San Diegans for Open Gov't v. City of San Diego

Decision Date20 November 2015
Docket NumberD067127
Citation195 Cal.Rptr.3d 133,242 Cal.App.4th 416
Parties SAN DIEGANS FOR OPEN GOVERNMENT, Plaintiff and Appellant, v. CITY OF SAN DIEGO et al., Defendants and Respondents.
CourtCalifornia Court of Appeals Court of Appeals

Briggs Law Corporation, Cory J. Briggs and Anthony N. Kim for Plaintiff and Appellant.

Jan I. Goldsmith, City Attorney, Daniel F. Bamberg, Assistant City Attorney, Meghan Ashley Wharton and Laura M. Depoister, Deputy City Attorneys, for Defendants and Respondents.

HUFFMAN, Acting P.J.

The issue in this appeal is whether a lease-back financing plan the City of San Diego (City) adopted to fund public infrastructure improvements violates state and local requirements that municipal indebtedness exceeding annual income and revenue be approved by a two-thirds vote of the electorate. (Cal. Const., art. XVI, § 18 (a); San Diego City Charter, art. VII, § 90(a); hereafter section 90(a).) San Diegans for Open Government (SDOG) contends the court erred by entering judgment against it in this reverse validation action on the ground the debt limitation provisions are inapplicable under Rider v. City of San Diego (1998) 18 Cal.4th 1035, 77 Cal.Rptr.2d 189, 959 P.2d 347 (Rider ) because the bonds will not be issued by the City, but by a separate public entity formed under a joint powers agreement. SDOG asserts Rider is factually distinguishable from this case in numerous respects, and thus it is inapplicable. SDOG also assigns error to several issues unrelated to Rider . We are unpersuaded by SDOG's positions, and thus we affirm the judgment.

FACTUAL AND PROCEDURAL BACKGROUND1

In 1958, the City created the Redevelopment Agency of the City of San Diego (Redevelopment Agency). In 1991, the City and the Redevelopment Agency formed a joint powers authority called the Public Facilities Financing Authority of the City of San Diego (Financing Authority), pursuant to the Joint Exercise of Powers Act (Gov.Code, § 6500 et seq. ). The Financing Authority is a separate public entity. (Gov.Code, §§ 6503.5, 6507.)

In 2011, legislation was enacted that required the dissolution of the state's redevelopment agencies. (Assem. Bill Nos. 26 & 27 (2011–2012 1st Ex. Sess.) enacted as Stats. 2011, 1st Ex. Sess. 2011–2012, chs. 5–6 (hereafter Assembly Bill 26 and Assembly Bill 27).)2 As of February 1, 2012, the Redevelopment Agency was dissolved. On that date, a successor agency (Successor Agency) the City established in conformance with Health and Safety Code section 34173, assumed the Redevelopment Agency's assets, rights and obligations, and became responsible for winding up its affairs. "A successor agency is a separate public entity from the public agency that provides for its governance and the two entities shall not merge." (Health & Saf.Code, § 34173, subd. (g).) The nine members of the San Diego City Council (City Council) serve as the Successor Agency's governing board. Further, the Successor Agency has an oversight board with seven members, two of whom the City appoints.

Effective January 1, 2013, the City, the Successor Agency, and the Housing Authority of the City of San Diego (Housing Authority) entered into a Third Amended and Restated Joint Exercise of Powers Agreement (Third JPA) to reconstitute the Financing Authority. The Housing Authority is a state agency created in conformance with the Housing Authorities Law (Health and Saf.Code, § 34200 et seq. ). A housing authority is a separate public entity. The governing body of the Housing Authority consists of the nine members of the City Council.

The Third JPA provides the agreement was made "for the purpose of ... financing of certain public capital facilities improvements...." It also provides: "The Bonds, together with the interest and premium, if any, thereon, shall not be deemed to constitute a debt of the City, the Successor Agency or the Housing Authority or pledge of the faith and credit of the City, the Successor Agency, [or] the Housing Authority.... The Bonds shall be only special obligations of the [Financing] Authority, and the [Financing] Authority shall under no circumstances be obligated to pay the Bonds or the respective project costs except from revenues and other funds pledged therefor." The Third JPA acknowledges that the Successor Agency "will terminate pursuant to State law at some future date and that a joint exercise of powers agreement must have at least two members."

In February 2014, the City Council adopted an ordinance that authorizes the Finance Authority's issuance of lease revenue bonds (2014A Bond Series) of up to $130 million (for a net of $120 million) under the Marks–Roos Local Bond Pooling Act of 1985 (Marks–Roos Act; Gov.Code, § 6584 et seq. ) to finance various public capital improvements or projects. The City Council also passed a resolution that identifies more than 20 projects to be funded by the bonds, including fire stations, a lifeguard station, libraries, sidewalks, and storm drains.

The 2014A Bond Series financing is based on a lease-back arrangement. The City owns properties that were already the subject of lease agreements between it and the Financing Authority, including a police vehicle maintenance facility, a City operations building, and the Evan V. Jones Parkade. Under an amended site lease, the City will lease these properties to the Financing Authority for nominal rent, and under an amended facilities lease, the Financing Authority will lease the properties back to the City for an amount equal to the annual debt service on the bonds.

SDOG brought a reverse validation action (Code Civ. Proc., § 860 et seq. ) against the City, the Successor Agency, the Housing Authority, and the Financing Authority.3 The complaint alleged the financing plan "is an artifice designed to circumvent" article XVI, section 18(a), of the California Constitution, which prohibits a city from "incur[ring] any indebtedness ... exceeding in any year the income and revenue provided for such year, without the assent of two-thirds of the qualified electors," and section 90(a), which imposes a similar two-thirds vote requirement.

