1 county vector control district; · district is also a "taxing entity" pursuant to...
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1 COUNTY VECTOR CONTROL DISTRICT; METROPOLITAN WATER DISTRICT OF
2 SOUTHERN CALIFORNIA; LOS ANGELES
3 COUNTY OFFICE OF EDUCATION; 2802 PICO, L.P., a California limited partnership; 430 PICO,
4 L.P., a California limited partnership; HIGH PLACE WEST, L.P., a California limited
5 partnership; HIGH PLACE EAST, L.P., a California limited partnership; FAME SANTA
6 MONICA SENIOR APARTMENTS, L.P., a
7 California limited partnership; STEP UP ON SECOND STREET, INC., a California nonprofit
8 benefit corporation; STEP UP ON COLORADO, L.P., a California limited partnership;
9 RELATED/SANTA MONICA VILLAGE, LLC, a California limited liability company; SANTA
10 MONICA HOUSING PARTNERS, L.P. a
11 California limited partnership; OCEAN PARK COMMUNITY CENTER, a California nonprofit
12 corporation; BANK OF AMERICA, N.A.; and Roes 101 through 200, inclusive,
13
Real Parties In Interest 14
Counsel List Continued 15
16 MURRAY 0. KANE, Bar No. 48082 [email protected]
17 GUILLERMO FRIAS, Bar No. 201800 [email protected]
18 KANE, BALLMER & BERKMAN 515 South Figueroa Street, Suite 1850
19 Los Angeles, California 90071 Telephone: (213) 617-0480
20 Facsimile: (213) 625-0931
21 Attorneys for Petitioners and Plaintiffs CITY OF SANTA MONICA and
22 SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF
23 THE CITY OF SANTA MONICA
24 LISA SCHWARTZ TUDZIN, BarNo. 132173 LAW OFFICES OF MICHAEL TUDZIN
25 [email protected] 5700 Canoga Avenue, Suite 300
26 Woodland Hills, California 91367 Telephone: (818) 887-1000
27 Facsimile: (818) 887-1110
28 Attorneys for Petitioner and Plaintiff COMMUNITY CORPORATION OF SANTA MONICA
PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
STATEMENT OF THE CASE
2 Petitioners and Plaintiffs City of Santa Monica, Successor Agency to the Redevelopment
3 Agency of the City of Santa Monica, and the Community Corporation of Santa Monica (at times
4 individually "Petitioner" and collectively "Petitioners") have filed this action to seek an end to the
5 arbitrary and capricious, unlawful and unconstitutional implementation of ABix 26 and AB 1484 by
6 Respondents Ana J. Matosantos, Californian Director of Finance ("the DOF"); California Board of
7 Equalization, and Wendy L. Watanabe, the Los Angeles County Auditor-Controller ("County
8 Auditor-Controller").
9 For many years, the State of California championed affordable housing and mandated that
I 0 cities and their redevelopment agencies use tax increment generated from redevelopment to finance
11 and subsidize affordable housing. Accordingly, redevelopment agencies were required to spend not
12 less than twenty percent of all tax increment to increase, improve and preserve affordable housing.
13 To comply with this State mandate, the Redevelopment Agency of the City of Santa Monica
14 ("the RDA'') made loan commitments to non-profit affordable housing developers, including
15 Community Corporation of Santa Monica and the other developer named real parties in interest. The
16 RDA then entered into agreements with the City to implement the RDA's affordable housing
17 obligations. The result was that, while the RDA made direct commitments to the non-profit
18 developers, the City entered into construction loan agreements with the non-profit developers.
19 In reliance upon the RDA's financing commitments, these non-profit affordable housing
20 developers then acquired property; expended money for design and development; applied for and
21 obtained federal tax credits or bond allocations; entered into tax credit partnerships; procured
22 institutional loans; provided financing guarantees to institutional lenders; and entered into
23 construction contracts with third party contractors to fulfill its contractual obligations to build and
24 operate affordable housing.
25 In the midst of this affordable housing development, the State legislature enacted ABix 26
26 and then AB 1484, which suspended redevelopment agencies effective June 29,2011 and then
27 dissolved them on February I, 2012. The goal of this legislation was to take away tax increment
28 from redevelopment agencies in an attempt to reduce the State's on-going budget deficit. However,
I PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
the State legislature specifically expressed its intent in AB1x 26 and AB 1484 that all pre-existing
2 obligations of the RDA be honored.
3 The DOF was tasked with the implementation of AB1x 26 and AB 1484 under strict and
4 accelerated deadlines. In order to meet these deadlines, the DOF published "desk guidelines" that
5 dictate to its employees which former RDA obligations can be honored, in conflict with ABlx 26
6 and AB 1484, and without regard to the specifics of any particular obligation. For example, while
7 AB 1484 (Section 34171(d)(1)(E)) defines "enforceable obligation" to include "[a]ny legally binding
8 and enforceable agreement or contract that is not otherwise void as violating the debt limit or public
9 policy," the DOF's desk guidelines include blanket directives to invalidate all "cooperation
IO agreements", "statements of intent to award a contract" and any agreements that have not been
II executed by the RDA.
I2 This rigid procedure has resulted in the inconsistent, arbitrary, and incorrect application of
I3 significant provisions of AB!x 26 and AB 1484. Furthermore, capricious decision making has
I4 become the norm as the DOF has taken any pretext to reject as many former RDA obligations as it
I5 can, even when the obligations are valid and enforceable under applicable law.
I6 Petitioners have been harmed by these actions. They complied with the State's mandate to
I7 build affordable housing. They committed and used redevelopment funds in the way that these funds
I8 were intended to be used. They entered into and relied on contractual commitments, lawfully made,
I9 that were designed to carry out precisely what the State mandated they do. But despite all this, the
20 DOF has unlawfully failed to honor these agreements. Consequently, the express legislative intent to
2I honor the former RDA's financial commitments has been thwarted; the City's affordable housing
22 developers and housing stock are now in jeopardy; and the City is facing unlawful threats of civil
23 penalties, unconstitutional withholding of the City's sales and property taxes, and the future
24 withholding of revenues needed to pay the former RDA's legal obligations. This is not the intended
25 outcome of AB I x 26 or AB 1484. Nor is this supported by the State's constitution.
26
27
28
2 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
GENERAL ALLEGATIONS
2 Petitioners allege as follows:
3 1. Venue is proper in this Court under Health and Safety Code Section 34189.3. (All
4 subsequent statutory references are to the Health and Safety Code unless otherwise indicated.)
5 2. Petitioner City of Santa Monica ("City") is a California charter city and municipal
6 corporation, organized and existing under the laws of the State of California.
7 3. Petitioner Successor Agency to the Redevelopment Agency of the City of Santa
8 Monica ("Successor Agency") is the successor agency to the former Redevelopment Agency of the
9 City of Santa Monica ("RDA") under Section 34173(a). The Successor Agency is a legal entity
1 o separate from the City pursuant to Section 34173(g).
11 4. Petitioner Community Corporation of Santa Monica ("Community Corp."), is a
12 California nonprofit public benefit corporation whose purpose and mission is to produce and operate
13 affordable housing. Community Corp. entered into four (4) affordable housing loan commitment
14 agreements with the former RDA, which agreements have been unlawfully abrogated by the State
15 Department of Finance ("DOF"). The four (4) affordable housing loan commitment agreements
16 relate to the development of affordable housing on real property located at 2802 Pico Boulevard in
17 the City of Santa Monica; 430-508 Pico Boulevard in the City of Santa Monica; 1942, 1946 1948,
18 1950 & 1954 High Place and 2345 & 2349 Virginia Avenue in the City of Santa Monica
19 (collectively, "High Place West"); and 1943, 1945, 1955, and 1959 High Place in the City of Santa
20 Monica (collectively, "High. Place East").
21 5. Respondent Ana J. Matosantos is, and at all times herein mentioned was, the Director
22 of Finance of the State of California and is named in her official capacity.
23 6. Respondent California State Board of Equalization is, and at times mentioned herein
24 was, an agency of the State of California.
25 7. Respondent Wendy L. Watanabe is, and at all times mentioned herein was, the
26 Auditor-Controller of the County of Los Angeles and is named in her official capacity.
27 8. The true names and capacities, whether individual, corporate, or otherwise, of
28 Respondents named as Does I through 100, inclusive, are unknown to Petitioners at this time.
3 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Petitioners will seek leave of court to amend this Petition to reflect the true names and capacities of
2 these fictitiously named Respondents when they have been ascertained. Petitioners are informed and
3 believe, and based thereon, allege that each of the Respondents named as Does l through l 00,
4 inclusive, are legally responsible for the laws and actions challenged here.
5 9. Real Party in Interest Santa Monica Community College District is an "affected
6 taxing entity" as defined under Section 33353.2. Santa Monica Community College District is also a
7 "taxing entity" pursuant to Section 3417l(k) as an entity that claims the right to receive pass-through
8 payments and/or distribution of taxes pursuant to Sections 34183 and 34188 ("Sections 34183 and
9 34188").
10 10. Real Party in Interest Santa Monica-Malibu Unified School District is an "affected
11 taxing entity" as defined under Section 33353.2. Santa Monica-Malibu Unified School District is
12 also a "taxing entity" pursuant to Section 34171(k) as an entity that claims the right to receive pass-
13 through payments and/or distribution of taxes pursuant to Sections 34183 and 34188.
14 II. Real Party in Interest Los Angeles County Fire District is an "affected taxing entity"
15 as defined under Section 33353.2. Los Angeles County Fire District is also a "taxing entity"
16 pursuant to Section 34171(k) as an entity that claims the right to receive pass-through payments
17 and/or distribution of taxes pursuant to Sections 34183 and 34188.
18 12. Real Party in Interest Los Angeles County Department of Public Works is an
19 "affected taxing entity" as defined under Section 33353.2. Los Angeles Department of Public Works
20 is also a "taxing entity" pursuant to Section 34171 (k) as an entity that claims the right to receive
21 pass-through payments and/or distribution of taxes pursuant to Sections 34183 and 34188.
22 13. Real Party in Interest County of Los Angeles is an "affected taxing entity" as defined
23 under Section 33353.2. County of Los Angeles is also a "taxing entity" pursuant to Section 3417l(k)
24 as an entity that claims the right to receive pass-through payments and/or distribution of taxes
25 pursuant to Sections 34183 and 34188.
26 14. Real Party in Interest Los Angeles West County Vector Control District is an
27 "affected taxing entity" as defined under Section 33353.2. Los Angeles West County Vector Control
28
4 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
District is also a "taxing entity" pursuant to Section 34171 (k) as an entity that claims the right to
2 receive pass-through payments and/or distribution of taxes pursuant to Sections 34183 and 34188.
3 15. Real Party in Interest Metropolitan Water District of Southern California is an
4 "affected taxing entity" as defined under Section 33353 .2. Metropolitan Water District of Southern
5 California is also a "taxing entity" pursuant to Section 34171 (k) as an entity that claims the right to
6 receive pass-through payments and/or distribution of taxes pursuant to Sections 34183 and 34188.
7 16. Real Party in Interest Los Angeles County Office of Education is an "affected taxing
8 entity" as defined under Section 33353.2. Los Angeles County Office of Education is also a "taxing
9 entity" pursuant to Section 34171 (k) as an entity that claims the right to receive pass-through
10 payments and/or distribution of taxes pursuant to Sections 34183 and 34188.
II 17. Real Party in Interest 2802 Pi co, L.P., is a California limited partnership with
12 Community Corp. as the general partner, and party to an affordable housing construction loan
13 agreement with the City that has been unlawfully abrogated by the DOF. The agreement relates to
14 the property located at 2802 Pi co Boulevard, in the City of Santa Monica.
15 18. Real Party in Interest 430 Pico, L.P., is a California limited partnership with
16 Community Corp. as the general partner, and party to an affordable housing construction loan
17 agreement with the City that has been unlawfully abrogated by the DOF. The agreement relates to
18 the properties located at 430-508 Pico Boulevard, in the City of Santa Monica.
19 19. Real Party in Interest High Place West, L.P. is a California limited partnership with
20 Community Corp. as the general partner, and party to an affordable housing construction loan
21 agreement with the City that has been unlawfully abrogated by the DOF. The agreement relates to
22 the property located at High Place West.
23 20. Real Party in Interest High Place East, L.P. is a California limited partnership with
24 Community Corp. as the general partner, and party to an affordable housing construction loan
25 agreement with the City that has been unlawfully abrogated by the DOF. The agreement relates to
26 the property located at High Place East.
27 21. Real Party in Interest FAME Santa Monica Senior Apartments, L.P ., ("Senior
28 Apartments Partnership") is a California limited partnership whose purpose and mission is to
5 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
produce and operate affordable housing. Senior Apartments Partnership entered into an affordable
2 housing loan commitment agreement with the former RDA and an affordable housing construction
3 loan agreement with the City that have been unlawfully abrogated by the DOF. The agreements
4 relate to the properties located at 1924 & 1930 Euclid Street, 1753 18th Street, and 1754 19th Street
5 in the City of Santa Monica.
6 22. Real Party in Interest Step Up on Second Street, Inc., is a California nonprofit benefit
7 corporation whose purpose and mission is to produce and operate affordable housing. Step Up on
8 Second Street, Inc., entered into an affordable housing loan commitment agreement with the former
9 RDA that has been unlawfully abrogated by the DOF. The agreement relates to the property located
10 at 520 Colorado Avenue, in the City of Santa Monica.
11 23. Real Party in Interest Step Up on Colorado, L.P., is a California limited liability
12 company, whose purpose and mission is to produce and operate affordable housing. Step Up on
13 Colorado, L.P. is party to an affordable housing construction loan agreement with the City that has
14 been unlawfully abrogated by the DOF. The agreement relates to the property located at 520
15 Colorado Avenue, in the City of Santa Monica.
16 24. Real Party in Interest Related/Santa Monica Village, LLC ("Related"), is a California
17 limited liability company whose purpose and mission is to produce and operate affordable housing.
