A small Orange County city approved a half-century tax-sharing agreement that sends the lion's share of sales tax revenue to a private developer, and residents now allege the whole thing was negotiated behind closed doors in violation of California's open-meeting law.
The Brea city council voted 3-1 last December to grant developer Dwight Manley a 50-year deal tied to a proposed Costco and gas station on the former 34-acre Beckman Coulter campus. Under the agreement's terms, the city's general fund would collect nothing from the project's discretionary sales tax revenue for the first two years after the store opens. After that, Brea's cut starts at just 5 percent and climbs so slowly that a 50-50 split does not arrive until roughly 30 years into the contract.
Over the full life of the deal, Manley is projected to receive approximately $77 million. The city would collect just over $50 million. A separate 5 percent annual set-aside, beginning after the rebate kicks in, is earmarked for Brea's senior center programs, roughly $7 million across five decades.
And if Brea ever raises its local sales tax during those 50 years, Manley would pocket 40 percent of the additional revenue the increase generates. That clause alone turns a long-term incentive into a rolling entitlement, one that rewards a private party every time local taxpayers agree to pay more.
A resident group called Brea4All has accused city officials of violating California's Brown Act, the state law that requires local government bodies to deliberate and decide in open, publicly noticed meetings. The group obtained text messages through public records requests that it says show the agreement was effectively settled before the council ever held its required public hearing.
One October text message from Jason Killebrew, Brea's assistant city manager and community development director, told Manley directly:
"Everybody gave the thumbs up to move forward."
Another message from Killebrew, reviewed by Voice of OC, was even more explicit about the sequencing:
"It has to be a public hearing because it's tax dollars. I have verbal support from city council."
Read plainly, the messages describe a city official telling a developer that council members had already signaled their approval, months before the December vote that was supposed to be the public's opportunity to weigh in. If accurate, the public hearing was not a deliberation. It was a formality.
Killebrew denied any wrongdoing. He said the messages have been taken out of context and insisted council members did not see the specific tax-sharing agreement until just days before voting on it. He offered a blanket assurance:
"The city continues to follow the Brown Act and will continue to honor and respect the Brown Act."
That defense asks residents to believe that "verbal support from city council" and "everybody gave the thumbs up" referred to something other than the substance of the deal those same council members approved weeks later.
Brea4All member Mark Strom, who lives about a quarter-mile from the proposed site, told Voice of OC that the agreement's front-loaded payout structure is unlike anything standard in municipal finance. Strom pointed to the two-year zero-revenue window and the decades-long ramp to an even split.
"No one does this front loading."
Strom did not limit his criticism to the numbers. He described a pattern of closed-door decision-making that left residents out of the process entirely:
"It's the complete lack of transparency, the sneaking around [and] making key decisions in private."
David Cain, a former finance director for the nearby city of Fountain Valley, reviewed the agreement and offered a blunt assessment. He called it "the worst sales tax sharing agreement I've ever seen in my history." Cain's credentials give that judgment weight, municipal finance directors negotiate and evaluate these deals as a core part of their jobs.
Manley, for his part, has dismissed the criticism. He characterized the allegations as "character assassination" and pointed to the scale of his investment, citing a purchase price of roughly $140 million for the site plus additional development costs he said justify the generous tax-rebate terms.
Councilmember Christine Marick cast the lone dissenting vote. She questioned whether the city had enough financial protection if the development failed. But Marick made clear her objection was about the deal's structure, not the project itself:
"I actually would love to have a Costco in the City of Brea. That is not a secret."
That distinction matters. Residents pushing back on this agreement are not anti-development cranks. They want a Costco. They object to a contract that gives a private developer $77 million of their tax dollars over 50 years while the city, already projecting a roughly $14 million budget shortfall for the 2027-28 fiscal year, gets nothing for the first two years and a pittance for the next decade after that.
Brea's own budget projections make the terms harder to defend. City departments have already been looking for ways to temporarily reduce spending to close that $14 million gap. Approving a half-century revenue giveaway while scrambling to cut current budgets is not a sign of careful fiscal management. It is a contradiction.
Brea4All has moved beyond public complaints. Attorneys representing the group sent a cease-and-desist letter to city officials last month demanding they stop making decisions about the Costco proposal in private and properly schedule future discussions through noticed public meetings.
The threat of a lawsuit now hangs over the project. If a court finds the Brown Act was violated, that council members effectively committed to the deal before the public hearing, the agreement itself could be voided.
Mayor Cecilia Hupp and the remaining council members who voted in favor have largely declined to discuss the controversy publicly. Silence is not a defense. When residents produce text messages showing a city official telling a developer he already has council support before a required public hearing, elected officials owe their constituents a substantive answer, not a closed door.
Several questions remain unanswered. The city has not disclosed whether it formally responded to the cease-and-desist letter. The identities of the three council members who voted yes, and their individual reasoning, have not been publicly detailed beyond the vote count. And Costco's own level of commitment to the project remains unclear from available reporting.
What is clear is the math. A developer stands to collect $77 million. Taxpayers get $50 million, spread across 50 years, back-loaded so heavily that meaningful revenue does not arrive for decades. A former municipal finance director reviewed the terms and called them the worst he has ever seen. And the text messages residents unearthed suggest the whole arrangement may have been blessed in private before a single member of the public had the chance to speak.
Residents who demand that their city government follow the law and negotiate in the open are not the problem in Brea. They are the last line of accountability.