Amended in Assembly April 15, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 382


Introduced by Assembly Member Mullin

February 14, 2013


An act to amend Sectionsbegin delete 6254.26, 54956.81,end deletebegin insert 54956.81end insert and 54957.5 of the Government Code, relating to state and local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 382, as amended, 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.

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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.

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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:

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P2    1

SECTION 1.  

Section 6254.26 of the Government Code is
2amended to read:

3

6254.26.  

(a) Notwithstanding any other provision of this
4chapter or other law, the following records regarding alternative
5investments in which public investment funds invest shall not be
6subject to disclosure pursuant to this chapter, unless the information
7has already been publicly released by the keeper of the information:

8(1) Due diligence materials that are proprietary to the public
9investment fund or the alternative investment vehicle.

10(2) Quarterly and annual financial statements of alternative
11investment vehicles.

12(3) Meeting materials of alternative investment vehicles.

13(4) Records containing information regarding the portfolio
14positions in which alternative investment vehicles invest.

15(5) Capital call and distribution notices.

16(6) Alternative investment agreements and all related documents.

17(b) Notwithstanding subdivision (a), the following information
18contained in records described in subdivision (a) regarding
19alternative investments in which public investment funds invest
20shall be subject to disclosure pursuant to this chapter and shall not
21be considered a trade secret exempt from disclosure:

22(1) The name, address, and vintage year of each alternative
23investment vehicle.

P3    1(2) The dollar amount of the commitment made to each
2alternative investment vehicle by the public investment fund since
3inception.

4(3) The dollar amount of cash contributions made by the public
5investment fund to each alternative investment vehicle since
6inception.

7(4) The dollar amount, on a fiscal yearend basis, of cash
8distributions received by the public investment fund from each
9alternative investment vehicle.

10(5) The dollar amount, on a fiscal yearend basis, of cash
11distributions received by the public investment fund plus remaining
12value of partnership assets attributable to the public investment
13fund’s investment in each alternative investment vehicle.

14(6) The net internal rate of return of each alternative investment
15vehicle since inception.

16(7) The investment multiple of each alternative investment
17vehicle since inception.

18(8) The dollar amount of the total management fees and costs
19paid on an annual fiscal yearend basis, by the public investment
20fund to each alternative investment vehicle.

21(9) The dollar amount of cash profit received by public
22investment funds from each alternative investment vehicle on a
23fiscal year-end basis.

24(c) For purposes of this section, the following definitions shall
25apply:

26(1) “Alternative investment” means an investment in a private
27equity fund, venture fund, hedge fund, or absolute return fund, or
28a nonpublicly traded direct real estate investment or nonpublicly
29traded indirect real estate investment.

30(2) “Alternative investment vehicle” means the limited
31partnership, limited liability company, or similar legal structure
32through which the public investment fund invests in portfolio
33companies or nonpublicly traded real estate.

34(3) “Nonpublicly traded direct real estate investment” means
35the direct ownership of private real estate investments in the name
36of a fund or special purpose entity, whether equity or debt,
37consisting of a 100 percent interest or partial interest in the
38investment position. These investments consist of separate account
39investments.

P4    1(4) “Nonpublicly traded indirect real estate investment” means
2the indirect ownership of private real estate investments in the
3name of a fund or special purpose entity, whether equity or debt,
4consisting of a 100 percent interest or partial interest in the
5investment position. These investments are commonly interests in
6limited partnerships or limited liability corporations, similar to
7most private equity investments. These investments consist of
8commingled fund investments.

9(5) “Nonpublicly traded real estate” means a nonpublicly traded
10direct real estate investment or nonpublicly traded indirect real
11estate investment.

12(6) “Portfolio positions” means individual portfolio investments
13made by the alternative investment vehicles.

14(7) “Public investment fund” or “fund” means any public
15pension or retirement system, and any public endowment or
16foundation.

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17

begin deleteSEC. 2.end delete
18begin insertSECTION 1.end insert  

Section 54956.81 of the Government Code is
19amended to read:

20

54956.81.  

