Charlotte Observer: Did closed sessions break law?

Two experts now say those votes violated the state’s open-meeting laws, which require almost all government business to be conducted in the sunshine. Amanda Martin, an attorney for the N.C. Press Association, said the city could have discussed its negotiating strategy in private, but needed to take a final vote in public.

The city of Charlotte says that’s not true, that it has been in “full compliance” with the law. The city has pointed to an expert on N.C. government from UNC Chapel Hill who has said the state’s open-meeting statutes “apparently” give governments the power to acquire property by purchase or option in closed session.

The N.C. Attorney General’s office says public bodies can meet in closed session to discuss “negotiating positions.” It doesn’t say whether officials can authorize land purchases.

At issue are three votes council members took in 2008 and 2009 to secure options on the empty Belk and Dillard’s department stores at Eastland Mall. The city paid for the options with the hope it could partner with a private developer to transform the site into a community of homes, stores and offices.

It appears now that the city may lose the $400,000 when its options expire at the end of March. A developer hasn’t stepped up to redevelop the site.

Charlotte City Council member Michael Barnes, a Democrat, was the only council member to vote against the options. He complained the city was wasting its money.

He said a February 2009 vote to extend the options for $200,000, which came at the depth of the recession, might have turned out differently if council members faced greater scrutiny and had to vote in public.

Barnes, an attorney, reviewed the N.C. statute last week and said he believes the council “probably” should have had a public vote on the options.

Differing opinions

Public bodies such as the Charlotte City Council can meet in closed session when discussing real estate transactions. Council members can discuss privately with staff how much they believe a piece of land is worth and how much they are willing to pay.

Martin contends that public bodies can give staff specific instructions. Staff can then negotiate with the seller, and even reach a tentative deal. But she said formal authorization to buy the land, or secure an option, must come in a public session.

McCarley said that’s how the city handles most real estate transactions. But the city has the right to purchase land or secure land by option without a public vote to protect taxpayers, he said.

David Lawrence, a professor of public law and government at UNC Chapel Hill, has written a book about the state’s open records and meetings laws. In the book, he answers a question about whether governments can buy land without a public vote.

Lawrence writes: “Apparently so. Again, the statute permits giving instructions to a negotiator on behalf of the public body or unit. If the seller is willing to convey the property on terms acceptable to the public body, as communicated to the agent, it seems clear that the agent can go ahead and enter the contract to purchase on behalf of the public body.”

Martin said that interpretation is “hogwash.”

She said that under N.C. law, the default position is that everything is open and all business should be conducted in public. When there are exceptions, they are specifically stated.

She said if the law was meant to allow land acquisition by purchase or option in closed session, the statute would use phrases such as “authorize a purchase.”

Dale Harrison is the assistant director of the Sunshine Center at Elon University, a group that conducts training sessions for local governments on open records and public meetings. His interpretation of the statute is that votes to acquire land by purchase or option must come in open session.

“Closed sessions are only allowed for what’s explicitly stated in the statute,” Harrison said. “If it’s not explicitly in the statute, it’s not covered. The statue doesn’t say ‘approve or enter into a contract.'”

The N.C. Attorney General publishes a book called “Guide to Open Government and Public Records.”

That guide, written in consultation with the N.C. Press Association, says a public body may hold a closed session to “establish negotiating positions or to instruct its staff/agents about negotiating positions to be taken on certain types of contracts.”

Noelle Talley, a spokesperson for Attorney General Roy Cooper, said attorneys with his office can provide only legal interpretations and opinions to government officials. She said the statute is open to interpretation, and that it would be up to a court to rule on the issue.

Martin said Lawrence has studied N.C. government for decades, but she said the attorney general’s interpretation is the most important.

Lawrence noted that the open meetings statutes used to specifically state that public bodies had to vote to authorize real estate purchases in public, though that was removed in the early 1990s.

Martin said the old statute was vague, allowing public bodies to discuss, in general terms, real estate transactions. The new statute specifically states what elected officials can do, which are limited to price and other negotiating strategies, Martin said.

Angela Carmon, the city attorney for Winston-Salem, said in an e-mail she wasn’t sure if a public vote is needed to acquire land. She said that city staff could “arguably” vote to buy the land without a public vote.

She said the city hasn’t acquired land by purchase or option in closed session in her two years as city attorney. She has worked in the Winston-Salem attorney’s office for 21 years, and doesn’t recall any closed session land purchase.

Plan seen as risky

When council members voted in March and June 2008 to first secure the options, the plan was seen as risky, because the city was spending money on a failing mall.

The nation was sliding deeper into recession, but civic leaders were still bullish about the Charlotte economy. The mantra often heard about a recession was “last one in, first one out.”

But when the city invested more money in the mall, the national and local economy had gotten worse.

In October 2008, after the financial crisis had broken out, City Manager Curt Walton extended those two options until March 2009, for $25,000 each.

In February 2009, council members voted in closed session to extend the options for another year, spending $200,000.

Barnes said council members should have reversed course in light of the economy.

Days before the February vote, the federal government said job losses in January had been the highest for a single month in 34 years. The commercial real estate market had also nosedived.

Tom Flynn, the city’s economic development director, said the city extended those options in October and February because the mall owner and property manager were late in marketing the mall to potential buyers.

“We thought the marketing would have been sooner,” Flynn said. “If we were to have walked away from our options, there would have been limited opportunity for the sale of the mall to take place.”

Mayor Pat McCrory, a Republican, said he had concerns about the options and questioned whether anyone else was interested in the two stores. He didn’t veto the options, however.

Last month, when the city was considering buying the mall, McCrory said he was concerned that too much of the Eastland discussion had taken place in closed session.

Republican council member John Lassiter, who chairs the city’s economic development committee, said he doesn’t regret the option votes. He said the city was able to control two important pieces of the mall for what he said was a small amount of money.

Lassiter, an attorney, said he hadn’t studied the state’s open meetings law to know whether council should have voted in public.

“I have relied on the opinion of our city attorney as to what we can and should do in closed session,” said Lassiter.

by Steve Harrison, Observer Staff Writer