Wednesday, April 21, 2010
Court Allows Cerritos Lease Swap With School District for Senior Homes
By Steven M. Ellis, Staff Writer
The City of Cerritos can use funds earmarked for low-income housing to buy and renovate real property to lease to a school district in exchange for a lease to district property on which the city wants to build housing for senior citizens, this district’s Court of Appeal ruled yesterday.
Affirming a trial court’s judgment approving the city and its redevelopment agency’s financing agreement with the district for the proposed Cuesta Villas senior housing development, Div. Eight said the arrangements were not required to be submitted to a vote of the electorate.
Cuesta Villas, to be located at the former site of ABC Unified School District administrative buildings, is planned to include 247 apartments with 207 units for moderate-income households, 15 for low-income households and 25 for very low-income households. A new 13,000-square-foot senior center and a four-acre park are also planned.
The city, its redevelopment agency and the district in 2008 sought a determination that the financing agreement was valid, binding and lawful, and that the city could spend low- and moderate-income funds in such a manner without sending it to voters for approval.
The plan was opposed by two groups, the Cerritos Taxpayers Association and the United Community Alliance, which argued that the project was improper because the city was spending funds on the district, not on housing.
The groups also contended voter approval was required under Art. XXXIV of the California Constitution, which requires voter approval for a “low rent housing project” developed, constructed or acquired by any state public body.
Los Angeles Superior Court Judge John A. Torribio rejected the arguments and entered an order validating the financing agreement, and the Court of Appeal affirmed in an opinion by Los Angeles Superior Court Judge Peter D. Lichtman, sitting by assignment.
Lichtman wrote that a government agency may use funds earmarked for low- and moderate-income housing to purchase and renovate buildings that will not themselves be used for affordable housing if the acquisition is directly linked to a transaction that will increase the supply of affordable housing.
He also said that the Cuesta Villas project was expressly excepted from Art. XXXIV by Health and Safety Code Sec. 37001 because the development would be privately owned by a nonprofit corporation created by the city, would receive no ad valorem property tax exemption other than those specified under the law, and did not allocate more than 49 percent of its accommodations to persons of low income.
Lichtman further opined that the project could not qualify as a “low rent housing project” in any event where only 16 percent of housing units would be dedicated to very low- or low-income households.
The judge then rejected an argument by the taxpayers groups that the school district should have offered the property it leased to the city to other entities identified in Government Code Sec. 54222, writing that there was no prejudice even if the law had been violated.
He also said the redevelopment agency was not required to demonstrate that the senior housing project itself would eliminate blight, and rebuffed the groups’ assertion that the common law doctrine of incompatibility of office applied.
The doctrine prevents the same person from holding two offices, but Lichtman noted that even though the nonprofit corporation’s board was initially composed of city council members, none of its current board members held public office.
Justices Laurence D. Rubin and Madeleine Flier joined Lichtman in his opinion.
The case is City of Cerritos v. Cerritos Taxpayers Association, B214530.
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