Filed 6/2/17
                              CERTIFIED FOR PUBLICATION




               IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
                               THIRD APPELLATE DISTRICT
                                         (Sacramento)
                                              ----



CITY OF GALT et al.,                                                C075897

                 Plaintiffs and Appellants,                     (Super. Ct. No.
                                                              34-2013-80001380-
        v.                                                       CUWMGDS)

MICHAEL COHEN, as Director, etc.,

                 Defendant and Respondent;

CALLANDER ASSOCIATES LANDSCAPE
ARCHITECTURE, INC.,

                 Real Party in Interest and Respondent.




       APPEAL from a judgment of the Superior Court of Sacramento County, Eugene
L. Balonon, Judge. Affirmed.

        Best Best & Krieger, Iris P. Yang, Kimberly E. Hood for Plaintiffs and Appellants.

       Kamala D. Harris and Xavier Becerra, Attorneys General, Douglas J. Woods,
Senior Assistant Attorney General, Mark R. Beckington, Susan K. Smith, and John W.
Killeen, Deputy Attorneys General, for Defendant and Respondent.

        No appearance for Real Party in Interest and Respondent.



                                               1
       After Governor Brown announced his intention to dissolve redevelopment
agencies, but before the legislation passed, City of Galt entered into an agreement (the
Cooperative Agreement) with its former redevelopment agency under which the former
redevelopment agency agreed to finance several parts of the redevelopment plan, totaling
more than $22,000,000. To obtain money for the financing, the former redevelopment
agency issued tax allocation bonds, which were to be repaid using tax increment revenue.
With the dissolution of redevelopment agencies discussed but still not signed into law,
City of Galt and its former redevelopment agency filed a complaint to validate the
Cooperative Agreement. No one responded to the complaint, so the trial court entered a
validation judgment.
       The Legislature and Governor eventually dissolved redevelopment agencies (the
Dissolution Law). The Dissolution Law, on its face, renders unenforceable any
agreement between a local agency and its former redevelopment agency (sponsor
agreements) during a specified period of time before dissolution took place (the freeze
component of the Dissolution Law). The Department of Finance (DOF) determined that
the Cooperative Agreement here is unenforceable under the freeze component. City of
Galt filed a petition for writ of mandate, but the trial court upheld DOF’s determination.
       On appeal, City of Galt contends: (1) the state must allow City of Galt to use the
proceeds from the tax allocation bonds to fund the Cooperative Agreement projects;
(2) the Cooperative Agreement is enforceable because it was the subject of a validation
judgment, and (3) equitable estoppel bars DOF from determining that the Cooperative
Agreement is unenforceable. None of City of Galt’s contentions has merit.
                                     BACKGROUND
       As background in this redevelopment dissolution case, we quote parts of the
Supreme Court’s decision in California Redevelopment Assn. v. Matosantos (2011) 53
Cal.4th 231 (Matosantos), which upheld the provisions of the Dissolution Law relevant to
this case:

                                             2
       “Assembly Bill[] 1X 26 . . . consist[s] of [two] principal components, codified as
new parts 1.8 [and] 1.85 . . . of division 24 of the Health and Safety Code. Part 1.8
([Health & Saf. Code,] §§ 34161 to 34169.5)[1] is the ‘freeze’ component: it subjects
redevelopment agencies to restrictions on new bonds or other indebtedness, new plans or
changes to existing plans, and new partnerships, including joint powers authorities (§§
34162 to 34165). Cities and counties are barred from creating any new redevelopment
agencies. (§ 34166.) Existing obligations are unaffected; redevelopment agencies may
continue to make payments and perform existing obligations until other agencies take
over. (§ 34169.) Part 1.8’s purpose is to preserve redevelopment agency assets and
revenues for use by ‘local governments to fund core governmental services’ such as fire
protection, police, and schools. (§ 34167, subd. (a).)
       “Part 1.85 (§§ 34170 to 34191) is the dissolution component. It dissolves all
redevelopment agencies (§ 34172) and transfers control of redevelopment agency assets
to successor agencies, which are contemplated to be the city or county that created the
redevelopment agency (§§ 34171, subd. (j), 34173, 34175, subd. (b)). Part 1.85 requires
successor agencies to continue to make payments and perform existing obligations. (§
34177.) However, unencumbered balances of redevelopment agency funds must be
remitted to the county auditor-controller for distribution to cities, the county, special
districts, and school districts in proportion to what each agency would have received
absent the redevelopment agencies. (See §§ 34177, subd. (d), 34183, subd. (a)(4),
34188.) Proceeds from redevelopment agency asset sales likewise must go to the county
auditor-controller for similar distribution. (§ 34177, subd. (e).) Finally, tax increment
revenues that would have gone to redevelopment agencies must be deposited in a local
trust fund each county is required to create and administer. (§§ 34170.5, subd. (b),