18 Related entered into a Disposition and Development Agreement, dated June I 0, 2008 ("DDA") with
19 the former RDA. The DDA contemplates the conveyance of a 99 year leasehold interest in real
20 property located 1725 Ocean Avenue, in the City (known as "the Village") in consideration for the
21 construction and operation of 160 affordable dwelling units in the Village for 99 years.
22 25. Real Party in Interest Santa Monica Housing Partners, L.P. ("Housing Partners"), is a
23 California limited partnership (with Related affiliate as a general partner) that is the 99 year lessee of
24 the Village, which leasehold interest was conveyed to Housing Partners in accordance with the
25 DDA.
26 26. Real Party in Interest Ocean Park Community Center ("Community Center"), is a
27 California non-profit corporation whose purpose and mission is to produce and operate affordable
28 housing. Community Center is the 55 year lessee of real property located at 1751 Cloverfield
6 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Boulevard, in the City. The former RDA conveyed the leasehold interest to Community Center in
2 accordance with a lease agreement entered into by and between the former RDA and Community
3 Center on October 3, 2003. Community Center is currently operating this propetiy as transitional
4 housing for the homeless.
5 27. Real Party in Interest Bank of America, N.A., is a national bank, authorized to do
6 business in the State of California, and is party to that certain Credit Agreement, entered into by and
7 between the former RDA (as the "Borrower") and Bank of America (as "the Bank"), and dated May
8 I, 2008.
9 28. The true names and capacities, whether individual, corporate, or otherwise, of Real
10 Parties in Interest named as Roes 101 through 200, inclusive, are unknown to Petitioners at this time.
11 Petitioners will seek leave of court to amend this Petition to reflect the true names and capacities of
12 these fictitiously named Real Parties in Interest when they have been ascertained. Petitioners are
13 informed and believe, and based thereon, allege that each of the Real Parties in Interest named as
14 Roes 101 through 200, inclusive, are either affected taxing entities and claim the right to receive
15 pass-through payments and/or distribution of taxes pursuant to Sections 33483 and 33488; or are
16 parties to agreements with the former RDA and City that have been unlawfully abrogated by the
17 DOF.
18 BACKGROUND
19 General Background on Redevelopment
20 29. In 1951, the state legislature enacted the Community Redevelopment Law (Section
21 33000 et seq.) ("CRL") which codified the creation of redevelopment agencies ("RDAs") and the
22 adoption of redevelopment project areas to eliminate urban blight.
23 30. In 1952, the voters adopted Article XVI, section 16 of the California Constitution to
24 authorize the use of property tax increment by RDAs to fund redevelopment. Under tax increment
25 financing, which was codified in Section 33670, those public entities entitled to receive property tax
26 revenue in a redevelopment project area (also known as "the affected taxing entities") are allocated a
27 portion of tax revenue based on the assessed value of the property prior to the effective date of the
28 redevelopment plan. Any tax revenue in excess of that amount (e.g., the tax increment created by the
7 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
increased value of project area property) goes to the redevelopment agency for repayment of debt
2 incurred to finance the project.
3 31. The RDA was created in 1957. Following the creation of the RDA, the City Council
4 adopted redevelopment plans for the Ocean Park Redevelopment Project Area lA (adopted on June
5 30, 1960), the Ocean Park Redevelopment Project Area lB (adopted on January 24, 1961), the
6 Downtown Redevelopment Project Area (adopted on January 13, 1976), and the Earthquake
7 Recovery Redevelopment Project Area (adopted on June 21, 1994). Each redevelopment plan
8 authorized the allocation of tax increment to the RDA.
9 State Mandate to Dedicate Not Less than 20% in Tax Increment for Affordable
IO Housing
II 32. Beginning in 1976, Section 33334.2 required most redevelopment agencies to
I2 establish a low and moderate income housing fund ("Affordable Housing Fund" or "Set Aside
I3 Fund") and deposit not less than twenty percent (20%) of gross tax increment to finance the increase,
I4 improvement and preservation of low- and moderate-income housing ("affordable housing").
I5 33. The RDA met its obligation under Section 33334.2 by financing, in whole or part, the
I6 rehabilitation, constmction, or purchase of 1,651 affordable dwelling units within the City of Santa
I7 Monica through private non-profit affordable housing developers, including Petitioner Community
I8 Corp. and named Real Parties in Interest 2802 Pico, L.P., 430 Pico, L.P., High Place West, L.P.,
I9 High Place East, L.P., FAME Santa Monica Senior Apartments, L.P. ("Senior Apartments
20 Partnership"), Step Up on Colorado, L.P., Santa Monica Housing Partners, L.P. ("Housing
2I Partners"), and Ocean Park Community Center ("Community Center").
22 34. On August 8, 2010, pursuant to Section 33205, which authorized a redevelopment
23 agency to delegate to the city in which it is located any of its powers or functions with respect to the
24 planning or undertaking of a redevelopment project in the area in which that city is authorized to act,
25 and also authorized that city to carry out or perform the powers or functions so delegated by the
26 agency, the RDA approved and adopted Agency Resolution No. 527.
27 35. Agency Resolution No. 527 delegated to the City the RDA's authority to carry out the
28 development of design criteria, design, planning, preparation of construction bid documents, and
8 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
construction or rehabilitation of certain of the RDA's housing projects, as identified in Exhibit 1 to
2 Resolution No. 527, but retained for the RDA the authority and responsibility for financing those
3 housing projects through tax increment. (A true and correct copy of Resolution No. 527 is attached
4 hereto and incorporated herein by this reference as Exhibit A.)
5 36. On August 8, 2010, pursuant to City Council Resolution No. 10519, and acting under
6 the authority provided to it by Section 33205, the City accepted such delegated authority and power
7 to act from the RDA. Exhibit 1 to City Council Resolution No. 10519 also identifies the housing
8 projects for which the City accepted such delegated authority. (A true and correct copy of Resolution
9 No. 10519 is attached hereto and incorporated herein by this reference as Exhibit B.)
10 37. Through this transfer of partial responsibility and authority, the former RDA also met
II its obligation under Section 33334.2 with respect to the increase, improvement and preservation of
12 low and moderate income housing.
13 38. Pursuant to the authority provided under Section 33205, Agency Resolution No. 527
14 and City Council Resolution No. 10519 also authorized and approved a Cooperation Agreement
15 between the City and the RDA, for the purpose of carrying out and facilitating the transfer of certain
16 powers, authority and responsibility from the RDA to the City, and confirming the retention by the
17 RDA of its authority and responsibility for funding the housing projects identified on Exhibit 1 to
18 each of the authorizing Resolutions.
19 39. The approval and adoption of the foregoing resolutions and their implementation
20 through Cooperation Agreement No. 9267, executed September 1, 2010 ("the "201 0 Cooperation
21 Agreement"), were legislative acts duly authorized by the CRL and each such act was taken in
22 compliance with all applicable law.
23 40. The former RDA also met its obligation under Section 33334.2 by acquiring real
24 property with Affordable Housing Fund money for disposition and development as affordable
25 housing, including the propetiies located at 1725 Ocean Avenue (currently ground leased to Housing
26 Partners for development of affordable housing) and 1751 Cloverfield Boulevard (currently ground
27 leased to Community Center for operation as a transitional homeless shelter).
28 41. Article 5 of Part I of the Health and Safety Code (commencing with Section 33640)
9 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
authorized RDAs to issue bonds for any of their corporate purposes. The term "bonds" is defined
2 broadly in Section 33602 as "bonds, notes, interim certificates, debentures, or other obligations
3 issued by an agency" pursuant to Article 5.
4 42. In order to increase its ability to finance affordable housing projects, the RDA entered
5 into that certain Credit Agreement with Real Party in Interest Bank of America, NA, dated May I,
6 2008, wherein Bank of America agreed to loan the RDA up to $50,000,000 to be used "to provide
7 financing for housing activities eligible for funding from the Borrower's Low and Moderate Income
8 Housing Fund from the Earthquake Recovery Redevelopment Project Area." (Section l.l(d) of the
9 Credit Agreement). In consideration for the loan, the RDA pledged to repay Bank of America from
10 its Affordable Housing Fund generated from the Earthquake Recovery Redevelopment Project Area.
11 (A true and correct copy of the Bank of America Credit Agreement is attached hereto and
12 incorporated herein by this reference as Exhibit C.)
13 Housing Guidelines
14 43. The RDA's affordable housing efforts were implemented in accordance with the
15 City's Housing Trust Fund Guidelines (the "Guidelines"). The Guidelines set forth the eligible uses
16 for various sources of public funding, including the RDA's Affordable Housing Fund. Similar to
17 other housing programs throughout the state, the Guidelines contemplate phased financing of
18 eligible affordable housing projects, beginning with loans to finance predevelopment and/or property
19 acquisition ("Phase I Loans") followed by loans to finance construction ("Phase II Loans").
20 44. Because affordable housing projects have limited operating income due to restrictive
21 covenants that limit the income that can be generated from rental or sale of dwelling units, the
22 Guidelines contemplate that repayment of a Phase I Loan will be deferred and rolled over into the
23 Phase II Loan, and the repayment of the Phase II Loan will be deferred for as long as a housing
24 project operates as affordable housing.
25 45. In accordance with Section 33334.3(1), the Guidelines provide that affordable
26 dwelling units developed or otherwise assisted with moneys from the Affordable Housing Fund must
27 be restricted for no less than fifty-five (55) years for rental units and no less than forty-five (45)
28 years for owner-occupied units.
10 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
46. The Guidelines also contemplate that housing developers will procure additional
2 financing sources (called "layering") to supplement the RDA's subsidy for affordable housing,
3 including federal and state tax credits, state bond allocations, institutional lenders, and other "soft"
4 public financing sources (e.g., State MHP financing).
5 State Mandated Monitoring of Affordable Dwelling Units
6 47. Section 33418(a) requires monitoring, on an ongoing basis, of any affordable housing
7 developed or otherwise made available by use of the Affordable Housing Fund. The purpose of this
8 monitoring is to ensure that the affordable housing financed with Affordable Housing Funds is
9 operated in accordance with State mandated recorded covenants that limit the income levels of the
I 0 occupants of such housing, as well as the rent that can be charged by the owners of such housing
II during the covenant period (55 years for rental housing and 45 years for ownership housing).
12 48. As part of the State mandated Section 33418(a) monitoring, owners or managers of
13 affordable housing must submit annual reports. These annual reports must include for each rental
14 unit the rental rate and income and family size of the occupants, and for each owner occupied unit
15 where there was a change in ownership from the prior year and, if so, the income and family size of
16 the new owners. The cost of annual monitoring the affordable housing units developed with the
17 former RDA's Affordable Housing Fund is approximately $1,218.00 per dwelling unit.
18 THE FORMER RDA'S AFFORDABLE HOUSING PROJECTS
19 Loan History for 2802 Pico Boulevard
20 49. Following the Guidelines and in accordance with the CRL, the former RDA (as
21 "Lender") and Petitioner Community Corp. (as "Borrower") entered into that certain Acquisition and
22 Predevelopment Loan Agreement on February 2, 2009 ("Phase I Loan Agreement") whereby the
23 RDA agreed to loan Community Corp. $5,595,897 to finance Community Corp.'s acquisition of land
24 and pre-development (including design and procurement of entitlements) for thirty-three (33)
25 affordable housing units on the site known as 2802 Pico Boulevard, in Santa Monica ("the 2802 Pico
26 Project"). (A true and correct copy of the Phase I Loan Agreement is attached hereto and
27 incorporated herein by this reference as Exhibit D.)
28
11 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
50. The Phase I Loan Agreement specifically contemplated that Community Corp. would
2 apply for federal tax credits and procure construction loan financing to construct the 2802 Pico
3 Project. (See page 28 of Exhibit D; Petitioner's Exhibits Vol. I, Page 0085.)1
4 51. Following regulations codified in the California Code of Regulations, Title 4,
5 Division 17, Chapter 1, sections 10300 et seq. (specifically referenced herein as "Tax Credit
6 Committee Regulations") and in reliance upon the Phase I Loan Agreement, Community Corp.
7 submitted an application to the Tax Credit Allocation Committee ("Tax Credit Committee"), the
8 State entity responsible for awarding federal tax credits within California.
9 52. As a condition to obtaining federal tax credits, Section 10322(h)(l5) of the Tax Credit
I 0 Committee Regulations requires each applicant to include evidence of all financing commitments.
11 Section 10325(f)(8)(A)-(B) of the Tax Credit Committee Regulations establishes the parameters to
12 evidence such commitments, as follows:
13 (A) Evidence provided shall signify the form of the commitment, the loan,
14 grant or subsidy amount, the length of the commitment, condition of
I 5 participation, and express authorization }rom the governing body, or an
I 6 official expressly authorized to act on behalf of said governing body,
I 7 committing the funds, as well as the applicant's acceptance in the case of
I 8 privately committed loans.
I 9 (B) Commitments shall be final and not preliminary, and only subject to
20 conditions within the control of the applicant, with one exception, the
21 attainment of other financing sources including an award of Tax Credits.
22 53. Following the Tax Credit Committee Regulations, the former RDA and Community
23 Corp. executed a firm commitment letter ("Firm Commitment Letter"), dated March 7, 2011,
24 whereby the former RDA promised to provide construction and permanent financing for the 2802
25 Pi co Project in the amount of $9,207,402, including the $5,595,897 previously loaned to Community
26
27 1 As used in this Petition, "PE" refers to the "Petitioner's Exhibits" filed in three volumes concurrently herewith. For example, page 0085 found in the first volume will be marked "Vol. I,
28 PE 0085."
12 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Corp. under the Phase I Loan Agreement. (A true and correct copy of the Firm Commitment Letter
2 is attached hereto and incorporated herein by this reference as Exhibit E.). The former RDA
3 appropriated and encumbered its existing Affordable Housing Funds and Bank of America Credit
4 Agreement proceeds to pay for its commitment.
5 54. In accordance with the Tax Credit Committee Regulations, the Firm Commitment
6 Letter stated that the loan commitment was contingent only upon the award of tax credits. The Firm
7 Commitment Letter included the project description, amount of the loan, the interest rate, the terms
8 for repayment, the required security, the provision for recordation of affordable covenants,
9 occupancy restrictions, rent restrictions, disbursement conditions, and other conditions for the loan.
