic Bag
Coalition v. City of Manhattan Beach (2011) 52 Cal.4th 155, 165; see also Cal. Code Civ. Proc.
1086.) Second, the petitioner must have no plain, speedy, and adequate remedy at law. (Id.)
Finally, the respondent must have a clear, present, and usually ministerial duty to perform the action
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the petitioner seeks to compel. (City of Dinuba v. County of Tulare (2007) 41 Cal.4th 859, 868; see
also Cal. Code Civ. Proc. 1085(a).)
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Each of these requirements is met here. As to the first element, a beneficial interest is a
special interest over and above the interest of the public at large. (California Assn for Health
Services at Home v. Dept. of Health Services (2007) 148 Cal.App.4th 696, 706.) Mr. Peebler is a
beneficially interested party because the DOFs failure to perform its duty under the Dissolution Act
will deprive him of the benefit of his contractual rights under the Settlement Agreement, and this
interest is specific to Mr. Peebler. Additionally, because there is no administrative remedy available
to Mr. Peebler, there is no plain, speedy, and adequate remedy at law by which he may obtain the
benefits of his contractual right. (See Baiza v. Southgate Recreation & Park Dist. (1976) 59
Cal.App.3d 669, 673-74 [exhaustion of administrative remedies is a prerequisite to intervention by a
court of law].) Both Mr. Peebler and the City have already written to the DOF asking it to approve
the Settlement as an enforceable obligation, and the DOF has repeatedly denied this request.
Finally, as argued below, the Dissolution Act imposes a clear, present, and ministerial duty upon the
DOF to approve the inclusion of the Citys obligations on its ROPS. A ministerial duty is one that
the entity is required to perform in a prescribed manner without any exercise of judgment or opinion
concerning the propriety of the act. (California Assn for Health Services at Home v. Dept. of
Health Services, supra, 148 Cal.App.4th at pp. 707-07.) Because the Peebler Settlement is a
preexisting obligation the DOF is required to approve under the terms of the Dissolution Act, the
Court should issue a writ of mandate compelling the DOF to perform this duty and properly
approve the Settlement Agreement on the Citys ROPS.
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I.
THE PEEBLER SETTLEMENT IS AN ENFORCEABLE OBLIGATION

PROPERLY INCLUDED IN THE ROPS.
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The Peebler Settlement is an enforceable obligation of the Successor Agency as both an
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enforceable contract in the form of a settlement agreement and a judgment entered by a court of
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law. The DOF contends that the 1984 Peebler Settlement is not an enforceable obligation, but the
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plain language of the Dissolution Act compels a finding that the Settlement Agreement is
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enforceable. Although the California Supreme Court upheld the statute in California
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Redevelopment Assn. v. Matosantos, supra, 53 Cal.4th 231, the Court did not discuss what
constitutes an enforceable obligation. Section 34171(d)(1) of AB 1484the Health and Safety Code
defines enforceable obligation. for purposes of Part 1.85 of AB x1 26. It provides that
enforceable obligations include [a]ny legally binding and enforceable agreement or contract that
is not otherwise void as violating the debt limit or public policy. The Peebler Settlement is a
legally binding and enforceable agreement which was executed in 1984, long before the Dissolution
Act was passed. Accordingly, just as the City has recognized the Settlement Agreement as an
enforceable obligation under the plain language of the statute, so too must the DOF.
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The Dissolution states that enforceable obligations include [j]udgments or settlements

