Filed 5/17/13 Grantville Action Group v. City of San Diego CA4/1

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA



GRANTVILLE ACTION GROUP,                                            D059318

         Plaintiff and Appellant,

         v.                                                         (Super. Ct. No. 37-2008-00092628-
                                                                                    CU-MC-CTL)
CITY OF SAN DIEGO et al.,

         Defendants and Respondents.



         APPEAL from a judgment of the Superior Court of San Diego County, Joan M.

Lewis, Judge. Affirmed.



         Law Office of Craig A. Sherman and Craig A. Sherman for Plaintiff and

Appellant.

         Kane Ballmer & Berkman, Murray O. Kane, Donald P. Johnson; Thomas E.

Montgomery, County Counsel, and William A. Johnson, Deputy County Counsel, for

Defendants and Appellants.
       In May 2005 the City of San Diego (the City) and its redevelopment agency (the

Agency) adopted the Grantville Redevelopment Project (GRP) finding that the area

within the GRP was blighted and required action by the Agency to remedy that blight.

       In this action, plaintiff Grantville Action Group (GAG) sought to challenge, under

the Community Redevelopment Law (CRL), Health & Safety Code (all undesignated

statutory reference are to the Health & Safety Code) section 33000 et seq., decisions

made by the defendants City, the Agency, and the County of San Diego (the County)

(collectively referred to as defendants) arising from a settlement of the County's lawsuit

challenging the GRP. Specifically, GAG asserts that the County's lawsuit, and the

subsequent settlement agreement, improperly guaranteed the County would recapture 100

percent of its projected $49 million in lost tax revenue from adoption of the GRP. GAG

asserts that this "revenue shifting scheme" is "exactly the type of action the Legislature

sought to prohibit in enacting the [CRL]." Further, GAG asserts that these actions

violated the legal doctrine that you "cannot do indirectly what the law (and Legislature)

prohibits [you] from doing directly."

       Following a court trial, the court issued a decision in the City, County and

Agency's favor, finding the CRL does not "prohibit[] the transfer of monies in this

manner."

       On appeal, GAG asserts the court erred in its ruling because (1) the settlement of

the County's lawsuit violated the CRL, which established a pass-through formula, offset

requirements for such projects, and other requirements for redevelopment plans; (2) when

approving the transfer and use of a redevelopment tax increment for public facilities, it

                                             2
was inappropriate to reference an entire redevelopment plan, with no identified project;

and (3) the County's agreement to transfer and use the GLP's tax increment for

construction/improvement of its County Administration Center (CAC) was in violation of

the restrictions set forth in the CRL. We affirm.

                              FACTUAL BACKGROUND

       A. The GRP

       In May 2005 the City and the Agency adopted the GRP. In the GRP, the City and

Agency found that the area within the boundaries of the GRP was blighted and required

action by the Agency to remedy that blight. The objectives of the GRP included the

following: (1) eliminate and prevent the spread of blight and deterioration of the area; (2)

improve traffic flow through the development of a circulation network to the Mission

Gorge corridor and Grantville industrial area; (3) improve public infrastructure, including

storm drains to Alvarado Creek and the San Diego River, widening existing roadways

and sidewalks or creating new ones, and undergrounding utilities; (4) alleviate the

shortage of commercial and industrial parking; (5) streetscape enhancements and

revitalization of incompatible uses and obsolete buildings; (6) revitalize the commercial

corridor along Mission Gorge Road; (7) expand and add community park and recreational

facilities, including along the San Diego River.

       The Agency also adopted a five-year implementation plan (Five-Year Plan), which

provides a general outline of the actions the Agency may take in eliminating blight in the

Grantville area. The actions proposed during the first year of the Five-Year Plan involve

actions relating to the objectives described, ante, including, among other items: (1)

                                             3
planning for Mission Gorge Road traffic improvements, including the Interstate 8

interchange at Alvarado Canyon Road; (2) pedestrian circulation improvements along

Alvarado Creek, focused on the Grantville Trolley Station; (3) identifying storm drain

improvements; (4) developing opportunities of the San Diego River Master Plan once it

is finalized; and (5) monitoring, coordinating and expanding activities with other public

agencies, including business outreach and marketing, housing programs, streetscape,

lighting and landscape improvements.

       B. The County's Lawsuit

       The County filed an action challenging the adoption of the GRP. The County's

complaint alleged, among other claims, that there was insufficient evidence of physical

and economic blight in the Grantville area.

       Atomic Investments, Inc. (AII) also filed a case challenging the GRP. AII

challenged the inclusion of two of its properties (the Discount Tire property and the

Veteran's Administration property) in the GRP.

       The County and the AII cases were subsequently consolidated (the County Case).

GAG did not participate in the County Case. Thereafter, the County Case settled.

