Brea City Council members voted 3-0 on Tuesday morning to approve and send an "unconditional commitment response" to a resident group, denying allegations of Brown Act violations related to a sales tax sharing agreement for a proposed Costco store. Mayor Cecilia Hupp and Councilmember Christine Marick were absent from the vote. The city's action comes after Brea4All, a resident group, sent a cease and desist letter to the city, alleging that city leaders reached a consensus on the sales tax agreement for the Costco store and gas station outside public view.
City officials maintain they did not violate California’s open meetings law. According to a staff report, the approved response letter "provides an unconditional commitment that the City Council will cease, desist from, and not repeat the challenged past actions." The report explicitly states that the letter "does not constitute an admission that a Brown Act violation occurred and the letter expressly denies that there was any violation." City Attorney Terence Boga stated during the special meeting, "we do not believe there’s been a Brown Act violation under state law," adding that approving the letter would prevent a lawsuit over the allegations. Councilmember Blair Stewart affirmed his comfort with the letter's construction, noting his concern about "making sure that we weren’t agreeing or accepting any kind of Brown Act violations."
The Brown Act prohibits a majority of council members from discussing city business out of public view, and city staff are also barred from polling council members to build consensus outside of public meetings. Brea4All’s letter specifically alleged that decisions regarding an economic development agreement with longtime developer Dwight Manley were made without public scrutiny. Residents pointed to text exchanges between Assistant City Manager and Community Development Director Jason Killebrew and Manley as evidence, including one from October where Killebrew stated, "Everybody gave the thumbs up to move forward." Killebrew previously clarified that this text referred to an ordinance for tax sale rebates, not Manley's specific tax sharing agreement for the Costco.
The sales tax sharing schedule with Manley for the Costco project was approved by the City Council in December by a 3-1 vote, with Councilmember Marick voting no and Councilmember Stewart absent. Under this agreement, Manley, as the developer, is projected to receive most of the sales tax revenue generated by the Costco store for approximately three decades. The city's share will gradually increase, and the deal is set to sunset after 50 years. For the first two years of operation, the city's general fund will not receive any revenue, though about 5% of annual tax revenue will fund programs at the city’s senior center. Over the agreement's lifetime, Manley is estimated to make $77 million, while the city is projected to receive just over $50 million, and senior programs $7 million. This agreement follows city staff projections of a $14 million budget shortfall for the 2027-28 fiscal year.
Mark Strom, a Brea resident representing Brea4All, criticized the city’s response at the Tuesday morning meeting. He stated that the record "still appears to show hub-and-spoke interactions between Mr. Killebrew and the Council," which he considered a Brown Act violation. Councilmember Steven Vargas questioned City Attorney Boga on whether such alleged actions, if true, would constitute a Brown Act violation. Boga confirmed it would be a violation if true, but reiterated his belief that the allegations were not accurate, stating he had spoken with Killebrew who denied it publicly. The proposed Costco project could appear before the city’s planning commission by the winter of this year.