1      Further undesignated section references are to the Health and Safety Code.

                                              3
34182, subd. (c)(1).) All amounts necessary to satisfy administrative costs, pass-through
payments, and enforceable obligations will be allocated for those purposes, while any
excess will be deemed property tax revenue and distributed in the same fashion as
balances and assets. (§§ 34172, subd. (d), 34183, subd. (a).)” (Matosantos, supra, 53
Cal.4th at pp. 250-251.)
       “During the freeze, redevelopment agencies were authorized to continue
distributing tax increment pursuant to enforceable obligations, the definition of which
included ‘sponsor agreements’ between a former redevelopment agency and its sponsor
agency [such as City of Galt and the former redevelopment agency here]. (§§ 34167,
subd. (d), 34169, subd. (a)). Postdissolution, however, the definition of ‘enforceable
obligations’ entitled to tax increment from the successor agencies excluded all sponsor
agreements. (§§ 34171, subd. (d)(2), 34177, subd. (a).)” (City of Brentwood v. Campbell
(2015) 237 Cal.App.4th 488, 494 (Brentwood), original italics, fn. omitted.)
                           TIMELINE OF RELEVANT EVENTS
       Retroactive to December 31, 2010 – Proceeds from bonds issued by a former
redevelopment agency after this date may not be used by the successor agency if they are
not encumbered by an enforceable obligation. (§ 34191.4, subd. (c)(2); statute eff. June
27, 2012.)
       Retroactive to January 1, 2011 – After this date, transfers of assets from the
former redevelopment agency to the sponsoring agency were “deemed not to be in the
furtherance of the Community Redevelopment Law and [] thereby unauthorized.”
(§ 34167.5; statute eff. June 29, 2011.)
       January 6, 2011 – City of Galt entered into an agreement with real party in
interest Callander Associates Landscape Architecture, Inc. (the Callander Agreement).
Callander agreed to provide design, engineering, and other services on the Central Galt
Corridor Rehabilitation and Union Pacific Railroad (UPRR) Parking Lot projects in



                                             4
exchange for $326,029, with some additional compensation for optional services.      The
former redevelopment agency was not a party to this agreement.
         January 18, 2011 – Governor Brown proposed eliminating redevelopment
agencies as a partial means of closing the state’s projected operating deficit.
(Matosantos, supra, 53 Cal.4th at p. 250.)
         January 21, 2011 – City of Galt and its former redevelopment agency entered into
a Cooperative Agreement under which the City agreed to complete nine redevelopment
projects and the former redevelopment agency agreed to reimburse City of Galt a total of
$22,015,000 for those projects. The following projects were specified: Central Galt
Corridor Improvements ($2,000,000), UPRR Parking Lot and Landscaping ($1,000,000),
Simmerhorn Commercial Property Acquisition ($3,000,000), Simmerhorn Infrastructure
Improvements ($10,100,000), Industrial Way/Live Oak Road Improvements
($1,000,000), SR 99 Water Crossing Improvement ($500,000), Old Town Property
Acquisitions ($1,000,000), Theater Property Acquisition and Infrastructure
Improvements ($2,000,000), and Brewster Building Rehabilitation ($1,415,000). Further
details of the Cooperative Agreement are provided below.
         February 1, 2011 – The board of directors of the former redevelopment agency
passed a resolution authorizing the former redevelopment agency to issue up to $17
million in tax allocation bonds to pay for redevelopment activities in Galt. The
indentures would provide that the bond indebtedness would be paid from tax revenues.
         March 1, 2011 – The former redevelopment agency issued tax allocation bonds in
the amounts of $7,720,000 (Series A) and $6,005,000 (Series B) under an Indenture of
Trust.
         March 14, 2011 - City of Galt and the former redevelopment agency filed a
complaint for validation judgment of the Cooperative Agreement between the City and
the former redevelopment agency.



