The District Attorney of Orange County asked the Attorney General for an opinion on what items may be discussed under the real estate negotiations exemption to the open meeting requirement of the Ralph M. Brown Act (“Brown Act”). In Opinion 10-206, the Attorney General opined that the exemption allowed for discussion in closed session of the amount to be paid or accepted in a transaction, the terms of that payment, and other information essential to arriving at the price and terms, such that public disclosure would be tantamount to revealing the information about the amount or terms of payment.
Attorney General Opinion
The Brown Act requires the legislative bodies of public agencies to hold their meetings open to the public, except as expressly authorized by the Brown Act. One such exception allows real estate transactions to be discussed in closed session. It allows a legislative body to hold a closed session “with its negotiator prior to the purchase, sale, exchange, or lease of real property by or for the local agency to grant authority to its negotiator regarding the price and terms of payment for the purchase, sale, exchange, or lease.” The Brown Act also requires the legislative body to disclose in an open and public session the property concerned, its negotiator, and other parties to the negotiations.
The Attorney General opined that the answer to this question is found in the plain language of the exemption, which specifies that it applies to a discussion of the “price and terms of payment.” The word “price” is commonly understood to mean the amount of compensation given or sought in exchange for the property. “Terms of payment” is best understood to mean the form, manner and timing upon which the agreed upon price is to be paid, the Attorney General said. Because the word “terms” is immediately modified by the words “of payment,” it is clear that the Legislature did not intend to allow for discussion in closed session of any other terms of the transaction than the payment, the Attorney General added.
Additionally, the exceptions, while narrow, must also be construed in a manner that gives effect to the underlying purposes of the law. Here, that purpose is to conserve scarce public resources through effective negotiation of real estate transactions. Therefore, other information relating to the price and terms of payment, including sales or rental values of comparable properties, is permitted to be discussed in closed session.
For those reasons, the Attorney General opined that the real estate negotiations exemption to the Brown Act permits the closed-session discussions of: 1) the amount of consideration that the local agency is willing to pay or accept in exchange for the property; 2) the form, manner and timing of how that consideration will be paid; and 3) items that are essential to arriving at the authorized price and payment terms, such that their public disclosure would be tantamount to revealing the information that the exception permits to be kept confidential.
Questions
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Jeffrey L. Massey or Marsha A. Bedwell | 916.321.4500