10 The Firm Commitment Letter was executed by the RDA's Executive Director and Community
II Corp.'s representative.
12 55. Community Corp. included the Firm Commitment Letter as part of its Tax Credit
13 Committee application. On June 22,2011, Community Corp. received its Preliminary Reservation
14 Letter from the Tax Credit Committee for the award of federal tax credits over the period often
15 years. The Preliminary Reservation Letter states that it is conditioned upon the 2802 Pico Project
16 Applicant constructing, rehabilitating or acquiring and rehabilitating the 2802 Pi co Project in
17 accordance with the application for low income housing tax credits submitted to the Tax Credit
18 Committee and is subject to full compliance by the Applicant with Tax Credit Committee
19 Regulations. Among other things, the Preliminary Reservation Letter required Community Corp. to
20 procure a Letter oflntent from Community Corp.'s private equity limited partner; evidence of
21 continuing firm commitments from public funding sources; and required Community Corp. to pay
22 the Tax Credit Committee a fee in the amount of$39,480. The Preliminary Reservation Letter was
23 executed by William J. Pavao, Tax Credit Committee's Executive Director. (A true and correct copy
24 of the Tax Credit Committee Reservation Letter is attached hereto and incorporated herein by this
25 reference as Exhibit F.)
26 56. In reliance upon the Firm Commitment Letter and the award of tax credits from Tax
27 Credit Committee, Community Corp. procured tax credit equity from its limited partner in the
28 amount of$3,032,675 for construction financing and $10,166,000 in permanent financing and a
13 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
bank loan from Bank of America in the amount of $7,664,000 for construction financing and
2 $855,883 in permanent financing.
3 57. The City, acting to implement the former RDA's obligations to Community Corp.
4 under the March 7, 2011 Firm Commitment Letter, executed a construction loan agreement, dated
5 November 29,2011 ("Phase II Loan Agreement") with named Real Party in Interest 2802 Pico, L.P.
6 (with Community Corp. as the general partner of the L.P.) in accordance with the terms and
7 conditions of the Firm Letter Commitment. (A true and correct copy of the Phase II Loan Agreement
8 is attached hereto and incorporated herein by this reference as Exhibit G.)
9 58. The City was legally authorized to enter into the Phase II Loan Agreement by Section
10 33205, Agency Resolution No. 527, City Council Resolution No. 10519, and the 2010 Cooperation
11 Agreement, which remained in effect until February, 1, 2012, when part 1.85 of the Health and
12 Safety Code went into effect per AB1x 26, as reformed by the California Supreme Court (see
13 paragraphs 112 through 120, below).
14 59. The City's authority to implement the Phase II Loan Agreement after February 1,
I 5 2012 is based upon the authority granted in Section 34176( c) (see paragraphs 112 through 120,
16 below).
17 60. The City has thus far funded the Phase II Loan with $3,611,505 of the former RDA's
18 Affordable Housing Fund and $5,595,897 of the fmmer RDA's Bank of America Credit Agreement
19 proceeds. Construction of the 2802 Pico Project is more than 75% complete. Fifty-five year
20 affordability covenants were recorded on the property on December 2, 2011.
21 Loan History for 430 Pico Boulevard
22 61. The loan history for 430-508 Pico Boulevard is similar to that for 2802 Pi co
23 Boulevard, except as to the following particulars:
24 62. The Acquisition and Predevelopment Loan ("Phase I Loan Agreement") for the
25 amount of$6,223,333 (including $3,720,204 from the former RDA) was executed on January 12,
26 2009 by and between the RDA and Community Corp. The 430 Pico Project consists of construction
27 of thirty-two (32) affordable units located at 430-508 Pico Boulevard, in Santa Monica. (A true and
28
14 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
correct copy of the Phase I Loan Agreement is attached hereto and incorporated herein by this
2 reference as Exhibit H.)
3 63. The RDA and Community Corp. executed a Firm Commitment Letter on March 7,
4 2011 in the amount of$8,711,189, including the $3,720,204 in RDA funds previously loaned to
5 Community Corp. under the Phase I Loan Agreement. (A true and correct copy of the Firm
6 Commitment Letter is attached hereto and incorporated herein by this reference as Exhibit I.)
7 64. The City entered into that certain Construction Loan Agreement with named Real
8 Part in Interest 430 Pico, L.P. (with Community Corp. as the general partner of the L.P.)("Phase II
9 Loan Agreement"), dated January 26, 2012. (A true and correct copy of the Phase II Agreement is
IO attached hereto and incorporated herein by this reference as Exhibit J.)
II 65. The City's authority to enter into the Phase II Loan Agreement was based upon the
I2 authority granted under Section 33205, Agency Resolution No. 527, City Council Resolution No.
I3 10519, and the 2010 Cooperation Agreement, which remained in effect until February, 1, 2012,
I4 when part 1.85 of the Health and Safety Code went into effect per AB1x 26, as reformed by the
I5 California Supreme Court (see paragraphs 112 through 120, below).
I6 66. The City was legally authorized to implement the Phase II Loan Agreement after
I7 February 1, 2012 by Section 34176(c) (see paragraphs 112 through 120, below).
IS 67. In reliance upon the Firm Commitment Letter, Community Corp. procured
I9 $4,689,820 in tax credit equity from its limited partner for construction financing and $7,444,000 for
20 permanent financing for the 430 Pico Project. Community Corp. procured $4,374,000 in
2I construction financing and $936,873 in permanent financing from Citi Community Capital for the
22 430 Pico Project.
23 68. The City has thus far funded the Phase II Loan with $2,410,893 of the former RDA's
24 Affordable Housing Fund and $3,720,204 of the former RDA's Bank of America Credit Agreement
25 proceeds. The project is 75% complete. Fifty-five year affordability covenants were recorded on
26 March 15,2012.
27
28
15 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Loan History for 1942, 1946, 1948, 1950 & 1954 High Place and 2345 & 2349 Virginia
2 Avenne ("High Place West")
3 69. The loan history for High Place West is similar to that for 2802 Pico Boulevard,
4 except as to the following particulars:
5 70. The former RDA and Community Corp. entered into a Second Amended and
6 Restated Program Loan Agreement, dated November 30, 2009, whereby the former RDA agreed to
7 loan Community Corp. $953,111 to construct off-site improvements for new construction of forty-
8 seven ( 4 7) units of affordable dwelling units located at 1942, 1946, 1948, 1950 & 1954 High Place
9 and 2345 & 2349 Virginia Avenue, in Santa Monica. (A true and correct copy of the Second
1 o Amended and Restated Program Loan Agreement is attached hereto and incorporated herein by this
11 reference as Exhibit K.)
12 71. The former RDA and Community Corp. executed a Firm Commitment Letter on July
13 14,2010, in the amount of$12,020,481, including the $953,111 of former RDA Affordable Housing
14 Fund funds previously loaned to Community Corp. under the Phase I Loan Agreement. (A true and
15 correct copy of the Firm Commitment Letter is attached hereto and incorporated herein by this
16 reference as Exhibit L.)
17 72. In reliance upon the Firm Commitment Letter, Community Corp. submitted the Firm
18 Commitment Letter as part of its Tax Credit Committee application and the Tax Credit Committee
19 issued its Tax Exempt Reservation Letter on July 20, 2011. (A true and correct copy of the Tax
20 Exempt Reservation Letter is attached hereto and incorporated herein by this reference as Exhibit
21 M.)
22 73. The City, acting to implement the former RDA's obligations to Community Corp.
23 under the July 14, 20 I 0 Firm Commitment Letter, entered into that certain Construction Loan
24 Agreement ("Phase II Loan Agreement") with named Real Party in Interest High Place West, L.P.
25 (with Community Corp. as the general partner of the L.P.), dated September 16, 2011, in accordance
26 with the Firm Commitment Letter. (A true and correct copy of the Phase II Loan Agreement is
27 attached hereto and incorporated herein by this reference as Exhibit N.)
28
16 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
74. The City was legally authorized to enter into the Phase II Loan Agreement by Section
2 33205, Agency Resolution No. 527, City Council Resolution No. 10519, and the 2010 Cooperation
3 Agreement, which remained in effect until February, l, 2012, when part 1.85 of the Health and
4 Safety Code went into effect per AB lx 26, as reformed by the California Supreme Court (see
5 paragraphs 112 through 120, below).
6 75. The City was legally authorized to implement the Phase II Loan Agreement after
7 February I, 2012, by Section 34176(c) (see paragraphs 112 through 120, below).
8 76. In reliance upon the Firm Commitment Letter, Community Corp. procured
9 $1,138,014 in tax credit equity for construction financing and $8,459,000 for permanent financing
10 for the High Place West Project. Community Corp. procured $12,000,000 in construction bond
II financing and permanent bond financing through Citibank. The State's Multi-family Housing
12 Program ("MHP") has also committed to loan $3,667,537 in permanent financing.
13 77. Bond allocations are awarded by the State of California Debt Allocation Committee
14 ("Debt Allocation Committee") in accordance with implementing regulations that have been adopted
15 in accordance with the Administrative Procedure Act (California Code of Regulations, Title 4,
16 Division 9.5, Chapter l, Article 1, sections 5000 et seq. or "Debt Allocation Committee
17 Regulations").
18 78. Because Section 5230 of the Debt Allocation Committee Regulations require
19 evidence of a "fitm" Joan commitment from the public entity providing public financing, in reliance
20 upon the Firm Commitment Letter, Community Corp. also submitted the Firm Commitment Letter
21 as part of its bond application to the Debt Allocation Committee.
22 79. The City has thus far funded the Phase II Loan with $4,349,934 of the former RDA's
23 Bank of America Credit Agreement proceeds. The High Place West Project is complete. Fifty-five
24 year affordability covenants were recorded on September 26, 2011.
25 Loan History for 1924 & 1930 Euclid Street, 1753 18th Street, and 1754 19th Street
26 ("Senior Apartments Partnership")
27 80. The loan history for Senior Apartments Partnership is similar to that for 2802 Pico
28 Boulevard, except as to the following particulars:
17 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
81. The Acquisition and Predevelopment Loan ("Phase I Loan Agreement") for the
2 amount of$4,424,711 was entered into on June 16,2009 by and between the former RDA and
3 named Real Party in Interest Senior Apartments Partnership. The Senior Apartments Partnership
4 Project is for construction of forty-nine ( 49) affordable units located at 1924 & 1930 Euclid Street,
5 1753 18th Street, and 1754 19th Street, in Santa Monica. (A true and correct copy of the Phase I
6 Loan Agreement is attached hereto and incorporated herein by this reference as Exhibit 0.)
7 82. The former RDA and Senior Apartments Partnership executed a Firm Commitment
8 Letter on March 7, 2011 in the amount of$11,475,000, including the $4,424,711 in funds previously
9 loaned to Senior Apartments Partnership under the Phase I Loan Agreement. (A true and correct
10 copy of the Firm Commitment Letter is attached hereto and incorporated herein by this reference as
11 Exhibit P.)
12 83. In reliance upon the Firm Commitment Letter, Senior Apartments Partnership
13 submitted the RDA loan commitment letter agreement as part of its Tax Credit Committee
14 application and the Tax Credit Committee issued its Preliminary Reservation Letter awarding federal
15 tax credits on May 18, 2011. (A true and correct copy of the Preliminary Reservation Letter is
16 attached hereto and incorporated herein by this reference as Exhibit Q.)
17 84. The City, acting to implement the former RDA's obligations to Senior Apartments
18 Partnership under the March 7, 2011 Firm Commitment Letter, entered into that certain Loan
19 Agreement ("Phase II Loan Agreement") with Senior Apartments Partnership, dated November 17,
20 2011, in accordance with the Firm Commitment Letter. (A true and correct copy of the Phase II
21 Loan Agreement is attached hereto and incorporated herein by this reference as Exhibit R.)
22 85. The City's authority to enter into the Phase II Loan Agreement was based upon the
23 authority granted under Section 33205, Agency Resolution No. 527, City Council Resolution No.
24 10519, and the 2010 Cooperation Agreement, which remained in effect until February, 1, 2012,
25 when part 1.85 of the Health and Safety Code went into effect per AB1x 26, as reformed by the
26 California Supreme Court (see paragraphs 112 through 120, below).
27 86. The City was legally authorized to implement the Phase II Loan Agreement after
28 February I, 2012, by Section 34176(c) (see paragraphs 112 through 120, below).
18 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
87. In reliance upon the Firm Commitment Letter, Senior Apartments Partnership
2 procured $1,032,866 in tax credit equity for construction financing and $4,664,962 in permanent
3 financing for the project. Senior Apartments Partnership procured $8,422,205 in construction
4 financing and $960,072 in permanent financing from Citibank for the project.
5 88. The City has thus far funded the Phase II Loan with $5,236,655 of the former RDA's
6 Bank of America Credit Agreement proceeds. The Senior Apartments Partnership Project is 45%
7 complete. Fifty-five year affordability covenants were recorded on December I, 2011.
8 Loan History for 1943-1959 High Place ("High Place East")
9 89. The loan history for High Place East is similar to that for 2802 Pico Boulevard,
1 o except as to the following particulars:
11 90. The former RDA and Community Corp. entered into a Program Loan, dated August
12 16,2002, to acquire, rehabilitate, and operate fourteen (14) affordable High Place East dwelling
13 units. The Program Loan amount was $2,002,000. The Program Loan was amended and restated on
14 June 23,2006 to modify the High Place East Project scope to new construction of forty-five (45)
15 affordable units with additional funding for the High Place East Project in the amount of$1,093,000.