                                              5
       June 29, 2011 – The Dissolution Law was enacted, as described above. (Stats.
2011, 1st Ex. Sess. 2011-2012, ch. 5X.)
       October 26, 2011 – The superior court entered judgment on the complaint for
validation judgment, declaring the validity of the “Cooperative Agreement Between the
Redevelopment Agency of the City of Galt and the City of Galt.”
       December 29, 2011 – The California Supreme Court upheld the Dissolution Law
as constitutional. (Matosantos, supra, 53 Cal.4th 231.)
       February 1, 2012 – Redevelopment agencies in California were dissolved under
the Dissolution Law as reformed in Matosantos. (Matosantos, supra, 53 Cal.4th at p.
275.) City of Galt became the successor agency of the Redevelopment Agency of the
City of Galt.
       May 15, 2012 – City of Galt, as successor agency, adopted Recognized Obligation
Payment Schedules (ROPS I & II), which included the Callander Agreement and project
delivery costs under the Cooperative Agreement as enforceable obligations to be paid
with tax allocation bond proceeds, for the periods from January 2012 to June 2012 and
from July 2012 to December 2012. The oversight board of the former redevelopment
agency approved ROPS I and II. DOF approved ROPS I and II, with exceptions to that
approval not relevant here.
       June 28, 2012 – The oversight board of the former redevelopment agency
authorized use of the tax allocation bond proceeds to fund projects in Galt. DOF did not
object to this action by the oversight board.
       August 23, 2012 – City of Galt submitted ROPS III to DOF for the period from
January 2013 to June 2013, listing the tax allocation bonds and the Cooperative
Agreement as obligations of the former redevelopment agency. Separately, ROPS III
listed the following as enforceable obligations to be paid out of bond proceeds:
(1) $118,518 owed to Callander and (2) $7,374,530 payable to “various.”



                                                6
       December 18, 2012 – DOF determined that (1) the Callander Agreement was not
an enforceable obligation of the former redevelopment agency because the former
redevelopment agency was not a party to the contracts between City of Galt and
Callander and (2) the “project delivery costs” under the Cooperative Agreement were not
enforceable obligations because there were no contracts in place for the various projects.
       January 30, 2013 – City of Galt, on its own behalf and as successor agency of the
redevelopment agency, filed a petition for writ of mandate and complaint for injunctive
relief seeking a reversal of the determinations of DOF with respect to the Cooperative
Agreement and other contracts relating to redevelopment projects.
       October 28, 2013 – The trial court entered judgment in favor of DOF, denying the
petition for writ of mandate. On the issues relevant to this appeal, the court held:
    Issuance of the tax allocation bonds did not create enforceable obligations with
       respect to the projects to be funded by the bond proceeds.
    City of Galt’s claim that DOF’s denial of the plan to use bond proceeds to pay for
       the projects is an impairment of contracts is premature.
    “Project delivery costs” under the Cooperative Agreement are not enforceable
       obligations.
    The Callander Agreement is not an enforceable obligation.
    DOF’s denial of proposed enforceable obligations related to the Cooperative
       Agreement, which was the subject of the validation judgment, did not violate the
       separation of powers doctrine.
    DOF is not equitably estopped from determining that the items proposed by City
       of Galt are not enforceable obligations.




                                             7
                                        DISCUSSION
                                             I
                                    Use of Bond Proceeds
       City of Galt contends that the trial court erred in sustaining DOF’s determination
concerning the use of bond proceeds to pay for Cooperative Agreement projects
(including to meet the obligations of City of Galt on the Callander Agreement). We
conclude the trial court did not err.
       A.       Bonds as Enforceable Obligations Argument
       The Dissolution Law includes as enforceable obligations “[b]onds . . . , including
the required debt service, reserve set-asides, and any other payments required under the
indenture or similar documents governing the issuance of the outstanding bonds of the
former redevelopment agency.” (§ 34171, subd. (d)(1)(A).) City of Galt argues that,
under this provision, not only the payment of the bond debt itself is an enforceable
obligation but also payments to fulfill the bond covenants. Specifically, City of Galt
contends that the projects named in the Cooperative Agreement and meant to be financed
with the bond proceeds are also enforceable obligations under section 34171, subdivision
(d)(1)(A). We conclude that the Dissolution Law does not support this interpretation.
       There is no dispute that tax increment revenue can be used to pay the enforceable
obligation of debt service on the tax allocation bonds. We deal in this part of the
discussion only with whether the Cooperative Agreement projects also became
enforceable obligations by virtue of the intention of the former redevelopment agency to
use the bond proceeds to finance the Cooperative Agreement projects. The simple
answer is no.
       City of Galt contends: (1) the plain language of the Dissolution Law “makes the
bond covenants, not just the debt service of the bonds, an enforceable obligation” and
(2) DOF improperly applied a statute that was not in effect at the time the tax allocation
bonds were issued. Neither contention has merit.

