Filed 12/10/19 City of Ridgecrest v. Bosler CA3

NOT TO BE PUBLISHED

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE DISTRICT

(Sacramento)

—-

CITY OF RIDGECREST,

Plaintiff and Appellant,

v.

KEELY BOSLER, as Director, etc.,

Defendant and Respondent;

COUNTY OF KERN, et al.,

Real Parties in Interest and Respondents.

C084574

(Super. Ct. No. 34201380001438CUWMGDS)

As is well known, the Legislature dissolved redevelopment agencies in 2011. (Health & Saf. Code, §§ 34161-34176, the “Dissolution Law”.) It tasked defendant Department of Finance to ensure that local agencies who succeeded to the redevelopment agencies’ obligations remitted their unencumbered funds for redistribution to other taxing entities.

The Department determined that a loan the former redevelopment agency of the City of Ridgecrest approved before the Dissolution Law became effective and eventually made to a private developer was not an enforceable obligation, and it directed plaintiff City of Ridgecrest to remit the amount of the loan.

The City challenged the Department’s action by a petition for writ of mandate under Code of Civil Procedure section 1085 and complaint for declaratory and injunctive relief and damages. The trial court denied the petition. Relying on California contract law, we reverse.

FACTS AND PROCEEDINGS

At a hearing on March 16, 2011, the City’s redevelopment agency approved a $3 million loan commitment for a developer. The developer proposed using the funds to build a senior housing project. The commitment was necessary to enable the developer to apply for tax credits from the state Tax Credit Allocation Committee to be used with the project.

The agency’s executive director issued a loan commitment letter dated March 23, 2011. The letter was addressed to Alexis Gevorgian of Ridgecrest Pacific Associates, a California L.P. (the developer). It stated: “We are pleased to inform you that the City of Ridgecrest Redevelopment Agency . . . has approved your request for financing in the amount of $3,000,000. Loan terms will include a simple interest rate of 4 [percent] with an amortization term consistent with a regulatory agreement, to be executed. Payments shall be based on 60 [percent] of residual receipts until paid in full with a maturity date of not less than sixteen years. The loan is subject to the final execution of a promissory note, deed of trust, regulatory agreement and an Owner Participation Agreement (OPA). After the loan is paid off in full, the Agency, or successor entity[] to the extent that the Agency exists at the time, shall receive twenty percent (20%) of the cash flow from the property in perpetuity. The remaining loan terms will be in accordance with the Agency’s ‘or successor entity’ standard [of] affordable housing lending policies which will be codified in loan documents including a promissory note, deed of trust and regulatory agreement.”

The commitment letter included two preconditions. It stated: “Please be advised that this loan commitment is expressly conditioned upon your successful application for housing tax credits and the production of a final sources and uses confirming that the project is feasible.”

The developer set out to fulfill the preconditions. On March 21, 2011, the developer secured a loan commitment from a private lender to complete funding for the project. On June 22, 2011, the Tax Credit Allocation Committee approved the developer’s application for tax credits. The private financial commitment and the reservation of tax credits constituted the final sources and uses confirming that the project was feasible. The developer informed the agency that it had fulfilled the commitment letter’s preconditions.

The Dissolution Law took effect on June 29, 2011, seven days after the Tax Credit Allocation Committee approved the developer’s application for tax credits. (Health & Saf. Code, §§ 34161-34191.6, statutory section references that follow are to the Health and Safety Code.) The law prevented the redevelopment agency from entering into contracts or incurring obligations, but it authorized the agency to continue meeting “enforceable obligations.” (§§ 34163, subd. (b), 34166, 34169.) An “enforceable obligation” included “[a]ny legally binding and enforceable . . . contract that is not otherwise void as violating the debt limit or public policy.” (§ 34171, subd. (d)(1)(E).)

