California Legislature—2013–14 Regular Session

Assembly Bill No. 382

Introduced by Assembly Member Mullin

February 14, 2013

An act to amend Sections 6254.26, 54956.81, and 54957.5 of the Government Code, relating to state and local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 382, as introduced, Mullin. State and local government: alternative investments: public access.

Existing law, the California Public Records Act, requires state agencies and local agencies to make public records available for inspection, subject to specified criteria, and with specified exceptions. Existing law excludes from disclosure records of public investment funds regarding alternative investments, as defined, unless the information has already been publicly released by the keeper of the information. Existing law defines an alternative investment to mean an investment in a private equity fund, venture fund, hedge fund, or absolute return fund.

This bill would further exempt from disclosure records of public investment funds regarding nonpublicly traded direct real estate investments or nonpublicly traded indirect real estate investments, as defined. The bill would make conforming changes to related provisions.

Existing law, the Ralph M. Brown Act, requires the meetings of the legislative body of a local agency to be conducted openly and publicly, with specified exceptions. Existing law authorizes the legislative body of a local agency that invests pension funds to hold a meeting in closed session to consider the purchase or sale of particular, specific pension fund investments.

This bill would further authorize the legislative body of a local agency that invests pension funds to hold a meeting in closed session to consider information related to alternative investments and alternative investment vehicles, as specified.

Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest.

This bill would make legislative findings to that effect.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

SECTION 1.  

Section 6254.26 of the Government Code is
amended to read:

6254.26.  

(a) Notwithstanding any begin insert other end insert provision of this
chapter or other law, the following records regarding alternative
investments in which public investment funds invest shall not be
subject to disclosure pursuant to this chapter, unless the information
has already been publicly released by the keeper of the information:

(1) Due diligence materials that are proprietary to the public
investment fund or the alternative investment vehicle.

(2) Quarterly and annual financial statements of alternative
investment vehicles.

(3) Meeting materials of alternative investment vehicles.

(4) Records containing information regarding the portfolio
positions in which alternative investment begin delete funds end delete begin insert vehicles end insert invest.

(5) Capital call and distribution notices.

(6) Alternative investment agreements and all related documents.

(b) Notwithstanding subdivision (a), the following information
contained in records described in subdivision (a) regarding
alternative investments in which public investment funds invest
shall be subject to disclosure pursuant to this chapter and shall not
be considered a trade secret exempt from disclosure:

(1) The name, address, and vintage year of each alternative
investment vehicle.

(2) The dollar amount of the commitment made to each
alternative investment vehicle by the public investment fund since
inception.

(3) The dollar amount of cash contributions made by the public
investment fund to each alternative investment vehicle since
inception.

(4) The dollar amount, on a fiscal yearend basis, of cash
distributions received by the public investment fund from each
alternative investment vehicle.

(5) The dollar amount, on a fiscal yearend basis, of cash
distributions received by the public investment fund plus remaining
value of partnership assets attributable to the public investment
fund’s investment in each alternative investment vehicle.

(6) The net internal rate of return of each alternative investment
vehicle since inception.

(7) The investment multiple of each alternative investment
vehicle since inception.

(8) The dollar amount of the total management fees and costs
paid on an annual fiscal yearend basis, by the public investment
fund to each alternative investment vehicle.

(9) The dollar amount of cash profit received by public
investment funds from each alternative investment vehicle on a
fiscal year-end basis.

(c) For purposes of this section, the following definitions shall
apply:

(1) “Alternative investment” means an investment in a private
equity fund, venture fund, hedge fund, or absolute return fund begin insert , or
a nonpublicly traded direct real estate investment or nonpublicly
traded indirect real estate investment end insert .

(2) “Alternative investment vehicle” means the limited
partnership, limited liability company, or similar legal structure
through which the public investment fund invests in portfolio
companies begin insert or nonpublicly traded real estate end insert .

begin insert

(3) “Nonpublicly traded direct real estate investment” means
the direct ownership of private real estate investments in the name
of a fund or special purpose entity, whether equity or debt,
consisting of a 100 percent interest or partial interest in the
investment position. These investments consist of separate account
investments.

end insert begin insert

(4) “Nonpublicly traded indirect real estate investment” means
the indirect ownership of private real estate investments in the
name of a fund or special purpose entity, whether equity or debt,
consisting of a 100 percent interest or partial interest in the
investment position. These investments are commonly interests in
limited partnerships or limited liability corporations, similar to
most private equity investments. These investments consist of
commingled fund investments.

end insert begin insert

(5) “Nonpublicly traded real estate” means a nonpublicly traded
direct real estate investment or nonpublicly traded indirect real
estate investment.

end insert begin delete

(3) 

end delete

begin insert (6) end insert begin insert   end insert “Portfolio positions” means individual portfolio investments
made by the alternative investment vehicles.

begin delete

(4) 

end delete

begin insert (7) end insert begin insert   end insert “Public investment fund” begin insert or “fund end insert begin insert ” end insert means any public
pension or retirement system, and any public endowment or
foundation.

