A long-awaited opinion of the Attorney General adopts the view argued by CalAware that the Brown Act, in permitting a local body to hold closed sessions to discuss real property negotiations with its bargaining agent, narrowly confines what may be addressed in these sessions.

The League of Cities had contended, in its letter to the AG on the issue, that the Act's allowance for discussion of "price" and "terms of payment" should be read broadly to include any issues and facts affecting the price to be paid or asked, and all "terms" of the deal. This view led, for example, to the secret negotiation of complex disposition and development agreements, of which a local agency's real property interest was only a small corner.

CalAware's argument to the AG was that, for reasons of legislative history and of previous use of the phrase "terms of payment" in cases and statutes, as well as in view of the narrow construction rule of Proposition 59, the subject matter for closed sessions could not be stretched to include everything with potential impact on the price, or every element of the proposed agreement beyond price. CalAware's  view is clearly the one adopted in the opinion (attached).

While the AG leaves room for considering certain direct determinants of economic value that, if disclosed, would necessarily hamper the government's ability to get the best benefit of the bargain (how much a rental property has been earning, what a parcel or building's appraised value is, etc.), that kind of discussion has never been considered an abuse of the scope of closed sessions.

But otherwise the opinion takes a very conservative view of the topic areas for property negotiation closed sessions, and lines up with the view of the Court of Appeal in a case several years ago concluding that many matters privately discussed by the San Diego City Council in connection with a large stadium project had no place in closed session, no matter how "related" they might be from some perspective.

CalAware's June 1, 2010 letter reads as follows:

Marc J. Nolan

Deputy Attorney General

300 South Spring Street, Suite 1702

Los Angeles, CA  90013

RE: Opinion  Request 10-206

Dear Mr. Nolan,

In response to the May 26 invitation from Supervising Deputy Attorney General Susan Duncan Lee regarding this opinion request, summarized as “Does the real estate exception to the open meeting requirement of the Brown Act allow closed-session 
discussions of anything other than price and terms?”, the following points are submitted.

1. The summarized issue quoted above misstates the statute, which refers to “price and terms of payment.”

2. A focus on the exact meaning of the phrase “terms of payment” is crucial to resolving most of the questions submitted by District Attorney Rackauckas in his opinion request.

3. A narrow construction of statutory language used to limit public access to the meetings of public bodies is constitutionally compelled.  Art. 1, Section 3,  subd. (b), par. (2).

4. The legislative history of the bill that added Government Code §54956.8 to the Brown Act—SB 2216 (Keene) of 1984—shows a progressively narrowing scope of the intended range of issues intended for closed session discussion.

As introduced February 17, the section was worded:

Notwithstanding any other provision of this chapter, a county board of supervisors may hold a closed session with other persons for purposes of negotiations for the purchase,  sale or lease of property by or for the county.

Thus while the class of local legislative bodies authorized to employ this exemption was narrow, other aspects were very broad.  Closed sessions were permitted with unspecified “other persons.” Any aspect of “negotiations for the purchase, sale or lease” was legitimate subject matter.  And transactions in any “property”—real, personal or intellectual—were eligible for such confidential discussions.

As amended April 23, the entities entitled to assert the exemption were expanded to the maximum—“a legislative body of a local agency”—while the authorized closed session function was collapsed to “meeting with its designated negotiator to give instructions” and the subject matter to “the terms or price, or both.”  It is this broad scope—any aspect of consideration— that most if not all local agencies appear to be reading into the statute as they currently understand it.

The May 7 amendment reduced the permitted range of discussion to its narrowest scope—“price.”  The August 16 amendment settled on “price and terms of payment.”

There is no record in the legislative history as to how the author or the Legislature understood the shift from “terms” to “terms of payment.”  By that time the center of attention of both proponents and opponents had fastened overwhelmingly on highly controversial provisions in the bill that codified—and considerably limited—the authority of local legislative bodies to hold closed sessions concerning pending litigation: Government Code §54956.9.

But there is every reason to believe that “terms of payment” was understood and intended to mean something far narrower and more specific than elements of consideration in general, namely the form, manner and timing of payment of the price.  At the time, all references to the phrase in California case law that we have been able to discover used it in this confined sense.*  No case used “terms of payment” in any broader sense, nor has any since.

