image of Port of Tacoma

As Port of Tacoma commissioners consider how to use the spot previously leased by Northwest Innovation Works prior to its decision to abandon a methanol plant on the Tacoma Tideflats, they may want to be mindful of a recent Open Public Meetings Act (“OPMA”) decision.

The Washington Supreme Court’s Columbia Riverkeeper v. Port of Vancouver decision, filed June 8, 2017, is remarkably on point.

Commissioners discussed “basically all topics” related to port lease in executive session

The Port of Vancouver case was set in 2013, when Port of Vancouver (“Port”) commissioners engaged in lease negotiations with Tesoro Corporation and Savage Companies for a large rail terminal on Port land.

Typically, Port lease terms and benefits were negotiated by Port staff, not commissioners, but staff kept commissioners updated throughout the process. Port staff also were responsible for determining an appropriate lease price. At the end of the negotiation process, Port Commissioners deliberated and voted to either accept or deny a lease.

In the case of the Tesoro-Savage lease, Port staff presented the project to Commissioners in executive session. The Port argued that it conducted its lease discussions in executive session to avoid “poaching” by other ports, which might undercut a fledgling lease deal.

In order to avoid “poaching,” Port Commissioners recessed to at least seven executive sessions to discuss “basically all topics” related to real estate, including the base lease rate, wharfage and dock fees, the duration of an exclusivity agreement, the implications of Tesoro-Savage forming an LLC, the type of crude expected to flow through pipelines and associated risks, construction timelines, and whether extensions would be allowed. Port staff and commissioners reasoned that a variety of topics can influence lease prices, so all are appropriate for discussion in executive session.

Although the Port of Vancouver also held open public meetings on the issue, on October 2, 2013, Columbia Riverkeeper, the Sierra Club, and Northwest Environmental Defense Center sued, arguing that five of the executive session meetings violated the OPMA.

Wide-ranging discussions exceeded scope of “minimum price” exception

The OPMA contains a “minimum price” exception that allows governing bodies to enter executive session “to consider 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.” See RCW 42.30.110(1)(c).

Initially, the trial court agreed with the Port’s interpretation of the law allowing for executive session to discuss “minimum price,” reasoning that governmental entities should be able to discuss the factors that make up a minimum price because those factors are essential to the price itself.

The trial court held that the Port could discuss in executive session information that would give a customer an advantage in negotiating a lower price, and information that would give a competitor an opportunity to negotiate with the Port’s customer, thus creating a bidding process that would decrease the Port’s price.

But because the question was one of “first impression,” the trial court stayed the remaining proceedings pending appellate review. Riverkeeper petitioned the Washington Supreme Court for review, and the Supreme Court accepted the case.

In its analysis, the Supreme Court concluded that the OPMA does not permit a Port to engage in a general discussion of contextual factors influencing price in executive session. The factors behind price – quality of land, environmental impacts, and property improvements, among other things – must be discussed in public.

Once relevant factors have been discussed in public session, though, commissioners may retire to executive session to decide an appropriate minimum value for the lease or sale of the property.

Have questions? Contact me to set up a consultation. Call (206) 371-4720 or email erica@ericadoctorlaw.com