On December 15, 2011, approximately six months after the Dissolution Law froze the redevelopment agency’s authority to enter contracts, the agency and the developer signed the owner participation agreement. In the agreement, the agency agreed to disburse the loan subject to the developer satisfying 18 conditions precedent set forth in the agreement. The conditions required the developer, among other things, to submit evidence of financing, insurance and title, to submit a final project budget, standard form lease agreement, a management plan and a partnership agreement, to have obtained all building permits, to comply with all relevant laws, and not to have defaulted.

The owner participation agreement also provided further detail about the loan’s terms. The obligation to repay was to be set forth in a promissory note with a term of 55 years at an interest rate of 4 percent per annum. The developer was to pay annually an amount equal to 60 percent of its residual receipts from operating the project until the note was paid in full. The term “residual receipts” was defined, roughly, as an amount equal to annual revenue less expenses. Because the amount of the annual payment would fluctuate based on the amount of residual receipts each year, the promissory note clarified that the developer would make the annual payment until the note had been paid in full, but in no event later than the earlier of 55 years or December 31, 2075.

On or about the same day, December 15, 2011, the agency funded the loan. Construction soon began, and the project was completed in November 2012.

Meanwhile, the Dissolution Law dissolved the redevelopment agency on February 1, 2012. (California Redevelopment Assn. v. Matosantos (2011) 53 Cal.4th 231, 275.) The agency’s assets and enforceable obligations were transferred to the City acting as the successor agency.

The Dissolution Law required successor agencies to remit any of the former redevelopment agency’s unencumbered balances to the county auditor-controller for eventual distribution to other local taxing agencies. (§§ 34177, subd. (d), 34183, subd. (a)(4), 34188.) The law included provisions to enforce this duty. One provision required successor agencies to list their enforceable obligations on a schedule, known as the recognized obligation payment schedule or ROPS, and submit the schedule to the Department for approval and payment. (Former §§ 34171, subd. (h), 34177, subds. (a), (l)(1).) Another provision required successor agencies to hire an accountant to review their balances in a due diligence review. (§ 34179.5.) Due diligence reviews were also subject to the Department’s approval. (§§ 34177, subd. (m); 34179.6, subds. (a)-(e).)

The City identified the $3 million loan in its ROPS and due diligence review as one of its enforceable obligations. The Department determined the loan did not qualify as an enforceable obligation because the commitment letter was not a binding agreement and the actual loan agreements were entered after the Dissolution Law froze the agency’s authority to enter contracts.

The City initiated this action, petitioning the superior court for a writ of mandate and declaratory and injunctive relief to reverse the Department’s decision. It also paid the county auditor-controller $2,992,887 under protest to remit the loan funds.

At the hearing on the petition, the City presented new evidence. The trial court remanded the matter to the Department to consider the evidence. After doing so, the Department issued its revised final determination on December 14, 2015, finding the commitment letter was not an enforceable obligation.

The trial court denied the City’s petition and entered judgment in favor of the Department. It ruled the Department did not abuse its discretion when it determined the commitment letter was not an enforceable obligation. The redevelopment agency approved the commitment only on condition that a binding agreement would be approved later in the form of the owner participation agreement. That agreement was not approved before the Dissolution Law became effective. The court relied upon comments made by Alexis Gevorgian, agency staff, and agency members at the approval hearing to reach its conclusion.

The trial court also found the public had no knowledge at the hearing that the borrower was the developer, Ridgecrest Pacific Associates. At the hearing, Gevorgian stated he was with another entity, AMG and Associates. The court stated there was no evidence the public knew the borrower would be the developer, and it intimated this lack of notice violated requirements of the Ralph M. Brown Act, the state’s open meetings law. (Gov. Code, §§ 54950 et seq., 54954.2.)

DISCUSSION

The City contends the trial court erred. It argues the commitment letter was an enforceable obligation because it was a binding contract. It contained all material terms needed to be an enforceable contract. The agency and the developer intended to be bound by the letter, and the developer satisfied all the letter’s preconditions.

The City also claims the court erred when it found no evidence that the public knew the developer was the borrower. Gevorgian disclosed his relationship to the developer with enough specificity at the agency hearing and in other documents that the agency and the public knew the developer was the borrower.

