Can California voters use the local referendum power to block a city's resolution selling former redevelopment-agency property under a long-range plan that the state has already approved?

Plain-English summary

In 2011, facing a fiscal crisis, California dissolved local redevelopment agencies and redirected their tax-increment revenue to school districts, counties, and cities for general government services. The dissolution law assigned "successor agencies" to wind down each former redevelopment agency's affairs. A successor agency must prepare a long-range property management plan inventorying the dissolved agency's real estate and proposing how each property will be sold or repurposed. That plan goes to a seven-member oversight board, then to the state Department of Finance for approval. Once approved, the plan "shall govern, and supersede all other provisions relating to, the disposition and use of the real property assets of the former redevelopment agency."

The City of Hollister, acting as the successor agency to its dissolved redevelopment agency, had its long-range plan approved by both the oversight board and the Department of Finance. The plan called for selling a downtown parcel known as the "400 Block property" through a disposition and development agreement. After several years of negotiation, the city council adopted Resolution 2017-139 in June 2017 authorizing the city manager to sign the disposition agreement with two development partners.

Local opponents tried to file a referendum petition to block the resolution. Assembly Member Anna Caballero asked the AG whether the referendum power applied. The AG said no, on three independent grounds.

First, the resolution was administrative, not legislative. California's referendum power reaches only legislative acts. The legislative-administrative test asks whether the act "prescribes a new policy or plan" (legislative) or "merely pursues a plan already adopted by the legislative body itself, or some power superior to it" (administrative). The Hollister resolution did not adopt new policy; it carried out a plan that the state had already approved. The fact that the city retained limited discretion over implementation details did not convert an administrative act into a legislative one.

Second, when a city implements a long-range property management plan to dispose of dissolved redevelopment property, it acts as an "administrative arm of the state." Pre-dissolution, courts had long held that local agency action implementing redevelopment plans was administrative because it pursued a state legislative policy. The same logic carries over to post-dissolution wind-down activity.

Third, applying the referendum power here would frustrate the redevelopment dissolution law's purpose of expeditiously winding down former redevelopment agencies and redirecting tax revenue to core government services. If voters could veto each implementation step indefinitely, the state-mandated wind-down could never finish. Under California's "consequences" test, a referendum interpretation that would seriously impair an essential governmental function is presumed unintended.

The AG also rejected the referendum proponents' argument that the city had limited discretion in choosing how to implement the plan, which they said made the resolution legislative. The AG responded that even administrative acts can involve "some limited discretion," and the discretion exercised here was insufficient to flip the act from administrative to legislative.

Currency note

This opinion was issued in 2018. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is the difference between a legislative act and an administrative act for referendum purposes?

A legislative act declares a public purpose and provides the means to accomplish it. An administrative act carries out a policy or plan that has already been adopted by the legislative body or by a higher authority. The "classic test" the AG applied: legislative if the act prescribes a new policy or plan; administrative if it merely pursues a plan already adopted. Only legislative acts are subject to referendum.

Why did the AG say Hollister was acting as an "administrative arm of the state"?

When the Legislature creates a state policy and assigns a local body the duty to implement it, the local body's implementation actions are state administrative actions. California courts have applied this reasoning to redevelopment-plan implementation since at least the 1959 San Bernardino case. The 2011 dissolution law continued the pattern: the long-range property management plan is a creature of state statute, the state Department of Finance approves it, and the plan governs disposition of the property by force of state law. The local resolution implementing that plan is therefore an administrative act of the state.

Did this opinion say no resolution about redevelopment property is subject to referendum?

No. The AG focused on the specific situation where the resolution carries out an already-approved long-range plan. A resolution that adopted a new plan, or amended a plan in ways that exceeded statutory authority, could be a different question. The opinion is narrow to its facts.

Could the referendum proponents have challenged the city in court instead?

Yes. The opinion notes in passing that the proponents argued the city acted improperly by not announcing it was sitting as the successor agency. The AG declined to address that, citing Memorial Hospitals Assn. v. Randol: "Simply put, unlawful action is addressed in the courts, not in the voting booth." If the proponents thought the resolution itself was unlawful, the remedy was litigation, not referendum.

What does this mean for other California cities winding down redevelopment agencies?

The opinion articulated a general framework for dissolution-era resolutions: implementing an approved long-range property management plan is administrative, and a referendum cannot block it. Cities should still tailor each implementation step to the approved plan; if a city deviated from the plan substantively, the deviation could potentially be characterized as a new legislative act subject to referendum.