       C. Hearings on GRP

       On July 29, 2008, the San Diego City Council (City Council) and the Agency's

board (the Board) held a joint public hearing on the subject agreements. Proponents and

opponents of the proposed settlement and the related agreements were heard. The

opponents, including GAG's representative, Brian Peterson, criticized the Agency's



                                              4
finding of blight in the Grantville area and the Agency's possible use of eminent domain

relating to the GRP.

       At the conclusion of the public hearing, the City Council and Agency's board

adopted resolutions approving four cooperation agreements by a vote of seven to one and

made findings required by section 33445. The Agency's board also adopted a resolution

to settle AII's claims in the County Case by a vote of eight to zero.

       Similarly, on September 23, 2008, the County Board of Supervisors held a public

hearing and adopted resolutions relating to two cooperation agreements and made

findings required by section 33445

       Counsel for the opponents of the settlement submitted a letter to the County and

made a presentation in opposition to the settlement and its related agreements. GAG also

submitted a letter and made a presentation in opposition to the settlement.

       The settlement agreement, which included four cooperation agreements, was

approved by all parties on August 29, 2008. The four cooperation agreements and

resolution that effectuated the settlement consist of the following:

       1. The transit line improvement cooperation agreement, which provided that the

Agency would transfer $31.36 million to the City for the construction of improvements to

the C Street trolley line downtown as part of the Centre City Redevelopment Project.

Those improvements were required to permit a direct transit line for trolley line riders

between Grantville and downtown, thereby increasing Grantville public transit use and

alleviating existing transit congestion in Grantville.



                                              5
       2. The North Embarcadero improvements and facilities cooperation agreement

(North Embarcadero agreement) provided for the Agency's payment of $31.36 million in

Centre City Development Corporation (CCDC) funds to the County for use in

constructing improvements relating to the County Waterfront Park Plan along the harbor-

front area of downtown, so long as they are consistent with CRL.

       3. The joint projects cooperation agreement provided for the payment by the

Agency of $7.84 million for the development of projects recommended by the County

that benefit the Grantville Redevelopment Project area consistent with the CRL.

       4. The affordable housing credit and allocation agreement, which provided that

the County would receive $9.8 million in affordable housing credits towards its share of

the regional housing needs allocation.

       5. The AII resolution, which provided that certain properties owned by AII would

not be subject to eminent domain.

       On September 8, 2008, pursuant to the settlement agreement, the court issued a

judgment on validated actions. That judgment validated the GRP and found that the GRP

was legal and valid in all respects. No party to the validation action filed an appeal.

       D. The Instant Action

       On September 26, 2008, GAG filed a complaint and petition for writ of mandate

seeking to invalidate the resolutions, actions and findings made by the City, the Agency,




                                              6
and the County, related to the GRP.1 In its complaint and petition, GAG challenged

three of the four cooperation agreements - the transit line improvements agreement, the

joint projects agreement, and the North Embarcadero agreement GAG also challenged

the resolution that settled AII's claims, but that claim was subsequently dismissed by the

court.

         The trial in this matter was heard on November 16, 2010. At the conclusion of

trial, the court took the matter under submission.

         On December 20, 2010, the trial court issued its tentative statement of decision. In

that tentative statement of decision, the trial court made several findings. As to GAG's

argument that the defendants "cannot do indirectly what [they] cannot legally do

directly," the court found: "Although there is some appeal to this argument, the Court

does not believe the law prohibits the transfer of monies in this manner. The Court

agrees with the thoughts expressed by the Attorney General's office that 'although it

might be questioned whether this arrangement carries out the Legislatures' [sic] intent in

adopting the anti-pass through provision in 1993, it appears to be technically permissible.'

[Citation.] [¶] For the foregoing reasons—and for the reasons discussed below—this

Court concludes that the appropriate findings under [section] 33445 were made and that

the settlement and related transactions did not violate pass-through restrictions. The

motion for judgment on this issue is therefore denied."



1     A complaint filed by an interested person to invalidate a public agency matter is
commonly referred to as a "reverse validation" action. (Bonander v. Town of Tiburon
(2009) 46 Cal.4th 646, 656.)
                                              7
       Footnote 5 in the court's tentative decision states: "In this regard, the Court finds

Graber v. City of Upland (2002) 99 Cal.App.4th 424 to be distinguishable. There, the

improper purpose of the ordinance was conceded by the City as the Court of Appeal

acknowledged ['Although the issue is a close one, the city's candid statement of its

reasons for adopting ordinance No. 1683 makes it clear to us that the sole purpose of the

ordinance was to avoid the base year limitation for the 77-acre parcel. We agree with the

trial court that this is an improper purpose which conflicts with the statutory scheme.'] In

this case there is no acknowledged improper purpose."