Notwithstanding any other provision of this chapter,
21a legislative body of a local agency that invests pension funds may
22hold a closed session to consider the purchase or sale of particular,
23specific pension fund investments or the information set forth in
24subdivision (a) of Section 6254.26. All investment transaction
25decisions made during the closed session shall be made by rollcall
26vote entered into the minutes of the closed session as provided in
27subdivision (a) of Section 54957.2.

28

begin deleteSEC. 3.end delete
29begin insertSEC. 2.end insert  

Section 54957.5 of the Government Code is amended
30to read:

31

54957.5.  

(a) Notwithstanding Section 6255 or any other
32begin deleteprovisions ofend delete law, agendas of public meetings and any other
33writings, when distributed to all, or a majority of all, of the
34members of a legislative body of a local agency by any person in
35connection with a matter subject to discussion or consideration at
36an open meeting of the body, are disclosable public records under
37the California Public Records Act (Chapter 3.5 (commencing with
38Section 6250) of Division 7 of Title 1), and shall be made available
39upon request without delay. However, this section shall not include
P5    1any writing exempt from public disclosure under Section 6253.5,
26254, 6254.3, 6254.7, 6254.15, 6254.16, 6254.22, or 6254.26.

3(b) (1) If a writing that is a public record under subdivision (a),
4and that relates to an agenda item for an open session of a regular
5meeting of the legislative body of a local agency, is distributed
6less than 72 hours prior to that meeting, the writing shall be made
7available for public inspection pursuant to paragraph (2) at the
8time the writing is distributed to all, or a majority of all, of the
9members of the body.

10(2)  A local agency shall make any writing described in
11paragraph (1) available for public inspection at a public office or
12location that the agency shall designate for this purpose. Each local
13agency shall list the address of this office or location on the agendas
14for all meetings of the legislative body of that agency. The local
15agency also may post the writing on the local agency’s Internet
16Web site in a position and manner that makes it clear that the
17writing relates to an agenda item for an upcoming meeting.

18(3) This subdivision shall become operative on July 1, 2008.

19(c) Writings that are public records under subdivision (a) and
20that are distributed during a public meeting shall be made available
21for public inspection at the meeting if prepared by the local agency
22or a member of its legislative body, or after the meeting if prepared
23by some other person. These writings shall be made available in
24appropriate alternative formats upon request by a person with a
25disability, as required by Section 202 of the Americans with
26Disabilities Act of 1990 (42 U.S.C. Sec. 12132), and the federal
27rules and regulations adopted in implementation thereof.

28(d) This chapter shall not be construed to prevent the legislative
29body of a local agency from charging a fee or deposit for a copy
30of a public record pursuant to Section 6253, except that a surcharge
31shall not be imposed on persons with disabilities in violation of
32Section 202 of the Americans with Disabilities Act of 1990 (42
33U.S.C. Sec. 12132), and the federal rules and regulations adopted
34in implementation thereof.

35(e) This section shall not be construed to limit or delay the
36public’s right to inspect or obtain a copy of any record required to
37be disclosed under the requirements of the California Public
38Records Act (Chapter 3.5 (commencing with Section 6250) of
39Division 7 of Title 1).This chapter shall not be construed to require
P6    1a legislative body of a local agency to place any paid advertisement
2or any other paid notice in any publication.

3

begin deleteSEC. 4.end delete
4begin insertSEC. 3.end insert  

The Legislature finds and declares that Sections 1begin delete, 2,
5and 3end delete
begin insert and 2end insert of this act, which amend Sectionsbegin delete 6254.26, 54956.81,end delete
6begin insert 54956.81end insert and 54957.5 of the Government Code, impose a
7limitation on the public’s right of access to the meetings of public
8bodies or the writings of public officials and agencies within the
9meaning of Section 3 of Article I of the California Constitution.
10Pursuant to that constitutional provision, the Legislature makes
11the following findings to demonstrate the interest protected by this
12limitation and the need for protecting that interest:

13The public interest in nondisclosure pursuant to this act
14outweighs the public interest in disclosure, since disclosure of the
15information under the act puts public pension funds at a competitive
16 disadvantage in the marketplacebegin insert,end insert likely reducing a pension fund’s
17return on investment and thereby necessitating greater contribution
18from the public for the support of public pensions.



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