entered by a competent court of law or binding arbitration decisions against the former
redevelopment agency, other than passthrough payments that are made by the county auditorcontroller pursuant to Section 34183. 7 (Health & Saf. Assem. Bill No. AB xX1 26 (2011-2012
Reg. Sess.) 34171(d)(1)(D).) As noted above, the Peebler Settlement is a binding and enforceable
judgment issued by a California court in favor of third party private entities, not affected taxing
entities. It is not a passthrough agreement, as it is not an agreement between the RDA and another
public agency.8 It also was issued and became binding and enforceable long before the effective
date of the Dissolution Act. As such, not only is the Settlement Agreement an enforceable
obligation under the statute as a legally binding and enforceable agreement, but also as a
judgment or settlement.
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Further, the Dissolution Act makes clear that the Legislature intended to honor all pledges
made by the former RDARedevelopment Agency. (See Health & Saf. 34175(a).) That section
specifically protects the stream of revenues available to meet the requirements of such protected
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Health & Safety Code section 34183(a)(1) allows the continuation of any passthrough agreement between a
redevelopment agency and a taxing jurisdiction that was entered into prior to January 1, 1994, that would be in force
during that fiscal year had the redevelopment agency existed at that time. (Emphasis added.) Examples of such
taxing jurisdictions include other public agencies such as school districts, water districts, etc. (County of Solano v.
Vallejo Redevelopment Agency (1999) 75 Cal. App. 4th 1262, 1268.)
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pledges. (Id.) The structure of the Settlement Agreementpledging a percentage of tax increment
to a specific person, entity or purposewas typical of many redevelopment transactions, and there
is no indication in the Dissolution Act that the Legislature intended to invalidate this type of
agreement.
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Because the terms of the Dissolution Act deem preexisting obligations such as the Peebler
Settlement to be enforceable obligations, the DOF may not refuse to approve the ROPS submitted
by the City. The Court should order the DOF to comply with the terms of the Dissolution Act and
approve the Settlement Agreement as an enforceable obligation.
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II.
THE CITY AND MR. PEEBLER ENTERED INTO A BINDING CONTRACT AND
THE CITY IS OBLIGATED TO PERFORM UNDER THE AGREEMENT.
The Peebler Settlements plain language obligates the City as Successor Agency to set aside
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additional tax revenues for low- and moderate-income housing and utilize additional tax revenues
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on Corridor improvements for the Plans duration. If this Court should find the contracts language
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ambiguous, parol evidence further demonstrates the parties intended to enter into a definite, non-
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speculative agreement. Even if this Court finds the contract is contingent upon tax increments
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continued existence, the City as Successor Agency is obligated to utilize any funds collected prior
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to the Dissolution Act as the Settlement dictates.
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A. The Parties Created a Clear and Binding Contract That Obligates the RDA to Set
Aside Additional Tax Revenue for Low-Income Housing and to Spend
Additional Tax Revenue on Improvements in the Corridor.
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Mr. Peebler entered into a clear and unambiguous contract with the City in 1984, and the
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DOFs refusal to recognize the contract as a preexisting enforceable obligation is in violation of the
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terms of the Dissolution Act. Under general principles of California contract law, a valid and
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enforceable contract must satisfy the following elements: (1) parties capable of contracting; (2) their
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consent; (3) a lawful object; and (4) sufficient consideration. (Civ. Code, 1550; Marshall & Co.
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v. Weisel (1966) 242 Cal.App.2d 191, 196.) The Peebler Settlement satisfies all of these elements,
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and the parties are consequently bound by its terms.
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Mr. Peebler and the City were capable of contracting, as [a]ll persons are capable of
contracting, except minors, persons of unsound mind, and persons deprived of civil rights. (Civ.
Code, 1556). There is no dispute as to this element. The parties also knowingly consented to the
contract. Mutual consent for a contract is determined under an objective standard applied to the
outward manifestations or expressions of the parties. (Reigelsperger v. Siller (2007) 40 Cal.4th
574, 579.) The consent of the parties must be free, mutual, and communicated by each to the other.
(Civ. Code, 1565.) Mr. Peeblers and the Citys consent to the contract was indeed free, mutual,
and communicated by each to the other, as evidenced by the fact that all parties were represented by
counsel, there was substantial negotiation as to terms, the negotiation resulted in a signed
Settlement Agreement, and the parties subsequently performed pursuant to the signed Agreement,
as discussed in further detail below. Neither the City nor Mr. Peebler ever disputed that they gave
informed consent when entering into the contract.
Additionally, the Settlement Agreement constitutes a lawful object, as it was both lawful and
possible when entered into by the parties. (Civ. Code, 1596). The parties intended for Mr.
Peebler to withdraw his lawsuit and waive his rights to further objection to the redevelopment
Pplan. The City, for its part, promised to undertake certain obligations with regard to the setting
aside and utilizing of additional tax revenue in the South Main Project Area. There is no dispute as
to this element.
Finally, the contract was supported by consideration. Consideration is defined as [a]ny
benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which the
promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by such person,
other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the
promisor, is a good consideration for a promise. (Civ. Code, 1605). When Mr. Peebler entered
into the contract, he gave up his constitutional right to pursue his lawsuit and his meritorious claim
for invalidation of the entire redevelopment Pplan. In exchange, the City agreed both to exempt his
property from eminent domain and to set aside two pots of incremental tax revenue funds: a 20
percent set- aside for low-income housing in the South Main Project Aarea, and a 20 percent setaside to be utilized for public improvements in the South Main Corridor. Both parties bargained for
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these benefits and gave up legal rights, which constitute valid consideration. As the Peebler
Settlement meets each of the four elements to establish a contract under California law, it is
undeniable that Mr. Peebler and the City entered into an enforceable contract when they signed the
Settlement Agreement. The DOF admitted as much in the temporary restraining order hearing in
June 2011. (See Exhibit Z at p. 15 [Its a contract.].)
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Not only did Mr. Peebler and the City enter into a contract, but the terms of the contract
were sufficiently certain so as to render it enforceable. Under California law, a contract will be
enforced if it is sufficiently definite for the court to ascertain the parties obligations and to
determine whether those obligations have been performed or breached. (Ersa Grae Corp. v. Fluor
Corp. (1991) 1 Cal.App.4th 613, 623.) Here, the contract unambiguously states that Mr. Peebler
stipulates to the Redevelopment Plans lawfulness and gave up his right to the lawsuit. (Exhibit F,
1-5.)
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The contracts language also unambiguously demonstrates that the City as Successor
Agency must fulfill the Settlements requirements to utilize 20 percent of the increased tax revenue
for public improvements and low- and moderate-income housing through the end of 2035. The
Settlements use of mandatory language like obligation and shall 9 indicates that the City is not
free to evade its responsibilities under the agreement.
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The Peebler Settlement obligates the RDARedevelopment Agency (and now the City as
Successor Agency) to spend a specified percentage of property tax revenues in the Corridor,
whether those revenues are terms tax increments or something else. The Settlement states that
[t]wenty percent (20%) of the tax increments or tax increments generated or related revenues, or
moneys repayable from tax increments from the project area on low- and moderate-income
housing in the Project Area and on improvements in the Corridor. (Exhibit B, italics added.) The
inclusion of the related revenues language demonstrates that the parties intended that any funds
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California Health and Safety Code section 16 defines shall as mandatory. (Health & Saf. Code 16.)
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related to increased property value from the Project Area, whether delineated as tax increment
revenues or otherwise, be included in the 20 percent provisions of the Settlement Agreement.
Further, the Peebler Settlement states, the Redevelopment Agency and any and all
successors thereto are lawfully obligated to carry out and accomplish the terms and conditions of
[the Judgment]. (Exhibit F 5, italics added) Such language should obligate the City as Successor
Agency to comply with the Settlements terms.
Finally, the Settlement includes language that demonstrates that its specific allocation of a
portion of the property tax revenue will end in 2035. The documents related to the Settlement and
Plan are interconnected and explain the Settlements intended length. Resolution No. 84-2
entitl[es] the Agency to the receipt of all taxes to be allocated to the Agency pursuant to the terms
of the Plan. (Exhibit B at 4.) The Plan was originally effective through July 6, 2012, 30 years
from the date of its adoption. (See Exhibit D at 30 800.) The Settlements reference to the Plan
presumably includes any amendments made to it prior to the Dissolution Act. The latest of these
amendments, adopted in 2007, extended the Plan until July 6, 2025. (Exhibit H.) The same
amendment authorized the RDA to collect additional tax revenue through July 6, 2035 to repay
indebtedness incurred under the Plan. (Id.)
The scope of both parties duties under the contract is clear, and a partys noncompliance
with any of these provisions would constitute a breach of the agreement. As such, the terms of the
contract are sufficiently certain to render the Peebler Settlement enforceable, and the DOF must
approve the Citys ROPS listing the contract as a preexisting enforceable obligation.
B. If the Parties Intent Under the Peebler Settlement is Ambiguous, Extrinsic
Evidence Demonstrates Their Intent to Enter Into a Definite, Contingency-Free
Contract.
Even if this Court were to find, based on its review of the contract language, that the parties
intent under the agreement is ambiguous as to whether it was speculative or based on a contingency,
extrinsic evidence proves that the intent of the parties was to create a definite, non-speculative
agreement. While the parol evidence rule generally bars extrinsic evidence of prior or
contemporaneous agreements to add to or modify the terms of an unambiguous integrated written
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contract, when two equally plausible interpretations of the language of a contract exist, parol
evidence is admissible to interpret the parties intent under the written agreement. (See Delta
Dynamics, Inc. v. Arioto (1993) 69 Cal.2d 525, 528.)
In the present case, the DOF contends that the contract was never a guarantee of money, but
rather a speculative agreement dependent on the continued existence of tax increment financing.
(See Exhibit Z at p. 15.) The DOF argues that, because the Legislature has renamed revenue
earned from rising property values property tax revenues as opposed to the former tax increment
revenues, this effectively disposes Mr. Peebler of his right, bargained for in settlement
negotiations, to direct the use of the additional revenue obtained from the increase in property
values in the designated area. (See id. at pp. 13-15.) The DOF bases this argument on the language
of the Dissolution Act, which provides: [u]pon their dissolution, any property taxes that would
have been allocated to redevelopment agencies will no longer be deemed tax increment. Instead,
those taxes will be deemed property tax revenues and will be allocated first to successor agencies to
make payments on the indebtedness incurred by the dissolved redevelopment agencies. (AB x1 26
section 1(i).)
However, the Legislatures renaming of this tax revenue is not a legal basis on which to
deprive Mr. Peebler of the benefit of his bargain. Mr. Peebler bargained for a specific portion of the
funds generated from rising property values in the South Main Project Area to be utilized on public
improvements in the Corridor, and for an additional portion of those funds to be set aside for lowincome housing in the Project Area. (See Exhibit B, at 4.) The parties agreed that these designated
portions of the funds would continue to be used in this manner through the end of the current Plan,
including amendments to the Plan. They did not intend for the contract to apply solely or
specifically to tax increment financing or to be based on the contingency that tax increment
financing exist. As such, the 20 percent contract provisions remain enforceable, despite the
Legislatures renaming of tax increment financing, through July 6, 2035, the end date for the
collection of additional tax revenues to repay indebtedness incurred under the Plan.
If this Court should find that the Settlements language is ambiguous, parol evidence is
admissible to demonstrate the parties intended that 20 percent of additional tax revenue from rising
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property taxes in the Project Area to be spent in the Corridor and on low-income housing during the
existence of the Plan and any amendments extending it.
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1. Extrinsic Evidence Involving Negotiations of the Peebler Settlement