       As to GAG's argument that the agreements should be reviewed as a single

transaction in determining if they were lawful, rather than reviewing each individual

agreement, the trial court found that GAG challenged only certain portions of the overall

settlement, and that, "Similar to how [GAG] approached the case—and as Defendants

argue—the Court believes it may look at each agreement separately to see if any of

Plaintiff's other arguments have merit."

       As to the transit line agreement, the trial court found that the agreement "was

adequately provided for in the Grantville Redevelopment Plan" and "[t]he appropriate

findings" were made pursuant to section 33445, and therefore GAG's motion as to that

agreement was denied

       As to the joint projects agreement, the court found, "Although the 'Joint Projects'

are not identified with specificity, the Joint Projects Agreement provides that the projects

be consistent with the CRL [citation], which requires a five year implementation plan.

[Citation.] The Grantville Five-Year Implementation Plan lists specific projects that may

                                              8
be funded. [Citations.] Moreover, the funding of a joint project must follow a process

requiring Agency approval based upon whether the proposed project benefits the

Grantville Redevelopment Project area consistent with the CRL. [Citation.] The Court

concludes that the Joint Projects are sufficiently identified for purposes of compliance

with the CRL." The court also found that this challenge to the joint projects agreement

had not been administratively exhausted as to the City and Agency.

       As to the North Embarcadero agreement, the court found that the issue relating to

the alleged possible use of the North Embarcadero funds to improve the County

Administrative Center in purported violation of section 33445, subdivision (g)(1) (section

33445(g)(1)) had not been administratively exhausted, and therefore denied judgment as

to that issue.

       On February 15, 2011, the court entered judgment in defendants' favor, finding

that all of the subject actions taken by the City, Agency, and County were "adequate,

sufficient, legal, and valid and in conformity with the applicable provisions of laws and

enactments, including the applicable provisions of the Community Redevelopment

Law . . . ."

       After plaintiffs filed this appeal from the judgment of dismissal, the CRL was

amended to dissolve all redevelopment agencies in California. (§ 34172.) The Agency

was dissolved effective June 29, 2011, and the City of San Diego Redevelopment

Successor Agency (Successor Agency) was designated as its successor agency as

provided for in the amended provisions of the CRL. (§§ 34171, subd. (j), 34173, subds.

(b) & (d)(1), 34176, subd. (a).) The Successor Agency now stands in the place of the

                                             9
Agency in this litigation. (§ 34173, subd. (b) ["all authority, rights, powers , duties and

obligations previously vested with the former redevelopment agencies . . . are hereby

vested in the successor agencies."].)

                                        DISCUSSION

        On this appeal, GAG does not challenge the affordable housing credit and

allocation agreement or the AII resolution. Therefore, only three of the cooperation

agreements are before us on this appeal: the transit line improvements agreement, the

joint projects agreement and the North Embarcadero agreement.

                                I. STANDARD OF REVIEW

        Because this appeal involves issues of law, we apply the de novo standard of

review. (Redevelopment Agency v. County of Los Angeles (1999) 75 Cal.App.4th 68, 74;

Community Youth Athletic Center v. City of National City (2009) 170 Cal.App.4th 416,

427.)

                                        II. ANALYSIS

        A. Section 33445 Permits the Subject Agreements

        Redevelopment agencies are funded by a portion of property taxes generated

within a redevelopment project area, which is commonly referred to as "tax increment"

financing. (Section 33670, subd. (b)); City of Dinuba v. County of Tulare (2007) 41

Cal.4th 859, 866.)

        Section 33445, subdivision (a) (section 33445(a)) authorizes the transfer of tax

increment from a redevelopment project for the construction of public facilities. At the

time the subject agreements were approved, former section 33445(a) permitted the

                                             10
transfer of tax increment for a public facility within or without the redevelopment project

area if the appropriate legislative body made the following findings: (1) "That the

buildings, facilities, structures, or other improvements are of benefit to the project area or

the immediate neighborhood in which the project is located, regardless of whether the

improvement is within another project area;" (2) there are "no other reasonable means of

financing" the public improvements; and (3) the payment of the funds for the public

improvements will assist in eliminating one or more blighting conditions within the

project area and is "consistent with" the redevelopment project implementation plan.

       The findings required by section 33445(a), if they are made as specified in that

section, are final, conclusive, and not subject to court review. (§ 33445, subd. (b)

(section 33445(b)).)

       As we have discussed, ante, defendants made these findings in satisfaction of the

requirements of section 33445(a). Furthermore, those findings procedurally complied

with the requirements of the CRL governing the adoption of the related resolutions.

(Meaney v. Sacramento Housing & Redevelopment Agency (1993) 13 Cal.App.4th 566,

580-581 (Meaney).)