                                             8
       First, the plain language of the Dissolution Law does not support a finding that the
Cooperative Agreement projects became enforceable obligations because the former
redevelopment agency intended to finance those projects from the bond proceeds. City of
Galt argues that the language of the statute includes such projects as enforceable
obligations, but it does not.
       As quoted above, section 34171, subdivision (d)(1)(A) makes payment on the debt
service of bonds an enforceable obligation. Also included as enforceable obligations are
“any other payments required under the indenture.” (§ 34171, subd. (d)(1)(A).) But this
language is unhelpful to City of Galt. Although the official statement accompanying the
bond indenture mentions the Cooperative Agreement projects, it does not make them
enforceable obligations. As recounted in City of Galt’s brief, the official statement
provided: “A portion of the net proceeds of the Bonds will be used to pay all or a portion
of the costs of financing redevelopment activities that are of benefit to the Project Area.
Actual projects to be financed may vary based upon various considerations to be made by
the Agency.” In other words, the official statement accompanying the bond indenture
provided that bond proceeds would be used in as-yet-to-be-determined ways and subject
to future decisions of the former redevelopment agency. Therefore, on its face, the
official statement did not require the former redevelopment agency to use bond proceeds
to fund any particular project.
       Also section 34177, subdivision (i), cited by City of Galt, does not turn any project
for which bond proceeds would have been used into an enforceable obligation. That
subdivision, in part, provides that successor agencies are required to “[c]ontinue to
oversee development of properties until the contracted work has been completed or the
contractual obligations of the former redevelopment agency can be transferred to other
parties. Bond proceeds shall be used for the purposes for which bonds were sold unless
the purposes can no longer be achieved, in which case, the proceeds may be used to
defease the bonds.” (§ 34177, subd. (i), italics added.) As we have previously held with

                                              9
respect to this provision, “[s]ection 34177 details the obligations of the successor agency;
it does not define ‘enforceable obligations.’ We do not read this provision on the duties
of a successor agency to enlarge and supersede the specific definition of an enforceable
obligation in section 34171. [Citation.] Here, the purpose for which the [tax allocation
bonds] were sold ‘can no longer be achieved’ because it is prohibited by the enactment of
the dissolution law. Therefore, there is no violation of section 34177, subdivision (i).”
(City of Petaluma v. Cohen (2015) 238 Cal.App.4th 1430, 1440.)
       And second, City of Galt’s suggestion that DOF improperly applied the
Dissolution Law is unconvincing. City of Galt observes that one of the statutes cited by
DOF to find that the projects mentioned in the official statement of the bond indenture
were not enforceable obligations was passed after the issuance of the bonds, and City of
Galt claims that there is no evidence that the Legislature intended for that statute to apply
retroactively. We conclude the statute clearly applies, even though it was enacted after
the tax allocation bonds were issued.
       Former section 34191.4, subdivision (c) was enacted as part of Assembly Bill No.
1484 (2011-2012 Reg. Sess.), after the Supreme Court upheld the Dissolution Law in
Matosantos. That statute provided that proceeds from bonds issued on or before
December 31, 2010, “shall be used for the purposes for which the bonds were sold.”2
(Stats. 2012, ch. 26, § 35, italics added.) The implication, of course, is that proceeds
from bonds issued after December 31, 2010, are not to be used for the purposes for which
the bonds were issued. Citing precedent that statutes are normally applied only
prospectively (see Quarry v. Doe I (2012) 53 Cal.4th 945, 955; see also City of
Emeryville v. Cohen (2015) 233 Cal.App.4th 293, 308 [“ ‘ “statute may be applied



2      Former section 34191.4, subdivision (c) was amended in 2015. (Stats. 2015, ch.
325, § 21.) The parties have not suggested that this amendment changes DOF’s
application of the law to this case.