Background and statutory framework

Redevelopment in California, before and after 2011

For decades, California authorized local redevelopment agencies under the Community Redevelopment Law. When a redevelopment agency cleared blight in a project area and the area's property values rose, the agency captured the increased property tax (the "tax increment") to fund further redevelopment. By 2011, redevelopment agencies were diverting billions of property tax dollars away from schools, counties, and cities. Facing a fiscal emergency, the Legislature dissolved them.

The dissolution law assigned wind-down responsibilities to "successor agencies," typically the city or county that had sponsored the dissolved agency. Each successor agency operates under the supervision of an oversight board, a seven-member body whose appointees represent the various taxing entities (schools, counties, special districts) that benefit from the redirected revenue. Members of the oversight board owe fiduciary duties to enforceable-obligation holders and the taxing entities.

Long-range property management plans

Successor agencies must prepare and submit a long-range property management plan for disposition of all the dissolved agency's property. The plan inventories each parcel and explains the proposed disposition: sale to a private developer, transfer to the sponsoring city for governmental use, or retention pending future use. Once the oversight board approves the plan and the Department of Finance approves it, "the plan shall govern, and supersede all other provisions relating to, the disposition and use of the real property assets of the former redevelopment agency." Plans may be amended only in narrow circumstances, and only once.

The Hollister 400 Block plan

Hollister's plan, adopted in 2013 and amended in 2014, dealt with a key downtown parcel known as the 400 Block property. The plan directed the use of "a disposition and development agreement or development agreement as a tool to assure that disposition of the 400 Block property facilitates development of the site as a keystone property in Downtown Hollister to support economic development." The successor agency was first to negotiate a first-option agreement with the city. If that did not result in a transfer to the city, the successor agency was to issue a request for qualifications for a mixed-use or commercial building of 30,000 to 40,000 square feet conforming to specified guidelines.

By 2017, those processes had played out. The city was the negotiating party. After accepting a proposal from Del Curto Brothers Group in partnership with the Community Foundation for San Benito County, and after authorizing an exclusive negotiating agreement, the city council passed Resolution 2017-139 authorizing the city manager to execute the disposition and development agreement.

How referendum power normally works

The California Constitution reserves to the people the power to veto recent legislative enactments through referendum. The state-level referendum cannot reach urgency statutes, statutes calling elections, or statutes appropriating funds for usual current expenses. Beyond those constitutional carve-outs, courts have developed two more limits.

First, the Legislature can withdraw local referendum power by either preempting local discretion ("definite indication" of intent to occupy the field) or delegating decision-making "so exclusively to a local governing body as to indicate its intent to preclude the citizens' otherwise coextensive right of referendum."

Second, the legislative-administrative dichotomy excludes administrative acts from referendum reach. The rationale, as the courts have put it, is that "to allow the referendum or initiative to be invoked to annul or delay the executive or administrative conduct would destroy the efficient administration of the business affairs of a city or municipality."

Why the dissolution law preempts local discretion here

The redevelopment dissolution law removes essentially all local discretion over how dissolved-agency property is disposed of. The successor agency drafts a plan; the oversight board approves it; the state Department of Finance approves it. After that, the plan "shall govern, and supersede all other provisions" relating to property disposition. That is the kind of preemption Empire Waste Management v. Town of Windsor described as withdrawing referendum power.

The AG also drew an analogy to pre-dissolution redevelopment cases. In Andrews v. City of San Bernardino (1959), Gibbs v. City of Napa (1976), and PR/JSM Rivara LLC (2009), local agency action implementing redevelopment plans was held administrative because it pursued state legislative policy. The dissolution wind-down is structurally similar: state-mandated process, state-approved plan, local implementation.

Citations

The opinion draws heavily on California's mature jurisprudence on referendum power and the legislative-administrative distinction:

• DeVita v. County of Napa (1995) 9 Cal.4th 763 is the modern California Supreme Court framework for evaluating limits on local referendum power.
• Voters for Responsible Retirement v. Board of Supervisors (1994) 8 Cal.4th 765 confirms that constitutional limits on the state referendum apply to local referendums and treats preempted local action as not subject to referendum.
• California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231 upheld the dissolution law against constitutional challenge and is the foundational case for the wind-down regime.
• Memorial Hospitals Assn. v. Randol (1995) 38 Cal.App.4th 1300 holds that local implementation of statewide policy is beyond the reach of referendum, and is the source of the AG's "implementing statewide policy" framing.
• Andrews v. City of San Bernardino (1959) 175 Cal.App.2d 459 and Gibbs v. City of Napa (1976) 59 Cal.App.3d 148 are the historical anchors for treating redevelopment implementation as administrative.
• Geiger v. Board of Supervisors (1957) 48 Cal.2d 832 establishes the consequences-of-applying-the-rule test the AG used as the third independent ground.