       Moreover, Courts of Appeal have consistently approved the use of tax increments

for public improvements under section 33445. In Meaney, supra, 13 Cal.App.4th 566,

the county entered into an agreement with the city and agency by which the City of

Sacramento and its redevelopment agency agreed to pay the county the amount of

property tax it would have otherwise received and provided that such payment would be

made toward a new county courthouse and "other related County public facilities." (Id. at

                                              11
p. 573.) The court rejected the plaintiff's argument that use of tax increment to construct

the courthouse was illegal, stating, "It will be noted that the first paragraph [of section

33445] generally authorizes an agency to pay for the construction cost and land value of

publicly owned facilities which benefit the [redevelopment] project area. . . . The

agency's authority to make the payments implies, we conclude, authority to enter into

agreements governing the conditions of payment, including agreements with the local

government which will own the public facility." (Meaney, at p. 575.)

       In this case, defendants found that (1) the North Embarcadero improvements

would benefit the Centre City Redevelopment Project or the immediate neighborhood in

which the improvements were located; and (2) the use of $7.84 million of tax increment

for joint projects consistent with the CRL would benefit the GRP or the immediate

neighborhood in which they are located. Thus, under section 33445 and Meaney, these

are lawful expenditures of the Grantville tax increment.

       Similarly, in City of Cerritos v. Cerritos Taxpayers Assn. (2010) 183 Cal.App.4th

1417 (Cerritos), the Court of Appeal addressed a transaction in which the redevelopment

agency agreed to lease school district-owned property to a nonprofit housing corporation

whose board of directors was the city council. The agency would then finance the

development of a low-cost housing project. As part of that same transaction, the city

agreed to purchase certain real property and improve that property for the relocation of

the school district offices. (Id. at pp. 1425-1427.) The Court of Appeal affirmed the trial

court judgment validating the transaction, holding that the subject transaction was

prmitted by section 33445(a). (Cerritos, at pp. 1430-1431.)

                                              12
       Moreover, as both the Meaney and Cerritos courts noted, the required legislative

findings are final and conclusive and beyond judicial review under section 33445(b).

(Meaney, supra, 13 Cal.App.4th at p. 578 ["the evidentiary basis for the findings are

supported by substantial evidence or by any evidence at all in the administrative record"];

Cerritos, supra, 183 Cal.App.4th at pp. 1434-1435 ["The City and Agency made all the

findings required by [section 33445(a)] . . . . Nothing further is required by section

33445. And, as subdivision (b) of that section states, 'The determinations . . . shall be

final and conclusive.'"] The only permissible judicial review is whether the appropriate

procedures were followed and whether the determinations that were made comply with

section 33445. (Meaney, supra, 13 Cal.App.4th at pp. 578-579.)

       In this case, defendants utilized the procedures prescribed by section 33445(a).

They approved the expenditure of GRP funds for the construction of public

improvements located outside the Grantville Project area. In approving those

expenditures, defendants made the statutory findings that the subject expenditures will

benefit the GRP or the immediate neighborhood in which the project is located, that there

is no other reasonable means of financing the public improvements, and that the

expenditures for the public improvements will assist in the elimination of one or more

blighting conditions and are consistent with an adopted implementation plan.

       Those findings are now beyond judicial scrutiny because defendants proceeded as

required by law. (§ 33445(b).)

       Finally, it should be noted that the Attorney General's Office reviewed the subject

transactions and opined in a letter to Senator Christine Kehoe that the subject transactions

                                             13
are "permissible" under the CRL. An opinion by the Attorney General's Office, while not

binding, "'[is] entitled to great respect' and given great weight by the courts." (Shapiro v.

Board of Directors (2005) 134 Cal.App.4th 170, 183, fn. 17.)

       B. Legislators' Motivation

       As noted, ante, GAG asserts that the City, Agency, and County were

impermissibly motivated to "do indirectly what [they] cannot legally do directly." We

reject this contention because courts do not review the motivations of local legislators in

the actions they undertake. Courts only review the legality of the actions themselves.

       In County of Los Angeles v. Superior Court (1975) 13 Cal.3d 721, the plaintiff

filed a taxpayer suit challenging the County's adoption of an ordinance on the basis that it

had been adopted as a result of a threatened illegal strike by public employees. The trial

court granted a motion to permit certain discovery relating to the supervisors' motivation

in enacting the ordinance. The California Supreme Court issued a writ of prohibition as

to that discovery, holding it was barred by the rule precluding courts from inquiring into

legislators' motivation. As our high court explained, "[T]he discovery order in the instant

case implicates a . . . fundamental, historically enshrined legal principle that precludes

any judicially authorized inquiry into the subjective motives or mental processes of

legislators. As early as 1855, Chief Justice Murray declared in an opinion for this court:

'I know of no authority this Court possesses to inquire into the motives of the Legislature

in the passage of any law; on the contrary, it has been uniformly held, that they could not

be inquired into.' [Citation.] This doctrine has been reiterated in literally scores of

California decisions." (Id. at p. 726.) "'The diverse character of such motives, and the

                                             14
impossibility of penetrating into the hearts of men and ascertaining the truth, precludes all

such inquiries as impracticable and futile.'" (Ibid.)