The City raises additional arguments. It claims the Department’s decision was arbitrary and capricious, the Department is estopped from denying that the commitment letter is an enforceable obligation, the letter was validated by operation of law, and it was an enforceable obligation as a matter of law.

I

Standard of Review

Code of Civil Procedure section 1085 authorizes a court to issue a writ of mandate “to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station . . . .” (Code Civ. Proc., § 1085, subd. (a).)

“In reviewing a judgment granting or denying a writ of mandate petition [under Code of Civil Procedure section 1085], ‘ “we apply the substantial evidence standard of review to the court’s factual findings . . . .” ’ (James [v. State of California (2014)] 229 Cal.App.4th [130,] 136; accord, Cox v. Los Angeles Unified School Dist. (2013) 218 Cal.App.4th 1441, 1444-1445.) We are governed by this review standard even ‘ “when the matter is heard only on written evidence . . . .’ ” (Agosto [v. Board of Trustees (2010)] 189 Cal.App.4th [330,] 336.) ‘ “[A]ll conflicts in the written evidence are resolved in favor of the prevailing party, and factual findings are examined for substantial evidence.” ’ (Ibid.) On questions of law, including statutory interpretation, the appellate court applies a de novo review and makes its own independent determination. (Ibid.)” (Hayes v. Temecula Valley Unified School Dist. (2018) 21 Cal.App.5th 735, 746.)

II

Commitment Letter as Binding Contract

The City contends the commitment letter was an enforceable obligation for purposes of the Dissolution Law because under California contract law, it was a binding agreement. It contained all the material terms needed to be an enforceable contract. The agency and the developer intended to be bound by the letter, and the developer satisfied the letter’s preconditions before the Dissolution Law took effect. We agree with the City. As a result, we do not address the parties’ other arguments.

“It is well established that ‘. . . separate written instruments between the same parties and relating to the same subject matter . . . are to be construed together as one transaction . . . .’ [Citations.]” (Chern v. Bank of America (1976) 15 Cal.3d 866, 874.) Thus, if the commitment letter is a binding contract, all of the agreements executed by the parties to implement the loan would be considered one agreement, and that agreement would be an enforceable obligation under the Dissolution Law because the parties entered into the contract before the Dissolution Law took effect. We, therefore, must decide whether the commitment letter is an enforceable contract.

Where the evidence is not in conflict, the court decides as a question of law whether a writing is sufficiently definite to be enforced as a binding contract. (Bustamante v. Intuit, Inc. (2006) 141 Cal.App.4th 199, 208-209.) “The interpretation of a written instrument, even though it involves what might properly be called questions of fact (see Thayer, Preliminary Treatise on Evidence, pp. 202-204), is essentially a judicial function to be exercised according to the generally accepted canons of interpretation so that the purposes of the instrument may be given effect. (See Civ. Code, §§ 1635-1661; Code Civ. Proc., §§ 1856-1866.) Extrinsic evidence is ‘admissible to interpret the instrument, but not to give it a meaning to which it is not reasonably susceptible’ [citations], and it is the instrument itself that must be given effect. (Civ. Code, §§ 1638, 1639; Code Civ. Proc., § 1856.) It is therefore solely a judicial function to interpret a written instrument unless the interpretation turns upon the credibility of extrinsic evidence. Accordingly, ‘An appellate court is not bound by a construction of the contract based solely upon the terms of the written instrument without the aid of evidence [citations], where there is no conflict in the evidence [citations], or a determination has been made upon incompetent evidence [citation].’ [Citations.]” (Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 865-866, fn. omitted.)

A trial court’s interpretation of a written instrument is binding “only when conflicting inferences arise from conflicting evidence, not from uncontroverted evidence . . . . ‘The very possibility of . . . conflicting inferences, actually conflicting interpretations, far from relieving the appellate court of the responsibility of interpretation, signalizes the necessity of its assuming that responsibility.’ [Citations.]” (Parsons v. Bristol Development Co., supra, 62 Cal.2d at p. 866, fn. 2.)

