BILL NUMBER: AB 382 INTRODUCED
BILL TEXT
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 other 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 funds
vehicles 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 ,
or a nonpublicly traded direct real estate investment or nonpublicly
traded indirect real estate investment .
(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 or nonpublicly traded real estate .
(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.
(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.
(5) "Nonpublicly traded real estate" means a nonpublicly traded
direct real estate investment or nonpublicly traded indirect real
estate investment.
(3)
(6) "Portfolio positions" means individual
portfolio investments made by the alternative investment vehicles.
(4)
(7) "Public investment fund" or "fund
" 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 or the information set forth
in subdivision (a) of Section 6254.26 . 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, or 6254.22 , or
6254.26 .
(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) Nothing in this This
chapter shall not 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
no a surcharge shall not 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). Nothing in this This chapter
shall not 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.