Downey Cares v. Downey Community Development Commission

196 Cal. App. 3d 983, 242 Cal. Rptr. 272, 1987 Cal. App. LEXIS 2394
CourtCalifornia Court of Appeal
DecidedDecember 7, 1987
DocketB018578
StatusPublished
Cited by42 cases

This text of 196 Cal. App. 3d 983 (Downey Cares v. Downey Community Development Commission) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Downey Cares v. Downey Community Development Commission, 196 Cal. App. 3d 983, 242 Cal. Rptr. 272, 1987 Cal. App. LEXIS 2394 (Cal. Ct. App. 1987).

Opinion

Opinion

ASHBY, J.

—The Downey Community Development Commission and City of Downey appeal from a judgment granting a peremptory writ of mandate invalidating an ordinance of the City of Downey which amended the city’s 1978 redevelopment plan.

In 1978 the City of Downey adopted a redevelopment plan involving a 116-acre project area. On July 10, 1984, the city council adopted, by a three-to-two vote, ordinance No. 759, which amended tfie 1978 plan by adding another 386 acres in an area known as the Firestone Corridor. Plaintiffs Downey Cares and Paul Sarvis, opponents of the amendment, filed this action, challenging the validity of the amendment on numerous grounds. Andrews Rancho del Norte, Andrews Rancho del Sur, David Logan and Anthony Lavier, who are other affected property owners, were nominally defendants (hereinafter the Andrews-Logan defendants) but aligned themselves with plaintiffs in opposing the amendment, and urged various grounds for invalidating the amendment.

The trial court reached only two of the grounds raised, concluding that the amendment was invalid on each of those grounds. 1 The trial court issued *988 a writ of mandate invalidating the ordinance primarily upon the ground that city Councilmember James Santangelo, whose affirmative vote was essential to the three-to-two passage of the ordinance, was disqualified to vote due to conflict of interest, because he had a financial interest in the decision, by virtue of his ownership of five properties in the project area and a real estate business in the project area. (Gov. Code, § 91003.) The alternative ground of the writ was that the project area committee required by Health and Safety Code sections 33385-33388 had been improperly formed in violation of section 33385.

The trial court then awarded substantial attorney’s fees to plaintiffs and to the Andrews-Logan defendants, pursuant to provisions of the conflict of interest law. (Gov. Code, § 91003.)

Appellants, the Downey Community Development Commission and the City of Downey, contend that (1) the adoption of the redevelopment plan did not affect Santangelo’s financial interest; (2) the project area committee was properly formed; and (3) even if the writ of mandate is affirmed, the trial court erred in its award of attorney’s fees to plaintiffs and the Andrews-Logan defendants. We affirm, concluding that Councilmember San-tangelo was barred from voting by conflict of interest and that the trial court did not abuse its discretion in calculating the award of attorney’s fees.

Conflict of Interest

The Political Reform Act of 1974 (Gov. Code, § 81000 et seq.) was enacted by initiative in June 1974. Government Code section 87100 prohibits any public official from participating in a governmental decision in which he knows or has reason to know he has a financial interest. Government Code section 87103 states that an official has a financial interest in a decision “if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally,” on, among others, any real property in which the official has an interest of more than $1,000 or any source of income of $250 or more.

The act also establishes the Fair Political Practices Commission (Gov. Code, § 83100), which is authorized to adopt regulations to carry out the purposes and provisions of the act. (Gov. Code, § 83112.) The commission has adopted a regulation defining material financial effect, which provides: “The financial effect of the governmental decision on an economic interest of a public official is material if the decision will have a significant effect on the business entity, real property or source of income in question.” (Cal. Admin. Code, tit. 2, § 18702, subd. (a).)

*989 Councilmember Santangelo owned four real properties in the old (1978) project area. Apparently the four properties were contiguous; they were zoned commercial; and their fair market values were: (1) 11240 - 11242 Woodruff Street, $345,000 to $460,000; (2) 9424 Firestone Boulevard, $270,000 to $360,000; (3) 9418 Firestone Boulevard, $270,000 to $360,000; (4) 9400 Firestone Boulevard, $90,000 to $120,000.

Mr. Santangelo also owned a real property in the new or amended project area, 10802 Downey Boulevard, with a fair market value of $300,000. That property was also the site of Mr. Santangelo’s real estate business, a Century 21 realty office employing 32 sales persons, of which Santangelo was the sole proprietor.

Concluding that the adoption of the ordinance amending the redevelopment plan was a decision which was reasonably foreseeable to have a material financial effect, distinguishable from its effect on the public generally, on Councilmember Santangelo’s financial interest, the trial court held that Santangelo’s participation was barred by conflict of interest. Since Mr. Santangelo’s vote was essential to the three-to-two passage of the ordinance, the court granted a writ of mandate commanding that ordinance No. 759 be set aside and an injunction restraining its implementation, pursuant to Government Code section 91003. 2

The trial court mentioned several reasonably foreseeable effects of the adoption of the ordinance. Under the tax increment method of financing redevelopment (Cal. Const., art. XVI, § 16; Health & Saf. Code, § 33670), the assessed valuation of property within the redevelopment area is fixed upon the adoption of the plan, and property taxes from future increases in assessed valuation “shall be paid into a special fund of the redevelopment agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by such redevelopment agency to finance or refinance, in whole or in part, such redevelopment project. . . .” (Health & Saf. Code, § 33670, subd. (b).) Tax revenues for this special fund can be generated before the agency approves any specific projects or spends any money for actual improvements, because under Proposition 13 (Cal. Const., art. XIIIA, § 2) assessed valuation can increase when the cost of living increases and whenever property changes ownership. A portion of the $81 million estimate of tax *990 increment funds to be generated over the 30-year life of the amendment was attributable to these factors, independent of estimated increases in value attributable to assumed improvement projects.

Mr. Santangelo owned properties in both the old and new redevelopment areas. Adoption of the amendment initiated the tax increment financing process to set aside a pool of tax revenues for the use of the redevelopment agency for the exclusive benefit of the redevelopment area. Although the plan itself did not provide for expenditures for specific projects benefiting specific properties, it commenced the process of setting aside funds which could be used only for improving the redevelopment area.

The trial court also found the ordinance had a foreseeable material effect on Mr.

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Cite This Page — Counsel Stack

Bluebook (online)
196 Cal. App. 3d 983, 242 Cal. Rptr. 272, 1987 Cal. App. LEXIS 2394, Counsel Stack Legal Research, https://law.counselstack.com/opinion/downey-cares-v-downey-community-development-commission-calctapp-1987.