Clean Marine Distribution for California's Heartland of West Sacram August 7, 2024 Honorable Judge Timothy Fall*

The West Sacramento Port Commission reported the Exclusive Negotiating Agreement (ENA) with Fulcrum-Bluerise was entered and recorded at their closed Board meeting in March 2022, but no record was found in the March 2022 minutes. The public was unaware that an ENA was being considered for this property and created a perception the Port Commission was not being transparent in their plans. Response: The Port disagrees partially with the finding. The Port agrees that the March approval of the ENA was not reported following closed session, but disagrees that it should have been reported. The Ralph M. Brown Act ("Brown Act") governs the conduct of closed sessions, and allows a local agency to meet in closed session to discuss "price and terms" of real property dispositions (Government Code Section 54956.8).1 Following such a closed session, the Brown Act requires a public report of the "approval of an agreement concluding real estate negotiations . . . after the agreement is final" (§ 54957.1(a)(1).) An ENA is not an "agreement concluding real estate negotiations"; it is merely an interim step in the negotiations process, and binds neither party to the sale or lease of real property. As such, disclosure of the approval of an ENA is not legally required. Furthermore, there are legitimate reasons for why public agencies take this approach, including the need to maintain market competitiveness for the project being considered.

In order for the West Sacramento Port Commission to proceed with the Purchase and Sale Agreement of the Seaway property as described in Resolution No. P22-4 of the Port Commission, adopted on October 5, 2022, the California Department of Housing and Community Development (HCD) must deem the property Exempt Surplus Property from the Surplus land Act (SLA). The process described by law for the property to be exempt requires All statutory references are to the Government Code unless otherwise noted. 1110 West Capitol Avenue West Sacramento, CA 95691 (916) 617-4880 Port of West Sacramento at www.cityofwestsacramento.org Docusign Envelope ID: 85F054A5-3975-499D-B351-D1B0D3BA8012 Attachment 2 the Port Commission to apply to the HCD for approval and exemption. The Port Commission did not apply to HCD for the exemption, but simply declared in its Resolution that the property was exempt. Self-certification of exempt status is not sufficient as stated in the SLA. In the final stages of preparing this report, the Grand Jury learned that the Port Commission applied for an SLA exemption which was granted on March 27, 2024 [4]. Response: The Port disagrees with the finding. At the time the Port Commission made its determination that the property at issue was exempt surplus land, the statute did not require that that determination be reported to HCD. Section 54221(f)(1)(P)(iv) of the Government Code was updated after 2022 to make that a requirement. In any event, that new section only requires that a local agency provide HCD with a written notification at least 30 days before the "disposal" of land, not the approval of an agreement to sell land. Consistent with the law at the time, the Port Commission made written findings to support its determination that the Property was exempt when it approved Resolution P22-4 on October 5, 2022. Following a change in the law that required disclosure of exemption determinations, the Port notified HCD on March 6, 2024, more than 30 days prior to disposal of the land. A copy of that notification is attached as Enclosure 1. HCD confirmed that the Port had properly identified the Property as exempt surplus land in its letter of March 27, 2024 (Enclosure 2). As confirmed by HCD, the Port acted in compliance with the Surplus Land Act.

The Sacramento-Yolo Port Policies Manual of 1997 is out-of-date, does not include guidance on the sale of surplus land, and does not address strategies and policies for the sale and use of real estate properties. Response: The Port agrees with the finding. GRAND JURY RECOMMENDATIONS