Here, conflicting inferences arise from uncontroverted evidence. We thus determine the enforceability of the commitment letter de novo.

“Whether a writing constitutes a final agreement or merely an agreement to make an agreement depends primarily upon the intention of the parties. . . . Where all of the essential terms of an agreement are definitely agreed upon in the writing there is a binding contract even though there is an intention that a formal writing will be executed later. [Citations.] The intent of the parties is to be determined by an objective standard and not by the unexpressed state of mind of the parties. (King v. Stanley (1948) 32 Cal.2d 584, 591.) Where any of the terms are left for future determination or there is a manifest intention that the formal agreement is not to be complete until reduced to a formal writing to be executed, there is no binding contract until this is done. (Store Properties, Inc. v. Neal (1945) 72 Cal.App.2d 112, 116.)” (Smissaert v. Chiodo (1958) 163 Cal.App.2d 827, 830-831.)

“ ‘To be enforceable, a promise must be definite enough that a court can determine the scope of the duty[,] and the limits of performance must be sufficiently defined to provide a rational basis for the assessment of damages.’ (Ladas v. California State Auto. Assn. (1993) 19 Cal.App.4th 761, 770; see also Robinson & Wilson, Inc. v. Stone [(1973)] 35 Cal.App.3d [396,] 407.) ‘Where a contract is so uncertain and indefinite that the intention of the parties in material particulars cannot be ascertained, the contract is void and unenforceable.’ (Cal. Lettuce Growers v. Union Sugar Co. (1955) 45 Cal.2d 474, 481; see also Civ. Code, § 1598; Ladas v. California State Auto. Assn., supra, 19 Cal.App.4th at p. 770.) ‘The terms of a contract are reasonably certain if they provide a basis for determining the existence of a breach and for giving an appropriate remedy.’ (Rest.2d Contracts, § 33, subd. (2); accord, Weddington Productions, Inc. v. Flick [(1998)] 60 Cal.App.4th [793,] 811.) But ‘[i]f . . . a supposed “contract” does not provide a basis for determining what obligations the parties have agreed to, and hence does not make possible a determination of whether those agreed obligations have been breached, there is no contract.’ (Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 811.)” (Bustamante v. Intuit, Inc., supra, 141 Cal.App.4th at p. 209.)

As we apply these tests, we acknowledge that “ ‘ “ ‘[t]he law does not favor but leans against the destruction of contracts because of uncertainty; and it will, if feasible, so construe agreements as to carry into effect the reasonable intentions of the parties if [they] can be ascertained . . . .’ ” ’ [Citations.]” (Patel v. Liebermensch (2008) 45 Cal.4th 344, 349.)

“Under the usual principles of lender liability, ‘[a] loan commitment is not binding on the lender unless it contains all of the material terms of the loan, and either the lender’s obligation is unconditional or the stated conditions have been satisfied. When the commitment does not contain all of the essential terms . . . the prospective borrower cannot rely reasonably on the commitment, and the lender is not liable for either a breach of the contract or promissory estoppel.’ (9 Miller & Starr, [Cal. Real Estate (3d ed.)] § 28.4, at p. 8, fn. omitted [see now 11 Miller & Starr, Cal. Real Estate (4th ed.) § 35.9, fn. omitted].) The material terms of a loan include the identity of the lender and borrower, the amount of the loan, and the terms for repayment. ([Ibid.]; see Laks v. Coast Fed. Sav. & Loan Assn. (1976) 60 Cal.App.3d 885, 891, 893.)” (Peterson Development Co. v. Torrey Pines Bank (1991) 233 Cal.App.3d 103, 115.)

“Other essentials are . . . payment schedules for each loan, identification of the security, prepayment conditions, terms for interest calculations, loan disbursement procedures, and rights and remedies of the parties in case of default. None of these, standing alone, would necessarily make the offer conditional if missing. However, the fact that so many important conditions [may be] absent, further emphasizes the conditional nature of the letter and strengthens the argument that the parties were still in the negotiation stage.” (Laks v. Coast Fed. Sav. & Loan Assn., supra, 60 Cal.App.3d at p. 891.)