Demonstrates the Parties Intent.
Evidence involving the parties negotiations of the Peebler Settlement demonstrates their
intent to be bound by a definite, non-speculative contract which mandated that additional tax
revenue be spent in the South Main Corridor and set -aside for low-income housing in the Project
Area during the pendency of the Plan. Mr. Peeblers goals in negotiating the Settlement Agreement
were twofold: (1) prevent his property from being seized through eminent domain; and (2) secure
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funding to be spent on improvements in the South Main Corridor and low-income housing in the
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Project Area. (See Peebler Decl. 5, 8; Ferguson Decl. 15-17.) While saving his property
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from eminent domain was a significant concern for Mr. Peebler, it was not his only concern.
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Securing funds for improvements in the Corridor was also a primary goal, and his attorney
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specifically bargained for this provision when he consented to the Settlement Agreement, as
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evidenced by negotiation letters between the parties. (See Peebler Decl. 5, 8; Ferguson Decl.
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12, 13, 15-16.) In fact, obtaining funds for the Corridor was such an integral aspect of the contract
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that Mr. Peebler would not have entered into the Settlement Agreement had the City not promised
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to utilize increased tax revenue in this area. (See Peebler Decl. 8; Ferguson Decl. 15.)
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On its part, the City secured valuable consideration in the form of a waiver of all objections
to the Plan, which was critical to allow the City to move forward.
Knowing the funds were such a vital component of Mr. Peeblers settlement goals, Mr.
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Ferguson, as Mr. Peeblers attorney, specifically structured the Settlement Agreement to require that
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funds be collected and committed to improvements in the South Main Corridor. (See Ferguson
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Decl. 18, 3032.) Understanding that tax increment financing was a means to raise funds for
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development, but not the only means, Mr. Ferguson negotiated terms that went beyond tax
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increment financing by including language calling for 20 percent tax increments or related
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revenues collected in the Project Area to be spent on improvements in the Corridor. (See Exhibit
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B at 4.) In structuring the Peebler Settlement this way, Mr. Ferguson furthered the intent of the
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parties by ensuring that any funds related to increased property values from the South Main Project
Area, whether delineated as tax increment revenues or otherwise (i.e. related revenues) would be
included in the 20 percent provisions of the Settlement Agreement.
Basically, Mr. Ferguson foresaw the States argument that the characterization of the tax is
more important than its function, and carefully drafted language to negate such a claim and protect
his clients rights. The natural consequence of the Plan was that property would appreciate and as
that occurred, property tax revenues would increase. Rising property tax revenues are related to tax
increment revenues, given that tax increment revenues were designed so cities could benefit from
the resulting increase of property values they caused and is based on the assumption that a
revitalized project area will generate more property taxes than were being produced before
redevelopment. (Soo-Hoo Decl. 22-23; Redevelopment Book p. 232; see also California
Redevelopment Assn. v. Matosantos, supra, 53 Cal.4th at p. 246-47.) Accordingly, despite the
Comment [A6]: Christine: This is the section re