       Similarly, in Board of Supervisors v. Superior Court (1995) 32 Cal.App.4th 1616

the court stated, "'[T]here is an element of futility in a judicial attempt to invalidate a law

because of the bad motives of its supporters. If the law is struck down for this reason,

rather than because of its facial content or effect, it would presumably be valid as soon as

the legislature or relevant governing body repassed it for different reasons.'" (Id. at p.

1624, fn. 3.)

       Also, the United States Supreme Court in Soon Hing v. Crowley (1885) 113 U.S.

703, 710-711, made the following statement: "[T]he rule is general with reference to the

enactments of all legislative bodies that the courts cannot inquire into the motives of the

legislators in passing them, except as they may be disclosed on the face of the acts, or

inferrible from their operation, considered with reference to the [conditions] of the

country and existing legislation."

       In Rider v. City of San Diego (1998) 18 Cal.4th 1035 (Rider II), the California

Supreme Court reviewed a transaction by which the City of San Diego and the San Diego

Port Authority formed a joint authority to issue bonds for expansion of the City's

convention center. The plaintiff there asserted that the City and Port Authority's

motivation in doing so was to avoid the two-thirds vote requirement that would have

applied if the City had issued the bonds. Our high court rejected that argument, stating,

"We are not naive about the character of this transaction. If the City had issued bonds to

pay for the Covention Center expansion, the two-thirds vote requirement would have

                                              15
applied. Here, the City and the Port District have created a financing mechanism that

matches as closely as possible (in practical effect, if not in form) a City-financed project,

but avoids the two-thirds vote requirement. Nevertheless, the law permits what the City

and Port District have done." (Id. at p. 1055.)

       Acknowledging the holding in Rider v. County of San Diego (1991) 1 Cal.4th 1

(Rider I) that local governments could not circumvent Proposition 13's requirement of a

two-thirds vote to impose "special taxes" by creating a financing agency, our high court

nevertheless held that the actions of the City in Rider II were proper: "The short answer

to plaintiffs' argument is that the Constitution and the City's charter permit the City to

avoid the two-thirds vote requirement by creating a joint powers agency to finance public

works projects. Therefore, however we might characterize the financing plan at issue

here, we cannot characterize it as unlawful." (Rider II, supra, 18 Cal.4th at p. 1042.)

       Accordingly, GAG's attempt to challenge the agreements based on defendants'

purported motivation is unavailing. Courts may not inquire into the motivations of a

local legislative body, such as the City Council, Agency and County Board of

Supervisors, to determine if they intended to "do indirectly what they could not do

directly."

       GAG asserts that Graber v. City of Upland, supra, 99 Cal.App.4th 424, controls in

this case. However, the Court of Appeal in Graber was only able to consider the local

legislators' intent only because that intent was admitted by the city and expressly stated in

the ordinance that was under review by the court: "[T]he city's candid statement of its

reasons for adopting ordinance No. 1683 makes it clear to us that the sole purpose of the

                                              16
ordinance was to void the base year limitations for the 77-acre parcel. We agree with the

trial court that this is an improper purpose which conflicts with the statutory scheme."

(Id. at p. 433).

       In this case, however, defendants have made no such admissions relating to the

subject agreements. Rather, it has been defendants' position throughout these

proceedings that the subject agreements were lawful under the CRL.

       GAG's citation to St. John's Well Child & Family Center v. Schwarzenegger

(2010) 50 Cal.4th 960 is also unavailing. That case concerned the Governor's line item

veto power, not the motivation of legislators in enacting laws. (Id. at p. 979, fn. 13.)

       C. The Subject Agreements Do Not Violate Section 33607.5

       GAG asserts that the settlement violates section 33607.5 because the settlement

amounts to a prohibited "pass-through" of tax increment to the County. Procedurally,

that argument is barred by the doctrine of failure to exhaust administrative remedies.

Substantively, the argument fails as the agreements are not subject to the limitations of

section 33607.5. Finally, this contention misapprehends the payments under the subject

agreements. They are not payment of additional general fund moneys "passing through"

to the County. Rather, they are permissible transfers of tax increment for projects

consistent with the purpose of redevelopment.

