February 27, 2024
City Attorney's Office
DATE: February 27, 2024
TO: Mayor Martinez as the President of the Board of the Richmond Surplus Property Authority and its Board
Members
FROM:
Dave Aleshire, Counsel for the Richmond Surplus
Property Authority
Subject:
Ratification of SPA leases at PPMT
FINANCIAL IMPACT: None.
PREVIOUS COUNCIL
ACTION:
None.
STATEMENT OF THE
ISSUE:
Lease agreements involving property owned by SPA
require SPA Board approval or authorization. During
certain periods of its existence the SPA did not hold
regular meetings, and certain agreements and leases
were instead approved by the City Council. The purpose
of this action is for the SPA Board to ratify these past agreements and update them under the statutes of the
State of California.
RECOMMENDED ACTION:
ADOPT a resolution ratifying and approving lease
agreements of certain property owned by the Surplus
Property Authority that were previously approved by the City Council of the City of Richmond.
AGENDA
REPORT
February 27, 2024
DISCUSSION:
A. Background
On June 12, 1967 the City Council adopted Ordinance No. 218 N.S. to establish the Surplus Property Authority for the City of Richmond (the “Authority”). The Authority was established as a vehicle to initially acquire Shipyard No. 3 property from the Federal Government located within the Port of Richmond. The Authority has since operated under State law as a public corporation for the primary purpose of acquiring and leasing property within the Port of Richmond . The Authority now owns 146.77 acres subject to some 13 Leaseholds with three of the properties vacant.
While the Authority remains legally distinct from the City, the board of commissioners for the Authority (the “Board”) share the same members as the City Council, with the president of the Board being the Mayor of the City of Richmond. The Board has authority to exercise all powers on behalf of the Authority, including the authority to sell, lease, exchange, transfer, assign, or otherwise dispose of real or personal property or any interest in such property.
Meetings of the Board are subject to the Ralph M. Brown Act under California Government Code Section 54950 et seq., (“Brown Act”) and must be duly noticed and open to the public. In addition, any ordinance, resolution, or motion of the Board requires affirmative votes from at least a majority of the Board members and such votes must be entered upon the minutes of the Board where an action is taken with less than a unanimous vote.
Attached as Attachment 1 is a map showing all properties owned by the SPA. Attachment 2 is a Table showing when the current leases of the SPA were entered into, and amended and extended, their terms, and who executed them. These leases were generally listed on agendas of the City Council which were noticed and acted upon in accordance with the Brown Act and regular Council procedures.
B. Authority of Officers
Reviewing the Authority’s organizing document, we reviewed Resolution 1 adopted July 10, 1967 which besides (in Section 6) appointing the Mayor as Chairman of the Authority and the Councilmembers as Commissioners, it made the City Manager of the City the Manager for the Authority, and the City Attorney of the City the Attorney of the Authority.
Moreover, in Section 3 it went on to state:
“3. . . . Insofar as practicable, the business of the Board shall be conducted in accordance with rules and procedures adopted by the Council of the City of Richmond.”
We have found no separate Bylaws or other procedures specific to the Authority, but the early meetings show active participation by the City Manager, presenting staff reports and
February 27, 2024
recommendations and entering debate and discussion, as well as the City Attorney providing legal opinions and advice. The conduct of these officers was consistent with Section 3.
C. Inactivity by Board
During certain periods of its existence, there were formally noticed and conducted agendas of the SPA, similar to how the Housing Authority meetings are currently conducted. However, that was not always the case; sometimes the City Council agenda stated that the City Council also served as Surplus Property Authority or Joint Powers Finance Authority, but there was no distinct SPA agenda.
The issue has been posed that the City practice of not having a separate agenda is not adequate under the Brown Act. The failure to post separate agendas can create legal confusion even though the Council members and Board commissioners are the same.
The authorization or approval of any such lease agreements involving property owned or controlled by the Authority must be authorized or approved by the Board at duly noticed Board meetings. If the capacity in which the members are acting is not d istinct, it can leave the record of their actions unclear. As such, there is a need to clarify the Authority’s process for future agendas and also to clarify its past actions . The Board needs to convene at a duly noticed meeting to approve and ratify prior agreements for the lease of certain property owned by the Authority, as listed within Attachment 2 to this report, that received approval, authorization, or were executed by City Council at duly noticed Council meetings rather than receiving approval by the Board at duly noticed Board meetings.
D. Legal Principles Supporting Ratification
The City Attorney has based the foregoing recommendation that the Board ratify the leases and other actions of the City Council which was acting as t he Surplus Property Authority as shown in Attachment 2. These leases are longstanding and currently in effect, some enacted as long ago as 1993 and 2004 and running as long as to 2043.
Except in one instance, in all of these cases, the tenants are current in their lease payment obligations and there is no current litigation. In one case, there is ongoing litigation but the Authority is not contesting the validity of the initial lease.
There are several legal bases that support the ratification of these leases and the legality of the Authority’s actions in the Resolution. The good faith of the tenant’s actions, the detrimental reliance on the representations and estoppel would be arguments to prevent the Authority from now denying the validity of the leases on behalf of tenants who are fully performing their obligations.
Additionally, three times each year the State legislature adopts what is known as the “Validating Statutes” and the most recent one was adopted June 29, 2023 (SB 879) validating the organizat ions, acts and proceedings of, among other entities, local cities
February 27, 2024
and agencies, but with certain limitations. The limitations prohibit the validation of (i) acts not constitutional, (ii) acts being legally contested and now pending, and (iii) any act previously determined to be illegal, void or ineffective.
These acts are uncodified, two of which are typically urgency measures that validate the organization, boundaries, acts, proceedings, and bonds of the state and counties, cities, and specified distr icts, agencies and entities. These measures may be used to cut off challenges to local legislative acts and to establish a presumption of validity. See Miller v McKenna (1944) 23 C2d 774, 781 (validity of tax proceedings; effective date of validating act); People ex rel Amestoy Estate Co. v Van Nuys Lighting Dist. (1916) 173 C 792, 797. (See Municipal Law Handbook, section 13.188.) However, there are few cases that have interpreted the scope of the legislative acts that may be validated pursuant to the Validating Act.
However, the cases that have applied this validation legislation have held these Validating Acts are intended to cure all defects resulting from a failure to comply with provisions which are merely directory of the mode of the exercise of th e power. But defects and omissions which go to the jurisdiction of the Public Body to act at all, and which make their action absolutely void, cannot be cured in this manner.
As our purpose here is not to create jurisdiction in the Authority but merely to cure defects to comply with directory authorities, we believe in addition to the other authority cited, this is a property use of the Validating Statutes.
E. Conclusion: Recommendation
It appears that while the Authority’s early procedures were very formal, though the written procedures were not extensive as they relied on the City’s procedures, but after some time, gradually the Authority agenda process became relaxed. However, its many significant tenants relied in good faith on the Authority’s procedures. In light of the Validating Statutes and other authorities, Staff therefore requests that the Board for the Authority approve a resolution to ratify all prior agreements contained in Attachment 2 that received approval, authorization, or execution from or by City Council.
DOCUMENTS ATTACHED:
Attachment 1 – Map of Point Potrero Marine Terminal with Tenants listed in Attachment 2 Highlighted
Attachment 2 – Port Leases Owned by SPA that were Approved or Executed by City Council
Attachment 3 – Resolution of the Board of the Richmond Surplus Property Authority Ratifying Prior Lease Agreements