TIF that we were discussing earlier. Feel free to
change if you think it needs to be altered.
Legislatures relabeling of tax increment revenues to property tax revenues, the City as
Successor Agencys obligation under the Peebler Settlement remains intact, as the Settlement
Agreement was structured to explicitly include any additional tax revenues generated from rising
property values in the Project Area.
To ensure that any successor agency was obligated to abide by the Peebler Settlements
terms, Mr. Ferguson included language stating that, the Redevelopment Agency and any and all
successors thereto are lawfully obligated to carry out and accomplish the terms and conditions of
[the Judgment]. (Peebler SettlementExhibit F at 2;, 5; Ferguson Decl. 34.) Mr. Ferguson used
mandatory language such as shall and obligation to demonstrate that the City was undeniably
bound by the terms within the Settlement Agreement. Both parties executed the agreement with the
mandatory language and, at the Citys request, took the additional step to enter it as a court
judgment. (See Ferguson Decl. 18, 30-32.)
In sum, not only does the language of the Peebler Settlement itself indicate that the parties
intended any funds related to tax increment financing to be included in the 20 percent provisions,
but evidence of the parties negotiations demonstrates that they intended for funds from additional
tax revenues to be spent on Corridor improvements and low-income housing for the duration of the
Comment [A7]: Need correct citation
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Plan. As property tax revenues were encompassed within the 20 percent provisions of the
Settlement Agreement, Mr. Peebler is entitled to the benefit of his bargain. The City should be held
to this agreement. To allow the City to comply with the clear mandates of the contract, the DOF
must recognize the Peebler Settlement as an enforceable obligation.
2. The RDAs Subsequent Performance Under the Peebler Settlement

Demonstrates Its Intent to Spend Additional Tax Revenue in the Corridor.
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In addition to the plain language of the Settlement Agreement and the extrinsic evidence of
the parties intent upon entering into the Agreement, evidence of the RDAs subsequent
performance under the Peebler Settlement also demonstrates its intent to be bound by a definite,
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contingency-free contract. Since entering into the Settlement Agreement in 1984, the RDAs
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performance demonstrates that it intended to utilize 20 percent of revenues related to tax increments
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from the Project Area towards public improvements in the Corridor, per the terms of the Peebler
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Settlement. Since 1984, the RDA has actively searched for ways in which it could utilize the
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Peebler Settlement funds on improvements in the Corridor, and it has undertaken a number of
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public improvement projects that were funded by money derived from the Settlement. (See Uehli
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Decl. 7-10, 13; Nelson Decl. 8-9.) Such public improvement projects include:
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1. establishing a faade rebate program running from the late 1980s to mid-1990s, and starting
again in 2001;
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2. building parking lots on Main Street in the mid-1980s;
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3. improving lighting, sidewalks, curbs, and gutters on the Main Street sidewalk in the early
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4. installing traffic signals on the Main Street Corridor;
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5. realigning McFadden Street; and
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6. placing a historical archway sign over South Main Street.
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(See Uehli Decl. 7-10, 13; Nelson Decl. _9.)

More recently, the City as Successor Agency would have commenced and completed
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additional South Main public improvement projects had the DOF recognized the Settlement
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Agreement as an enforceable obligation and approved the Citys ROPS. For example, in early 2011
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the RDA began looking into the feasibility of a faade enhancement program that would benefit the
business owners of the Corridor. (See Uehli Decl. 13-14.) The RDA planned and began to
institute a program which was phased over ten or more years. (Id.) Around March 2011, the RDA
interviewed companies to undertake the project and eventually settled on Abacus Project
Management, Inc. (Id. 14.) The RDA drafted a contract to engage Abacus and was ready to
execute the contract. (Id.) However, the RDA was forced to abandon the project after the passage
of the Dissolution Act and the DOFs refusal to approve the Citys ROPS, as it could not finance the
project without Peebler Settlement funds. (Id. 14-15.)
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In addition to taking affirmative steps to expend Peebler Settlement funds on public

improvements in the Corridor, the RDA also acted in compliance with the Settlement Agreement by
adhering to the Agreements limitations. For instance, because the RDA knew the Peebler
Settlement limited where it could spend the Peebler funds, the RDA did not spend Peebler funds
outside the Corridor. When the RDA did want to spend Peebler Settlement funds outside of this
area, RDA officials understood that they had to obtain Mr. Peebler and Mr. Alberts permission to
do so. (See Peebler Decl. 10-13; Nelson Decl. 12.) This is evidenced by David Ream and
Cynthia Nelsons meetings with Mr. Peebler and Mr. Albert in 2010 in which they asked for
authorization to spend funds outside the Corridor. (See Peebler Decl. 10-13; Nelson Decl.
12.)
In addition to seeking permission for itself, the RDA also advised others that Mr. Peebler
and Mr. Albert would need to consent before any Peebler Settlement funds were used outside the
Corridor. When Joe Adams, the Director of the Discovery Science Center of Santa Ana, expressed
his desire to obtain Peebler Settlement funds to improve the Discovery Science Center, Cynthia
Nelson and David Ream informed him that Mr. Peebler and Mr. Albert would have to authorize the
spending of funds outside the Corridor. (See Peebler Decl. 17-19; Nelson Decl. 13; Adams
Decl. 4-5.) In seeking permission from Mr. Peebler and Mr. Albert and its advising of others to
do the same, the RDA demonstrated that it understood it was bound by the terms of the Settlement
Agreement.
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3. The RDAs Subsequent Performance Under the Peebler Settlement

Demonstrates Its Intent to Spend 20 Percent of Additional Tax Revenue
on Low- and Moderate-Income Housing.
The RDAs performance since 1984 demonstrates that it understood that, pursuant to the
Peebler Settlement and judgment, it was legally required to set -aside 20 percent of additional
property tax revenues from the South Main Project Area towards affordable housing in Santa Ana.
(SL-B Decl.) Since 1984, the RDA has actively searched for ways in which to use the Peebler
Settlement money throughout the City for housing. The RDA undertook a number of housing
projects with third party developers using money derived from the Peebler Settlement. (SL-B Decl.)
Such low- and moderate-income housing projects include:
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Formatted: Highlight
1. for-sale single family homes: five projects, twenty-four units total, for residents ranging
from 50-120% Area Median Income (AMI);
2. special needs transitional and permanent housing units for the homeless and people with
HIV/AIDS: one project, twenty-six units total, for residents at 80% AMI;
3. rental family homes: multiple projects, 1000+ units, for residents ranging from 14-120%
and 26%-50% AMI; and
4. senior rental units: two projects, 147 units total, for residents ranging from 50%-80% AMI.
(See SL-B Decl., Exhibit A)