                                             10
retroactively only if it contains express language of retroactivity or if other sources
provide a clear and unavoidable implication that the Legislature intended retroactive
application” ’ ”]), City of Galt claims this provision should not be applied to the tax
allocation bonds, which were issued before Assembly Bill No. 1484 took effect. To the
contrary, the reach of the statute was clearly stated: it approved use of “bonds issued on
or before December 31, 2010” for the purpose for which the bonds were issued. This
specific reference to the date of bond issuance in the statute evinces the Legislature’s
intent concerning the application of the provision, whether retroactive or prospective.
(City of Emeryville v. Cohen, supra, 233 Cal.App.4th at p. 310.) Therefore, the argument
that the Legislature did not intend for the statute to operate retroactively is without merit.
       B.     Impairment of Contracts
       City of Galt contends that not allowing it to use the tax allocation bond proceeds
to fund the Cooperative Agreement projects unconstitutionally impairs contracts, namely
the obligations to the bondholders. The contention is without merit because (1) City of
Galt has no standing to raise the argument and (2) there is no impairment of any
obligation. The bondholders will be paid as promised.
       “No State shall . . . make any . . . Law impairing the Obligation of Contracts . . . .”
(U.S. Const., art. I, § 10, cl. 1.) And a “law impairing the obligation of contracts may not
be passed.” (Cal. Const., art. I, § 9.)
       City of Galt’s argument is worded in a way that leaves doubt concerning whose
constitutional rights are being discussed, whether it is City of Galt’s or the bondholder’s.
If the constitutional rights are City of Galt’s, then it has no standing because a
municipality may not complain that the state is impairing its contract. (Star-Kist Foods,
Inc. v. County of Los Angeles (1986) 42 Cal.3d 1, 5-6.) If the constitutional rights are the
bondholders’, then City of Galt has no standing to assert the rights of others. (Amador
Valley Joint Union High Sch. Dist. v. State Bd. of Equalization (1978) 22 Cal.3d 208,
239-242.)

                                              11
       In any event, even if City of Galt had standing to complain that the rights of the
bondholders were being violated, the argument is without merit. City of Galt makes no
attempt to establish that bondholders will not be paid under the terms of the bonds.
Instead, City of Galt claims that “DOF’s rejection of the Validation Judgment as an
enforceable obligation, and its determination that the [tax allocation bond] proceeds
cannot be used to fund the Cooperative Agreement Projects specified in the Validation
Judgment” “impermissibly results in an impairment of contract.” More specifically, City
of Galt argues that, because the law existing at the time the tax allocation bonds were
issued allowed issuance of the bonds to fund the Cooperative Agreement projects (see
§ 34177, subd. (i) [“Bond proceeds shall be used for the purposes for which bonds were
sold . . . .”]), DOF could not apply the amended law disallowing the use of the funds for
the Cooperative Agreement projects (see § 34191.4, subd. (c) [enacted after issuance of
tax allocation bonds]). In support of this argument, City of Galt cites cases for the
proposition that the laws in effect at the time bonds are issued define the contractual
obligations under the bonds. (See, e.g., Sutter Basin Corp. v. Brown (1953) 40 Cal.2d
235, 241 [government cannot impair fulfillment of bond obligations under laws in
existence at time of bond issuance].)
       The defect in City of Galt’s argument is that it does not establish that the former
redevelopment agency had an obligation to the bondholders to use the bond proceeds to
fund the Cooperative Agreement projects. The obligation to the bondholders is to make
the payments required. Citing a statute requiring the former redevelopment agency to use
bond proceeds for the purposes for which the bonds were sold does not logically or
legally create a duty to the bondholders. Since the former redevelopment agency had no
contractual obligation to the bondholders to use the bond proceeds to fund the
Cooperative Agreement projects, DOF did not impair those contracts (the bond
agreements) when it determined that the bond proceeds could not be used to fund the
Cooperative Agreement projects.

                                             12
       C.     Legislative Intent
       City of Galt also contends that the “overarching goals regarding the wind down of
redevelopment agencies under the Dissolution Act” support its argument that the tax
allocation bond proceeds should be used to fund the Cooperative Agreement projects.
Those goals include (1) payment of enforceable obligations and (2) maximizing value for
taxing entities. The contention is without merit because (1) the Cooperative Agreement
projects are not enforceable obligations and (2) the plain language of the law prevails
over conceptions concerning the overarching goals of the Dissolution Law.
       As we discussed above, the Cooperative Agreement did not create enforceable
obligations. Neither did the validation judgment.
       Also, City of Galt fails to establish that the “overarching goals” of the Dissolution
Law should prevail over the specific language of the statute. “[W]e are concerned with
giving effect to the specific language of a specific statute, not an overarching policy
penumbra.” (Brentwood, supra, 237 Cal.App.4th at p. 501.)
       City of Galt cites Dissolution Law statutes providing that (1) oversight boards are
intended to operate for the best interests of the taxing entities (§§ 34179, subd. (i); 34181,
subds. (d) & (e)) and (2) successor agencies should act in a manner to maximize value
and enforce the rights of the taxing entities while overseeing projects until contracted
work is completed (§ 34177, subds. (e), (f) & (i)).
       None of these statutes contradicts the implication contained in former section
34191.4, subdivision (c) that proceeds from bonds issued after December 31, 2010, are
not to be used for the purposes for which the bonds were sold. (Stats. 2012, ch. 26, § 35.)
A finding that the Legislature intended for bond proceeds to be used for the purposes for
which the bonds were sold regardless of when the bonds were sold would render
meaningless former section 34191.4, subdivision (c), which provides that the proceeds
from bonds sold on or before December 31, 2010, “shall be used for the purposes for
which the bonds were sold.” (Stats. 2012, ch. 26, § 35.)

