06.16.2017

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Updates

The Washington Supreme Court significantly narrowed the ability of public agencies to discuss real estate deliberations in executive session. In a ruling on June 8, 2017, the court held that the Open Public Meetings Act (OPMA) requires that governing-body discussions regarding the sale or lease of real property generally must be conducted in open public meetings, and only the price minimums can be discussed privately in executive sessions.

Case Background

The case involved a lease negotiation between the Port of Vancouver USA and Tesoro Savage Petroleum Terminal LLC. Columbia Riverkeeper sued the port, arguing that the lease was invalid because the port’s discussions of lease terms during five executive sessions should have been subject to open public meetings, per the OPMA.

The OPMA dictates that all meetings of the governing body of a public agency (such as a city council meeting) be open to the public. An exception to the law (RCW 42.30.110(1)(c)) allows private meetings to be held when the governing body is considering the “minimum price at which real estate will be offered for sale or lease when public knowledge regarding such consideration would cause a likelihood of decreased price.” In Columbia Riverkeeper, the court interpreted this exception for the first time and held that only narrow discussions of minimum price meet this exception. Although the court conceded that executive sessions may address the factors that influence setting a bottom-line price, the court also noted that the factors themselves cannot be the focus of the meeting.

The court dismissed concerns that this rule would render executive sessions impractical. It indicated that because some, albeit limited, contextual references are allowable in executive session, the meetings would still be workable. Similarly, the court was unconcerned about undermining agencies’ negotiation power, and it indicated that the public interest in open and public meetings outweighed any potential loss of competitiveness.

Implications for Agency Real Estate Transactions

Given this narrow OPMA exception, agencies should be careful when conducting an executive session involving the sale or lease of real estate, and be sure to limit the discussion to setting a minimum price. Though executive sessions may address the factors influencing minimum price (including things like environmental risks, potential impacts on local jobs, public safety, etc.), the meeting must focus on establishing the minimum allowable price and not on the factors themselves. And, any of the factors discussed in an executive session must first be addressed in public meetings. Finally, once the minimum price is determined in executive session, agencies should return to the open public meeting for any further discussions of the sale or lease.

Potential tenants or purchasers of real estate from public agencies regulated by the OPMA should discuss with the agency how it intends to conduct its governing body’s deliberations on a proposed lease or real estate transaction and monitor executive session announcements.

In this ruling, the court did not reach the question of remedies for OPMA violations; the case was remanded to Clark County Superior Court for further review based on its interpretation. The court also noted that it is the role of the legislature to balance the practical implications and possible competitive disadvantages of the OPMA—suggesting that the port’s policy arguments could be presented to the legislature to seek a rewrite of the statute.

The authors recognize the contributions of summer associate Carl Rubinstein to this update.

© 2017 Perkins Coie LLP