       1. Failure to exhaust administrative remedies

       GAG never raised any issue relating to a potential violation of section 33607.5 in

its opposition at the City/Agency hearing or at the County hearing. Therefore, that issue

is barred by the doctrine of failure to exhaust administrative remedies. (Evans v. City of

                                             17
San Jose (2005) 128 Cal.App.4th 1123, 1136-1137 [In a validation action challenging a

redevelopment plan adoption, the challenger must raise all issues at the administrative

level.].)

        2. The agreements are not subject to section 33607.5

        Section 33607.5, subdivision (f)(2) (section 33607.5(f)(2)) provides:

"Notwithstanding any other provision of law, a redevelopment agency shall not be

required, either directly or indirectly, as a measure to mitigate a significant environmental

effect or as part of any settlement agreement or judgment brought in any action to contest

the validity of a redevelopment plan pursuant to Section 33501, to make any other

payments to affected taxing entities, or to pay for public facilities that will be owned or

leased to an affected taxing entity."

        However, the legislative history of section 33607.5, states that it "[p]rohibits an

agency from paying for any public improvement unless the legislative body makes the

determination that the proposed improvement will assist in the elimination of blight."

(Assem. Com. on Housing and Community Develoment, Rep. on Assem. Bill No. 1290

(1993-1994 Reg. Sess.) June 16, 1993, p. 4, italics added.) Defendants made such a

finding as to each cooperation agreement and therefore section 33607.5 does not apply.

        Additionally, appellant's argument as to the joint projects agreement also fails

under the express language of section 33607.5(f)(2). This is so because (1) the Agency is

not being compelled to make the subject payments, they are voluntary payments under

the terms of the subject cooperation agreements; (2) there is no payment to the County as

the payment is to a joint account; and (3) there is no evidence that a joint project will be

                                              18
owned by the County because the agreement requires the joint project to be consistent

with the CRL, under which such ownership would be precluded.

       Recognizing that the express provisions of section 33607.5(f)(2) do not support its

position, GAG argues that the intent of the CRL should override the specific statutory

provisions. However, "'"If the [statutory] language is clear and unambiguous there is no

need for construction, nor is it necessary to resort to indicia of the intent of the

Legislature."'" (People v. Zambia (2011) 51 Cal.4th 965, 972.)

       Further, the intent of the CRL as to additional payments to local taxing entities

does not assist appellant in this case. The intent of the CRL was to eliminate pass-

through agreements and replace them with the statutory pass-through payments.

       Under sections 33607.5 and 33607.7, agencies must pay a portion of their tax

increment to "affected taxing entities." These payments are referred to as "pass-through"

payments. (Los Angeles Unified School Dist. v. County of Los Angeles (2010) 181

Cal.App.4th 414, 421-422 [discussing the general nature of pass-through payments].)

       However, in this case, the Agency (now the Successor Agency) is not paying any

additional money into the County's general fund pursuant to the subject agreements. Any

money transferred pursuant to the subject agreements is strictly for projects consistent

with the CRL. For example, the joint projects agreement repeatedly provides that any

expenditure under the agreement must benefit the GRP consistent with the CRL.

Similarly, the Agency found that the North Embarcadero improvements will benefit the

Centre City Redevelopment Project. (1AR ex. 8:69, ¶ 1.a)!



                                              19
       Therefore, because any tax increment transferred under the joint projects

agreements is limited to benefiting redevelopment consistent with the CRL and is not

paid into the County's general fund for any expenditure that the County may choose to

make, the funds transferred under the subject agreements do not constitute impermissible

additional payments under section 33607.

       Finally, GAG argues that public policy should support its position. However,

questions relating to public policy are to be addressed by the Legislature, not the courts.

(Los Angeles Unified School Dist. v. County of Los Angeles, supra, 181 Cal.App.4th at p.

427 "[I]t is not our province 'to second-guess the wisdom of legislative appropriations.

The forums for addressing this issue lie with the voters and the Legislature.'"].)

       D. Failure To Identify Specific Projects

       GAG contends that the joint projects agreement violates the CRL because it does

not specifically identify the joint projects that are the subject of the agreement. That

argument is unavailing for two reasons. First, this issue has been waived because neither

GAG nor any other entity or person raised that issue in the administrative hearings

conducted by the City and Agency. Second, this contention is not supported by law.

Under the CRL, joint public projects may be "consistent with" the redevelopment plan

without being specifically identified.

       1. Waiver

       No objection was made at the joint public hearing of the City Council and Agency

board that the joint projects agreement was unlawful because it failed to identify the

specific development projects that were going to be constructed. As we have noted, ante,

                                             20
a challenger in a validation case "must also show that the issues raised in the judicial

proceeding were raised at the administrative level. . . . [¶] 'The rule affords the public

agency an "opportunity to receive and respond to articulated factual issues and legal

theories before its actions are subjected to judicial review."'" (Evans v. City of San Jose,

supra, 128 Cal.App.4th at pp. 1136-1137.)