Source

• Landing page: https://oag.ca.gov/opinions/yearly-index
• Original PDF: https://oag.ca.gov/system/files/opinions/pdfs/17-702_0.pdf

Original opinion text

TO BE PUBLISHED IN THE OFFICIAL REPORTS
OFFICE OF THE ATTORNEY GENERAL
State of California
XAVIER BECERRA
Attorney General

OPINION
of
XAVIER BECERRA
Attorney General
CATHERINE BIDART
Deputy Attorney General

No. 17-702
April 27, 2018

THE HONORABLE ASSEMBLY MEMBER ANNA M. CABALLERO has requested an opinion on the following question:

Does the power of referendum apply to a resolution by the City of Hollister approving the execution of an agreement to sell real property for development, pursuant to an approved long-range property management plan for disposing a dissolved redevelopment agency's property?

CONCLUSION

The City of Hollister's resolution approving the execution of an agreement to sell real property for development, pursuant to an approved plan for disposing a dissolved redevelopment agency's property, is not subject to referendum.

ANALYSIS

Background

The question here arises from the Legislature's 2011 dissolution of redevelopment agencies and redirection of their assets to fund core local governmental services. For decades, the Legislature authorized local governments to create such agencies to redevelop areas of blight under the Community Redevelopment Law. When an area was redeveloped and its property values increased, the resulting increase in property tax revenue was attributed to the redevelopment, and the increased revenue (known as "tax increment") was used to fund the agency.

In 2011, however, facing a fiscal crisis, the Legislature dissolved redevelopment agencies and instituted a process for "successor agencies" to expeditiously wind down the former redevelopment agencies' affairs and to redirect tax revenues to local core government services. These winding-down activities take place under the direction of an oversight board, generally comprised of representatives for various entities that receive local property tax revenue. The process requires a successor agency to submit a long-range property management plan to its oversight board for approval, and then to the state's Department of Finance for its approval.

We are informed that the City of Hollister passed Resolution 2017-139 on June 5, 2017, authorizing its city manager to enter into a Disposition and Development Agreement for the sale and development of real property (known as the "400 Block property"), which would implement the long-range plan approved by the oversight board and by the Department of Finance. The parties to the agreement include the City, Del Curto Brothers Group, and the Community Foundation for San Benito County. The resolution recites several preceding resolutions, including ones that authorized a request for proposals; accepted the Del Curto Brothers' proposal in partnership with Community Foundation for San Benito County to construct a mixed-use development; approved the proposal as conforming to the long-range plan; and authorized an exclusive negotiating agreement.

We have been asked whether Hollister's Resolution 2017-139 is subject to referendum. To determine the answer to this question, we must look to the principles governing the power of referendum, discussed below.

Referendum Power

The power of referendum refers to an electorate's authority to reject a recent enactment by a legislative body. Referendum allows voters to veto statutes and local ordinances and resolutions before they become effective. If a referendum petition challenging an ordinance or resolution is timely filed and certified to be sufficient, its effective date is suspended and the enacting legislative body must reconsider the ordinance or resolution. If the body does not repeal the act, it must be submitted to the voters. The act then does not go into effect unless a majority votes in its favor. If the voters instead reject the act, or if the legislative body repeals the act without submitting it to the voters, the same act cannot be reenacted for at least one year from the date of its rejection or repeal.

Although the California Constitution vests legislative power in the Legislature, "the people reserve to themselves the powers of initiative and referendum." The Constitution expressly recognizes that referendum power extends to voters at the level of a city and county, which "is generally co-extensive with the legislative power of the local governing body." The legislative decisions of a city council or board of supervisors are thus presumed to be subject to referendum unless there is a showing of contrary legislative intent.

Still, there are some limits on the referendum power. For instance, the Constitution provides that the power does not apply to "urgency statutes, statutes calling elections, and statutes providing for tax levies or appropriations for usual current expenses of the State." Further, the power does not apply to administrative acts, only to legislative ones. Courts therefore look to whether an act is "legislative" or "administrative" to determine whether referendum applies. The "legislative-administrative dichotomy reflects a determination to balance the ideal of direct legislation by the people against the practical necessity of freeing municipal governments from time-consuming and costly referenda on merely administrative matters." "The plausible rationale for this rule espoused in numerous cases is that to allow the referendum or initiative to be invoked to annul or delay the executive or administrative conduct would destroy the efficient administration of the business affairs of a city or municipality."