The City claims the commitment letter is an enforceable contract because it includes the material terms of the loan and its preconditions were fulfilled. It identifies the lender as the redevelopment agency. It identifies the borrower as Ridgecrest Pacific Associates. It identifies the amount of the loan as $3 million. It identifies the interest rate as 4 percent. It states payments are based on 60 percent of residual receipts until the loan is paid in full with a maturity date of not less than 16 years. Remaining terms were to be consistent with the agency’s standard affordable housing lending policies and would be codified in loan documents including a promissory note, deed of trust, and a regulatory agreement.

Also, the City contends the commitment letter became effective because the preconditions were fulfilled before the Dissolution Law froze the redevelopment agency’s authority to enter contracts. The developer timely obtained tax credits and it demonstrated the project was financially feasible. The commitment letter was a binding contract and thus an enforceable obligation under the Dissolution Law.

The City argues that the loan being subject to final execution of an owner participation agreement, promissory note, deed of trust, and a regulatory agreement did not render the commitment letter unenforceable. The parties did not intend to construe those obligations in the same manner as the conditions requiring the developer to obtain tax credits and prove the project’s feasibility. Both parties intended to perform, and did perform, the terms of the commitment letter before the owner participation agreement was executed. In addition, executing a binding loan commitment before executing an owner participation agreement and related implementing agreements was standard practice. Indeed, state regulations required the loan commitment to be final and enforceable for the developer to receive tax credits. (4 Cal. Code Regs., § 10325, subds. (e), (f)(3), (f)(8)(B).)

The Department contends the commitment letter is not a binding loan agreement. It does not include all of the material terms; specifically, an amortization schedule or a maturity date. The borrower named in the commitment letter is not the borrower the agency approved at its March 16 hearing to receive the loan. And the agency could not rely on customs and practices to supply the missing material terms.

The Department also argues the evidence shows the agency and the developer did not intend for the commitment letter to be binding. The letter itself indicates it is not a binding agreement. It was conditional and subject to further negotiation in the form of the owner participation agreement. That agreement supplied the missing material terms, and it imposed new conditions on the developer before the agency would make the loan. The parties could not have intended the commitment letter to be binding absent execution of the owner participation agreement and fulfillment of its preliminary conditions. Extrinsic evidence in the form of comments at the March 16 hearing also show the parties did not intend for the commitment letter to be binding.

The Department further argues that the commitment letter’s conditions were not satisfied by the time the Dissolution Law froze the agency’s ability to enter contracts. Specifically, the condition that the owner participation agreement be executed was not timely satisfied.

We conclude the commitment letter states all the material terms of the loan transaction. We address the City’s and the Department’s arguments on this issue.

A. Material terms

The letter names the parties, the loan amount, and the terms of payment such that a court could objectively determine damages or specific performance should a party breach. Although a payment of 60 percent of “residual receipts” seems vague, the agency staff defined the term at the hearing. Staff stated the loan was a residual loan because “every year, an audit would be performed and based on the profits generated by the management company for the project, revenues above expenditures for that year would be shared . . . part going to deferred profit of the developer and part going to the retirement of the loan . . . .” Gevorgian, to whom the commitment letter was addressed at Ridgecrest Pacific Associates, clarified at the agency’s hearing that payment on the loan is based on a percentage of cash flow. This was a sufficiently objective definition to be enforceable.

Because the agreement was a “residual” type of agreement, it was not important for the commitment letter to include an amortization schedule and a maturity date. In fact, it would be impossible for such an agreement at its inception to include an accurate amortization schedule, as the amount of the payment on the loan changes each year based on profit, not on a predetermined price. In this instance, the lack of an amortization schedule does not prevent the borrower from knowing how much it owes or a court from determining damages should the borrower breach. “The law in California is clear that so long as the price may be objectively determined, a contract in which the price is not expressed may nonetheless be enforced.” (Carver v. Teitsworth (1991) 1 Cal.App.4th 845, 853.)