5. Likewise,  statutes employing the phrase clearly give it the narrow sense of how and when payment is to be made, e.g. in Civil Code §§1695.3, 1803.2, 2891.9, 2892 and 3225 and Government Code §27754.  We have been unable to find its use in a broader sense, as a synonym for “consideration” or otherwise, anywhere in the California Codes.  Nor was the Legislature in 1984 incapable of distinguishing “terms of payment” from “consideration.” For example, as noted by the court in Segura v. McBride,

The Home Equities Sales Contract Act [enacted in 1979] is a comprehensive set of laws designed to protect homeowners in default against unfair purchases of their home equity. . .  At the heart of the scheme is the requirement that the agreement between buyer and seller be in writing, with specific terms aimed at protecting the homeowner. The contract must include the total consideration given, terms of payment and terms of any rental agreement; a conspicuous statement of the right to cancel within five business days or until 8 a.m. on the day scheduled for foreclosure, with an attached notice of cancellation; and a conspicuous notice that until the right to cancel has ended, the equity purchaser cannot ask the seller to sign a deed or any other document.

5 Cal. App. 4th 1028,1034  (Cal.App.Dist.1 04/27/1992) (Emphasis added).

6. No case on the Brown Act attempts to construe “terms of payment.”  The leading case on Section 54956.8, Shapiro v. San Diego City Council, 96 Cal.App.4th 904 (Cal.App. Dist.4 03/05/2002), found it unnecessary to approach that issue since the wide-ranging closed session discussion involved had not even settled on a particular parcel or parcels, and none of the related topics discussed beyond “price and terms of payment” had been listed on the closed session agenda.  But the expansive “rule of reason” argued by the city council—and reasoned by many local agencies since then to be justified where the agenda does identify the parcel under negotiation—is impossible to reconcile with either the constitutional narrow construction rule or the fact that the Legislature at one point contemplated such breadth in the phrase “terms or price, or both,” only to abandon it in favor of “price” and a phrase never used in any sense other than to specify how and when the price will be paid.

City attorneys and other local agency counsel are sometimes heard to rationalize the “rule of reason” advocated by the city council in Shapiro with the observation that “everything affects the price.”  One might just as easily note that “everything affects the people’s ability to ‘retain control of the instruments they have created.’” If in the Shapiro case a particular parcel had been specified as the subject of a particular negotiation and if all the related issues had been listed on the agenda as items of discussion, would it have been lawful for the council to use the closed session for discussion of the following?

• “land acquisition matters,

• “design work of architect engineers;

• “infrastructure and parking developments;

• “authority to hire ballpark manager;

• “need to hire a project director for the ballpark project;

• “capping interim expenses;

• “environmental impact report (EIR);

• “alternative sites;

• “traffic and parking;

• “financing of the ballpark project;

• “naming rights in the ballpark;

• “homeless and effects of redevelopment on homeless; and

• “obtaining consultants."

We submit that, given the meaning otherwise assigned without exception to the phrase “terms of payment” in California law, none of these topics would be fair game for discussion in closed session under 54956.8.  If local agencies need a “rule of reason” allowing them the flexibility secretly to discuss all aspects of any project involving some transfer of an interest in real property, they must seek such authority in new legislation.  Otherwise their “rule of reason” is precisely what is withheld in the Brown Act’s preamble as “the right to decide what is good for the people to know and what is not good for them to know.”

Cordially,

Terry Francke

General Counsel

 

*     Mills v. Skaggs, 64 Cal. App. 2d 656, (Cal.App.Dist.1 06/01/1944)

Avalon Products Inc. v. Lentini, 98 Cal. App. 2d 177 (Cal.App.Dist.2 06/23/1950)

Young v. Hampton, 36 Cal. 2d 799, 228 P.2d 1 (Cal. 03/09/1951)

Boosman v. United Building Co., 109 Cal. App. 2d 486 (Cal.App.Dist.2 02/27/1952)

Lathrop v. Gauger, 127 Cal. App. 2d 754 (Cal.App.Dist.2 10/05/1954)

Gould v. Callan, 127 Cal. App. 2d 1 (Cal.App.Dist.2 08/03/1954)

Bruggeman v. Sokol, 122 Cal. App. 2d 876 (Cal.App.Dist.4 01/27/1954)

