HR Files Lawsuit Challenging Redevelopment Bills

Two weeks ago we filed California Redevelopment Association v. Matosantos, an original writ proceeding in the California Supreme Court challenging a two-bill package in which the Legislature first eliminated California's 400 redevelopment agencies and then stayed execution if the agencies, or their sponsoring cities and counties, pay $1.7 billion this year and $400 million annually thereafter, primarily for support of the schools. The writ petition and supporting documents are here; the State's "informal opposition" is here; our "informal reply" is here; and the Supreme Court's docket is here. The petition alleges that the redevelopment bills violate Prop. 1A (2004) and Prop. 22 (2010), two constitutional amendments that prohibit the State from using or diverting local tax revenues.

California Supreme Court Upholds Regulatory Fees

In California Farm Bureau Federation v. State Water Resources Control Board (here), the California Supreme Court held that regulatory fees imposed by the State Water Resources Control Board to pay the cost of administering California’s water rights program are not facially unconstitutional as invalid taxes. The decision adopts generous language concerning the scope of a regulatory fee. While such a fee cannot “exceed the reasonable cost of regulation with the generated surplus used for general revenue collection,” the fee need not benefit the fee payers, and it need not be proportional to the service rendered to individual fee payers. With respect to the as-applied challenge, the Supreme Court remanded for the trial court to make detailed findings regarding the Board’s showing that the regulatory costs were reasonably related to the fees assessed. However, the Court acknowledged that while fees must be reasonably related to regulatory costs, a “government agency should be accorded some flexibility in calculating the amount and distribution of a regulatory fee.” It therefore appears that the plaintiffs have an uphill battle to support their claim that the fee is illegal, even though under the statutory scheme, only 40% of those subject to the Board’s jurisdiction are being assessed to pay the regulatory costs (because the remaining 60% of water rights holders are either grandfathered or immune from Board decisions granting vested rights)

Court Upholds Regents' Autonomy

In Goldbaum v. Regents of the University of California (here), the Court of Appeal held that the Regents are not bound by the fee-shifting provision contained in Labor Code §218.5. The Court held that applying the statute to the Regents would violate their constitutional autonomy under Article IX, Section 9(a).

This decision is not a surprise. Earlier cases had held that the Regents were exempt from prevailing wage statutes. See, e.g., San Francisco Labor Council v. Regents of the University of California, 26 Cal. 3d 785 (1980); Regents of the University of California v. Aubry, 42 Cal. App. 4th 579 (1996). Similarly, the courts have held that the Regents are exempt from a statute requiring employers to indemnity employees for necessary expenses and losses incurred in discharging job duties. In re Work Uniform Cases, 133 Cal. App. 4th 328 (2005). Accordingly, there is little likelihood that the California Supreme Court will grant review.