An omission of a contract term or duration also did not render the commitment letter fatally uncertain and indefinite. (Consolidated Theatres, Inc. v. Theatrical Stage Employees Union (1968) 69 Cal.2d 713, 724.) “However, such omission does require that the duration of the contract be judicially determined in accordance with established rules of construction. [Citations.] [¶] In construing contracts which call for continuing performance or forbearance but which contain no express term of duration, it is first necessary to determine whether the intention of the parties as to duration can be implied from the nature of the contract and the circumstances surrounding it. [Citations.] Thus, in some cases the court by referring to the nature of the contract and the totality of circumstances is able to determine that the obligations of the contract were impliedly conditioned as to duration upon the occurrence or non-occurrence of some event or situation.” (Id. at pp. 724-725.)

“California courts have not hesitated to imply a term of duration when the nature of the contract and surrounding circumstances afford a reasonable ground for such implication. Thus, in Haggerty v. Warner [(1953)] 115 Cal.App.2d 468, it was held that a contract which provided that plaintiff was to receive ‘Five Per Cent (5%) of all our billings’ on certain units, but which contained no express term of duration, was subject to the construction that its obligations were to continue as long as ‘billings’ were made by defendants. (115 Cal.App.2d at p. 473; [citations].” (Consolidated Theatres, Inc. v. Theatrical Stage Employees Union, supra, 69 Cal.2d at p. 727.)

Such is the case here. Under the commitment letter, the developer’s obligation to pay 60 percent of its annual profit toward the loan continues until the loan is paid in full. Because the commitment letter required the developer to make payments that were to be determined annually until the loan was paid off, no specific term of duration was required to make it enforceable.

B. Approval of the borrower

As to the identification of the parties, there is no doubt the commitment letter identified the borrower. The Department, however, contends the agency never approved making the loan to the borrower; it approved making the loan to another entity named AMG. We disagree.

The developer’s name was not mentioned at the hearing. The hearing’s agenda called for authorizing a letter of commitment “for AMG and Associates LLC Low Income Set-Aside Housing Project.” The staff report for the hearing referred to the matter as a letter of commitment for “AMG Senior and Market Rate Housing” and the “pending AMG project.” A chart summarizing the development named it the “Ridgecrest Senior Apartments by AMG.” Other pages in the staff report said the development was “by AMG/Pacific West Communities,” and referred to the project as “Proposed AGM [sic] Apartments” and “Proposed AGM [sic] Senior Apartments.” The financial pro forma for the project stated it was prepared by “AMG/Pacific West Communities, Inc.” Gevorgian’s resume was included in the staff report. It stated he “is the Managing Member of AMG & Associates, LLC.” At the agency hearing, staff introduced the matter as “a letter of commitment for AMG for senior and market rate housing.”

Gevorgian, however, appeared at the hearing as an agent. He introduced himself at the hearing as follows: “[I] am with AMG and Associates. I represent the partnership that has proposed the project in conjunction with Pacific West Communities. Combined, we’ve developed approximately 150 of these projects throughout California. . . . In fact, in the City of Ridgecrest, we’ve already developed one project, which has been very successful. We are not newcomers to Ridgecrest. We’ve been here for approximately 6 years.”

Other evidence confirmed that Gevorgian was the developer’s agent. In declarations submitted to the trial court in support of the City’s petition, Caleb Roope stated AMG was the developer’s authorized agent. Roope said he was a member of “Roope LLC, an Idaho limited liability company of Ridgecrest Pacific Associates, L.P. (‘Ridgecrest Pacific’), a California limited partnership.” His company was the administrative general partner of the project. Ridgecrest Pacific owned the land on which the project was built and was the entity that applied to the redevelopment agency for the loan. Ridgecrest Pacific hired AMG Associates to represent it before the City and the redevelopment agency. Gevorgian of AMG & Associates appeared at the agency hearing as Ridgecrest Pacific’s authorized agent.