16 The Program Loan was amended a second time on November 30, 2009 to provide additional funding
17 for off-site improvements for the Project in the amount of $1,331,155. The Program loans are
18 collectively referenced herein as "Phase I Loan Agreement". (A true and correct copy of the Phase I
19 Loan Agreement is attached hereto and incorporated herein by this reference as ExhibitS.)
20 91. The RDA issued a Firm Commitment Letter to Community Corp. on March 9, 2011,
21 for the amount of$13,016,025, including the $4,426,155 in funds previously loaned to Community
22 Corp. under the Phase I Loan Agreement. (A true and correct copy of the Firm Commitment Letter
23 is attached hereto and incorporated herein by this reference as Exhibit T.)
24 92. In reliance upon the Firm Commitment Letter, Community Corp. was awarded a tax
25 credit allocation of $7,985,000 from the Tax Credit Committee for construction/permanent financing
26 of the High Place East Project, as well as an allocation of$12,000,000 in tax-exempt bond financing
27 from the Debt Allocation Committee. (True and correct copies of the Tax Exempt Reservation letter,
28
19 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
dated July 11,2012 and the Debt Allocation Committee Bond Allocation letter, dated May 16, 2012,
2 are attached hereto and incorporated herein, respectively, by this reference as Exhibits U and V.)
3 93. The City entered into that certain Loan Agreement with named Real Party in Interest
4 High Place East, L.P. (with Community Corp. as the general partner of the L.P.), dated November
5 16,2012 ("the Phase II Loan Agreement"), for construction financing. (A true and correct copy of
6 the Phase II Loan Agreement is attached hereto and incorporated herein as Exhibit W.)
7 94. The City was legally authorized to implement the Phase II Loan Agreement after
8 February I, 2012, by Section 34176(c) (see paragraphs 112 through 120, below).
9 95. The City has thus far funded the Phase II Loan with $3, I 04,343 of the former RDA's
10 Affordable Housing Fund and $1,331,155 of the former RDA's Bank of America Credit Agreement
II proceeds. The High Place East Project is 5% complete. Fifty-five year affordability covenants were
12 recorded on November 20, 2012.
13 Loan History for 520 Colorado Avenue
14 96. The loan history for 520 Colorado Avenue is similar to that for 2802 Pico Boulevard,
15 except as to the following particulars:
16 97. The Acquisition and Predevelopment Loan for the amount of $3,645,422 ("Phase I
17 Loan Agreement") was executed on December 15,2010 by and between the former RDA and Step
18 Up on Second Street, Inc. for the development of the 520 Colorado Avenue Project. (A true and
19 correct copy of the Phase I Loan Agreement is attached hereto as Exhibit X and incorporated herein
20 by this reference.)
21 98. The 520 Colorado Avenue Project consists of construction of thirty-four (34)
22 affordable units located at 520 Colorado Avenue, in Santa Monica.
23 99. The former RDA issued a Firm Commitment Letter to Step Up on Second Street, Inc.
24 on March 9, 2011 for the amount of$5,041,255, including the $3,645,422 in funds previously loaned
25 to Step Up on Second Street, Inc., under the Phase I Loan Agreement. (A true and correct copy of
26 the Firm Commitment Letter is attached hereto and incorporated herein by this reference as Exhibit
27 Y.)
28
20 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
100. The City, acting to implement the former RDA's obligations to Step Up on Second
2 Street, Inc., under the March 9, 2011 Firm Commitment Letter, entered into that a Construction Loan
3 Agreement with named Real Party in Interest Step Up On Colorado, L.P.(with Step Up on Second
4 Street, Inc., as the non-managing member of the L.P.)("Phase II Loan Agreement"), dated January
5 25, 2012, in accordance with the Firm Commitment Letter. (A true and correct copy of the Phase II
6 Agreement is attached hereto as Exhibit Z and incorporated herein by this reference.)
7 101. The City has thus far funded the Phase II Loan with $2,655,189 of the former RDA's
8 Affordable Housing Fund. Fifty-five year affordability covenants were recorded on January 31,
9 2012. Step Up on Second Street, Inc. is in the process of applying for federal tax credits.
10 I 02. The City is authorized to enter into the Phase II Loan Agreement based upon the
11 authority granted under Section 33205, Agency Resolution No. 527, City Council Resolution No.
12 10519, and the 2010 Cooperation Agreement, which remained in effect until February, 1, 2012,
13 when part 1.85 of the Health and Safety Code went into effect per ABlx 26, as reformed by the
14 California Supreme Court (see paragraphs 112 through 120, below).
15 103. The City's authority to implement the Phase II Loan Agreement after February 1,
16 2012 is based upon Section 34176( c) (see paragraphs 112 through 120, below).
17 The Village Affordable Housing Development
18 104. Using Affordable Housing Fund money, the former RDA acquired real property
19 located at 1725 Ocean Avenue, in the City of Santa Monica from the RAND Corporation in 2000.
20 I 05. The former RDA and named Real Party in Interest Related/Santa Monica Village,
21 LLC a California limited liability corporation ("Related"), entered into that certain Disposition and
22 Development Agreement ("DDA"), dated June 10, 2008, whereby the former RDA promised to
23 ground lease the 1725 Ocean Way property to Related for 99 years in consideration for Related's
24 promise to construct 160 dwelling units of affordable housing (restricted as affordable housing for
25 99 years) on the property. (A true and correct copy ofthe.DDA is attached hereto and incorporated
26 herein by this reference as Exhibit AA.)
27
28
21 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
106. In accordance with the DDA, Related obtained federal tax credit financing, bond
2 financing, and institutional financing from Wells Fargo Bank to construct 160 affordable dwelling
3 units on the site.
4 1 07. The 99 year leasehold interest was conveyed to named Real Party in Interest Santa
5 Monica Housing Partners, L.P. a California limited partnership (with an affiliate of Related as a
6 general partner) on December 8, 2011. (A true and correct copy of the memorandum of the Village
7 Lease Agreement, recorded on December 29, 2011, is attached hereto and incorporated herein by
8 this reference as Exhibit BB.)
9 Community Center Home Shelter at 1751 Cloverfield Boulevard
10 108. Using its Affordable Housing Fund money, the former RDA acquired real propetty
II located at 1751 Cloverfield Boulevard, in the City.
12 109. On September 30, 2003, the former RDA and named Real Pmty in Interest
13 Community Center entered into a lease agreement which required the former RDA to convey a 55
14 year leasehold interest in the 17 51 Cloverfield Boulevard pro petty in consideration for Community
15 Center's promise to rehabilitate and operate a transitional homeless shelter on the propetty for very
16 low income persons. The Community Center homeless shelter was constructed and commenced
17 operation in 2007. (A true and correct copy of the memorandum of the Community Center Lease
18 Agreement is attached hereto and incorporated herein by this reference as Exhibit CC.)
19 AB lX 26 AND AB 1484
20 110. Following almost armual general fund deficits since the passage of Propositions 13
21 and 98, the State legislature enacted legislation to raid local agency property tax revenue and tax
22 increment. To prevent these raids on local revenues, the voters passed Proposition lA, which
23 prohibited the State from raiding local property taxes, and then Proposition 22, which prohibited the
24 State from raiding tax increment from the RDAs. In response to Proposition 22, the State legislature
25 enacted ABlx 26, which mandated the dissolution of all RDAs within the State. ABlx 26 was not
26 approved by a two thirds vote of the Legislature.
27 111. As explained in the November 14, 2012 report of the State Legislative Analyst's
28 Office ("LAO's Report"), as the operations of former RDAs wind down, their resources are
22 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
redistributed to the affected taxing entities. The RDA resources diverted to schools offset the State's
2 required general fund education spending, thereby creating general fund savings for the State. Thus,
3 the State has a direct pecuniary interest in diverting former RDA assets to schools. (A true and
4 correct copy of relevant excerpts from the LAO's Report are attached hereto and incorporated herein
5 by this reference as Exhibit DD; Vol. III, PE 0878-0879.)
6 AB 1x 26
7 112. AB 1x 26 was chaptered and became effective on June 29, 2011 and included parts 1.8
8 (§§34161 - 34169.5) and 1.85 (§§ 34170- 34191) of the Health and Safety Code. After its
9 enactment, the California Redevelopment Association challenged AB I x 26 directly in the California
10 Supreme Court in the case named California Redevelopment Association v. Matosantos, et al. (20 II)
11 53 Cal. 4th 231. The Court upheld ABix 26 but reformed the effective dates in part 1.85 arising
12 before May I, 2012, to take effect four months later.
13 113. Effective June 29,2011, part 1.8 authorized the suspension of all RDA activities
14 without impacting the RDA's existing obligations (Section 34169).
15 114. Effective February 1, 2012, part 1.85 dissolved all redevelopment agencies and
16 transferred control of all RDA assets to successor agencies, except that it authorized the City to
17 retain all of the former RDA's housing assets and functions, excluding the enforceable obligations
18 retained by the Successor Agency. (Section 34176(a)-(c)). Thus, AB lx 26 authorized the City to
19 assume the housing assets and functions previously performed by the former RDA, while the
20 Successor Agency retained the former RDA's monetary obligations to fund pre-existing loan
21 agreements and commitments.
22 115.
23 that,
24
25
26
27
28
Part 1.85 (Health and Safety Code section 34175(a)) also states the legislative intent
.... pledges of revenues associated with enforceable obligations of the
former redevelopment agencies are to be honored. It is intended that
the cessation of any redevelopment agency shall not affect either the
pledge, the legal existence of that pledge, or the stream of revenues
available to meet the requirements of that pledge.
23 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
116. AB 1484 was enacted as clean-up legislation to ABlx 26. Among other things, AB
2 1484 introduced a meet and confer process with the DOF. The meet and confer process purports to
3 allow the successor agencies an opportunity to register their objections to the DOF's preliminary
4 determinations or disapprovals regarding the disposition of former redevelopment agency assets and
5 future allocations of property taxes to the successor agencies. AB 1484 was not approved by a two
6 thirds vote of the Legislature.
7 117. In accordance with Section 34173(d)(l), on February I, 2012 the City of Santa
8 Monica became the designated successor agency ("Successor Agency") to the former RDA.
9 118. In accordance with Section 34176(a)(l), the City elected to retain the housing assets
I 0 and functions previously performed by the former RDA, excluding the enforceable obligations
II retained by the Successor Agency.
12 119. In accordance with Section 34176(c), the City, as the entity receiving the housing
13 assets and assuming the housing functions formerly performed by the RDA, may enforce
14 affordability covenants and perform related activities pursuant to applicable provisions of the
15 Community Redevelopment law (Section 33000 et seq.), including, but not limited to Section 33418.
16 120. In accordance with Section 34179, the Oversight Board to the Successor Agency was
17 formed before May I, 2012. AB!x 26 requires the Oversight Board to approve certain acts of the
18 Successor Agency.
19 Duties ofthe DOF, Los Angeles County Auditor-Controller, and State
20 Board of Equalization
21 121. Respondent DOF is generally charged with overseeing the implementation of AB!x
22 26 and AB 1484.
23 122. The legislature created the DOF for the purpose of conserving the financial resources
24 of the State and controlling expenditures of State money. (Irelandv. Riley, II Cal. App.2d 70
25 (1935)). Consequently, because of its institutional responsibilities, Petitioners are informed and
26 believe and therefore allege that the DOF has implemented ABlx 26 and AB 1484 in a biased
27 manner to further the State's pecuniary interest and without lawful regard to the legal commitments
28 made by the former RDA and the City and without lawful regard to the reasonable reliance on those
24 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
commitments by the City and others, including Petitioner Community Corp. and named Real Parties
2 in Interest 2802 Pico, L.P., 430 Pico, L.P., High Place West, L.P., High Place East, L.P., FAME
3 Santa Monica Senior Apartments, L.P. ("Senior Apartments Partnership"), Step Up on Colorado,
4 L.P., Santa Monica Housing Partners, L.P. ("Housing Partners"), and Ocean Park Community
5 Center ("Community Center"), all in violation of law.
6 123. Petitioners are further informed, believe, and therefore allege that the DOF has based
7 its ABlx 26 and AB 1484 determinations upon internal policy guidelines ("DOF Guidelines") that
8 have not been promulgated in accordance with the Administrative Procedure Act and do not
9 accurately reflect the express intent and content of AB I x 26 and AB 1484. (True and correct copies
10 of the DOF Guidelines are attached hereto and incorporated herein by this reference as Exhibit EE.)
11 124. Petitioners are further informed, believe, and therefore allege that the DOF
12 Guidelines reflect the DOF's institutional bias to discourage fair, neutral and diligent evaluation of
13 the former RDA's contractual obligations, including mandatory directives, as evidenced on page 9 of
14 the DOF Guidelines (Vol. III, PE 0888), that cooperation agreements and loan commitments
15 constitute invalid contracts/agreements, without regard to the legality of those agreements.
16 125. The DOF directive that loan commitments constitute invalid contract/agreements
17 conflicts with lawfully promulgated Tax Credit Committee Regulations and Debt Allocation
18 Committee Regulations that required evidence of these "firm" loan commitments as conditions to
19 obtaining to obtaining federal tax credits and bond allocations for the affordable housing projects
20 referenced in paragraphs 49 through I 03, above.
21 126. Respondent Los Angeles County Auditor Controller is generally charged with
22 calculating and distributing the Successor Agency's share of property tax revenues and residual
23 distributions of property taxes to the affected taxing entities, and has implemented the DOF's
24 directives regarding the Successor Agency's requests to receive property taxes, as further discussed
25 in paragraphs 128 through 138, below.
26 127. Respondent California State Board of Equalization is responsible for administering
27 California's local sales and use tax programs, and pursuant to Section 34179.6 and 34179.8, may be
28 directed by the DOF to offset or to withhold the City's local sales and use taxes as a penalty, if the
25 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
DOF determines that the Successor Agency has failed to remit funds asserted by the DOF to be
2 owed to the affected taxing entities.