SEC. 2.  

Section 54956.81 of the Government Code is amended
to read:

54956.81.  

Notwithstanding any other provision of this chapter,
a legislative body of a local agency that invests pension funds may
hold a closed session to consider the purchase or sale of particular,
specific pension fund investments begin insert or the information set forth in
subdivision (a) of Section 6254.26 end insert . All investment transaction
decisions made during the closed session shall be made by rollcall
vote entered into the minutes of the closed session as provided in
subdivision (a) of Section 54957.2.

SEC. 3.  

Section 54957.5 of the Government Code is amended
to read:

54957.5.  

(a) Notwithstanding Section 6255 or any other
provisions of law, agendas of public meetings and any other
writings, when distributed to all, or a majority of all, of the
members of a legislative body of a local agency by any person in
connection with a matter subject to discussion or consideration at
an open meeting of the body, are disclosable public records under
the California Public Records Act (Chapter 3.5 (commencing with
Section 6250) of Division 7 of Title 1), and shall be made available
upon request without delay. However, this section shall not include
any writing exempt from public disclosure under Section 6253.5,
6254, 6254.3, 6254.7, 6254.15, 6254.16, begin delete or end delete 6254.22 begin insert , or 6254.26 end insert .

(b) (1) If a writing that is a public record under subdivision (a),
and that relates to an agenda item for an open session of a regular
meeting of the legislative body of a local agency, is distributed
less than 72 hours prior to that meeting, the writing shall be made
available for public inspection pursuant to paragraph (2) at the
time the writing is distributed to all, or a majority of all, of the
members of the body.

(2)  A local agency shall make any writing described in
paragraph (1) available for public inspection at a public office or
location that the agency shall designate for this purpose. Each local
agency shall list the address of this office or location on the agendas
for all meetings of the legislative body of that agency. The local
agency also may post the writing on the local agency’s Internet
Web site in a position and manner that makes it clear that the
writing relates to an agenda item for an upcoming meeting.

(3) This subdivision shall become operative on July 1, 2008.

(c) Writings that are public records under subdivision (a) and
that are distributed during a public meeting shall be made available
for public inspection at the meeting if prepared by the local agency
or a member of its legislative body, or after the meeting if prepared
by some other person. These writings shall be made available in
appropriate alternative formats upon request by a person with a
disability, as required by Section 202 of the Americans with
Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal
rules and regulations adopted in implementation thereof.

(d)  begin delete Nothing in this end delete begin insert This end insert chapter shall begin insert not end insert be construed to prevent
the legislative body of a local agency from charging a fee or deposit
for a copy of a public record pursuant to Section 6253, except that
begin delete no end delete begin insert a end insert surcharge shall begin insert not end insert be imposed on persons with disabilities
in violation of Section 202 of the Americans with Disabilities Act
of 1990 (42 U.S.C. Sec. 12132), and the federal rules and
regulations adopted in implementation thereof.

(e) This section shall not be construed to limit or delay the
public’s right to inspect or obtain a copy of any record required to
be disclosed under the requirements of the California Public
Records Act (Chapter 3.5 (commencing with Section 6250) of
Division 7 of Title 1). begin delete Nothing in this end delete begin insert This end insert chapter shall begin insert not end insert be
construed to require a legislative body of a local agency to place
any paid advertisement or any other paid notice in any publication.

SEC. 4.  

The Legislature finds and declares that Sections 1, 2,
and 3 of this act, which amend Sections 6254.26, 54956.81, and
54957.5 of the Government Code, impose a limitation on the
public’s right of access to the meetings of public bodies or the
writings of public officials and agencies within the meaning of
Section 3 of Article I of the California Constitution. Pursuant to
that constitutional provision, the Legislature makes the following
findings to demonstrate the interest protected by this limitation
and the need for protecting that interest:

The public interest in nondisclosure pursuant to this act
outweighs the public interest in disclosure, since disclosure of the
information under the act puts public pension funds at a competitive
disadvantage in the marketplace likely reducing a pension fund’s
return on investment and thereby necessitating greater contribution
from the public for the support of public pensions.