Request By:
John A. Nelson
330 South Fourth Street
P. O. Box 149
Danville, KY 40423-0149Janet Hamner, President
Third Street Development Corporation, Inc.
304 South Fourth Street
Danville, KY 40422Edward Hays, City Attorney
114 South Fourth Street
P. O. Box 1517
Danville, KY 40423-1517
Opinion
Opinion By: Gregory D. Stumbo, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Meetings Decision
The question presented in this appeal is whether Third Street Development corporation, Inc. is a public agency for purposes of the Open Meetings Act, and if its meetings are governed by the Act. For the reasons that follow, we find that TSDC, a private non-profit corporation formed in June 2001 for the purpose of "foster[ing] the economic development and re-development of downtown Danville, Kentucky," is not a public agency as defined in KRS 61.805(2) and is, therefore, not bound by the requirements of the Act.
On December 10, 2003, Advocate Messenger Managing Editor John A. Nelson submitted a letter to Janet Hamner, President of TSDC, in which he asked that the newspaper "be informed of the date, time and place of [TSDC's] regular meetings and of any special called meetings." 1 Anticipating that TSDC would decline his request, Mr. Nelson asked that Ms. Hamner advise the newspaper of "any reason these laws do not apply to [TSDC] . . . to facilitate a legal judgment on the matter." 2 In a response dated December 11, 2003, Ms. Hamner requested that Mr. Nelson "send [her] any legal authority that [the newspaper] contend[s] is applicable to [TSDC's] compliance with [the newspaper's] request." Shortly thereafter, Mr. Nelson initiated this appeal, challenging TSDC's position that it is not a public agency and noting that "[s]ince its inception, . . . well more than 25 percent of the funds expended by TSDC have been from state or local authority funds, perhaps even 100 percent." He observed:
TSDC, a non-profit organization in Danville, tells us that it is a "single-asset" corporation with no operating revenue. It was formed in 2001 and that same year received over $ 960,000 from the city. The money represented most of the proceeds from a $ 975,000 state grant obtained through the Education, Arts & Humanities Cabinet. A memorandum of agreement between the cabinet and the city stated the money was to be used by the city to develop a downtown Danville landmark known as the Hub-Frankel building. City records show that it transferred the money to TSDC in at least three installments. The first $ 96,000 check which TSDC used as a down payment toward the purchase of the building, the second for $ 864,000 to pay the balance of the purchase price, and the third for $ 5,023, the use of which is not clear. We are still seeking to learn the use of the remaining money, close to $ 10,000.
Based upon The Advocate Messenger's interpretation of KRS 61.870(1), Mr. Nelson maintained that TSDC is a public agency and required to afford the newspaper "access to its records 3 and admittance to its meetings."
In supplemental correspondence directed to this office following commencement of The Advocate Messenger's appeal, Ms. Hamner elaborated on TSDC's position:
In 1999, a group of private citizens began working to address the problem of the vacant Hub-Gilcher Department store in downtown Danville. They worked primarily in response to citizen concern over the beloved buildings and their rapid deterioration.
In 2000, the Community Development Council held its first community planning meeting. Preserving the Hub-Gilcher buildings was identified as the number one community priority. Our representative, John W. D. Bowling, was in attendance at the forum, and went to Frankfort to secure $ 960,000 from the state surplus to assist the community in preserving the buildings. Representative Bowling asked the Boyle County Fiscal Court to accept the funds, asking the city to act as a pass through agency to a private group of citizens. Members of the community independently formed Third Street Development Corporation (TSDC) in June 2001, as a private, non-profit entity for this purpose.
Originally, TSDC board members were asked to serve by the chairman of the Community Development Council. Currently, the corporation, as set forth in our by-laws, fills any vacancies. Since acquisition of the Hub-Gilcher buildings in 2001, TSDC has accepted no public funds. We continue to work towards redevelopment, accepting no public funding in this effort.
In support, Ms. Hamner provided this office with copies of TSDC's 2003 financial statement, minutes of its July 19, 2001 meeting, Articles of Incorporation,, and the Memorandum of Understanding between the Education, Arts, and Humanities Cabinet and the City of Danville by which the City "agreed to serve as administrator and recipient of the [Community Development] Project grant money from the Cabinet . . .", related correspondence, and the real estate closing statement by which 224-236 West Main Street was purchased by TSDC from Land America Exchange Company.
On December 23, 2003, Danville City Attorney, Edward D. Hays, confirmed Ms. Hamner's position, asserting:
TSDC is a private, non-profit corporation with its own board of directors. It was not created by the City of Danville and does not exist as a department, committee, or agency of the City. The Danville City Commission is privy only to such activities of TSDC as the corporation sees fit to divulge.
Assuming the accuracy of these statements, we find that TSDC is not a public agency for open meetings purposes.
The term "public agency" is expansively defined at KRS 61.805(2) to include:
(a) Every state or local government board, commission, and authority;
(b) Every state or local legislative board, commission, and committee;
(c) Every county and city governing body, council, school board, special district board, and municipal corporation;
(d) Every state or local government agency, including the policy-making board of an institution of education, created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act;
(e) Any body created by or pursuant to state or local statute, executive order, ordinance, resolution, or other legislative act in the legislative or executive branch of government;
(f) Any entity when the majority of its governing body is appointed by a "public agency" as defined in paragraph (a), (b), (c), (d), (e), (g), or (h) of this subsection, a member or employee of a "public agency, " a state or local officer, or any combination thereof;
(g) Any board, commission, committee, subcommittee, ad hoc committee, advisory committee, council, or agency, except for a committee of a hospital medical staff or a committee formed for the purpose of evaluating the qualifications of public agency employees, established, created, and controlled by a "public agency" as defined in paragraph (a), (b), (c), (d), (e), (f), or (h) of this subsection; and
(h) Any interagency body of two (2) or more public agencies where each "public agency" is defined in paragraph (a), (b), (c), (d), (e), (f), or (g) of this subsection[.]
