Request By:
[NO REQUESTBY IN ORIGINAL]
Opinion
Opinion By: Albert B. Chandler III, Attorney General; Amye Bensenhaver, Assistant Attorney General
Open Meetings Decision
The question presented in this appeal is whether the Georgetown City Council violated the Open Meetings Act when it went into a closed session at its July 6, 2000, meeting "for the purpose of discussing the acquisition of real estate. " For the reasons that follow, we conclude that the Council properly relied on KRS 61.810(1)(b) in conducting a closed session discussion of issues relating to the purchase of the real estate that were likely to affect its value, and that insufficient evidence exists to support the allegation that action was taken in the course of the closed session discussion.
On July 14, 2000, Georgetown News-Graphic publisher Mike Scogin submitted a written complaint to Mayor Everret Varney in which he alleged that the Council improperly conducted an executive session at its July 6 meeting "to discuss among other items a zoning change recommended by the Georgetown/Scott County Planning and Zoning Commission." It was Mr. Scogin's position that the Open Meetings Act does not authorize closed session discussions of zoning changes. Mr. Scogin next alleged that council "agreed to an action in executive session. " He asserted that in the course of the closed session, City Attorney Charlie Perkins "advised the Council not to vote on this specific agenda item [namely, the proposed zoning change] , upon which the Council agreed." In support, Mr. Scogin noted that Council Member Terry Maurer stated in open session that "upon the attorney's advice, . . . any action by the Council would be a 'conflict of interest.'" Finally, Mr. Scogin alleged that based on an opinion column written by Mr. Perkins that was published in the News-Graphic , and in which he stated that "the city has made an offer to purchase the 441 acres, " it appears that the City Council improperly took action on this issue in closed session. As a means of remedying these alleged violations, Mr. Scogin proposed that the Council "acknowledge in the next Council meeting and in a letter to the News-Graphic that the Council violated Kentucky's Open Meetings Law and publicly pledge to carefully follow the law in the future."
In a response dated July 17, 2000, Mayor Varney and City Attorney Perkins denied the allegations contained in Mr. Scogin's complaint. They explained:
The closed session was held for the purpose of discussing the acquisition of real estate. The discussion centered on the recent meeting between a member of the Council, the City Attorney, several of the property owners and their attorney. One of the subjects discussed in the meeting was the potential conflict of interest, which would arise if the City heard the pending zone change. Included in this topic was the owners' potential claim for damages if the City took any action concerning this property for which it had designs. Such a claim could greatly affect the City's cost in this project.
We all agree that the Open Meetings Act prohibits the entry of closed session to discuss a zone change application. If that were the topic, we would have had no closed session. As part of the negotiations of the purchase, the conflict was discussed. The owners were concerned that the City's deliberations and zoning decision could impact their property and its value. As representative of the City and to demonstrate the good faith of the City, the City Attorney explained to the owners that he agreed City action on the zone change would create a potential conflict of interest. He further explained that to protect the parties anticipated transaction from any allegation of overreaching, he would advise the Council to abstain from deliberations on their application.
The owners' fear of the City's zoning authority and its impact on the transaction, whether on the price or in the form of damages for alleged violation of property rights gained through the planning and zoning process, was a proper topic for the negotiations with the owners. As a substantive part of the negotiations, it was a proper topic for the council update during the closed session. There was no substantive discussion of the zoning process or the merits of the application. The City Attorney informed the Council concerning that facet of the negotiations. He told them he would give them a proposed motion on the subject upon their re-entry of open session. The only response related to the zone change, which the City Attorney requested, was whether the Council members had any questions. They did not. As the Council re-entered open session Councilman Maurer told the City Attorney that he would make the motion. There was no vote on the matter until Councilman Maurer read the motion in open session.
In response to Mr. Scogin's allegations concerning the City's offer on the property, Mayor Varney and Mr. Perkins observed:
The City Council has never taken formal action on the acquisition of property prior to City representatives seeking appraisals and making conditional offers. The Council never votes on any land acquisition prior to acceptance of the conditional offer by the property owner. Upon the owner's acceptance of the conditional offer, the matter is presented to Council for approval. There is no purchase without public Council approval. If the City were to take formal action prior to extending the offer and negotiating, we would broadcast the City's intent and invite competing interests. Avoiding these interests is precisely the reason this subject is permitted in closed session.
The City Council thus maintained that it had acted "in good faith" and "within both the spirit and the letter of the law" throughout the process. Dissatisfied with the City Council's response, Mr. Scogin initiated this appeal on July 18, 2000. He asserted that the Council's reliance on KRS 61.810(1)(b) was only justified if public discussion of the subject discussed in closed session was likely to affect the value of the property, that a proposed zoning change was, under no circumstances, an appropriate subject for closed session discussion, and that evidence existed that final action had been taken in closed session on the issue of whether to vote on the proposed zone change, and on issue of extending an offer on the property.