The Peebler Settlement precedes the enactment of Cal. HSC 33334.6, which in pertinent
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part states: Except as otherwise permitted by subdivisions (d) and (e), not less than twenty percent
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of the taxes allocated to the agency pursuant to Section 33670 from project areas . . . shall be
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deposited into the Low and Moderate Income Housing Fund . . . . (Health & Saf. Code Cal. HSC
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33334.6(c).). This requirement under 33334.6 did not exist at the time of the stipulated judgment.
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This is significant, as it shows the 20 percent housing set-aside was not included simply to restate
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existing law but, like the rest of the Peebler Settlement, was a part of negotiated terms and not
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merely a recitation of existing law.
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In its letter, dated May 24, 2012, the DOF asserts that line item 88 on ROPS II, represents
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funds that should be transferred from the City back to the County of Orange. (Exhibit R at 2__.)
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The DOF cites the text of the Cal. HSC 34176(a). (Id.) That language states:
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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.
DOF assumes incorrectly that the funds collected and represented in line item 88 were collected
solely due to the statutory housing set-aside requirement in Cal. HSC Health and Safety Code
section 33334.6. However, these funds were set aside in accordance with the Peebler Settlement,
not Cal. HSC 34176(a). To comply with Peebler, the City is obligated to use these funds for third-
party contracts to create low and moderate income housing.
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C. Even If This Court Were to Find that the Peebler Settlement is Contingent on the
Continued Existence of Tax Increment Financing, the Funds Collected Prior to
the Dissolution Act That Have Not Been Utilized Are a Part of the Legally
Enforceable Obligation.
Mr. Peebler maintains that because the Settlement encompasses rising property tax revenue
resulting from redevelopment as funds related to tax increment revenue, as well as tax increment
revenue, the Peebler Settlement remains an enforceable obligation even after the passage of the
Dissolution Act. As such, the DOF should be ordered to approve the Citys ROPS to enable the
City as Successor Agency to perform under the contract through the end of the existing Plan. But,
even if this Court were to adopt the DOFs position that the Legislatures relabeling of tax
increment financing extinguishes the City as Successor Agencys future obligations under the
Peebler Settlement, the City as Successor Agency is still legally obligated to comply with the
Settlement for the funds that were collected prior to the passage of the Dissolution Act. $17.5
million was collected under the Peebler Settlement before the statute was enactedi.e. when tax
increment money existed in name. (Gorospe Decl. _.)
If the DOF wishes to ignore the past funds collected under the Settlement as an enforceable
obligation, at a minimum, it must point to language in the Settlement that indicates the parties
agreed to waive the payment of those funds. There is nothing in the Settlement that would permit
the DOF to make such a claim. In Mendly v. County of Los Angeles (1994) 23 Cal.App.4th 1193,
1205-06, a case concerning the enforcement of a stipulated judgment against a change in county
Comment [A8]: Housing people- Iris made this

comment: need to change citation (and cite itself)
from 33334.6 to 33334.2. subject to 2), above.
2 above states: footnote 1 -- the 20% housing setaside requirements is contained in SEction 33334.2,
not 33334.6 . The general requirement that
agencies set aside 20% of its tax increment for
affordable housing purposes was enacted in 1976,
See REdevelopment in California, p. 270. 33334.6
only applied to project areas not subject to the
requirements of 33334.2 (see subdivision (b). I say
this with the caveat that is true unless there was
something specific about this project area or the
plan that would have made 33334.6 applicable to
this project area. Need to check with Santa Ana or
Bob Ferguson.
Im not sure what she means by cite itself, or what
it should be changed to, but I figured you guys
would understand, as this is your section.
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welfare benefits, the court allowed the county to waive retroactive benefits because the judgment
contained an explicit waiver of those benefits. Mr. Peeblers Settlement does not contain any
provision resembling such a waiver, nor does it have provisions that permit the Settlement to be
altered if State legislative action implicating the Settlement occurs. (Id. at 1209-10.) Unlike
Mendly, the Peebler funds vested upon the collection of the tax. The stipulated judgment before
this court is inapposite to the one in Mendly because it was never even considered that the
contracting parties could waive past funds unilaterally or under the framework of new legislation.
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These funds are preexisting enforceable obligations because, to use the DOFs words, the
money flow that would be coming in under the Peebler Settlement had not yet been cut off.
(Exhibit Z at p. 19.) Since, tax increments were still collected and allocated to the appropriate
entitiesincluding the South Main Corridor and the low-income housing fundeven accepting the
DOFs position, the Dissolution Act did not affect the property tax revenues that were allocated
prior to the statutes enactment. At a minimum, the ROPS II should be approved as to all Peebler
funds collected prior to the Dissolution Acts effective date.
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III.
DOFS INTERPRETATION OF THE DISSOLUTION ACT