Despite the expansive language of this provision, and the clearly expressed legislative intent that the law is to be strictly construed so as to avoid unauthorized secret meetings of public agencies, the Attorney General has repeatedly recognized that a private, not-for-profit corporation is not a public agency within the scope and meaning of the Act. For example, in 96-OMD-180, this office held that Seven Counties Services, Inc., a private, not-for-profit corporation which provides mental health and mental retardation services, was not a public agency subject to the terms and provisions of the Open Meetings Act. See also, OAG 75-402 (community mental health board established by a not-for-profit corporation is not a public agency) ; OAG 78-395 (county water association that was established as a not-for-profit corporation is not a public agency) ; OAG 79-560 (rural electric cooperative, formed pursuant to KRS Chapter 279 as a not-for-profit corporation, is not subject to the Open Meetings Act) ; OAG 81-266 (county hospital foundation, incorporated as a not-for-profit corporation under KRS Chapter 273 for the purpose of local approval of loans for small businesses is not subject to the Open Meetings Act) ; OAG 84-237 (private, not-for-profit corporation formed under KRS Chapter 273 for the purpose of local approval of loans for small businesses is not subject to the Open Meetings Act) ; 98-OMD-174 (a committee of a private, non-profit professional association of physicians that oversaw county ambulance service was not a public agency under the Open Meetings Act) ; 01-OMD-34 (Kentucky Bourbon Festival, Inc., a private, non-profit corporation formed for the purpose of "directing the celebration . . . of all facets of the bourbon industry" is not a public agency within the scope of the Act). Thus, the overwhelming weight of authority supports the position that TSDC takes.
The Advocate Messenger's argument in chief is premised upon the fact that TSDC received $ 960,000 from the City to advance its stated goal, and that therefore, pursuant to KRS 61.870(1), it qualifies as a public agency. Leaving aside the issue of its status as a public agency for open records purposes, we find that this fact, standing alone, is not dispositive. At footnote 1 of 01-OMD-34, this office observed:
It should be noted that a private, non-profit corporation may be a public agency for purposes of the Open Records Act, though it is not a public agency for purposes of the Open Meetings Act. See, e.g., 97-ORD-140 [and 02-ORD-222] (holding that Seven Counties Services, Inc. is a public agency within the meaning of KRS 61.870(1)(h) in that it derives more than 25% of its funding from state or local authorities). This dichotomy arises from the differences in the definition of "public agency" found in each of the Acts. OAG 76-648.
The definition of "public agency" which appears at KRS 61.805(2), relating to the Open Meetings Act, does not include "[a]ny body which derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds." Accordingly, the fact that TSDC received $ 960,000 from the City of Danville in 2001 has no bearing on resolution of the issue of whether TSDC is a public agency for open meetings purposes. Accord, 96-OMD-180.
The record on appeal is devoid of proof that TSDC falls within the parameters of KRS 61.805(2)(a) through (h) set forth above. The Articles of Incorporation with which Ms. Hamner furnished this office demonstrate that it was established as a private, non-profit corporation in 2001, and does not owe its existence to legislative action or executive order. 4 Nor does the record presented support the view that the City of Danville exercises active control of that entity. It follows that the board of directors of TSDC is not required to comply with the requirements of the Open Meetings Act. 5 We proceed no further in our analysis. Because TSDC cannot properly be characterized as a public agency within the meaning of KRS 61.805(2)(a) through (h), its board is not obligated to conduct public meetings. Neither the corporation, nor its board, is governed by the 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 proceedings.
Footnotes
Footnotes
1 Pursuant to KRS 61.823(4)(a), public agencies are required to deliver personally, transmit by facsimile machine, or mail written notice of special meetings at least twenty-four hours before the special meetings, to media organizations which have filed written requests, including mailing addresses, to receive notices of special meetings.
2 Mr. Nelson's December 10 letter does not strictly conform to the requirements of KRS 61.846(1), relating to enforcement of the Open Meetings Act by administrative procedure. Mr. Nelson does not "state the circumstances that constitute an alleged violation of [the Act]" or "state what the public agency should do to remedy the alleged violation," but his letter substantially conforms to the requirements set forth in that provision, is the functional equivalent of the initiating document required by KRS 61.846(1), and was clearly intended to initiate enforcement procedures, including "a legal judgment on the matter."
3 In addition to his open meetings appeal, Mr. Nelson simultaneously initiated an open records appeal from TSDC's refusal to honor The Advocate Messenger's request for minutes of meetings and financial statements for 2003. Pursuant to KRS 61.880(2)(a), the Attorney General will issue a separate written decision within twenty business days of receipt of that appeal.
4 This office was unsuccessful in its attempts to obtain a copy of the City of Danville resolution referenced at Section 2.J. of the Memorandum of Understanding between the Cabinet and the City which "authorize[ed] the execution of [the] Memorandum. " Unless the resolution represents the instrumentality by which TSDC was created or extends control of TSDC to the City, our analysis is unaffected by the existence of the resolution.
5 This is not to say that the board could not voluntarily do so. For example, in 01-OMD-34, the subject entity, Kentucky Bourbon Festival, Inc., acknowledged the value of public accountability and agreed to open its meetings and records.