BRENTWOOD -- Brentwood plans to appeal a court ruling that determined the city must pay $20 million to the state as a result of being on the losing side of a lawsuit involving redevelopment money that was spent to improve the downtown.
The appeal stems from a court ruling that determined the state Departmentof Finance did not violate Proposition 22, a voter-approved initiative that bars the state from taking local revenues, when it demanded that Brentwood pay back $20 million in redevelopment funds used to make city improvements that included better sidewalks, new utilities, tree planting and a park restoration.
The April 2 ruling by Sacramento Superior Court Judge Allen Sumner reversed a tentative ruling he first made in December that had sided with Brentwood.
At a special meeting this week, City Council members voted 4-0 to appeal Sumner's final decision, with Councilman Gene Clare recusing himself due to a potential conflict of interest over concerns that the litigation may impact his employer. Appealing the case means the city does not have to pay back $20 million while the case is under review by a higher court.
At the urging of Gov. Jerry Brown, state lawmakers passed a law three years ago that got rid of redevelopment agencies so that property tax revenues that once went to those agencies could instead go to local governments to help close a budget gap.
The date of when exactly redevelopment went away is the crux of the legal case first filed by Brentwood in July 2013. The state argued under legislation that did away with redevelopment, the retroactive date for its demise is Jan. 1, 2011, and that any transfer of redevelopment funds made to Brentwood after that date have to be repaid. Brentwood contends that the cutoff date is Feb. 1, 2012, and that it should not have to return $20 million in funds received between Jan. 1, 2011, and Jan. 31, 2012, from its then-redevelopment agency that were spent on five public improvement projects.
"We don't dispute they have the authority to disband the agency," said Leah Castella, an attorney with the Oakland office of Burke, Williams and Sorensen, which represents the city in the lawsuit. "The issue is do they have the authority to retroactively claw back money from the city that was paid to the city based on valid commitments of the redevelopment agency and used by the city to fund redevelopment projects" that existed before redevelopment went away.
"If (an appeal) occurs, we will vigorously defend the state's position," said H.D. Palmer, the department's deputy director of external affairs. "The dollars associated with this transfer should go to schools, city, counties and special districts."
After the tentative ruling came out in December, the state contended that it would set a precedent for other cities to seek refunds or sue on similar grounds. If the ruling had stood, "the potential range of financial risk to the state could be in the neighborhood of $3 billion," Palmer said.
In a news release, Brentwood stated: "The city is very disappointed in the trial court's ruling, but it is confident that it was acting within the rules set by the State before and during the dissolution of (redevelopment); has a strong legal basis for its position; and intends to appeal the decision."
Contact Eve Mitchell at 925-779-7189. Follow her on Twitter.com/EastCounty_Girl.