Hancock Oil Co. v. McClellan, 135 Cal. App. 2d 667 (Cal.App.Dist.2 09/27/1955)

American Federation of Musicians v. Superior Court, 150 Cal. App. 2d 165 (Cal.App.Dist.2 04/16/1957)

Grainger v. Antoyan, 48 Cal. 2d 805 (Cal. 07/03/1957)

James v. Herbert, 154 Cal. App. 2d 873 (Cal.App.Dist.2 10/28/1957)

People v. Bouchard, 49 Cal. 2d 438 (Cal. 11/22/1957)

Horning v. Ladd, 157 Cal. App. 2d 806 (Cal.App.Dist.2 02/24/1958)

Plumer v. Superior Court of Los Angeles County, 50 Cal. 2d 631 (Cal. 07/17/1958)

Kux v. Cal-West Lumber Corp., 162 Cal. App. 2d 500 (Cal.App.Dist.2 08/01/1958)

Schalow v. Schalow, 163 Cal. App. 2d 448 (Cal.App.Dist.3 09/11/1958)

Roberts v. Adams, 164 Cal. App. 2d 312 (Cal.App.Dist.2 10/17/1958)

Roven v. Miller, 168 Cal. App. 2d 391 (Cal.App.Dist.4 03/05/1959)

Stark v. Stark, 177 Cal. App. 2d 561 (Cal.App.Dist.3 01/29/1960)

Hoult v. Beam, 178 Cal. App. 2d 736 (Cal.App.Dist.3 03/09/1960)

Herz v. Clarks Market, 179 Cal. App. 2d 471 (Cal.App.Dist.1 04/05/1960)

House v. Lala, 180 Cal. App. 2d 412 (Cal.App.Dist.2 04/27/1960)

People v. Kerfoot, 184 Cal. App. 2d 622, (Cal.App.Dist.2 09/16/1960)

Thompson v. California Brewing Co., 191 Cal. App. 2d 506, (Cal.App.Dist.1 04/25/1961)

Ontario Downs Inc. v. Lauppe, 192 Cal. App. 2d 697 (Cal.App.Dist.3 05/31/1961)

Hansen Pacific Corp. v. Buck Mountain Logging Co., 191 Cal. App. 2d 826 (Cal.App.Dist.3 05/05/1961)

Spector v. National Pictures Corp., 201 Cal. App. 2d 217 (Cal.App.Dist.2 03/12/1962)

Powers Regulator Co. v. Seaboard Surety Co., 204 Cal. App. 2d 338 (Cal.App.Dist.2 06/04/1962)

Pascoe Steel Corp. v. Pozun Brothers Inc., 205 Cal. App. 2d 762, (Cal.App.Dist.2 07/23/1962)

Kaufmann v. Nilan, 207 Cal. App. 2d 1 (Cal.App.Dist.1 08/20/1962)

Wilson v. Roppolo, 207 Cal. App. 2d 276 (Cal.App.Dist.1 08/30/1962)

Alaimo v. Tsunoda, 215 Cal. App. 2d 94 (Cal.App.Dist.1 04/15/1963)

Spaziani v. Millar, 215 Cal. App. 2d 667 (Cal.App.Dist.4 05/02/1963)

Mueller v. Chandler, 217 Cal. App. 2d 521 (Cal.App.Dist.4 06/24/1963)

Boys Town USA Inc. v. World Church, 221 Cal. App. 2d 468 (Cal.App.Dist.2 10/23/1963)

Burrow v. Timmsen, 223 Cal. App. 2d 283 (Cal.App.Dist.2 12/13/1963)

Estate of William J. Zappettini v. Ferroggiaro, 223 Cal. App. 2d 424 (Cal.App.Dist.1 12/17/1963)

Weisberg v. Ashcraft, 223 Cal. App. 2d 793 (Cal.App.Dist.2 12/27/1963)

Magna Development Co. v. Reed, 228 Cal. App. 2d 230 (Cal.App.Dist.1 06/26/1964)

Conley v. Fate, 227 Cal. App. 2d 418 (Cal.App.Dist.2 05/25/1964)

Haase v. Lamia, 229 Cal. App. 2d 654 (Cal.App.Dist.2 09/14/1964)

Smith v. Holmwood, 231 Cal. App. 2d 549 (Cal.App.Dist.3 01/04/1965)