                                             13
       In summary, the Cooperative Agreement projects (or the “project delivery costs,”
as referred to by the parties) were not enforceable obligations of the former
redevelopment agency under the Dissolution Law, and DOF did not misapply the law.
                                              II
                                    Validation Judgment
       City of Galt contends that, because it obtained a judgment validating the
Cooperative Agreement with the former redevelopment agency, the Cooperative
Agreement projects are enforceable obligations. We conclude that, even assuming that
we must give effect to the judgment validating the Cooperative Agreement, the
Cooperative Agreement, by itself, did not give rise to enforceable obligations, and the
Dissolution Law prohibits creation of new enforceable obligations. Therefore, DOF
acted properly in rejecting City of Galt’s request to use the tax allocation bond proceeds
to complete the Cooperative Agreement projects.
       Given this conclusion, we need not consider whether (1) the validation judgment
is valid and entitled to res judicata and (2) the Dissolution Law violated the separation of
powers doctrine if it had the effect of invalidating the validation judgment. As to those
further considerations, we express no opinion.
       A “validation judgment forecloses any claims that attack the validity of the
[agreement] or its terms. Code of Civil Procedure section 870, subdivision (a) provides
in pertinent part that a validation judgment ‘if no appeal is taken, or if taken and the
judgment is affirmed, shall, notwithstanding any other provision of law . . . become and
thereafter be forever binding and conclusive, as to all matters therein adjudicated or
which at that time could have been adjudicated, against the agency and against all other
persons, and the judgment shall permanently enjoin the institution by any person of any
action or proceeding raising any issue as to which the judgment is binding and
conclusive.’ (Italics added.) ‘A validation action implements important policy
considerations. “[A] central theme in the validating procedures is speedy determination

                                             14
of the validity of the public agency’s action.” [Citation.] “The text of section 870 and
cases which have interpreted the validation statutes have placed great importance on the
need for a single dispositive final judgment.” [Citation.] The validating statutes should
be construed so as to uphold their purpose, i.e., “the acting agency’s need to settle
promptly all questions about the validity of its action.” [Citation.]’ [Citation.]” (Macy v.
City of Fontana (2016) 244 Cal.App.4th 1421, 1433 (Macy), original italics.)
       We may give full effect to the validation judgment without finding that DOF erred
because the Cooperative Agreement did not create enforceable obligations. Careful
consideration of the Cooperative Agreement reveals only an agreement that future
contracts would be created to complete the Cooperative Agreement projects. City of Galt
agrees that future contracts would be necessary to accomplish the Cooperative
Agreement projects. It writes: “The Cooperative Agreement . . . is an executory contract
between the [former redevelopment agency] and the City [of Galt], which contemplates
execution of additional agreements between the City and third parties for the projects
specified for which the [former redevelopment agency] promised to reimburse the City.”
City of Galt continues: “In other words, the Validation Judgment validated the
Cooperative Agreement and the Projects specified in the Cooperative Agreement.
Agreements to carry out projects covered by the Validation Judgment are part and parcel
of that Validation Judgment. To hold otherwise would render the Validation Judgment
and Cooperative Agreement meaningless.”
       The flaw in this argument is where City of Galt makes the jump from the
Cooperative Agreement being validated by the validation judgment to the Cooperative
Agreement projects (and the agreements necessary to accomplish those projects) being
validated by the validation judgment. The judgment did not validate the projects or any
future agreements. The validation judgment is conclusive and binding as to the
Cooperative Agreement, but not as to any other contracts.