The record before us does not support the allegations contained in Mr. Scogin's original complaint or in his letter of appeal. Instead, we find that discussions held during the July 6 closed session were confined to matters that if made public would be likely to affect the value of the property. Further, we find that there is insufficient evidence in the record that final action on the question of whether to vote on the zone change, and/or to extend an offer on the property, was taken in closed session. It is our opinion that the discussion, although perhaps somewhat removed from issues normally associated with ongoing negotiation for the purchase of real estate, fell within the scope of KRS 61.810(1)(b). Public airing of these issues could well have compromised a significant governmental interest by inflating the property's costs.
In 00-OMD-64, this office analyzed KRS 61.810(1)(b) in considerable depth. Keeping in mind "that the exceptions to the Open Meetings Act 'must [be] narrowly construed and applied . . . so as to avoid improper or unauthorized closed, executive, or secret meetings,'"
Floyd County Board of Education v. Ratliff, Ky., 955 S.W.2d 921, 923 (1997), we nevertheless affirmed the Henderson City Commission's reliance on KRS 61.810(1)(b) as the basis for conducting a closed session discussion relating to the acquisition of a piece of property where "the proposed purchase price was not publicly disclosed prior to the closed session, was contingent on a collateral agreement which affected the property's value to the city, and was subject to the Commission's approval." 00-OMD-64, p. 5. We distinguished the facts in that appeal from the facts giving rise to 95-OMD-57 and 99-OMD-104.
In 95-OMD-57, the Attorney General held that the Lexington-Fayette Urban County Government improperly invoked KRS 61.810(1)(b) since LFUCG was obligated under a previously released memorandum of understanding with the state to reimburse the state on a particular date and at a particular price, for property acquired by the state. In 99-OMD-104, the Attorney General held that the Marion City Council was not justified in conducting a closed session discussion of the purchase of property when a purchase price had been agreed to, budgeted for, and publicized. In these decisions, we were unable to discern how the price of the property at issue could be affected by public disclosure since the terms of the purchase had been previously disclosed. "Under these circumstances," we concluded, "confidentiality could afford no material advantage to the public interest. " 00-OMD-64, p. 5.
In 00-OMD-64, the Attorney General analogized the appeal before him to a series of open meetings appeals construing KRS 61.810(1)(b), and affirming public agency reliance on the exception. KRS 61.810(1)(b) excludes from the general rule of open and public debate:
Deliberations on the future acquisition or sale of real property by a public agency, but only when publicity would be likely to affect the value of a specific piece of property to be acquired for public use or sold by a public agency [.]
In an early open meetings decision, the Attorney General recognized that:
Only when a public agency is discussing a specific piece of property relative to whether the agency will buy or sell that property and the discussion if made public would likely affect the price of that property, can the matter be discussed in a closed session [under this exception]. Confidentiality is only permissible when the public interest will be directly affected financially.
OAG 80-530, p. 3. There, the question was posed as a hypothetical.
However, in at least four open meetings decisions issued in the past decide, this office affirmed agency reliance on KRS 61.810(1)(b) as the basis for closed session discussion of the purchase or sale of real property. In 93-OMD-56, we held that the Board of Commissioners of the Allen County War Memorial Hospital did not violate the Open Meetings Act when it went into closed session to deliberate the proposed sale of a hospital building and the property on which it was located since a private entity had made an offer to purchase the hospital, and the Board feared that public deliberations might cause the buyer to adopt a "take it or leave it" stance in negotiations. Similarly, in 94-OMD-22, we affirmed the Anderson County Board of Education's closed session discussion relating to the acquisition of property since publicity was likely to affect the property's value. In 98-OMD-147, we held that the City of Sebree properly relied on KRS 61.810(1)(b) in conducting a closed session discussion of the sale price offered in settlement negotiations. Finally, in 00-OMD-64, we affirmed the Henderson City Commission's discussion in closed session of the purchase of property since the proposed purchase price had not been disclosed, was subject to collateral agreements affecting the value of the property, and was contingent on the Commission's approval. At page 5 of 00-OMD-64, we recognized that "discussions in open session of the commissioners' objections and concerns relative to the negotiated price might well have compromised the public's financial interests."
We believe that the facts of the appeal before us are more closely akin to the facts of the appeals that were resolved in favor of the public agencies in 93-OMD-56, 94-OMD-22, 98-OMD-147, and 00-OMD-64. The City acknowledges that the Open Meetings Act does not authorize closed session discussion of zone change applications, but develops facts to support its position that the application was not discussed, but instead the property owners' concerns about "the city's zoning authority and its impact on the transaction, whether on the price or in the form of damages for alleged violation of property rights gained through the planning and zoning process." It was the need to abstain from making a substantive decision on the zone change application based on the potential conflict of interest arising from the City's interest in acquiring the property, and not the merits of the zone change itself, that was the subject of the closed session discussion. Critical to this discussion were the owners' potential claims for damages if the city took action on the zone change application for the property it wished to acquire, and the likelihood that such claims would inflate the costs to the City, or stimulate interest in the purchase of the property by competing interests. Open discussion of the potential conflict, and the appropriate response thereto, was thus likely to have a direct effect on the public's financial interest. Although we know of no clear precedent for such closed session discussions relative to property acquisition, we believe that there is a sufficient nexus between the value of the property under consideration and the matters discussed in closed session to support the Georgetown City Council's reliance on KRS 61.810(1)(b).