3 ROPS Process
4 128. Under ABlx 26 (Section 34177), the Successor Agency is required to submit an
5 Oversight Board approved recognized obligation payment schedule ("ROPS") to the DOF for
6 authorization to make payments of "enforceable obligations" from either the former RDA's assets
7 (including bond proceeds and Affordable Housing Fund funds) or future semi-annual payments of
8 property taxes , which are specifically deposited into a segregated fund and allocated to the
9 Successor Agency by the Los Angeles County Auditor-Controller to pay for enforceable obligations
I 0 approved by the DOF (referred to as "Redevelopment Property Tax Trust Funds" or "RPTTF").
II 129. A ROPS payment period covers six months, based upon semi-annual distributions of
12 property taxes distributed by the Los Angeles County Auditor-Controller from the RPTTF every
13 January 2 and June 1, until the former RDA's enforceable obligations are paid.
14 130. Under Part 1.8 of the Health and Safety Code, which remained in effect until
15 February 1, 2012, the definition of"enforceable obligation" includes:
16 (a) Bonds, as defined by Section 33602 and bonds issued pursuant to
17 Section 5850 of the Government Code.
18 (b) Loans of moneys borrowed by the redevelopment agency for a
19 lawful purpose.
20 (c) Payments required by the federal government, preexisting
21 obligations to the state or obligations imposed by state law.
22 (d) Judgments or settlements.
23 (e) Any legally binding and enforceable agreement or contract that is
24 not otherwise void as violating the debt limit or public policy.
25 (f) Contracts or agreements necessary for the continued administration
26 or operation of the redevelopment agency to the extent permitted by
27 part 1.8. (Emphasis added.)
28
26 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
131. Under Part 1.85, which went into effect on February 1, 2012, the definition of
2 "enforceable obligation" remains the same as under Part 1.8, but excludes agreements between the
3 former RDA and the City of Santa Monica. (Section§ 34171(d)).
4 132. In accordance with the ROPS procedure, the Successor Agency submitted an
5 Oversight Board approved ROPS to the DOF for the period January- June 2013 ("ROPS III").
6 (True and correct copies of ROPS III is attached hereto and incorporated herein by this reference as
7 Exhibit FF.)
8 133. The Successor Agency listed payments on ROPS III, to cover (i) the costs of
9 monitoring affordable dwelling units financed with Affordable Housing Fund funds as required by
10 Section 33418 in the amount of$1,005,711 (item #29 on ROPS III; Vol. III, PE 0895) during the
11 ROPS III period; and (ii) Phase II Loan disbursements for the High Place East Project and the 520
12 Colorado Project (item# 19 and item #22 on ROPS III; Vol. III, PE 0894).
13 134. The DOF rejected the monitoring cost payments listed on ROPS III on the grounds
14 that these costs are the responsibility of the City since the City assumed the former RDA's housing
15 functions, even though Section 34171(d)(l)(C) includes "obligations imposed by state law" in the
16 definition of enforceable obligation. (A true and correct copy of the DOF's October 12, 2012
17 determination for ROPS III is attached hereto and incorporated herein by this reference as Exhibit
18 GG; Vol. III, PE 0901.)
19 135. The DOF rejected the Phase II Loan disbursements for the High Place East Project
20 and the 520 Colorado Project on the grounds that the City was a party to these agreements, even
21 though: (i) the Phase II Loan Agreements were executed by the City to implement the former RDA's
22 obligations under the Firm Loan Commitments; (ii) the City executed the Phase II Loan Agreements
23 while the 2010 Cooperation Agreement was still in effect under ABlx 26 and AB 1484; and (iii) the
24 Successor Agency retained the former RDA's enforceable obligations under Section 34176(a)(l).
25 (See Exhibit GG; Vol. III, PE 0901.)
26 136. The Successor Agency appealed the DOF's determinations by letter, dated October
27 16,2012, and requested an opportunity to meet and confer with the DOF .. (A true and correct copy of
28
27 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
the Successor Agency's appeal is attached hereto and incorporated herein by this reference as
2 Exhibit HH; Vol. III, PE 0906-0907 .)
3 137. The Successor Agency met and conferred with the DOF on October 31,2012.
4 138. On December 18,2012, the DOF issued a revised determination for ROPS III in
5 which it approved the Firm Loan Commitment for the High Place East Project, but continued to
6 deny the Phase II Loan Payments for the other listed housing projects because the Successor Agency
7 was not a party to these agreements. (A true and correct copy of the DOF's December 18,2012
8 determination letter is attached hereto and incorporated herein by this reference as Exhibit II; Vol.
9 III, PE 0912.)
10 DOF Review of Housing Assets
II 139. AB 1484 also added a definition of"housing asset" (Section 34176(e)) and
12 incorporated a new procedure whereby the DOF must review and approve the transfer of housing
13 assets to the City (Section 34176(a)(2)).
14 140. The housing asset review process required the City to submit to the DOF by August
15 1, 2012, a list of housing assets transferred between February 1, 2012 and the date that the list is
16 created. (Section§ 34176(a)(2)).
17 141. The DOF then had thirty (30) days to object to any of the assets or transfers of assets
18 identified on the list and the City had five (5) days to request a meet and confer to appeal the DOF's
19 determinations. (Section§ 34176(a)(2)).
20 142. In accordance with Section 34176(a), the City timely submitted to the DOF, a list of
21 all of the housing assets transferred between February 1 and August l, 2012 ("Housing Asset List")
22 with an explanation of how each asset on the list satisfies the definition of "housing asset" within the
23 meaning of Section 3417 6( e). (A true and correct copy of the City's Housing Asset List is attached
24 hereto and incorporated herein by this reference as Exhibit JJ.)
25 143. The Housing Asset List was submitted on forms provided by the DOF, including
26 Exhibits A through G (which exhibits are contained in Exhibit JJ). Exhibit C of the Housing Asset
27 List (contained in Exhibit JJ; Vol. III, PE 0921) contains a list of the Phase II Loan Agreements for
28 the six housing projects referenced in paragraphs 49 through 103, above.
28 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
144. Shortly thereafter, the City received a letter from the DOF, dated August 31,2012,
2 objecting to the six (6) affordable housing projects listed on Exhibit C, as follows:
3 • Exhibit C, Items 1 through 6 and Exhibit D, Items 27, 59, 63, 72, and 74- The
4 encumbrances do not qualifY as housing assets. The regulatory agreements executed
5 after June 27, 2011 are between the City and a third party. HSC section 34171 (d)(2)
6 states that agreements between the city that created the redevelopment agency and
7 the former redevelopment agency are not enforceable obligations. Also, HSC section
8 34163(b) prohibits an agency from entering into contracts with any entity for any
9 purpose after June 27, 2011. (Emphasis added.)
10 (A true and correct copy of the DOF's August 31, 2012 determination letter is attached
11 hereto and incorporated herein by this reference as Exhibit KK.)
12 145. Therefore, the DOF unlawfully and arbitrarily and capriciously rejected the Phase II
13 Loan Agreements as housing assets for the same reasons as they rejected the Phase II Loan
14 Agreement disbursements on ROPS III (discussed in paragraphs 128 through 138, above).
15 146. According to the DOF's unlawful reasoning, because the Phase II Loan Agreements
16 are not housing assets, any Affordable Housing Fund funds encumbered by the former RDA for the
17 Phase II Loan Agreements must be distributed to the affected taxing entities (thus reducing the
18 State's funding obligations to the schools) instead of to the developers of the affordable housing
19 projects with pre-existing Firm Loan Commitments and Phase II Loan Agreements.
20 147. The City requested a meet and confer with the DOF by letter, dated September 25,
21 2012, including the reasons for the City's disagreement with the DOF's determinations. (A true and
22 correct copy of the City's September 25, 2012letter is attached hereto and incorporated herein by
23 this reference as Exhibit LL.)
24 148. The City then met and conferred with DOF representatives on October 31, 2012.
25 149. As of the date of this pleading, the DOF has not issued a revised determination on the
26 status of the six ( 6) Phase II Loan Agreements. However, the DOF has made subsequent
27 determinations relating to these disputed housing assets (discussed further in paragraphs 175 through
28
29 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
179 herein) that are based upon the reasoning stated in the DOF's August 31, 2012 letter
2 determination.
3 Use of Housing Bond Proceeds
4 150. AB 1484 also added a new provision which allows the City, as the entity assuming
5 the housing functions, to use the proceeds of housing bonds (as defined in Section 33602) for
6 affordable housing purposes, regardless of whether the purposes constitute "enforceable obligations"
7 within the meaning of Section 34171 (d).
8 151. Specifically, Section 34176(g)(l)(A) allows the City, as the entity assuming the
9 housing functions, "to designate the use of and commit the indebtedness obligation proceeds that
I 0 remain afier the satisfaction of enforceable obligations that have been approved in a ROPS and that
II are consistent with the indebtedness obligation covenants. The proceeds shall be derived from
12 indebtedness obligations that were issuedfor the purposes of affordable housing prior to January 1,
13 2011 and were backed by the Low and Moderate Income Housing Fund." (Section 34176(g)(l )(A)).
14 152. In order to use these bonds proceeds for the purposes of affordable housing, the City
15 must ensure that the designations or commitments for use of these proceeds are included in a ROPS
16 that is submitted to the Oversight Board for its approval. (Section 34176(g)(l )(B).
17 153. The review of these designations or commitments by the Successor Agency,
18 Oversight Bomd, and the DOF is limited to "a determination that the designations and commitments
19 are consistent with bond covenants and that there are sufficient funds available." (Section
20 34176(g)(l)(B)).
21 154. The Successor Agency submitted a request to use $1,887,143 in Bank of America
22 Credit Agreement proceeds for the Senior Apartments Partnership affordable housing project (item#
23 20 on ROPS III; Vol. III, PE 0894) and $3,685,547 in Ban1c of America Credit Agreement proceeds
24 for the High Place West affordable housing project (item# 21 on ROPS III; Vol. III, PE 0894.)
25 155. The DOF issued its determination on October 12,2012 whereby it disapproved any
26 use of Bank of America Credit Agreement proceeds listed on ROPS III, despite the clear
27 authorization provided under Section 34176(g)(1)(B). (See Exhibit GG; Vol. III, PE 0901.)
28
30 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
156. The DOF further maintained that if the City desired to use the Bank of America
2 Credit Agreement proceeds to pay for affordable housing listed on ROPS III, the City had to wait
3 until the DOF issued a Finding of Completion to the Successor Agency pursuant to Section
4 34191.4(c). In accordance with Section 34179.7, a Finding of Completion can only be obtained if the
5 Successor Agency remits all former RDA assets determined by the DOF to be available for
6 distribution to the affected taxing entities, including schools.
7 157. As with all of the DOF's other determinations pertaining to the former RDA's assets
8 and obligations, nothing in ABlx 26 or AB 1484 expressly supports the DOF's position. For
9 example, nothing in Section 34176(g)(l )(A) conditions the City's use of the Bank of America's
10 Credit Agreement proceeds upon the Successor Agency receiving a Finding of Completion from the
11 DOF.
12 158. The Successor Agency requested a "meet and confer" with the DOF by letter
13 agreement, dated October 16,2012, which included the reasons for the Successor Agency's
14 disagreement with the DOF's determinations. The meet and confer was held in the DOF's office in
15 Sacramento on October 31, 2012. (See Exhibit HH; Vol. III, PE 0906.)
16 159. On December 18,2012, the DOF issued a final determination in which it maintained
17 that the City cannot use the Bank of America Credit Agreement proceeds until the DOF issues a
18 Finding of Completion to the Successor Agency pursuant to Section 34191.4(c). (A true and correct
19 copy of the DOF's December 18,2012 determination is attached hereto and incorporated herein by
20 this reference as Exhibit MM; Vol. III, PE 0955.)
21 Due Diligence Review Process
22 160. AB 1484 also created a new procedure that requires the Successor Agency to employ
23 a licensed accountant, approved by the County Auditor Controller and with expertise in local
24 goverrnnent accounting, to conduct a "due diligence review" (also referenced as "DDR") to
25 determine the unobligated Affordable Housing Fund balances available for transfer to taxing entities
26 (Sections 34179.5-34179.6).
27 161. Once the DDR is completed by the licensed accountant, the Oversight Board is given
28 an opportunity to review the DDR (after convening a public session). If approved by the Oversight
31 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Board, the DDR is then submitted to the DOF for its review and adjustment, if any, based upon
2 information provided by the Successor Agency (Sections 34179.6 (c)-(d)).
3 162. The DDR process requires the licensed accountant to total the net balances of former
4 RDA assets available for distribution to the taxing entities, after deducting (i) any amounts that are
5 legally restricted as to purpose and cannot be provided to the taxing entities, (ii) assets that are not
6 cash or cash equivalents (e.g., real property assets), and (iii) assets needed to pay for enforceable
7 obligations. (Section 34179.5(c)(6).)
8 163. The DOF has a limited time to complete its review and the Successor Agency has five
9 (5) days to appeal the DOF's determination by requesting to meet and confer with the DOF. The
1 o DOF then has 30 days from the request to meet and confer to either confirm or modify its
11 determination (Sections 34179.6(d)-(e)).
12 164. The DOF must then notify the Successor Agency of its determination and the
13 Successor Agency has five (5) working days to transmit the funds to the County Auditor-Controller.
14 (Section 34179.6(f)).
15 165. Successor Agencies are required to make "diligent efforts" to recover any money
16 determined by the DOF to have been transferred to third parties without an enforceable obligation.
17 (Section34179.6(f)).
18 166. The County Auditor-Controller and the DOF each have the authority to demand the
19 return of funds improperly spent or transferred to a private person or other private entity. If these
20 funds are not repaid within sixty (60) days, they may be recovered through any lawful means of
21 collection and are subject to a ten percent penalty plus interest at the rate charged for late personal
22 income tax payments from the date the improper payment was made to the date the money is repaid.
23 (Section 34179.6(h)(I)(B)).
