Brea officials have committed to be transparent in their dealings to bring a Costco to town this week but argue they didn’t violate California’s open meetings law after a resident group sent a cease and desist letter to the city, alleging leaders reached a consensus on a sales tax sharing agreement for the Costco store and gas station outside public view.
While officials are denying violating the Brown Act, they’ve approved what’s known as an “unconditional commitment response.” That means they’ve agreed to cease and desist from the challenged actions without admitting wrongdoing.
“In text that follows the statutory language, the proposed response letter provides an unconditional commitment that the City Council will cease, desist from, and not repeat the challenged past actions,” reads a staff report included with this morning’s city council meeting agenda.
“Issuance of the response letter does not constitute an admission that a Brown Act violation occurred and the letter expressly denies that there was any violation,” it continues. “The proposed response letter also includes a reminder that it is not a Brown Act violation for staff to have separate conversations with Council Members to answer questions or provide information as long as staff does not communicate the comments or position of any other Council Member.”
Council members voted 3-0 during a special meeting Tuesday morning that started just after 8 a.m. to approve and send the letter. Mayor Cecilia Hupp and Councilmember Christine Marick were absent from the vote.
“I have looked into this, my office has looked into this, we do not believe there’s been a Brown Act violation under state law,” City Attorney Terence Boga said during that meeting.
“All this does, if you approve this letter, is ensure that there is no lawsuit against you over these allegations, that you’re not spending city money fighting what we believe to be a baseless charge.”
City leaders didn’t offer much discussion during the meeting, which was held in a conference room at city hall instead of the regular city council meeting chambers.
“My concern about the letter was making sure that we weren’t agreeing or accepting any kind of Brown Act violations, and so I’m perfectly fine with how the letter is constructed,” Councilmember Blair Stewart said during Tuesday morning’s meeting.
The cease and desist letter, sent on behalf of a resident group known as Brea4All, alleged that leaders made decisions about the economic development agreement for the Costco store with Dwight Manley, a longtime developer in the city, out of public view.
Under the Brown Act, it’s illegal for a majority of the council members to discuss city business out of public view. City staff is also prohibited under the Brown Act from polling city council members and building consensus on an issue outside of public meetings.
Residents point to a host of text exchanges between Assistant City Manager and Community Development Director Jason Killebrew and Manley in the months leading up to approval of the development agreement — revealed by public records requests and reviewed by Voice of OC — as evidence of secret deliberations.
One text from October shows Killebrew telling Manley, “Everybody gave the thumbs up to move forward.”
In an interview for a previous story on this topic, Killebrew said the text message exchange had been misconstrued, adding that the consensus he was referring to was about an ordinance approved by council members that allows for tax sale rebates and not Manley’s specific application for a tax sharing agreement for the Costco.
[Read: Costco Is Coming to Brea As Concerns Grow Over Controversial Tax-Sharing Agreement]
Costco is coming to the city after council members voted 3-1 in December to approve the tax-sharing schedule with Manley. Marick voted no in December, and Stewart was absent from that vote.
The project could appear before the city’s planning commission by the winter of this year.
The proposed site of a new Costco along S. Kraemer Blvd. in Brea. Credit: JULIE LEOPO, Voice of OC
Manley, as the developer, will get most of the sales tax revenue generated if Costco opens for about three decades with the split gradually increasing for city coffers before the deal sunsets completely after 50 years.
While the city’s general fund — a discretionary pot of money that funds services like police and fire — won’t see any of the revenue for the first two years, about 5% of annual tax revenue from the store will go towards helping fund programs at the city’s senior center.
Manley’s share of the revenue will go from 95% in the first year the store is open to 45% after 30 years then dropping down to 35% by year 41 of the agreement.
Through the life of the agreement, Manley is estimated to make roughly $77 million, the city is estimated to make a little over $50 million and another $7 million will go towards senior programs.
The deal comes after city staff previously projected facing a roughly $14 million budget shortfall in the 2027-28 fiscal year, according to their 2025-27 biennial budget, with staff saying earlier this year that city departments are looking at ways to temporarily save money.
Mark Strom, a Brea resident who spoke at the Tuesday morning meeting representing Brea4All, criticized the city’s response.
“The record still appears to show hub-and-spoke interactions between Mr. Killebrew and the Council. That’s a Brown Act violation if the conclusion of one council member is reported to any other in building consensus,” he said.
“Your response asks us to believe that didn’t happen. Respectfully, we do not. What occurred smells wrong and certainly contradicts the most basic Brown Act training.”
Councilmember Steven Vargas asked legal counsel if the allegations outlined in the cease and desist letter would violate the Brown Act if they were true.
“The issue is that allegedly Jason [Killebrew] collected these opinions and passed them onto the applicant,” he said. “Is that a Brown Act violation?”
City Attorney Boga said it would be a violation if true, but he said he doesn’t believe the allegations are accurate.
“If it happened,” Boga said, answering Vargas. “I don’t believe that happened. I talked to Jason. Jason has said publicly at council meetings and elsewhere that that’s not what happened.”
Angelina Hicks is the Voice of OC Collegiate News Service Editor. Contact her at ahicks@voiceofoc.org or on Twitter @angelinahicks13.
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