The City submitted evidence showing that Gevorgian had acted as the developer’s agent on this project. On March 8, 2011, eight days before the agency hearing, Gevorgian signed a land purchase contract as the manager of the general partner of the developer, Ridgecrest Pacific Associates. By this contract, the developer purchased the land on which the project was built. Although there is no evidence the redevelopment agency was provided with a copy of this agreement before the hearing, it nonetheless supports Roope’s testimony that Gevorgian was the developer’s agent on the project.

“The rule is well established that the contract of an agent who deals in his own name without disclosing that of his principal, is the contract of the principal.” (Hollywood Holding & Development Corp. v. Oswald (1931) 119 Cal.App. 21, 25.) Thus, although the project bore AMG’s name and Gevorgian did not disclose the developer’s name at the hearing, his acknowledged appearance as an agent and his principal’s obvious ratification of his actions demonstrate the City entered into an enforceable agreement with the proper party.

“There is an important distinction to be drawn between a description [of a contractual party] which is inherently uncertain and indeterminate and one which is merely imperfect and capable of different applications. ‘To correct the one is, in effect, to add new terms to the instrument; while to complete the other is only to ascertain and fix the application of terms already contained in it. . . . In all these cases a resort to extraneous facts and circumstances may become necessary, in order to ascertain the individual to whom the description was intended to apply; but it is not perceived that the greater or less probability of this should, in either case, affect the validity of the deed.’ [Citation.]” (Woodward v. McAdam (1894) 101 Cal. 438, 440.)

The Department complains that the public was not informed of the developer’s identity. That fact does not render the letter unenforceable. There is no dispute that the agency approved a loan with the developer’s agent. There also is no evidence that once the developer’s name was known, any of the public objected.

Indeed, even the Brown Act allows for such contracts to remain enforceable. That law requires a public agency to include in its posted agenda a “brief general description” of each item to be discussed. (Gov. Code, § 54954.2, subd. (a)(1).) But if a public agency enters into a contract in violation of this or other provisions of the Brown Act, as the Department suggests the agency did, the agency’s action “shall not be determined to be null and void . . . .” (Gov. Code, § 54960.1, subd. (d)(2), (3).)

The agency’s approval of the loan at the hearing was not rendered unenforceable because it publicly negotiated the terms of the loan with the borrower’s agent.

C. Conditional terms

Although the commitment letter contained all of the material terms of a loan transaction to be enforceable, the Department argues the parties could not have intended the letter to be an enforceable contract because of its conditional nature. The letter stated the loan was subject to final execution of other agreements such as the owner participation agreement. It further stated the remaining terms would be in accordance with standard policies that would be codified in subsequent loan documents.

The Department also references comments made at the agency’s hearing by board members, staff, and Gevorgian that the approval was conditional. Staff stated, “Once, if they’re awarded, uh, tax allocations and tax credits, then we would come back and develop the specific agreement, loan documents, and all of that. So this is part of a competitive application to receive uh the State tax revenue.” Gevorgian stated, “This is a conditional commitment in which we would have to bring back to you all of the documents. Some cities like a DDA, others like an OPA. . . . [S]o ultimately, um, we would come back to the [agency board] and the documents would still have to be approved. So it’s a conditional commitment . . . .” Board members also expressed concern about how binding the commitment would be.

The evidence, however, shows that the condition on which the effectiveness of the commitment letter depended was whether the state would grant tax credits to the developer. All of the parties intended to agree to the loan if the developer obtained tax credits.

Staff indicated the issue before the board at the hearing was to provide a letter of commitment that the agency would fund the project in part. The development proposal would move forward only if the developer could win the tax credits, and the project had to be leveraged within the community it was servicing to win them. Indeed, by law, the commitment letter had to be binding in order for the state to award tax credits. (4 Cal. Code Regs. § 10325(e), (f)(3), (f)(8).)