                                             15
       “The distinction between an executed and executory contract is defined in Civil
Code section 1661 as follows: ‘An executed contract is one, the object of which is fully
performed. All others are executory.’ ‘In an executory contract some act remains to be
done, while in an executed contract everything is completed at the time of the agreement
without any outstanding promise calling for fulfillment by the further act of either party.’
[Citations.]” (Branche v. Hetzel (1966) 241 Cal.App.2d 801, 807-808.)
       The Cooperative Agreement essentially contained a wish list of projects and the
amount the former redevelopment agency was willing to put toward those projects. It
was an attempt to commit money to as-yet amorphous plans to continue redevelopment in
Galt despite Governor Brown’s intent, later executed in the Dissolution Law, to dissolve
redevelopment agencies and use tax increment revenue for the benefit of the taxing
entities. (Matosantos, supra, 53 Cal.4th at p. 251; see also Macy, supra, 244 Cal.App.4th
at pp. 1431-1432.)
       The Cooperative Agreement did not commit funds obtained by issuing the tax
allocation bonds; indeed, the Cooperative Agreement did not mention issuance of tax
allocation bonds or identify a source of money with which the former redevelopment
agency intended to finance further redevelopment in Galt.
       City of Galt complains that the Dissolution Law cannot interfere with the projects
proposed in the Cooperative Agreement. But City of Galt’s statement that “[t]o hold
otherwise would render the Validation Judgment and Cooperative Agreement
meaningless” provides no legal weight to its argument. The effect of the Dissolution
Law is to dissolve redevelopment as we know it and prevent the creation of future
enforceable obligations under the former law. The Legislature had authority to do that.
(Matosantos, supra, 53 Cal.4th at p. 262.) While we agree that the inability to enter into
future agreements to accomplish the Cooperative Agreement projects renders the
Cooperative Agreement meaningless, City of Galt’s beef is with the Legislature and the
Governor, not with us. The Legislature took away the means and ability to complete the

                                             16
Cooperative Agreement projects, at least to the extent City of Galt does not find some
other way to finance those projects.
         City of Galt argues the Cooperative Agreement was sufficient to bind the former
redevelopment agency to pay for the future projects. It writes: “Such agreements have
long been recognized as creating a valid indebtedness or obligation of redevelopment
agencies.” For this proposition, City of Galt cites California Supreme Court precedent
that “ ‘indebtedness,’ ” for the purpose of binding a redevelopment agency,
“ ‘encompasses “obligations which are yet to become due . . . .” ’ ” (Marek v. Napa
Community Redevelopment Agency (1988) 46 Cal.3d 1070, 1081 (Marek).)
         Marek does not help City of Galt. In that case, the redevelopment agency entered
into an executory contract with a developer to convert the downtown area of Napa into a
shopping district. The plan was to be financed with tax increment revenue. However, the
county auditor claimed that the executory contract did not constitute an “indebtedness”
under redevelopment law such that tax increment revenue could be disbursed. (Marek,
supra, 46 Cal.3d at p. 1083.) The Supreme Court concluded that the term “indebtedness”
in the redevelopment law should be construed broadly to include such executory
contracts (including obligations yet to become due) in order to accomplish the intent of
the law to spend tax increment revenue on redevelopment projects. (Id. at pp. 1081-1082,
1087.)
         Here, we must determine whether the Cooperative Agreement projects are
enforceable obligations under the Dissolution Law, not under the former redevelopment
statutes. The obvious shift in legislative intent is that tax increment revenue is to be
preserved for taxing entities to the extent it is not necessary to fund current enforceable
obligations of the former redevelopment agency. With this legislative intent in mind,
there is no good reason to construe “enforceable obligation” broadly to include future
contractual obligations taken on in furtherance of an executory contract.



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       In Marek, the court defined “indebtedness,” which did not have a clear definition
in the redevelopment statutes. On the other hand, the Dissolution Law includes a
definition of “indebtedness.” (§ 34171, subd. (e).)3 However, City of Galt does not cite
that definition but instead argues that the broad definition in Marek should be applied.
The text of the Dissolution Law does not require the broad interpretation of Marek and
does not refer to future obligations. The Supreme Court’s decision in Marek, construing
the former redevelopment statutes and utilizing the former legislative intent, does not
require City of Galt’s broad interpretation of “indebtedness” here. (See Matosantos,
supra, 53 Cal.4th at p. 258 [citing Marek as representation of former legislative intent].)
       We therefore conclude that the validation judgment does not require a finding in
this litigation that the Cooperative Agreement projects and the obligations to be incurred
in future contracts to complete those projects are enforceable obligations.
                                             III
                                    Equitable Estoppel
       City of Galt contends that DOF must be equitably estopped from challenging the
use of the proceeds from the tax allocation bonds to fund the Cooperative Agreement
projects because (1) DOF did not challenge the resolution of the oversight board
authorizing such use of the bond proceeds and (2) DOF did not object to ROPS I and
ROPS II, which included use of the bond proceeds to fund the Cooperative Agreement
projects. To the contrary, City of Galt’s equitable estoppel argument fails because
(1) any reliance on DOF’s failure to object to the use of the bonds proceeds was


3       “ ‘Indebtedness obligations’ means bonds, notes, certificates of participation, or
other evidence of indebtedness, issued or delivered by the redevelopment agency, or by a
joint exercise of powers authority created by the redevelopment agency, to third-party
investors or bondholders to finance or refinance redevelopment projects undertaken by
the redevelopment agency in compliance with the Community Redevelopment Law (Part
1 (commencing with Section 33000)).” (§ 34171, subd. (e).) Indebtedness is included in
enforceable obligations. (§ 34179.5, subd. (b)(2).)