The court denied SDOG any relief. It determined that Rider governs and under that opinion the debt limitation is inapplicable to the 2014A Bond Series financing because the Financing Authority is a separate public entity. The court disagreed with SDOG's argument that the Financing Authority is not legally autonomous, and thus its debt is actually a debt of the City.

DISCUSSION
ISubject Matter Jurisdiction

Preliminarily, we address the City's contention the judgment is void because the trial court lacked subject matter jurisdiction. Under Government Code section 6599, subdivision (a) the plaintiff in a validation action or reverse validation action is required to serve a copy of the complaint on the Attorney General and the Treasurer "by the first day of the publication of summons as required by Section 861 of the Code of Civil Procedure." Here, the summons was first published on April 4, 2014, and SDOG served the Attorney General and the Treasurer on July 11, 2014. The City moved for judgment on the pleadings, and the court denied the motion on the ground late service caused no harm. The Attorney General and the Treasurer were served three months before the hearing, and they had ample time to intervene but opted not to do so.4

" "Subject matter jurisdiction ... is the power of the court over a cause of action or to act in a particular way." " (Saffer, supra, 225 Cal.App.4th at p. 1248, 171 Cal.Rptr.3d 111.) " ‘Lack of jurisdiction in its most fundamental or strict sense means an entire absence of power to hear or determine the case, an absence of authority over the subject matter or the parties.’ " (People v. National Automobile and Casualty Ins. Co. (2000) 82 Cal.App.4th 120, 125, 97 Cal.Rptr.2d 858.) "When a court lacks jurisdiction in a fundamental sense, an ensuing judgment is void, and ‘thus vulnerable to direct or collateral attack at any time.’ " (People v. American Contractors Indemnity Co. (2004) 33 Cal.4th 653, 660, 16 Cal.Rptr.3d 76, 93 P.3d 1020.)

"Questions of subject matter jurisdiction are questions of law, which are reviewed de novo." (Tearlach Resources Limited v. Western States Internat., Inc. (2013) 219 Cal.App.4th 773, 780, 162 Cal.Rptr.3d 110.) Matters of statutory interpretation are also subject to de novo review. (Bean v. Pacific Coast Elevator Corp. (2015) 234 Cal.App.4th 1423, 1427, 185 Cal.Rptr.3d 63.)

A public agency may test the legal validity of certain of its acts by filing an in rem action within 60 days. (Code Civ. Proc., § 860.) If the public agency takes no action, "any interested person" may file a reverse validation action to challenge the validity of an act, within the same 60–day period. (Id., § 863.)

"[P]ublication is the primary means of notice in a validation case." (Katz v. Campbell Union High School Dist. (2006) 144 Cal.App.4th 1024, 1035, 50 Cal.Rptr.3d 839 (Katz ); Planning & Conservation League v. Department of Water Resources (2000) 83 Cal.App.4th 892, 921, 100 Cal.Rptr.2d 173 [jurisdiction over "interested parties" "may be had by publication of summons"].) "In a reverse validation action, the summons must be (1) in the prescribed form, (2) directed to all persons interested in the matter and to the public agency, and (3) published for the period and in the manner required by statute." (Protect Agricultural Land v. Stanislaus County Local Agency Formation Com. (2014) 223 Cal.App.4th 550, 559, 167 Cal.Rptr.3d 343 ; Code Civ. Proc., §§ 861, 861.1.)

"In a validation action the thing that is the subject of the action is the matter to be validated, i.e., the ordinance, resolution, or other action taken by the public agency. The only way for the court to acquire jurisdiction over the matter is to ensure that notice is given to all interested persons so that the resulting judgment can be conclusive as against them. [Citation.] Notice is provided by publishing the summons...

To continue reading

Request your trial
20 cases
  • Santa Clarita Org. for Planning & the Env't v. Castaic Lake Water Agency
    • United States
    • California Court of Appeals Court of Appeals
    • 28 Julio 2016
    ...perfects that jurisdiction by providing the proper type of constructive notice. (San Diegans for Open Government v. City of San Diego (2015) 242 Cal.App.4th 416, 428, 195 Cal.Rptr.3d 133 [“ ‘[f]ailure to publish a summons in accordance with the statutory requirements deprives the court of j......
  • RGC Gaslamp, LLC v. Ehmcke Sheet M, Inc.
    • United States
    • California Court of Appeals Court of Appeals
    • 23 Octubre 2020
    ...through 5 is moreover unnecessary for our decision on the appeals and cross-appeal. (See San Diegans for Open Government v. City of San Diego (2015) 242 Cal.App.4th 416, 432, fn. 6, 195 Cal.Rptr.3d 133.)7 RGC alleged in its complaint that Ehmcke completed work on the project in April 2017. ......
  • Cam-Carson, LLC v. Carson Reclamation Auth.
    • United States
    • California Court of Appeals Court of Appeals
    • 23 Agosto 2022
    ...for one thing, the City's control of the CRA is extensively alleged). San Diegans for Open Government v. City of San Diego (2015) 242 Cal.App.4th 416, 195 Cal.Rptr.3d 133 is another debt 298 Cal.Rptr.3d 496 limitation case, where the court found debt limitation provisions applicable to the ......
  • Orange Cnty. Soc. Servs. Agency v. B.O. (In re K.M.)
    • United States
    • California Court of Appeals Court of Appeals
    • 20 Noviembre 2015
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT