The open meetings law requires all official meetings of public bodies to be open to the public. G.S. 143-318.10(a). However, government bodies can hold closed-door meetings, known as closed sessions, under certain limited circumstances. This post focuses on closed sessions for the purpose of negotiating real property acquisition and employment contracts and is Part 3 of a series examining each of the closed session purposes.

Purpose (a)(5): Contracts for Acquiring Real Property and Employment Contracts  

Under G.S. 143-318.11(a)(5), government bodies may enter closed session to establish their bargaining position for negotiations surrounding real property acquisition contracts and employment contracts. Additionally, the subsection authorizes government bodies to instruct their staff or negotiating agents on the price or compensation and other material terms in negotiations for contracts to acquire real property and employment contracts while in closed session.

Let’s walk through the language of the statute.

“To establish, or to instruct the public body’s staff or negotiating agents concerning the position to be taken by or on behalf of the public body in negotiating…”

This closed session purpose allows establishing a bargaining position and instructing staff or negotiating agents on that bargaining position for certain contracts. To establish a bargaining position, a public body likely needs to discuss, deliberate, and then reach some sort of agreement, either by informal consensus or formal vote. This section seems to impliedly authorize formal voting since that is a way a board might “establish” its bargaining position.

Once a board agrees on its bargaining position, it can instruct its staff and negotiating agents in closed session regarding how to negotiate for this position. This language suggests that relevant staff and agents can be present at (a)(5) closed sessions unless other confidentiality laws apply. Two such confidentiality laws that might be relevant are the personnel file confidentiality statutes for city and county employees. (G.S. 160A-168 (cities); 153A-98 (counties)). Under these statutes, any information that a city or county collects regarding its employees related to some employment action is confidential. There are many exceptions to that general rule, including for “the terms of an employment contract.” Under G.S. 160A-168(b)(4) and G.S. 153A-98(b)(4), the terms of a current or former employee’s employment contract are public information. As a result, inviting staff and negotiating agents to a closed session involving a current or former employee’s contract negotiations should not violate these confidentiality laws.

Things are far less clear when dealing with contract negotiations for a prospective employee. Interestingly, both G.S. 153A-98 and 160A-168 are silent on the terms of a prospective employee’s employment contract, meaning that those terms are confidential. Even though Section 143-318.11(a)(5) contemplates allowing staff and negotiating agents at closed sessions involving prospective employees’ employment contracts, it is not clear that either G.S. 153A-98 or G.S. 160A-168 permit that access. A strict interpretation suggests that staff and negotiating agents cannot be present at closed sessions involving prospective employees’ employment contracts, but that interpretation contravenes typical practice in many jurisdictions. Without case law, it may be impossible to resolve this apparent statutory conflict.

“…the price and other material terms of a contract or proposed contract for the acquisition of real property by purchase, option, exchange, or lease;….”

Here, the statute explains that a public body can establish the price and other material terms of a contract or proposed contract for the acquisition of real property. The board can also instruct its staff and negotiating agents accordingly. While price is straightforward, what constitutes a “material term” of a real property acquisition contract is less so. Thankfully, case law has clarified this language. In Boney Publishers Inc. v. Burlington City Council, the Court of Appeals described that material terms are negotiable terms. 151 N.C. App. 651, 656 (N.C. Ct. App. 2002). An example of a negotiable term might be the structure of the property conveyance. Id. The context of each contract may impact whether certain terms are negotiable. For example, if only one tract of land is being considered, the land’s location is not a material term because it is not up for negotiation. Id. In contrast, if different tracts might be considered, then perhaps location would be a material term appropriate to discuss in closed session. Id.

In Boney Publishers, a city council entered closed session under G.S. 143-318.11(a)(5) to discuss acquiring a single tract of land for redevelopment. Id. at 652. Before the closed session started, a reporter asked the council to identify the property, its owners, and the purpose of the acquisition. Id. at 652-53. The council declined. Id.  The Court of Appeals later found that failing to disclose this requested information in open session violated the open meetings law. Id. at 657. Since the council was considering only one tract of land, the location, identity of the owners, and acquisition purpose were not negotiable—and therefore not material—terms of the contract at issue. Id. at 656. As a result, those terms should have been disclosed to the public rather than confined to closed session. Id.

Motions to enter closed session must include the purpose of the closed session under the open meetings law. G.S. 143-318.11(c). However, some local government attorneys have interpreted the Boney case to also require disclosing a property location, the owners’ identities, and the purpose of the acquisition prior to entering closed session. That interpretation is supported by the Court’s holding that “[t]he language of G.S. § 143–318.11(a)(5) does not permit a public body to deny the public access to information which is not a material term subject to negotiation regarding the acquisition of real property.” Id. at 657. On the other hand, the Court was careful to limit its holding to the facts of that case. Id. It is also relevant that there was a specific request in Boney for the information prior to entering closed session. Id. Arguably, this case could stand for the proposition that non-material terms must be disclosed upon request prior to entering closed session, rather than affirmatively supplied as part of a motion to enter closed session.

Notably, contracts for purchase fall under this subsection, but so do contracts for option, exchange, or lease (where the local government is the tenant). As long as the public body is considering a contract to acquire real property through one of these methods, it can use this closed session purpose to develop and establish its bargaining position for negotiable contract terms. Developing negotiation positions for contracts solely disposing of real property are not appropriate in closed session under this purpose. This subsection also does not cover contracts for acquiring or disposing of personal property.

“the amount of compensation and other material terms of an employment contract or proposed employment contract.”

Public bodies can establish a bargaining position regarding the amount of compensation in an employment contract or prospective employment contract.  They can also reach a bargaining position regarding other material terms in an employment contract and instruct their staff and negotiating agents on this bargaining position. Unlike with contracts for acquiring real property, case law has not defined “material terms” in the employment contract context. Since this provision lies in the same subsection as real property acquisition contracts, it may be reasonable to apply the same definition of material terms. That would mean that material employment contract terms include only negotiable terms, but that interpretation is untested. Using the definition of “material terms” from Black’s Law Dictionary, material terms include all terms regarding “…significant issue[s] such as subject matter, price, payment, quantity, quality, duration, or the work to be done.” Black’s Law Dictionary (11th ed. 2019). Without any cases on this part of the subsection, though, its scope and application remain unclear.