Drewry v. Welch, 236 Cal. App. 2d 159 (Cal.App.Dist.1 07/29/1965)

Colonial Savings and Loan Association v. Redwood Empire Title Co., 236 Cal. App. 2d 186 (Cal.App.Dist.1 07/30/1965)

Amacorp Industrial Leasing Co. v. Robert C. Young Associates Inc., (Cal.App.Dist.2 10/28/1965)

Kett v. Graeser, 241 Cal. App. 2d 571 (Cal.App.Dist.1 04/19/1966)

Zitny v. State Bar of California, 64 Cal. 2d 787 (Cal. 07/01/1966)

Vezaldenos v. Keller, 254 Cal. App. 2d 816 (Cal.App.Dist.5 09/29/1967)

Efron v. Kalmanovitz, 249 Cal. App. 2d 187 (Cal.App.Dist.2 03/06/1967)

Carpenson v. Najarian, 254 Cal. App. 2d 856 (Cal.App.Dist.5 10/02/1967)

People v. Midkiff, 262 Cal. App. 2d 734 (Cal.App.Dist.2 06/05/1968)

Zmak v. Arata Pontiac, 265 Cal. App. 2d 689 (Cal.App.Dist.1 09/16/1968)

White Point Co. v. Herrington, 268 Cal. App. 2d 458 (Cal.App.Dist.2 12/23/1968)

Lawrence v. Shutt, 269 Cal. App. 2d 749 (Cal.App.Dist.4 02/17/1969)

Swaffield v. Universal Ecsco Corp., 271 Cal. App. 2d 147 (Cal.App.Dist.2 03/27/1969)

Elster's Sales v. Longo, 4 Cal. App. 3d 216 (Cal.App.Dist.2 02/06/1970)

A. A. Baxter Corp. v. Home Owners & Lenders, 7 Cal. App. 3d 725 (Cal.App.Dist.4 05/19/1970)

Skelly v. Richman, 10 Cal. App. 3d 844 (Cal.App.Dist.2 08/26/1970)

Hunt v. Smyth, 25 Cal. App. 3d 807 (Cal.App.Dist.1 05/22/1972)

Brecher v. Gleason, 27 Cal. App. 3d 496 (Cal.App.Dist.2 08/28/1972)

Sevin v. State Bar of California, 8 Cal. 3d 641 (Cal. 01/05/1973)

People v. Randono, 32 Cal. App. 3d 164 (Cal.App.Dist.4 05/08/1973)

Dorman v. International Harvester Co., 46 Cal. App. 3d 11 (Cal.App.Dist.2 03/13/1975)

Dixon Mobile Homes Inc. v. Walters, 48 Cal. App. 3d 964 (Cal.App.Dist.3 06/06/1975)

Gantry Construction Co. v. American Pipe and Construction Co., 49 Cal. App. 3d 186 (Cal.App.Dist.2 06/18/1975)

Diaz v. United California Bank, 71 Cal. App. 3d 161 (Cal.App.Dist.2 06/27/1977)

Steiner v. Mobil Oil Corp., 20 Cal. 3d 90 (Cal. 10/11/1977)

Eldridge v. Burns, 76 Cal. App. 3d 396 (Cal.App.Dist.1 01/03/1978)

Sayble v. Feinman, 76 Cal. App. 3d 509 (Cal.App.Dist.2 01/04/1978

People v. Baseline, 84 Cal. App. 3d 662 (Cal.App.Dist.4 09/07/1978)

People v. Wong, 93 Cal. App. 3d 151 (Cal.App.Dist.2 05/17/1979)

People v. Batiste, 109 Cal. App. 3d 328 (Cal.App.Dist.2 08/19/1980)

Schneider v. Ampliflo Corp., 148 Cal. App. 3d 637 (Cal.App.Dist.2 11/01/1983)

Bartley v. Karas, 150 Cal. App. 3d 336 (Cal.App.Dist.1 12/30/1983)

Kawasho International v. Lakewood Pipe Service Inc., 152 Cal. App. 3d 785 (Cal.App.Dist.2 12/30/1983)

People v. Cervantes, 154 Cal. App. 3d 353 (Cal.App.Dist.5 03/19/1984)

E&H Wholesale Inc. v. Bros., 158 Cal. App. 3d 728 (Cal.App.Dist.2 07/25/1984)