How then to identify whether a given act is legislative (and therefore subject to referendum) or administrative (and therefore not subject to referendum)? Courts have provided the following guidance:

Legislative acts generally are those which declare a public purpose and make provisions for the ways and means of its accomplishment. Administrative acts, on the other hand, are those which are necessary to carry out the legislative policies and purposes already declared by the legislative body. . . . [T]he classic and often quoted test [is]: "(T)he power to be exercised is legislative in its nature if it prescribes a new policy or plan; whereas, it is administrative in its nature if it merely pursues a plan already adopted by the legislative body itself, or some power superior to it." [Citation omitted.] The test is not precise, and there is some inconsistency of approach between the published decisions.

Additionally, courts have identified two instances that indicate the Legislature has withdrawn referendum power:

[F]irst, when there is a "definite indication" by the Legislature that it intends to preempt the discretion of a local legislative body to legislate; second, when the Legislature rather than preempt local legislative action has instead sought to delegate legislative power so exclusively to a local governing body as to indicate its intent to preclude the citizens' otherwise coextensive right of referendum.

In the first instance, referendum power is deemed withdrawn when the Legislature removes the decision-making authority of a local legislative body over a particular subject. In the second instance, referendum power is deemed to have been withdrawn where the Legislature has specifically and exclusively delegated decision-making over a matter of statewide concern to a local legislative body. Both circumstances may be conceptualized as a means of identifying an administrative matter.

Finally, in determining whether referendum power exists as to a particular matter, "it is settled that consideration must also be given to the consequences of applying the rule." For example, "[i]f essential governmental functions would be seriously impaired by the referendum process, the courts, in construing the applicable constitutional and statutory provisions, will assume that no such result was intended."

Legislative-Administrative Analysis

As we explain in more detail below, we conclude that Hollister's Resolution 2017-139 is administrative rather than legislative in character, and therefore not subject to referendum.

The Legislature Designated Successor Agencies to Dispose of Dissolved Redevelopment Agencies' Assets

"Where the Legislature has enacted a statewide policy and has assigned to a particular local body the duty to implement that policy, the Legislature thereby places implementation of the statewide policy beyond the reach of initiative and referendum." We think this captures what the Legislature did in assigning a successor agency, following approval by its oversight board and the Department of Finance, the duty to dispose of a dissolved redevelopment agency's property.

The redevelopment dissolution law requires a successor agency to prepare a long-range property management plan that includes an inventory of the dissolved redevelopment agency's property including specific information, such as previous development proposals for each property. After the successor agency's long-range plan is approved by its oversight board and the Department of Finance, the plan governs the disposition of the dissolved agency's property. The Legislature provided in clear terms that "the plan shall govern, and supersede all other provisions relating to, the disposition and use of the real property assets of the former redevelopment agency."

The redevelopment dissolution law leaves no room for voter input on a settled long-range property plan. An approved plan may be amended, but only once, and only if the Department of Finance approved it before January 1, 2016, and the amendment related to retaining parking facilities and lots for governmental use.

Furthermore, the City's resolution occurred at the tail end of the statutorily prescribed process for disposing of a dissolved redevelopment agency's property. The successor agency's plan is the product of that process, and the City's resolution follows a string of decisions to implement that plan, further illustrating that the resolution is an administrative act implementing an established legislative policy and therefore not subject to referendum.

A City Implementing a Long-Range Property Management Plan Acts as an Administrative Agent of the State

Our conclusion that the resolution is not subject to referendum finds additional support by analogizing a city's implementation of a successor agency's long-range property management plan to sell and develop property, to a redevelopment agency's implementation of a redevelopment plan.

The implementation of a redevelopment plan was never subject to referendum because local agencies acting in redevelopment matters were acting as administrative arms of the state. We believe it is appropriate also to characterize local agencies as administrative arms of the state when they act to implement redevelopment wind-up matters. As such, it would follow that Hollister's resolution to sell and dispose of property as provided in the successor agency's approved long-range plan is not subject to referendum either.

The Potential Consequences of a Referendum Here Indicate that It Cannot Apply

That the referendum power cannot apply here is perhaps best demonstrated by its potential consequences. If Hollister's resolution were subject to referendum, the disposition and development of the property pursuant to the approved long-range plan could potentially never happen. The electorate could indefinitely prevent the sale of the property for development (as set forth in the approved long-range plan) by rejecting every attempt by Hollister to implement the plan. That would completely thwart the redevelopment dissolution law's purposes to dispose of redevelopment agencies' property expeditiously in order to fund core government services. It would also conflict with the statutory requirement that the dissolved agencies' property be disposed of as provided in a long-range property management plan approved by a successor agency's oversight board and the Department of Finance.

In short, referendum would frustrate the essential goals of the redevelopment dissolution law.

Conclusion

For the foregoing reasons, we conclude that the City's resolution is not subject to referendum.