Having said this, we are nevertheless obliged to point out that the City Council may not have complied in all particulars with KRS 61.815 in going into closed session. In 00-OMD-64, this office addressed the notice requirements set forth at KRS 61.815(1)(a), observing:
KRS 61.815(1)(a), contemplates more than agency recitation of language of the exception authorizing the closed session, but less than a detailed description of the matter to be discussed. In construing KRS 61.805 to 61.850, the Supreme Court observed:
[Floyd County Board of Education v. Ratliff, Ky., 955 S.W.2d 921, 923 (1997]. With specific reference to KRS 61.815, the Court declared that prior to going into closed session, the public agency "must state the specific exception contained in the statute which it relied upon," and give "specific and complete notification . . . of any and all topics which are to be discussed during the closed meeting." Id. at 924 (emphasis added). In view of the disparate nature of the twelve exceptions, there can be no bright line test for determining if specific and complete notification has been given. However, consistent with the right of the people to "remain[] informed so that they retain control over the instruments they have created" (1974 HB 100, Preamble), we believe that the notification must include both a statement of the exception authorizing the closed session and a description of the business to be discussed couched in sufficiently specific terms to enable the public to assess the propriety of the agency's actions.
00-OMD-64, p. 6.
In an earlier decision, the Kentucky Court of Appeals had declared, with specific reference to invocation of KRS 61.810(1)(b), then codified at KRS 61.810(2):
the drafters of KRS 61.810 provided that this type of deliberation would be held only when publicity would be likely to affect the value of a specific piece of property and we know of no instance where publicity would not have a possible effect upon realty values but in the instant case, it is at once apparent that the notice given in the open meeting preparatory to the closed session . . . falls short of subsection (1) of KRS 61.815. . . . In order to fully comply with the two statutes, the notice should have contained information that the [agency] intended to conduct an executive session for the purpose of discussing the sale or acquisition (in this instance a potential sale or lease) of real property and that the reason for privacy was due to the fact that publicity at the deliberation stage might be likely to affect the value.
Jefferson County Board of Education v. Courier-Journal, Ky. App., 551 S.W.2d 25, 28 (1977). Although the record is not abundantly clear on this point, it appears that the reason given for the closed session, namely, to discuss "the acquisition of real estate, " did not include an explanation that public deliberations were likely to affect the value of the subject property. We urge the Georgetown City Council to review the cited provisions to insure full compliance with the requirements for going into closed session.
Mr. Scogin also alleged that in the course of the July 6 closed session, the Council took actions consisting of an agreement to abstain from voting on the zone change application and to extend an offer for the purchase of the 441 acres that was the subject of the application. Again, we do not believe that the record supports these allegations. With respect to the first allegation of improper closed session action, Mr. Perkins refutes the charge, explaining that he advised the Council of the potential conflict of interest arising from the exercise of its zoning authority over real property which it was attempting to acquire by purchase. No action was taken on the advice in closed session. Upon return to open session, Councilman Maurer made the motion to abstain from a vote on the zone change application that Mr. Perkins had prepared, and action was taken on the motion in open and public session. KRS 61.805(3) defines the term "action taken" as "a collective decision, a commitment or promise to make a positive or negative decision, or an actual vote by a majority of the members of the governmental body[.]" The record amply demonstrates that no decision was made, or vote taken, on the City Attorney's advice in closed session.
Nor does the evidence presented suggest that action was taken in closed session to extend an offer on the 441 acres. Although the genesis of this land acquisition project is less clear, it appears that authority to proceed with the project was derived from the allocation of funds in the city budget for land acquisition, and not specific action of the Council. See 92-OMD-1688 (holding that Flemingsburg City Council did not violate Open Meetings Act relative to discussions concerning purchase of recycling equipment.) Mr. Perkins explained that City representatives initiated negotiations and obtained appraisals at the direction of the Mayor, and in advance of Council action. Discussions were conducted in closed session on the topic of property acquisition, since public discussion was likely to affect the value of the property, but formal action will be deferred until an offer has been accepted by the property owner, said offer being conditioned upon council approval . Without such approval, the purchase cannot be consummated. It is the vote on approving the purchase that must be conducted in an open and public session, and as we understand it, the City has not yet reached this point in its negotiations. Again, there has been no collective decision, or actual vote, on the purchase of the 441 acres because negotiations are still underway. And again, we find no violation of the Open Meetings Act.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.846(4)(a). The Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.