A Hollywood property owners association that governs a business improvement district must abide by local government open meeting laws, the Second District Court of Appeal has ruled. The unanimous three-judge panel held that the City of Los Angeles "created" the Hollywood Entertainment District Property Owners Association (POA) to assume the city's legislative functions regarding the Hollywood Entertainment District II Business Improvement District. The court rejected the argument that the POA, which incorporated in 1996, was not a city creation for purposes of a second BID established in 1998.. The Property and Business Improvement District Law of 1994 (Streets & Highways Code §§36600) authorizes cities to establish business improvement districts. The districts can levy property assessments for a variety of public purposes, including building and maintaining parks, sidewalks and pedestrian malls. Cities can create a BID only after property owners who would pay more than 50% of the total assessments sign a petition. On September 3, 1996, the Los Angeles City Council adopted an ordinance creating the Hollywood Entertainment District Business Improvement District (BID I) for a five-block stretch of Hollywood Boulevard. The BID's management plan proposed a program of security, marketing, maintenance and streetscape improvements. Three weeks later, the Hollywood Property Owners Association (POA) filed articles of incorporation as a nonprofit, mutual benefit corporation "to development and restore the public areas of the historic core of Hollywood in order to make it a more attractive and popular destination …" In August 1998, the city adopted another ordinance creating Hollywood Entertainment District II Business Improvement District (BID II), which extended the original bid 10 blocks farther down Hollywood Boulevard. The management plan for BID II identified the POA as the governing entity. Combined, the two BIDs had an annual budget of more than $2 million. The POA's monthly meetings did not comply with the Brown Act (Gov. Code §§54950). The POA did not open its meetings to the public, did not post agendas 72 hours in advance, and did not convene solely within the association's jurisdiction. Aaron Epstein, who owns the 15-shop Artisan Patio within BID II, filed a lawsuit in March 1999 to force POA to comply with the Brown Act. Los Angeles Superior Court Judge Ricardo Torres ruled against Epstein. Torres held that because the POA predated BID II by two years, the association was not a creation of the city; thus, the Brown Act did not apply. The Second District, Division Three, overturned Torres. The appellate panel extensively cited International Longshoremen's & Warehousemen's Union v. Los Angeles Export Terminal, Inc., (1999) Cal.App.4th 287, in which the court held that a private, for-profit corporation organized to design, construct and operate a coal export facility at Los Angeles Harbor was subject to the Brown Act. The city brought the private corporation into being, and delegated to the corporation the governmental authority to development and improve a city harbor, the court ruled. In the Hollywood case, "the issue is whether the POA is a private corporation or entity that was created by City, the elected legislative body, to exercise some authority that City could lawfully delegate to a private corporation or entity," Judge Walter Croskey wrote. "We conclude that here, just as in International Longshoremen's, the private entity, the POA, was ‘created' by City to exercise governmental authority over BID I, authority that City otherwise could exercise. … The POA's sole purpose was to ‘develop and restore the public areas of the historic core of Hollywood.'" The contention that the POA was a pre-existing entity that just happened to be available to govern BID II two years later was an argument of form over substance, the court ruled. "City itself, in the Management District Plan for BID II, explicitly recognized that the POA ‘was formed in 1996 to govern Phase I,' that the POA also would govern ‘Phase II,' and that BID II was just an ‘extension' of BID I," Croskey wrote. "The POA's status as an entity originally ‘created' to take over City's legislative functions was not somehow negated, annulled, or dissipated simply because its role subsequently was expanded by the geographic expansion of the area over which it exercised such functions." The Case: Aaron Epstein v. Hollywood Entertainment District II Business Improvement District, No. B134256, 00 C.D.O.S. 9499, 2000 Daily Journal D.A.R. 12772, filed November 30, 2000. The Lawyers: For Epstein: Dennis Winston, Moskowitz, Brestoff, Winston & Blinderman, (310) 785-0550. For the BID: Andre Cronthall, Sheppard, Mullin, Richter & Hampton, (213) 620-1780. For City of L.A.: Patricia Tubert, Senior Assistant City Attorney, (213) 485-5416