24 167. The DOF may also order the State Board of Equalization to offset the City's sales tax
25 distribution in the amount that the Successor Agency fails to remit. (Section 34179.6(h)(1 )(B)).
26 168. If the DOF does not order a sales tax offset, the County Auditor-Controller may
27 reduce the City's property tax allocation in the amount that the Successor Agency fails to remit.
28 (Section 34179.6(h)(I)(B)).
32 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
169. Alternatively, or in addition to the remedies above, the DOF may direct the County
2 Auditor Controller to deduct the unpaid amount from future allocations of property taxes allocated to
3 the Successor Agency pursuant to the ROPS procedure, which would preclude the Successor Agency
4 from paying enforceable obligations formerly authorized by the DOF, including bond payments to
5 third party creditors. (Section 34179.6(h)(2)).
6 170. Following the procedure outlined in Section 34179.5, the Successor Agency engaged
7 Macias, Gini & 0' Connell, LL.P. ("the Accountants") as its licensed accountant to perform the D DR
8 procedure to determine the unobligated Affordable Housing Fund balances available for transfer to
9 taxing entities.
1 o 171. The Accountants completed a draft of the DDR report and the Successor Agency
11 submitted the draft DDR report to the Oversight Board for consideration at a public session on
12 October 3, 2012. The draft DDR report was in a format provided by the DOF on its Website.
13 172. Exhibit A of the DDR report approved by the Oversight Board included a list of all
14 asset transfers.
15 173. The DDR report also included the Accountants' finding that the Successor Agency
16 did not have any Affordable Housing Fund funds available for transfer to the affected taxing entities.
17 174. The Oversight Board approved the draft of the DDR report on October 10,2012 at a
18 second public session, and the Successor Agency submitted notification of the approval to the
19 County Auditor-Controller and DOF on October 11,2012. (A true and correct copy of the DDR
20 report is attached hereto and incorporated herein by this reference as Exhibit NN.)
21 175. The DOF issued its determination letter on November 9, 2012, in which it unlawfully
22 ignored and rejected the Accountants' findings, and arbitrarily and capriciously determined that the
23 Successor Agency had $55 million available in Affordable Housing Fund funds to transfer to the
24 affected taxing entities. (A true and correct copy of the DOF's November 9, 2012 determination is
25 attached hereto and incorporated herein by this reference as Exhibit 00.)
26 176. The $55 million includes $19,361,188 in Bank of America Credit Agreement
27 proceeds held by the Successor Agency as of January 31, 2012, which proceeds are restricted under
28 Section 1.1 (d) ofthe Bank of America Credit Agreement (See Vol. I, PE 0022) to finance affordable
33 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
housing and cannot be distributed to the affected taxing entities, as confirmed by the Accountants.
2 (A ttue and correct copy of the Accountant's letter, dated December 18,2012 is attached hereto and
3 incorporated herein by this reference as Exhibit PP .)
4 177. Because the Bank of America Credit Agreement proceeds are restricted as to purpose
5 and cannot be distributed to the affected taxing entities, the DOF should have deducted these
6 proceeds from the amount of Affordable Housing Funds determined to be available for distribution
7 to the affected taxing entities, in accordance with Section 34719.5(c)(6). Furthermore, the Bank of
8 America Credit proceeds have been encumbered to pay for the former RDA's affordable housing
9 projects, including the six (6) projects referenced in paragraphs 49 through 103. (See Declaration of
10 Gigi Decavalles-Hughes, filed concurrently herewith.)
11 178. The $55 million also includes $22,635,323 in Affordable Housing Fund money
12 transfened from the RDA to the City to pay for enforceable obligations constituting the former
13 RDA's outstanding affordable housing loans and corrunitments, including the six (6) projects
14 referenced in paragraphs 49 through 103. (See Exhibit F ofthe DDR report; Vol. III, PE 0988-0990.)
15 Because these proceeds were properly encumbered, the DOF should have deducted these proceeds
16 from the amount of Affordable Housing Funds determined to be available for distribution to the
17 affected taxing entities, in accordance with Section 34719.5(c)(6).
18 179. As with the prior DOF determinations for ROPS III and the Housing Asset List,
19 because the Affordable Housing Fund money was transferred to the City to pay for the former
20 RDA's pre-existing housing loans and committnents including the Firm Loan Commitments and
21 Phase II Agreements, the DOF asserts that it can abrogate the former RDA's pre-existing affordable
22 housing loans and commitments, in direct conflict with Section 34176(a)(l).
23 180. Following the DOF's unlawful, arbitrary and capricious reasoning, because the
24 former RDA's housing agreements are no longer enforceable, $22,635,323 of the Affordable
25 Housing Fund, obligated to pay for these agreements, must now be deemed as available to be
26 distributed to the affected taxing entities.
27 181. The DOF also determined that $18 million in real properties acquired with Affordable
28 Housing Fund money must be transferred back to the Successor Agency for disposition in
34 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
accordance with a long range management plan, pursuant to Section 34191.4. (Items 8 through 12 of
2 Exhibit A of the DDR report; Vol. III, PE 0972; 0991.)
3 182. Two of the real properties identified by the DOF as required to be transferred to the
4 Successor Agency are subject to pre-existing lease agreements with the former RDA, including the
5 1725 Ocean Avenue property (Item No. 9; Vol. III, PE 0972), which was ground leased to named
6 Real Party in Interest Housing Partners for 99 years, and the 1751 C1overfield Boulevard property
7 (Item No. 1 0; Vol. III, PE 0972), was ground leased to named real Party in Interest Community
8 Center for 55 years.
9 183. The third property identified by the DOF as subject to transfer back to the Successor
10 Agency consists of capital infrastructure (e.g., water lines) installed before 2010, in a mobile home
II park owned by the City. (Item No. 12; Vol. III, PE 0972.)
12 184. Successor Agency staff specifically requested that the DOF review the documents
13 evidencing the former RDA's payments of the capital infrastructure during 2008-2009 and pre-
14 existing leases executed by the former RDA, but the DOF refused to do so. (A true and correct copy
15 of the DOF e-mail is attached hereto and incorporated herein by this reference as Exhibit QQ.)
16 185. The City requested a meet and confer with the DOF by letter, dated November 15,
17 2012, and included the reasons for the Successor Agency's objections. (A true and correct copy of
18 the November 15, 2012 request is attached hereto and incorporated herein by this reference as
19 Exhibit RR.)
20 186. The Successor Agency met and conferred with the DOF on December 5, 2012.
21 187. The DOF issued its final determination on December 15,2012, ratifying its earlier
22 findings and threatening civil penalties if the Successor Agency does not remit the amounts under
23 dispute, including threatening the City with the withholding of the City's sales taxes by the State
24 Board of Equalization, the withholding of the City's property taxes by the County Auditor
25 Controller, and the withholding of the Successor Agency's future RPTTF allocations. The DOF's
26 letter also threatened criminal penalties if the Successor Agency willfully failed to return the real
27 property assets identified in the DOF's December 15 letter. (A ttue and correct copy of the DOF's
28
35 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
December 15, 2012 determination is attached hereto and incorporated herein by this reference as
2 Exhibit SS.)
3 188. On December 21,2012, the Successor Agency remitted a check to the Los Angeles
4 County Auditor Controller in the amount of$12,518,741, which amount represents the Affordable
5 Housing Fund money available to the Successor Agency, along with the letter dated December 21,
6 2012 (also sent to the DOF), explaining the basis for the Successor Agency's inability to remit the
7 disputed amounts identified in the Successor Agency's December 21, 2012letter. (A copy of the
8 Successor Agency's December 21, 2012letter is attached hereto and incorporated herein by this
9 reference as Exhibit TT.)
10 189. The harm caused by DOF's unlawful, arbitrary and capricious and improperly biased
11 determinations cannot be understated. Health and Safety Code section 34176(a)(2) provides that "[i]f
12 the transferred asset is deemed not to be a housing asset as defined in subdivision (e), it shall be
13 returned to the successor agency .... " The Successor Agency's only means of returning Affordable
14 Housing Fund and Bank of America Credit Agreement proceeds distributed to Petitioner Community
15 Corp. and the developer named Real Parties in Interest would be to call the Phase I and Phase II
16 Loans. Any attempt to call these loans would precipitate other adverse consequences, including
17 breach of contract actions against the City and Successor Agency, breach of contract actions
18 amongst the general and limited equity partners of these developer partnerships, bankruptcy of the
19 general partners of the developer partnerships that executed guarantees, breach of contract actions
20 between the equity partners and their investors, foreclosure actions by the institutiona1lenders and
21 loss of tax credits. The enforceability of the affordability covenants would then be undermined and
22 the opportunity for affordable housing would be lost. (A true and correct copy of the Declaration of
23 Sarah Letts, which explains the adverse consequences to Community Corp., is filed concurrently
24 herewith.)
25 190. The Successor Agency's distribution of Bank of America Credit Agreement proceeds
26 to the affected taxing entities for non-housing purposes would cause the Successor Agency to breach
27 the Bank of America Credit Agreement.
28
36 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
191. The DOF's failure to honor pre-existing lease agreements with named Real Parties in
2 Interest Housing Partners and Community Center would cause numerous adverse consequences
3 including the breach of tax credit equity partnerships and the loss of much needed affordable
4 housing and transitional homeless sheltering. (A true and co!Tect copy of the Declaration of Barbara
5 Collins, which explains the loss of affordable housing and transitional homeless sheltering, is filed
6 concu!Tently herewith.)
7 192. In short, DOF's unlawful, arbitrary and capricious and improperly biased attempts to
8 unlawfully further the State's pecuniary interest will cause ilTeparable harm to Petitioners and the
9 developer named Real Parties in Interest.
10 FIRST CAUSE OF ACTION.
II (Writ of Mandate)
12 (Determination of Monitoring Costs as an Enforceable Obligation)
13 (Directed to California Director of Finance Ana J. Matosantos and Wendy L. Watanabe, Los
14 Angeles County Auditor-Controller)
15 193. Petitioners Successor Agency and City hereby re-allege paragraphs 1 through 192,
16 inclusive, and incorporate them by reference as if fully set forth below.
17 194. Respondent Matosantos has acted unlawfully and has abused her discretion by
18 unlawfully and arbitrarily and capriciously rejecting $1,005,711 of the costs incurred by the City
19 during the ROPS III period to monitor on an on-going basis the housing assets developed or
20 otherwise made available with the former RDA's Affordable Housing Fund, which monitoring is
21 mandated by Section 33418(a) (collectively, "Monitoring Costs").
22 195. The Monitoring Costs constitute an enforceable obligation within the meaning of
23 Section 34171 ( d)(l )(C), and were properly listed by the Successor Agency on ROPS III.
24 196. Respondent Matosantos denied such costs on ROPS III, in violation of the DOF's
25 duties under Section 34177 to approve all enforceable obligations listed on a ROPS.
26 197. Respondent Watanabe abused her discretion by implementing the DOF's arbitrary
27 and capricious directive to deny such Monitoring Costs on ROPS III, by withholding payment of
28
37 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
RPTTF money to the Successor Agency to pay for these costs, in violation of the County Auditor-
2 Controller's duties under Section 34183(a).
3 198. Petitioners have no plain, speedy and adequate remedy in the ordinary course of the
4 law other than issuance of a writ of mandate.
5 SECOND CAUSE OF ACTION
6 (Writ of Mandate and Injunctive Relief)
7 (Determination of Loan Commitments as Enforceable Obligations)
8 (Directed to California Director of Finance Ana J. Matosantos)
9 199. Petitioners hereby re-allege paragraphs 1 through 192, inclusive, and incorporate
1 o them by reference as iffully set forth below.
11 200. Respondent Matosantos has acted unlawfully and has abused her discretion by
12 unlawfully and arbitrarily and capriciously failing to approve the Phase I Loan Agreements, the Firm
13 Loan Commitment Letters, and the Phase II Loan Agreements (collectively, "Loan Commitments")
14 as enforceable obligations within the meaning of Sections 34171(d)(l)(C) or 34171 (d)(l)(E).
15 201. The above referenced Loan Commitments constitute enforceable obligations within
16 the meaning of Section 34171(d)(l)(C) or 3417l(d)(l)(E) and such costs were properly listed on
17 ROPS III by the Successor Agency. Defendant/Respondent Matosantos disagrees with such asse1iion
18 and has improperly denied the Successor Agency's payment of such costs from the former RDA's
19 Affordable Housing Fund on ROPS III, in violation of the DOF's duties under Section 34177 to
20 approve all enforceable obligations listed on a ROPS.
21 202. Petitioners have no plain, speedy and adequate remedy in the ordinary course of the
22 law other than issuance of a writ of mandate.
23 203. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
24 restrained, irreparable harm will be caused and Respondent Matosantos will continue to deny
25 payment of such Loan Commitments, in violation of Section 34177.
26 204. Petitioners have exhausted the administrative remedies afforded under AB 1484.
27 205. Furthe1more, the continuing denial of such payments will cause irreparable hmm to
28 Petitioners and will cause a multiplicity of legal actions that will burden the courts, including breach
38 PETITION FOR WIUT OF MANDATE AND INJUNCTIVE RELIEF
of contract actions against the City and Successor Agency, breach of contract actions amongst the
2 general and limited equity partners of Community Corp. and the developer named Real Parties in
3 Interest, bankruptcy of Conununity Corp. and the other developer partnerships that executed
4 guarantees, breach of contract actions between the equity partners and their investors, foreclosure
5 actions by the institutional lenders and loss of tax credits. The enforceability of the affordability
6 covenants would then be undermined and the opportunity to build and to operate affordable housing
7 within the City of Santa Monica would be lost. (See Declarations of Sarah Letts and Barbara Collins,
8 filed concurrently herewith.) Accordingly, Petitioners are entitled to injunctive relief.