Gevorgian stated the loan commitment was a conditional commitment because the developer would receive the agency’s money only when it was awarded the tax credits. Later in the hearing, staff confirmed with the mayor that he wanted the letter of intent conditioned on the successful award of tax credits and that the developer would not compel the City to make the loan from its general fund should the state take action detrimental to redevelopment agencies.

After a break to allow staff and Gevorgian to negotiate, the parties came back into open hearing and proposed the loan terms that were eventually offered in the commitment letter. Staff informed the board that the developer was willing to agree to the new terms “now.” Gevorgian confirmed that he was ready to agree to them “right now.” Staff stated the motion to approve the loan as follows: “[T]he motion as I understand it is to move forward with the agreement with 2.5 [million] from the Housing set-aside, $500,000 from the RDA, uh, 60/40 split until the pay down of the agreement, followed by a 20/80 split uh in perpetuity, um moving the number of residential units for this portion from 40 down to 32?”

Staff stated the city attorney wanted to remind the board that the motion was to condition the letter, and that the letter was not the actual agreement, which would come back to the board again. The board then approved the motion unanimously.

This evidence shows the agency intended to enter into a binding agreement to make the loan to the developer on condition the developer obtained the tax credits. Subsequent agreements necessary to implement the loan would not affect the material terms of agreement. “ ‘ “When parties orally agree upon all the terms and conditions of an agreement with the mutual intention that it shall thereupon become binding, the mere fact that a formal written agreement to the same effect is to be prepared and signed does not alter the binding validity of the oral agreement. [Citation.]” [Citation.]’ [Citations.]” (Kohn v. Jaymar-Ruby, Inc. (1994) 23 Cal.App.4th 1530, 1534.)

The parties’ subsequent conduct also indicates the parties intended the commitment letter to be a binding agreement. “When the parties to a contract perform under it and demonstrate by their conduct that they knew what they were talking about the courts should enforce that intent.” (Crestview Cemetery Assn. v. Dieden (1960) 54 Cal.2d 744, 754.) The parties fulfilled each of the conditions expressed in the commitment letter. The developer obtained financing and the tax credits, and the parties executed the other implementing agreements. Significantly, in none of these actions did the parties alter the material terms to which they had agreed in the commitment letter.

The commitment letter’s reference to standard conditions also did not make the agreement unenforceable or show the parties did not intend to be bound by it. “ ‘Equity does not require that all the terms and conditions of the proposed agreement be set forth in the contract. The usual and reasonable conditions of such a contract are, in the contemplation of the parties, a part of their agreement. In the absence of express conditions [in a real property purchase agreement], custom determines incidental matters relating to the opening of an escrow, furnishing deeds, title insurance policies, prorating of taxes, and the like. [Citations.] The material factors to be ascertained from the written contract are the seller, the buyer, the price to be paid, the time and manner of payment, and the property to be transferred, describing it so it may be identified [citations.]’ [Citation.]” (Patel v. Liebermensch, supra, 45 Cal.4th at p. 349.)

Here, where the material terms of the loan were stated in the commitment letter, it was appropriate for the parties to agree that the other terms would be consistent with standard policies for financing senior housing. That agreement did not render the material terms unenforceable.

The Department also contends the commitment letter was not an enforceable agreement by the time the Dissolution Law took effect because the condition that the parties enter into the owner participation agreement had not been fulfilled. This contention brings us back to where we began. “It is well established that ‘. . . separate written instruments between the same parties and relating to the same subject matter . . . are to be construed together as one transaction . . . .’ [Citations.]” (Chern v. Bank of America, supra, 15 Cal.3d at p. 874.) Because the commitment letter is a binding contract, all of the agreements executed by the parties to implement the loan are considered to be one agreement, and that agreement is an enforceable obligation under the Dissolution Law because the parties entered into the contract before the Dissolution Law took effect.

DISPOSITION

The judgment is reversed, and the matter is remanded with directions for the trial court to grant the petition for writ of mandate. Costs on appeal are awarded to the City. (Cal. Rules of Court, rule 8.278(a).)

HULL, J.

We concur:

RAYE, P. J.

ROBIE, J.