       GAG asserts that even if it did not exhaust this issue as to the City and Agency, it

did exhaust the issue as to the County. That contention is unavailing because GAG (or

another individual or entity) was obligated to raise and preserve the issue at all stages of

the administrative proceedings. (City of San Jose v. Operating Engineers Local Union

No. 3 (2010) 49 Cal.4th 597, 609 ["Exhaustion requires 'a full presentation to the

administrative agency upon all issues of the case and at all prescribed stages of the

administrative proceedings.'"].) Because the joint projects agreement was required to be

approved by the City/Agency and the County, GAG was required to raise this issue

before each approving body.

       2. Failure To Identify Specific Projects

       As we have noted, ante, GAG also asserts that the subject agreements violate the

CRL because they fail to identify any specific projects. We reject this contention.

       GAG's argument misapprehends the purpose of a redevelopment plan. A

redevelopment plan is not a blueprint for the construction of specific identified projects

on specific identified parcels of land in the project area. As the California Supreme Court

stated in In re Redevelopment Plan for Bunker Hill (1964) 61 Cal.2d 21, 52: "It appears

that a final [redevelopment] plan under the Community Redevelopment Law does not

                                             21
require an architectural plan complete with engineers' specifications; it contemplates,

rather, a comprehensive method or scheme of action, a way proposed to carry out within

the essential framework of the law a particular project of redevelopment."

       In County of Santa Cruz v. City of Watsonville (1985) 177 Cal.App.3d 831, 841

the Court of Appeal stated: "Thus, a redevelopment agency is unique among public

entities since in order to achieve its objective of eliminating blight it must rely upon

cooperation with the private sector. Redevelopment is also a process which occurs over a

period of years. These realities dictate that a redevelopment plan be written in terms that

enhance a redevelopment agency's ability to respond to market conditions, development

opportunities and the desires and abilities of owners and tenants. Such a plan then cannot

always outline in detail each project that a redevelopment agency will undertake during

the life of the plan. [Citations.] [¶] . . . . 'It cannot be seriously argued that a final plan

must be a compilation of blueprints or working drawings, representing final engineering

studies, primarily because the agency is not the one who does the building. The final

plan is not required to be precise from an engineering standpoint but only as reasonably

precise and detailed from a planning standpoint as may be expected in light of 'the

complexity and diversity of the conditions which will be encountered.'"

       A redevelopment plan is just that: a general plan for the redevelopment of

different types of identified projects. Here, the GRP provides for a wide variety of public

projects (in addition to private projects) designed to eliminate blight in the Grantville

Project area, as we have detailed, ante.



                                               22
       Therefore, GAG's contention that the joint projects agreement lacks any identified

projects is unavailing. As the court correctly found, the public projects that are the

subject of the joint projects agreement are adequately identified in the GRP and the

related Five-Year Plan.

       GAG asserts that defendants improperly found that the joint project may benefit a

neighborhood that is outside the neighborhood in which the joint project is located, rather

than solely the Grantville Project area. We reject this contention.

       First, the joint projects agreement requires that any proposed joint project benefit

the Grantville Project area. The Agency (now the Successor Agency) is obligated to

determine if the project proposed by the County "benefits the Grantville Redevelopment

Project Area."

       Further, defendants' findings were in accord with the provisions of former section

33445, subdivision (a)(1) (section 33445(a)(1)) as it existed at the time of the findings in

2008, which provided: "(a) Notwithstanding Section 33440, an agency may, with the

consent of the legislative body, pay all or a part of the value of the land for and the cost

of the installation and construction of any building, facility, structure, or other

improvement that is publicly owned either within or without the project area, if the

legislative body determines all of the following: [¶] (1) That the buildings, facilities,

structures, or other improvements are of benefit to the project area or the immediate

neighborhood in which the project is located, regardless of whether the improvement is

within another project area, or in the case of a project area in which substantially all of



                                              23
the land is publicly owned that the improvement is of benefit to an adjacent project area

of the agency." (Italics added.)

       Therefore, because defendants made the appropriate findings under section

33445(a)(1) as it is applicable to the joint projects agreement, GAG's challenge to that

finding lacks merit because those findings are final and conclusive. (§ 33445(b).)

       E. Alleged Use of Tax Increment for County Administration Center

       GAG asserts that the use of tax increment for improvements to the CAC violates

the CRL. GAG's argument is unavailing. First, the North Embarcadero agreement does

not provide for, or allow, funds to be used for the CAC building. Second, GAG failed to

raise this issue in the administrative proceedings, and therefore, as the trial judge

correctly concluded, the argument is waived.