9 THIRD CAUSE OF ACTION
10 (Writ of Mandate)
11 (Determination of Honsing Assets)
12 (Directed to California Director of Finance Ana J. Matosantos)
13 206. Petitioners hereby re-allege paragraphs 1 through 192, inclusive, and incorporate
14 them by reference as if fully set forth below.
15 207. Respondent Matosantos has acted unlawfully and has abused her discretion by
16 unlawfully and arbitrarily and capriciously refusing to recognize that the Phase II Loan Agreements
17 listed as items 1-6 of Exhibit C of the Housing Asset List constitute "housing assets" within the
18 meaning of Section 34176(e).
19 208. The Phase II Loan Agreements constitute "housing assets" within the meaning of
20 Section 34176(e) and Petitioners have listed them as such on the City's Housing Asset List.
21 Respondent Matosantos has unlawfully and arbitrarily and capriciously rejected the Phase II Loan
22 Agreements as Housing Assets that can be included on the City's Housing Asset List, in violation of
23 the DOF's duties under Sections 34176(a) and (e).
24 209. Petitioners have no plain, speedy and adequate remedy in the ordinary course of the
25 law other than issuance of a writ of mandate.
26
27
28
39 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
2
3
4
FOURTH CAUSE OF ACTION
(Writ of Mandate and Injunctive Relief)
(Use of Bank of America Credit Agreement Proceeds)
(Directed to California Director of Finance Ana J. Matosantos)
5 210. Petitioners hereby re-allege paragraphs I through 192, inclusive, and incorporate
6 them by reference as if fully set forth below.
7 211. Respondent Matosantos has acted unlawfully and has abused her discretion by
8 unlawfully and arbitrarily and capriciously determining that the Bank of America Credit Agreement
9 proceeds cannot be used to pay for (i) enforceable obligations identified on the City's Housing Asset
10 List and ROPS III, including without limitation, the Phase I and Phase II Loan disbursements; and
11 (ii) affordable housing projects that are consistent with the indebtedness obligation covenants of
12 Section 1.1 of the Bank of America Credit Agreement proceeds, in accordance with Sections
13 34176(g)(I)(A) and (B), unless the Successor Agency first obtains a Finding of Completion.
14 212. The Bank of America Credit Agreement proceeds may be used for the above
15 referenced purposes, in accordance with Section 34176(g)(I)(A) and (B). Respondent and Defendant
16 Matosantos improperly and unlawfully maintain that the Bank of America Credit Agreement
17 proceeds cannot be used for any purpose until such time as the Successor Agency receives a Finding
18 of Completion.
19 213. Petitioners have no plain, speedy and adequate remedy in the ordinary course of the
20 law other than issuance of a writ of mandate.
21 214. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
22 restrained, irreparable harm will be caused and Respondent Matosantos will continue to deny use of
23 the Bank of America Credit Agreement proceeds, in violation of Sections 34176(g)(l)(A) and (B).
24 215. Petitioners have exhausted the administrative remedies afforded under AB 1484.
25 216. Furthermore, the continuing denial of the use of these proceeds will cause irreparable
26 harm to Petitioners and a multiplicity oflegal actions will burden the courts, including breach of
27 contract actions against the City and Successor Agency, breach of contract actions amongst the
28 general and limited equity partners of Community Corp. and the developer named Real Parties in
40 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Interest, bankruptcy of Community Corp. and the other developer named Real Parties in Interest,
2 bankruptcy of the general partners of the developer partnerships that executed guarantees, breach of
3 contract actions between the equity partners and their investors, foreclosure actions by the
4 institutional lenders and loss of tax credits.( See Declaration of Sarah Letts, filed concurrently
5 herewith.) The enforceability of the affordability covenants would then be undermined and the
6 opportunity for affordable housing would be lost. (See Declaration of Barbara Collins, filed
7 concunently herewith.) Accordingly, Petitioners are entitled to injunctive relief.
8 FIFTH CAUSE OF ACTION
9 (Writ of Mandate and Injunctive Relief)
10 (Use of Bank of America Credit Agreement Proceeds)
11 (Directed to California Director of Finance Ana J. Matosantos)
12 217. Petitioners hereby re-allege paragraphs 1 through 192, inclusive, and incorporate
13 them by reference as if fully set forth below.
14 218. Respondent Matosantos has acted unlawfully and has abused her discretion by
15 unlawfully and arbitrarily and capriciously failing to approve the use of$1,887,143 in Bank of
16 America Credit Agreement proceeds to fund the Phase II Loan Agreement for the Senior Apartments
17 Partnership affordable housing project (listed as item# 20 on ROPS III) and $3,685,547 for the High
18 Place West affordable housing project (listed as item #21 on ROPS III) (collectively, "Loan
19 Commitments"), in violation of Sections 34176(g)(l)(A) and (B).
20 219. In the absence of a writ of mandate, Petitioners have no plain, speedy and adequate
21 remedy to address the DOF's failure to implement its statutory duties.
22 220. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
23 restrained, Respondent Matosantos will continue to deny the use of Bank of America Credit
24 Agreement proceeds for the above referenced lawful purposes.
25 221. Petitioners have exhausted all administrative remedies afforded under AB 1484.
26 222. Furthermore, the DOF's denial of the use of Bank of America Credit Agreement
27 proceeds will cause ineparable harm to Petitioners and will cause a multiplicity of legal actions that
28 will burden the courts, including breach of contract actions against the City and Successor Agency,
41 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
breach of contract actions amongst the general and limited equity partners of Community Corp. and
2 the developer named Real Parties in Interest, bankruptcy of Community Corp. and the other
3 developer partnerships that executed guarantees, breach of contract actions between the equity
4 partners and their investors, foreclosure actions by the institutional lenders and loss of tax credits.
5 (See Declaration of Sarah Letts, filed concurrently herewith.) The enforceability of the affordability
6 covenants would then be undermined and the opportunity for affordable housing would be lost. (See
7 Declaration of Barbara Collins, filed concurrently herewith.) Accordingly, Petitioners are entitled to
8 injunctive relief.
9 SIXTH CAUSE OF ACTION
10 (Writ of Mandate and Injunctive Relict)
11 (DDR Determination Regarding Enforceable Obligations)
12 (Directed to all Respondents)
13 223. Petitioners hereby re-allege paragraphs l through 192, inclusive, and incorporate
14 them by reference as if fully set forth below.
15 224. Respondent Matosantos has acted unlawfully and has abused her discretion by
16 unlawfully and arbitrarily and capriciously failing to deduct from the total net balance of Affordable
17 Housing Fund available for distribution to the affected taxing entities, approximately $22,635,323 of
18 encumbered Affordable Housing Fund money, which money is necessary to pay the former RDA's
19 enforceable obligations listed on Exhibit F of the DDR report, in violation of Section 34179.5(c)(6).
20 225. There is no adequate remedy at law to protect the Petitioner and the developer entities
21 named as Real Parties in Interest, other than issuance of a writ of mandate.
22 226. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
23 restrained, Respondents will demand that the Successor Agency exercise diligent efforts to claw
24 back Affordable Housing Fund proceeds transferred to Community Corp. and the developer named
25 Real Parties in Interest, as well as the other developers named on Exhibit F of the DDR report or,
26 alternatively, demand the return of such funds and recover such funds through any means of
27 collection pursuant to Section 34179.6(h)(l )(B).
28 227. Petitioners have exhausted all administrative remedies afforded under AB 1484.
42 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
228. Furthermore, the DOF's failure to deduct encumbered Affordable Housing Fund
2 proceeds will cause iiTeparable harms and will cause a multiplicity oflegal actions that will burden
3 the courts, including, withholding the City's sales and use taxes, withholding the City's property
4 taxes, and withholding the Successor Agency's RPTTF funds, if the Successor Agency is not able to
5 claw back the Affordable Housing Fund money already disbursed to pay for the former RDA's
6 affordable housing enforceable obligations. (See Declaration of Gigi Decavalles-Hughes, filed
7 concuiTently herewith.) Accordingly, Petitioners are entitled to injunctive relief.
8 SEVENTH CAUSE OF ACTION
9 (Writ of Mandate and Injunctive Relief)
10 (DDR Determination Regarding Bank of America Credit Agreement Proceeds)
11 (Directed to all Respondents)
12 229. Petitioners hereby re-allege paragraphs I through 192, inclusive, and incorporate
13 them by reference as if fully set forth below.
14 230. Respondent Matosantos has acted unlawfully and has abused her discretion by
15 unlawfully and arbitrarily and capriciously refusing to recognize that the $19,361,188 Bank of
16 America Credit Agreement Proceeds noted as Item #2 on Exhibit A of the DDR report constitute
17 "amounts legally restricted as to purpose and cannot be provided to taxing entities," within the
18 meaning of Section 34179.5(c)(5)(B).
19 231. These Bank of America Credit Agreement proceeds are restricted as to purpose and
20 cannot be distributed to the taxing entities. Respondent Matosantos unlawfully and arbitrarily and
21 capriciously disagrees and has failed to deduct such proceeds from the total net balance of
22 Affordable Housing Fund money available for distribution to the affected taxing entities, in
23 accordance with Section 34179.5(c)(6).
24 232. There is no adequate remedy at law to protect the Petitioner and the developer entities
25 named as Real Parties in Interest, other than issuance of a writ of mandate.
26 233. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
27 restrained, Respondents will continue to treat the Bank of America Credit Agreement proceeds as
28 unrestricted assets.
43 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
234. Petitioners have exhausted all administrative remedies afforded under AB 1484.
2 235. Furthermore, the DOF's failure to recognize that such assets are restricted as to
3 purpose will cause irreparable harms and will cause a multiplicity of legal actions that will burden
4 the courts, including withholding the City's sales and use taxes, withholding the City's property
5 taxes, and withholding the Successor Agency's RPTTF funds, if the Successor Agency is not able to
6 claw back the Bank of America proceeds already disbursed to pay for the former RDA 's affordable
7 housing enforceable obligations. Furthermore, requiring the Successor Agency to distribute these
8 proceeds to the affected taxing entities would cause the Successor Agency to default on the use
9 covenants of the Bank of America Credit Agreement, thus precipitating Bank of America's exercise
1 o of its contractual remedies, including calling the entire loan. (See Declaration of Gigi Decavalles-
11 Hughes, filed concurrently herewith.) Accordingly, Petitioners are entitled to injunctive relief.
12 EIGHTH CAUSE OF ACTION
13 (Writ of Mandate and ln,junctive Relief)
14 (DDR Determination Regarding Property Transfers)
15 (Directed to California Director of Finance Ana J. Matosantos)
16 236. Petitioners Successor Agency and City hereby re-allege paragraphs 1 through 192,
17 inclusive, and incorporate them by reference as if fully set forth below.
18 237. Respondent Matosantos has aeted unlawfully and has abused her discretion by
19 unlawfully and arbitrarily and capriciously determining that the real property assets listed as items 9
20 through 12 of Exhibit A of the DDR report must be transferred to the Successor Agency for
21 disposition in accordance with a Long Range Management Plan pursuant to Section34191.4.
22 238. Petitioners Successor Agency and City assert that these properties are not subject to
23 transfer back to the Successor Agency because they are subject to the requirements of existing
24 enforceable obligations, to wit: the Village Lease Agreement and the Community Center Lease
25 Agreement. Respondent Matosantos disagrees with such assertion and has ordered the return of such
26 assets to the Successor Agency, in violation of Section 34191.4(a).
27 239. There is no adequate remedy at law to protect the Petitioner and the developer entities
28 named as Real Parties in Interest, other than issuance of a writ of mandate.
44 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
240. In addition to seeking a writ of mandate, Petitioners request injunctive relief. Unless
2 restrained, the DOF will maintain its order to transfer these properties back to the Successor Agency
3 for disposition in accordance with a long range management place, in violation of Section
4 34191.4(a).
5 241. Petitioners have exhausted the administrative remedies afforded under AB 1484.
6 242. Furthermore, the maintenance of such an order will cause irreparable harm to
7 Petitioners City and Successor Agency and named Parties in Interest the Related, Housing Pmtners,
8 and Community Center, and a multiplicity oflegal actions that will burden the courts, including
9 breach of contract actions against the City and Successor Agency, breach of contract actions
I 0 amongst the general and limited equity partners of Related, and loss of federal tax credits. The return
11 of these properties to the Successor Agency for disposition to the affected taxing entities in
12 accordance with a long range management plan will also jeopardize the viability of a homeless
13 shelter and 160 units of desperately needed affordable housing. (See Declaration of Barbara Collins,
14 filed concurrently herewith.) Accordingly, Petitioners are entitled to injunctive relief.
15 NINTH CAUSE OF ACTION
16 (Injunctive Relie:l)
17 (Interference with Contract)
18 (Directed to California Director of Finance Ana J. Matosantos and Wendy L. Watanabe, Los
19 Angeles County Auditor-Controller)
20 243. Petitioners hereby re-allege paragraphs 1 through 192, inclusive, and incorporate
21 them by reference as iffully set forth below.
22 244. Respondent Matosantos has acted unlawfully and has failed to implement AB1x 26
23 and AB 1484 in accordance with the clear and express provisions stated therein.
24 245. The DOF's failure to lawfully implement ABlx 26 and AB 1484 has impaired (i)
25 contracts executed by the former RDA and Community Corp., FAME Santa Monica Senior
26 Apartments, L.P., Step Up on Second Street, Inc., Related/Santa Monica Village, LLC, Ocean Park
27 Community Center, and Bank of America; and (ii) contracts executed by City and 2802 Pico, L.P.,
28
45 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
430 Pico, L.P., High Place West, L.P., High Place East, L.P., FAME Santa Monica Senior
2 Apartments, L.P., Step Up on Colorado, L.P., and Santa Monica Housing Partners, L.P.
3 246. The DOF's implementation of the authority granted under Section 34179.6(h)(B) that
4 allows the DOF and County Auditor-Controller to demand the return of Affordable Housing Fund
5 money transferred to Petitioner Community Corp. and the named developer Real Parties in Interest
6 will result in the impairment of the above referenced contracts.