UNCONSTITUTIONALLY IMPAIRS PETITIONERS CONTRACT BY
RENDERING THE SETTLEMENT AGREEMENT UNENFORCEABLE.
The DOFs failure to recognize the Peebler Settlement as an enforceable obligation not only
violates the plain language of the Dissolution Act, but also results in an unconstitutional impairment
of the Settlement. The Contract Clauses in Article 1, section 10 of the United States Constitution
and Article 1, section 9 of the California Constitution prohibit the State from passing legislation
impairing contractual obligations. The United States Supreme Court has ruled that impairments are
constitutional only under very narrow circumstances. (Home Bldg. & Loan Assn v. Blaisdell (1934)
290 U.S. 398, 420.) The California Supreme Court has stated that an impairment must pass both
federal and State constitutional muster. (Allen v. Board of Administration (1983) 34 Cal.3d 114,
119.) Therefore, California courts analyze an impairment claim by asking first whether it was
substantial, and then, whether the state has a significant and legitimate public purpose behind its law
or action, such as the remedying of a broad and general social or economic problem. (Allied
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Structural Steel Co. v. Spannaus (1978) 438 U.S. 234, 245; Mendly v. County of Los Angeles,
(1994)supra, 23 Cal.App.4th 1193,at pp. 1210-11.) Furthermore, when the State seeks to impair a
contract between a private party and a political subdivision of the State, courts give less deference
to the States claims of justification for the impairment. (U.S. Trust Co. of New York v. New Jersey
431 U.S. 1, 26 (1977) [A governmental entity can always find a use for extra money, especially
when taxes do not have to be raised. If a State could reduce its financial obligations whenever it
wanted to spend the money for what it regarded as an important public purpose, the Contract Clause
would provide no protection at all.].) Finally, a court can only sustain an impairment if it is both
reasonable and necessary to address the States proffered interest. (Ibid.)
The State cannot meet its burden of proving that impairing the Peebler Settlement is
justified. In passing the Dissolution Act, the Legislature intended to redirect a portion of the funds
that would otherwise have been used for redevelopment to other local governmental services to
promote the common good. (Assem. Bill No. AB xX1 26 (2011-2012 Reg. Sess.) 1(j); Health &
Saf. Code 34167(a). ) However, if the Dissolution Act is construed to render the Settlement
Agreement unenforceable and thereby impair the petitioners contractual rights, the Legislatures
asserted justification for the impairment is to use the tax increment set-aside pledged under the
Settlement to fund core governmental services including police and fire protection services and
schools. (Health & Saf. CodeAssem. Bill No. AB xX1 26 (2011-2012 Reg. Sess.) 31467(a).)
The Legislature has indicated an increased need for such funding because the California economy is
slowly recovering from the worst recession since the Great Depression. (Assem. Bill No. AB x1
26 (2011-2012 Reg. Sess.)Ibid. 1(a).)
The fiscal crisis created by the recent recession is not a sufficient justification for an
impairment of the Settlement. In the seminal Contracts Clause case Home Building & Loan Assn. v.
Blaisdell, supra, 290 U.S. at pp. 415-417, the State passed a law that provided temporary relief
through court ordered extensions of sales and periods of redemption for mortgage-holders who were
unable to make payments. While the Supreme Court upheld the impairment in Blaisdell based on
economic emergency (Id. at pp. 444-47.), the extension of mortgage redemption periods upheld did
not void the contract indebtedness, but merely eased the repayment terms of existing debts.
Comment [A9]: Should be supra
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Furthermore, the statute was enacted during the depth of the [Great] Depression when the state
had no effective alternative. (United States Trust Co., supra, 431 U.S. at p. 15.)
As the California Supreme Court noted, the legislation in Blasidell was unlike many acts of
impairment because it was temporary and limited to the exigency that provoked the legislative
response. (Sonoma County Org. of Public Employees v. County of Sonoma (1979) 23 Cal. 3d 296,
306.) Moreover, the California Supreme Court highlighted that the temporary emergency measure
in Blaisdell imposed reasonable conditions to protect the rights of those affected: [T]he redemption
period was extended upon reasonable conditions; the integrity of the mortgage indebtedness was not
impaired; interest continued to run, and the right of the mortgagee to buy the property or to obtain a
deficiency settlement remained inviolate. (Ibid.)
Under the DOFs interpretation, the Dissolution Act impairs contractual rights under the
asserted justification of taking funds allocated for specific private interests for governmental
services suffering from the current recession. The DOFs interpretation goes against the Supreme
Courts concern in Sonoma County that legislation, which is not temporary or limited to the
exigency of the legislative response, is unjustifiable In this case, the statutes dissolution of
redevelopment agencies and redirection of redevelopment funds is not temporary. If the statute is
construed to render the Settlement Agreement unenforceable, it will permanently deprive the
petitioner of all contractual benefits.
California courts sometimes uphold impairments because the modification of a contract is
slight or still provides benefits to the contract holders. This is particularly relevant when the interest
is in an area traditionally regulated by the state to achieve a social purpose. (Cox Cable San Diego,
Inc. v. City of San Diego (1987) 188 Cal.App.3d 952, 967 [The reasonable governmental
regulation of rates and tariffs in industries affected with the public welfare has long been established
as a proper exercise of the police power.]; Interstate Marina Development Co. v. County of Los
Angeles (1984) 155 Cal.App.3d 435, 448 [The County rent law as applied to Lessees passes
constitutional muster because it is an interim measure in response to a real scarcity of affordable
housing, has a broad legitimate purpose that is within the police power, and is a reasonable response
to the exigency which called it forth.].) These cases are inapposite from the matter before this
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court because, in those cases, the contracts were left intact, although modified. Under the DOFs
interpretation, the Peebler Settlement will be completely extinguished. Thus, the State cannot argue
that its impairment is temporary or is limited to the economic crisis facing the State, if it eliminates
any probability that the contract will be fulfilled at a later date once the economic exigency has
passed.
Moreover, the Dissolution Act contains no reasonable conditions that would protect the
petitioners contractual rights. Essentially, the abrogation of his contractual rights under the DOFs
interpretation would be total. The United States Supreme Court wrote in Allied Structural Steel Co.
v. Spannaus (1978) 438 U.S. 234, 245 that [t]he severity of the impairment measures the height of
the hurdle the state legislation must clear. In the DOFs situation, the hurdle may be unattainable,
because of the extreme measures taken. The fact that the impairment eliminates all funds owed to
the petitioner under the Settlement makes it highly severe and must be balanced against many other
factors including, the nature and extent of the impairment, and whether the legislation is
appropriately tailored and limited to the situation necessitating its enactment. (See Donlan v.
Weaver (1981) 118 Cal.App.3d 675, 682.)
Although budget shortfalls are of great concern to the State, California courts do not
automatically permit State impairment of contracts simply because the State asserts a fiscal
emergency exists. (Board of Administration v. Wilson (1997) 52 Cal.App.4th 1109, 1161 [ruling
that legislation changing the schedule of pension payments to California employees during a fiscal
crisis violated the Contracts clause]; California Teachers Assn. v. Cory (1984) 155 Cal.App.3d 494,
512 [holding that the Governor and the DOFs plan to withhold payments to teachers retirement
fund to address gaps in education funding did not justify impairment]; Sonoma County, supra, 23
Cal.3d at p. 302 [ruling that legislation that limited salary raises with city-contracted labor
organizations in a response to a fiscal crisis resulting from Proposition 13 was an invalid
impairment].) In fact, the State has even indicated in a previous proceeding related to this matter
that [petitioners] argument that enforceable obligations are higher than core government services
may be true . . . . (Exhibit Z at p. 27.)
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An impairment of the Peebler Settlement would be extremely severe, and thus substantial,
when balanced against the States justification of fiscal emergency. Millions of dollars that have
accrued and been set aside by the RDA over the past 25 years in order to comply with the
Settlement Agreement will be permanently lost without any prospect of recovery. Redevelopment
efforts that the City of Santa Ana and many of its residents have undertaken in reliance on the
Settlement funds will be cancelled. To put matters in perspective, budget shortfalls in California
have come and gone. It is worthy to note that many of the United States Supreme Court decisions
that upheld impairments came out of efforts to combat the Great Depression. (Veix v. Sixth Ward
Building & Loan Ass'n of Newark (1940) 310 U.S. 32, 41 [legislation impairing contracts to protect
Comment [A10]: Add to table of authorities
buildings and loan associations from excessive withdrawals is permissible]; (Home Building &
Loan Assn. v. Blaisdell, supra, 290 U.S. at pp. 444-47.) Even then, these decisions modified but did
not extinguish private claims. The current recession does not equal the Great Depression in
magnitude, and the Legislature acknowledged that the California economy had already begun
recovering from the recession prior to the passage of the Dissolution Act. (Assem. Bill No. AB
xX1 26 (2011-2012 Reg. Sess.) 1(a).) Thus, the states reliance on Blaisdell and its progeny are
limited because of the distinguishable economic environments and the severity of the remedy as
interpreted by the DOF.
The United States Supreme Court has traditionally held that a total destruction of a contract
will fail to pass constitutional muster. In W.B. Worthen Co. v. Kavanaugh (1935) 295 U.S. 56, 62,
the Court struck down a law that impaired the contracts of bondholders by limiting their remedies to
foreclose mortgage benefit assessments given as security for their bonds. The Court characterized
the impairment as being an oppressive and unnecessary destruction of nearly all the incidents that
give attractiveness and value to collateral security because it would make the security almost
worthless from the perspective of a rational investor. (Id. at pp. 60-62.) This was unacceptable
from the Courts point of view. The Court has therefore used the impairment in Kavanaugh as the
benchmark of severity when having to analyze contractual impairments in subsequent cases.
(United States Trust Co., supra, 431 U.S. at p. 15; Allied Structural Steel Co. v. Spannaus, supra,
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Comment [A11]: Add to table of authorities
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438 U.S. at 250-51.) Thus, implicit in any court ruling on impairment is that a total extinguishment
of a contract is the least likely to satisfy constitutional standards.
When compared to Kavanaugh, a State impairment of the Peebler Settlement is even more
severe because it will permanently eliminate the petitioners bargained for consideration without
any hope of it being recovered in the future. Past and future funds set aside to comply with the
Settlement will be forever lost. Therefore, the DOFs determination that a budget shortfall is a valid
impairment is not justified when balanced against the impairments severity, as well as its nature
and extent.
Furthermore, although the Dissolution Act is intended to redirect redevelopment funds for
admittedly important purposes, the severity of the impairment makes it certain that the
government justification is not both reasonable and necessary to serve those purposes. (United
States Trust Co., supra, 431 U.S. at p. 29.) One Court of Appeal wrote that in adopting costcutting measures to further an important public purpose, there must be some indication the public
entity has given considered thought to the severity of the effect an enactment might have on the
particular contractual scheme at issue and to the possibility of alternative, less drastic, means of
accomplishing the public goal. (United Firefighters of Los Angeles City v. City of Los Angeles
(1989) 210 Cal.App.3d 1095, 1115.)
The DOF has not given such consideration, since it seeks to abrogate the entire Peebler
Settlement and neither recognizes past nor future funds that are meant to fulfill the Settlements
obligations. In Board of Administration v. Wilson, California Teachers Assn. v. Cory, and Sonoma
County Org. of Public Employees v. County of Sonoma, California courts determined that even
slight adjustments in pay schedules unconstitutionally violated the impairments clauses. In
petitioners case, the DOF takes the most drastic step possible by abrogating the entire Settlement.
Furthermore, there is no indication that the DOF attempted to conjure a plan that would be less
drastic than simply nullifying the Peebler Settlement.
The DOF makes a weak determination that not recognizing the Settlement as an enforceable
obligation is part of the best possible solution to address the States economic justification. That
argument, taken to its logical conclusion, would allow the State to abrogate any contract in the
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interest of the legislatures statement of fiscal necessity. Even though the State may argue that
budget constraints inhibit it from recognizing the Peebler Settlement, it still has the ability to collect
revenue from other sources, which mitigates the need to extinguish the entire Peebler Settlement.
Since other revenue sources exist and the State has not indicated why a total abrogation of the
Settlement is necessary, the impairment here violates the Contract Clauses of the United States and
California Constitutions. The Dissolution Act must then be construed to honor the Peebler
Settlement in order to prevent this violation.
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IV.
THE DOFS INTERPRETATION OF THE DISSOLUTION ACT CONSTITUTES