     1. The North Embarcadero agreement funds were not intended for use on the
CAC building

       The North Embarcadero agreement does not authorize funds to be used to

construct/improve a county administration building. Pursuant to the North Embarcadero

agreement, the Agency (now the Successor Agency) will provide a total of $31.36

million in 39 annual payments to pay for the North Embarcadero Project Improvements.

       The North Embarcadero Project Improvements are described in exhibit B to the

agreement which provides, "'North Embarcadero Project Improvements' shall include

projects consistent with the County 'Waterfront Park' Plan and the California Community

Redevelopment Law, as they may be amended from time to time."




                                              24
          Thus, the provisions of the North Embarcadero agreement require compliance

with the CRL and only include projects related to the proposed Waterfront Park Plan, not

the CAC building itself.

          For example, the Waterfront Park Plan provides for a waterfront park on land

adjacent to and in the vicinity of the CAC building. The Waterfront Park Plan's purpose

is to "transform this land into an unparalleled waterfront park . . . ." The term "land"

refers to the surface parking lots on either side of the County building, not the building

itself.

          Section 33445(g) does not prohibit the use of tax increment to improve a public

park on County-owned land. It only prohibits using tax increment funds towards either a

new County administration building or rehabilitation of an existing County

administration building. Former Section 33445, subdivision (g)(1) (now section 33445,

subd. (e)(1)) provides: "Notwithstanding any other authority granted in this Section, an

agency shall not pay for, either directly or indirectly, with tax increment funds the

construction, including land acquisition, related site clearance, and design costs, or

rehabilitation of a building that is, or that will be used as, a city hall or county

administration building." (Italics added.)

          The improvements and facilities which are the subject of the North Embarcadero

agreement, as set forth in exhibit B, do not include any description that would expressly

or impliedly allow the funds to be used for the CAC building. Because the CRL

specifically prohibits the expenditure of Agency funds for the "construction or expansion

of a county administrative office," the North Embarcadero agreement does not permit the

                                              25
alleged illegal expenditure argued by GAG. Indeed, if the County expenditures under the

North Embarcadero agreement are inconsistent with the agreement, i.e., violate the CRL,

the Agency Director is authorized to withhold the funds.

       GAG's argument is based on selected references to a planning document for the

Waterfront Park Plan that describes possible enhancements to the CAC building itself.

However, none of those building projects are included in the list of projects in exhibit B

to the North Embarcadero agreement because such use would be inconsistent with CRL

and contrary to the intent of the North Embarcadero agreement.

       GAG thus ignores the relevant evidence and the North Embarcadero agreement in

asserting that it allows funding for the CAC building itself. By the explicit terms of the

North Embarcadero agreement, the funds may only be used to fund projects consistent

with the Waterfront Park Plan and the CRL. Using the transferred funds for a County

administration building would violate the CRL and thus it is prohibited by the terms of

the North Embarcadero agreement itself. Accordingly, GAG's argument that the North

Embarcadero agreement violates the CRL and section 33445 is unavailing.

       2. GAG failed to raise this issue at any public hearing

       As the trial court found, neither GAG nor any other entity or person raised this

issue in the administrative proceedings, therefore, the issue has been waived. However,

GAG asserts that exhausting administrative remedies as to this issue would have been

futile. We reject this contention.

       "The doctrine requiring exhaustion of administrative remedies is subject to

exceptions. [Citation.] Under one of these exceptions, '[f]ailure to exhaust

                                            26
administrative remedies is excused if it is clear that exhaustion would be futile.'

[Citations.] 'The futility exception requires that the party invoking the exception "can

positively state that the [agency] has declared what its ruling will be on a particular

case."'" (Coachella Valley Mosquito & Vector Control Dist. v. California Public

Employment Relations Bd. (2005) 35 Cal.4th 1072, 1080-1081.)

       Here, GAG never raised this issue before the City and Agency and, as discussed,

ante, exhaustion is required before all approving public entities. Further, there is nothing

in the administrative record that suggests that the public hearing was a sham or the result

a foregone conclusion. Rather, the public was allowed to speak freely about the proposed

agreements, and the members of the Board of Supervisors debated the agreements and

approved them by a split vote.

       Had GAG raised the issue at the County's public hearing, the record could have

been clarified to make clear that the North Embarcadero agreement does not permit the

use funds for construction, land acquisition, site clearance, design costs, or rehabilitation

of the CAC because the use of the funds must be consistent with the CRL

       Accordingly, GAG's "futility" exception argument lacks merit.




                                             27
                                    DISPOSITION

      The judgment is affirmed. Defendants shall recover their costs on appeal.


                                               NARES, Acting P. J.

WE CONCUR:


McINTYRE, J.


IRION, J.




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