7 247. The above referenced impairment of contracts violates article I, section 10 of the
8 United States Constitution and article I, section 9 of the California Constitution.
9 248. Unless restrained, Respondent Matosantos will continue to impair the above
10 referenced contracts, in violation of the above referenced statutes and constitutional provisions.
11 249. Petitioners have exhausted the administrative remedies afforded under AB 1484.
12 250. Furthermore, the continuing impairment of the above referenced contracts will cause
13 irreparable harms and a multiplicity oflegal actions that will burden the courts, including breach of
14 contract actions against the City and Successor Agency, breach of contract actions amongst the
15 general and limited equity partners of the developer named Real Parties in Interest, bankruptcy of the
16 general partners of the developer partnerships that executed guarantees, breach of contract actions
17 between the equity partners and their investors, foreclosure actions by the institutional lenders, loss
18 of tax credits, and the loss of affordable housing. (See Declaration of Sarah Letts and Declaration of
19 Barbara Collins, filed concurrently herewith.) Accordingly, Petitioners are entitled to injunctive
20 relief.
21 TENTH CAUSE OF ACTION
22 (Injunctive Relief)
23 (Violation of Proposition lA- Unlawful Withholdingof City Sales Taxes)
24 (Directed to California Director of Finance Ana J. Matosantos and State Board of Equalization)
25 251. Petitioner City hereby re-alleges paragraphs I through 192, inclusive, and
26 incorporates them by reference as if fully set forth below.
27 252. The withholding of the City's sale and use tax under Section 34179.6(h)(l)(C)
28 (withholding provision) violates Article XIII, Section 24(b) of the California Constitution, which
46 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
states: "The Legislature may not reallocate, transfer, borrow, appropriate, restrict the use of or
2 otherwise use the proceeds of any tax imposed or levied by a local government solely for the local
3 government's purposes." Sales and use taxes are imposed by local governments solely for local
4 purposes. The withholding provision impermissibly and unlawfully reallocates the taxes away from
5 the City, impermissibly and unlawfully restricts the use of sales and use taxes, and impermissibly
6 otherwise uses the proceeds of those taxes by funneling them away from the local government
7 purposes for which they were intended.
8 253. The withholding of the City's Bradley-Burns sale and use tax revenues under Section
9 34179.6(h)(l)(C) violates Article XIII, section 25(a)(2) of the California Constitution, which
I 0 prohibits the Legislature from changing the method of distributing revenues derived under the
I I Bradley-Burns Uniform Local Sales and Use Tax Law as it read on November 3, 2004.
12 254. Unless restrained, Respondent Matosantos will direct the State Board of Equalization
I3 to withhold the City's share of sales and use taxes, in violation of Article XIII, Section 24(b) of the
14 California Constitution and Article XIII, section 25(a)(2) of the California Constitution.
15 255. Petitioners Successor Agency and City have exhausted all administrative remedies
16 afforded under AB 1484.
I7 256. Furthermore, the withholding of the City's sales and use tax will cause irreparable
18 harm and will cause a multiplicity of legal actions that will burden the courts, including, without
I9 limitation, a reduction in the City's general funds that are available to pay the City's existing general
20 fund operations and bond obligations. (See Declaration of Gigi Decavalles-Hughes, filed
2I concurrently herewith.) In essence, the DOF's threatened withholding leaves the City with the
22 Hobson's choice of either reducing its general services or failing to pay its third party contracts.
23 Accordingly, Petitioner City is entitled to injunctive relief.
24
25
26
27
28
47 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
ELEVENTH CAUSE OF ACTION
2 (Injunctive Relief)
3 (Violation of Proposition lA- Unlawful Withholding of City Property Taxes)
4 (Directed to California Director of Finance Ana J. Matosantos and Wendy L. Watanabe, Los
5 Angeles County Auditor-Controller)
6 257. Petitioner City hereby re-alleges paragraphs 1 through 192, inclusive, and
7 incorporates them by reference as if fully set forth below.
8 258. The withholding of the City's property taxes under Section 34179.6(h)(l)(C) violates
9 Article XIII, section 25.5(a)(3) of the California Constitution, which prohibits the Legislature from
10 reallocating property taxes between cities, counties, and special districts without a two-thirds vote of
11 the Legislature.
12 259. Unless restrained, Respondent Matosantos will direct the County Auditor Controller,
13 or the County Auditor-Controller will, on its own initiative, withhold the City's lawful share of sales
14 and use taxes, in violation of Article XIII, Section 25.5(a)(3) of the California Constitution.
15 260. Petitioner Successor Agency and City have exhausted all administrative remedies
16 afforded under AB 1484.
17 261. Furthermore, the withholding of the City's property will cause irreparable harm and
18 will cause a multiplicity of legal actions that will burden the courts, including, without limitation, a
19 reduction in the City's general funds that are available to pay the City's existing general fund
20 operations and bond obligations. (See Declaration of Gigi Decavalles-Hughes, filed concurrently
21 herewith.) In essence, the DOF's threatened withholding leaves the City with the Hobson's choice of
22 either reducing its general services or failing to pay its third party contracts. Accordingly, Petitioner
23 City is entitled to injunctive relief.
24
25
26
27
28
48 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
TWELFTH CAUSE OF ACTION
2 (Injunctive Relief)
3 (Unlawful Withholding ofRPTTF)
4 (Directed to California Director of Finance Ana J. Matosantos and Wendy L. Watanabe, Los
5 Angeles County Auditor-Controller)
6 262. Petitioners hereby re-allege paragraphs I through 192, inclusive, aod incorporate
7 them by reference as if fully set forth below.
8 263. The withholding of the Successor Agency's future RPTTF allocations under Section
9 34179.6(h)(2) violates Sections 34177 and 34183.
10 264. Unless restrained, Respondent Matosantos will direct the County Auditor Controller,
11 or the County Auditor-Controller will, on its own initiative, withhold the Successor Agency's lawful
12 share of sales and use taxes, in violation of Sections 34177 and 34183.
13 265. Petitioner Successor Agency and City have exhausted all administrative remedies
14 afforded under AB 1484.
15 266. Furthermore, the withholding of the Successor Agency's future RPTTF revenues will
16 cause itTeparable harm and will cause a multiplicity of legal actions that will burden the courts,
17 including, without limitation, causing the Successor Agency to default on its obligations for
18 payments listed on the ROPS for the period July- December 2013 ("ROPS IV"). (See Declaration
19 ofGigi Decavalles-Hughes, filed concutTently herewith.) Accordingly, Petitioner Successor Agency
20 is entitled to injunctive relief.
21
22 PRAYER
23 WHEREFORE, Petitioners pray for relief as follows:
24 1. For a judicial order, directing the DOF to approve the Monitoring Costs listed on
25 ROPS III and all future Monitoring Costs listed on a ROPS as an enforceable obligation within the
26 meaning of Section 34171 (d)(! )(C).
27 2. For a judicial order and injunctive relief, directing the DOF to expressly approve the
28 Loan Commitments as enforceable obligations within the meaning of Section 34171 (d)(! )(C) or
49 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
34171 ( d)(l )(E).
2 3. For ajudicia1 order, directing the DOF to approve the Phase II Loan Agreements as
3 "housing assets" within the meaning of Section 34176 (e).
4 4. For a judicial order and injunctive relief, directing the DOF to approve the use of the
5 Bank of America Credit Agreement proceeds to pay for (i) enforceable obligations identified on the
6 City's Housing Asset List and ROPS III, including without limitation, the Phase I and Phase II Loan
7 Agreement disbursements; and (ii) affordable housing projects that are consistent with the
8 indebtedness obligation covenants of Section 1.1 of the Bank of America Credit Agreement
9 proceeds, in accordance with Sections 34176(g)(l)(A) and (B), without first obtaining a Finding of
1 o Completion pursuant to Section 34191.4( c )(1 ).
11 5. For a judicial order and injunctive relief, directing the DOF to authorize the payment
12 of Bank of America Line of Credit proceeds for the Senior Apartments Partnership affordable
13 housing project and High Place West affordable housing project, as identified on items 20 and 21 of
14 ROPS III.
IS 6. For a judicial order and injunctive relief, directing the DOF to deduct $22,635,323
16 from the amount of Affordable Housing Fund funds determined by the DOF to be available for
17 distribution to the affected taxing entities, in accordance with Section 34179.5(c)(6).
18 7. For a judicial order and injunctive relief, directing the DOF to expressly acknowledge
19 that the Bank of America Credit Agreement proceeds are "restricted as to purpose and cannot be
20 distributed to taxing entities", within the meaning of Section 34179.5(c)(S)(B).
21 8. For a judicial order and injunctive relief, directing the DOF to deduct $19,361,188 of
22 Bank of America Credit Agreement proceeds from the amount of Affordable Housing Fund funds
23 determined by the DOF to be available for distribution to the affected taxing entities, in accordance
24 with Section 34179.5(c)(6).
25 9. Fora judicial order and injunctive relief, directing the DOF to determine that the
26 properties identified as items 9-12 on Exhibit A of the DDR report are encumbered by enforceable
27 obligations and are not subject to transfer back to the Successor Agency for disposition in
28 accordance with a long range management plan, in accordance with Section 34191.4(a).
50 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
10. For injunctive relief restraining Respondents s Los Angeles Auditor-Controller and
2 State Director of Finance Matosantos from interfering with the contract rights of the parties to the
3 Phase I Loan Agreements, the Firm Commitment Letters, the Phase II Loan Agreements, the DDA,
4 the Village Ground Lease and the Community Center Ground Lease.
5 11. For injunctive relief restraining Respondents Los Angeles Auditor-Controller, State
6 Director of Finance Matosantos, and State Board of Equalization from enforcing Section 34179.6(h).
7 12. For injunctive relief restraining Respondent State Director of Finance Matosantos
8 from violating Article III, section 3; Article III, section 24; Article III, section 25.5 and Article XVI,
9 section 16 of the California Constitution.
10
II
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
13.
14.
DATED:
DATED:
For attorneys' fees; and
For such other and further relief as the Court deems just and proper.
\--~O"J2
Attorneys for Petitioners and Plaintiffs City of Santa Monica and Successor Agency to the Redevelopment Agency of Santa Monica
LA~ Of:~S OF MICHAEL TUDZIN \. 1 \
By J \('"'
ISA!fCHWAR
Attorney for ~titioner and laintiff Community Corporation of Santa Monica
51 PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
EXHIBITS IN SUPPORT OF PETITION FOR WRIT OF MANDATE AND INJUNCTIVE RELIEF
Exhibit No. Description
A Resolution No. 527
B Resolution No. 10519 (CCS)
C Bank of America Credit Agreement
2802 PICO BLVD
D Acquisition and Predevelopment Loan Agreement, dated February 2, 2009
E Firm Commitment Letter , dated March 7, 2011
F Tax Credit Committee Reservation Letter, dated June 22, 2011
G Phase II Construction Loan Agreement, November 29, 2011
430 PICO BLVD
H Acquisition and Predevelopment Loan Agreement , January 12, 2009
I Firm Commitment Letter, dated March 7, 2011
J Phase II Construction Loan Agreement, January 26, 2012
HIGH PLACE WEST
K Second Amended and Restated Program Loan Agreement, dated November 30,
2009
L Firm Commitment Letter, dated July 14, 2010
M Tax Exempt Reservation Letter, dated July 20, 2011
N Phase II Construction Loan Agreement, September 16, 2011
FAME
O Acquisition and Predevelopment Loan Agreement, dated June 16, 2009
P Firm Commitment Letter, dated March 7, 2011
Q Preliminary Reservation Letter, dated May 18, 2011
R Phase II Construction Loan Agreement, dated November 17, 2011
HIGH PLACE EAST
S Program Loan Agreement, dated August 28, 2002
T Firm Commitment Letter, dated March 9, 2011
U Tax Exempt Reservation letter, dated July 11, 2012
V Debt Allocation Committee Bond Allocation Letter, dated May 16, 2012
W Phase II Construction Loan Agreements, August 16, 2012
520 COLORADO AVENUE
X Acquisition and Predevelopment Loan Agreement, dated December 15, 2010
Y Firm Commitment Letter, dated March 9, 2011
Z Phase II Construction Loan Agreement, dated January 25, 2012
THE VILLAGE
AA Disposition and Development Agreement, dated June 10, 2008
BB Village Lease Agreement, dated December 8, 2011
1751 CLOVERFIELD BLVD
CC Community Center Lease Agreement, dated September 30, 2003
AB 1X 26
DD State Legislative Analyst’s Report (Excerpts), November 14, 2012
EE Department of Finance Guidelines
ROPS PROCESS
FF Recognized Obligation Payments Schedule III – Period January – June 2013
GG Department of Finance Recognized Obligation Payments Schedule III
Determination Letter, dated October 12, 2012
HH Successor Agency Appeal Letter re 520 Colorado Avenue Determination, dated
October 16, 2012
II Department of Finance High Place East Determination Letter, dated December
18, 2012
REVIEW OF HOUSING ASSETS
JJ City of Santa Monica’s Housing Asset List
KK Department of Finance Determination Letter, dated August 31, 2012
LL City of Santa Monica’s Meet and Confer Request Letter, dated September 25,
2012
USE OF HOUSING BOND PROCEEDS
MM Department of Finance Determination Letter re Bank of America Agreement
Proceeds, dated December 18, 2012
DUE DILIGENCE REVIEW PROCESS
NN Low and Moderate Income Housing Fund Due Diligence Review, dated October
11, 2012
OO Department of Finance Determination re the LMIHF DDR, dated November 9,
2012
PP Macias, Gini & O’Connell Letter regarding Bank of America Credit Agreement,
dated December 18, 2012
QQ Department of Finance Electronic Mail, dated October 30, 2012
RR City of Santa Monica’s Meet and Confer Request, dated November 15, 2012
SS Department of Finance Final Determination Letter, dated December 15, 2012
TT Successor Agency LMIHF Payment Transmittal Letter, dated December 21,
2012