AN UNCONSTITUTIONAL TAKING BY DEPRIVING MR. PEEBLER OF THE
VALUE OF HIS SETTLEMENT.
Article 1, Section 19 of the California Constitution and the Fifth Amendment to the United
States Constitution prohibit the taking of private property for public use without just compensation.
The Fifth Amendment Takings Clause applies to the States through the Fourteenth Amendment.
(See Chicago B. & Q.R. Co. v. Chicago (1897) 166 U.S. 226.) The California Constitutions
Takings Clause is broader than the federal Takings Clause because it allows for compensation for
property damage, but California courts have construed the clauses congruently. (Monks v. City of
Rancho Palos Verdes (2008) 167 Cal. App. 4th 263, 294.) The DOFs denial of the Peebler
Settlement as an enforceable obligation imposes a severe burden on Mr. Peeblers property rights
under the Settlement, for which he received no compensation. Thus, the DOFs interpretation of the
Dissolution Act effectuates an unconstitutional taking.
CONCLUSION
Because the Peebler Settlement is an unambiguous and valid contract entered into before the
passage of the Dissolution Act, it is statutorily defined as an enforceable obligation and should
properly be included in the Citys ROPS. The Settlement Agreement is unaffected by the
Dissolution Acts relabeling of tax increment revenue to property tax revenue, as the plain
language of the 20 percent provisions within Settlement Agreement include related revenues, which
undeniably encompasses property tax revenues. Even if the contract is ambiguous as to whether
the 20 percent provisions were dependent upon the existence of tax increment financing, extrinsic
Comment [A12]: May expand this argument