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unreasonable and (2) application of equitable estoppel in this circumstance would
contravene public policy.
       We note that City of Galt is not arguing that DOF is statutorily prohibited from
challenging the use of the bond proceeds to fund the Cooperative Agreement projects
because DOF did not challenge the oversight board’s resolution or the inclusion of the
Cooperative Agreement projects in the earlier ROPS. Instead, City of Galt argues that
DOF should be equitably estopped from challenging the use of the bond proceeds
because DOF failed to make its objection to the use of bond proceeds earlier.
       “The equitable relief of estoppel requires proof that the opposing party was aware
of the facts and intended reliance on its conduct (or induced a reasonable reliance), that
the party asserting estoppel was ignorant of the true facts, and that the party asserting
estoppel in fact relied on the opposing party’s conduct to its own detriment; in addition, a
party cannot assert estoppel against a government entity if it would nullify a strong rule
of public policy. [Citation.]” (Brentwood, supra, 237 Cal.App.4th at p. 504, italics
added.)
       In Brentwood, we rejected the claim that DOF was equitably estopped from
rejecting an asserted enforceable obligation that had been approved in prior ROPS
submitted to DOF because any reliance on the part of the local agency was unreasonable.
Since our discussion in Brentwood is pertinent here, we quote it:
       “The logic supporting Brentwood’s claim of estoppel is strained. The entirety of
the argument on this point asserts that Brentwood ‘reasonably relied’ on the failure of the
Department to dispute the listing of PIA [public improvement agreement] projects in
ROPS I and II as enforceable agreements (or the inclusion of actual payments made for
PIA projects in ROPS III) ‘to move forward with the projects’ (by which we assume
Brentwood means it entered into the construction contracts with third parties).
       “This argument founders on the reasonability of the reliance on the Department’s
previous failure to raise any objection to the inclusion of PIA projects as enforceable

                                             19
obligations. As noted above, in its previous determination letters involving ROPS I to
ROPS III, the Department each time informed Brentwood that past approvals would not
prevent it from revisiting the validity of including an item on a future ROPS. If
Brentwood had wanted an ironclad guarantee that approval of an enforceable obligation
would be ongoing, it had the statutory remedy of petitioning the Department for a ‘final
and conclusive’ determination of approval for subsequent payments for that enforceable
obligation. (§ 34177.5, subd. (i).) Given the Department’s express reservation of rights
and the existence of a statutory remedy to achieve the same result as the estoppel, what
Brentwood now urges as reliance, after the fact, is not reasonable. Given the absence of
this element, we do not need to consider whether application of estoppel in the present
case would nullify public policy.” (Brentwood, supra, 237 Cal.App.4th at pp. 504-505,
fn. omitted.)
       The same absence of reasonableness defeats City of Galt’s claim of equitable
estoppel. First, City of Galt did not avail itself of the statutory means of obtaining a
“final and conclusive” determination of approval for subsequent payments for the
proposed enforceable obligation. (§ 34177.5, subd. (i).) And second, City of Galt’s
efforts, starting with entering into the Cooperative Agreement and continuing through
obtaining the validation judgment, came after Governor Brown revealed that
redevelopment as we knew it was in peril. In other words, City of Galt saw the writing
on the wall (end of tax increment financing for redevelopment) and tried to devise a plan
to avoid it. That the plan was not successful in light of the state’s authority over
redevelopment should not surprise City of Galt.
       Another reason to reject City of Galt’s equitable estoppel argument is that it would
nullify a strong rule of public policy, namely, that tax increment revenue should be
released to local taxing entities for use by “local governments to fund core governmental
services” such as fire protection, police, and schools. (§ 34167, subd. (a).). This public
policy, as determined by the Legislature, would be unjustifiably nullified if local agencies

                                             20
were allowed to cite earlier actions of DOF, which made preliminary and perhaps
unstudied decisions, to claim that the public policy decisions of the Legislature cannot be
given effect.
       DOF is not equitably estopped from challenging the use of the bond proceeds for
the Cooperative Agreement projects.
                                      DISPOSITION
       The judgment is affirmed. The Department of Finance is awarded its costs on
appeal. (Cal. Rules of Court, rule 8.278(a).)



                                                       NICHOLSON             , Acting P. J.



We concur:



      ROBIE                 , J.




      MURRAY                , J.




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