more.
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evidence involving negotiations of the Settlement Agreement and the RDAs subsequent
performance pursuant to the agreement demonstrates that the parties intended for the Peebler
Agreement to dedicate additional tax revenue to improvements in the Corridor and low-income
housing in the Project Area.
Furthermore, even if this Court were to find that the Dissolution Act renders the 20 percent
provisions of the Settlement Agreement moot, this Court should still hold that the statute does not
permit the DOF to take from the City the $17.5 million in additional property tax revenues that were
collected prior to the statutes dissolution of tax increment financing. At a minimum, the City as
Successor Agency owes Mr. Peebler the entirety of the Peebler funds that were collected prior to
the Dissolution Acts effective date, and the Court should order the DOF approve this amount on
the Citys ROPS. If the DOFs current decision stands, it will abrogate the entirety of the Peebler
Settlement and thus, unconstitutionally impair Mr. Peeblers contract.
For these reasons, Petitioner requests this Court issue a writ of mandate compelling the DOF
to recognize the Peebler Settlement as an enforceable obligation, which would allow the City as
Successor Agency to comply with the Settlements terms through the end of 2035.
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Dated: December 18, 2012
Respectfully Submitted,
Community and Economic
Development Clinic
University of California, Irvine
School of Law
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By:________________________
Robert Solomon
Carrie Hempel
Attorneys for Plaintiff Gerald Peebler
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Writ of Mandate Opening Brief - Draft 6-Ben Edits

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Writ of Mandate Opening Brief - Draft 6-Ben Edits

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1

UCI SCHOOL OF LAW

Attorneys for Petitioner and Plaintiff, Gerald Peebler

SUPERIOR COURT OF THE STATE OF CALIFORNIA

GERALD PEEBLER, et al.

Case No. 34-2012-80001172

Respondents and Defendants.

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE

INTRODUCTION ....................................................................................................................... iii3

STATEMENT OF FACTS ............................................................................................................ 13

REDEVELOPMENT AGENCIES AND FINANCING FROM PROPERTY

THE 1984 PEEBLER SETTLEMENT .................................................................. 25

THE RDAs PARTIAL PERFORMANCE UNDER THE PEEBLER

THE PEEBLER SETTLEMENT FUNDS AT STAKE....................................... 810

THE DISSOLUTION OF REDEVELOPMENT AGENCIES ............................912

THE DOFS DISAPPROVAL OF THE PEEBLER SETTLEMENTS

PROCEDURAL HISTORY .............................................................................. 1215

THE PEEBLER SETTLEMENT IS AN ENFORCEABLE OBLIGATION

THE CITY AND MR. PEEBLER ENTERED INTO A BINDING

If the Parties Intent Under the Peebler Settlement is Ambiguous,

Even If This Court Were to Find that the Peebler Settlement is

THE DOFS INTERPRETATION OF THE DISSOLUTION ACT

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION FOR WRIT OF MANDATE

THE DOFS INTERPRETATION OF THE DISSOLUTION ACT

Comment [A1]: Page numbers subject to change.

Save the Plastic Bag Coalition v. City of Manhattan Beach

Allied Structural Steel Co. v. Spannaus

(1978) 438 U.S. 234 ........................................................27, 29

Code of Civil Procedure

33334.6, subdivision (c)..25

REDEVELOPMENT AGENCIES AND FINANCING FROM PROPERTY TAX

at 246.) Exercising these powers, redevelopment agencies became a principal instrument of

economic development. (Ibid.)

To finance their work on behalf of blighted communities, redevelopment agencies relied on

Comment [A2]: I dont think we should truncate

THE 1984 PEEBLER SETTLEMENT

THE RDAS PARTIAL PERFORMANCE UNDER THE PEEBLER SETTLEMENT

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THE PEEBLER SETTLEMENT FUNDS AT STAKE

Formatted: Font: Not Italic

THE DISSOLUTION OF REDEVELOPMENT AGENCIES

Comment [A3]: Housing People Iris made this

THE DOFS DISAPPROVAL OF THE PEEBLER SETTLEMENTS INCLUSION IN

an enforceable obligation, since enforceable obligations include [j]udgments or settlements entered

Comment [A4]: Cannot find the final copy of this

THE PEEBLER SETTLEMENT IS AN ENFORCEABLE OBLIGATION

The Peebler Settlement is an enforceable obligation of the Successor Agency as both an

The Dissolution states that enforceable obligations include [j]udgments or settlements

to the Dissolution Act as the Settlement dictates.

and the parties are consequently bound by its terms.

1. Extrinsic Evidence Involving Negotiations of the Peebler Settlement

Comment [A6]: Christine: This is the section re

Comment [A7]: Need correct citation

2. The RDAs Subsequent Performance Under the Peebler Settlement