Opinion
Opinion By: Gregory D. Stumbo, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether Third Street Development Corporation, Inc., is a public agency for purposes of the Open Records Act, and if it violated the Act in the disposition of Advocate Messenger Managing Editor John A. Nelson's December 10, 2003 request for "copies of the Minutes of each of the meetings of [TSDC] during 2003, and copies of financial statements during the same time frame." For the reasons that follow, and based on our conclusion in 04-OMD-002, we affirm TSDC's disposition of that portion of his request relating to minutes of meetings, but find that TSDC did not provide sufficient proof to establish that it is not a public agency to the extent that it expended and/or retains any portion of the $ 960,000 to $ 975,000 it received from the state through the City of Danville in 2001. TSDC must therefore comply with Mr. Nelson's request in a manner consistent with the decision set forth below.
In her December 11, 2003 response to Mr. Nelson's December 10 request, TSDC President Janet Hamner asked that he provide her with "any legal authority that [he] contend[s] is applicable to [TSDC's] compliance with [his] request." Shortly thereafter, Mr. Nelson initiated this appeal, challenging TSDC's position that the Open Records Act is inapplicable to it 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 1 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 . . . ."
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. 2 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.
It is the opinion of this office that although the proof presented by TSDC and Mr. Hays is sufficient to support TSDC's claim that it is not a public agency for Open Meeting purposes, as we determined in 04-OMD-002, the same proof is insufficient to support the claim that TSDC is not a public agency for open record purposes.
In 04-OMD-002, the Attorney General held that because TSDC does not fall within the parameters of KRS 61.805(2)(a) through (h), defining the term "public agency" for purposes of open meetings analysis, the corporation was not governed by the Open Meetings Act, or required to notify The Advocate-Messenger of, or admit The Advocate-Messenger to, its meetings. As a corollary to this holding, we find that TSDC is not statutorily required to promptly record "[t]he minutes of action taken at every meeting . . . setting forth an accurate record of votes and actions at such meetings," or to make those minutes "open to public inspection at reasonable times no later than immediately following the next meeting of the body." KRS 61.823. Simply stated, TSDC has no obligation under the Open Meetings Act to create, or otherwise afford the public access to, minutes of its meetings. Accord, OAG 91-45 (Judicial Retirement and Removal Commission, now Judicial Conduct Commission, is not required to disclose the minutes of its meetings because it is not a public agency within the meaning of KRS 61.805(2) and not bound by KRS 61.835). We find no error in TSDC's nondisclosure of the minutes of its meetings.
Nevertheless, in 04-OMD-002 we "le[ft] aside the issue of [TSDC's] status as a public agency for open records purposes," citing footnote 1 of 01-OMD-34:
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.
Because the definition of "public agency, " which appears at KRS 61.805(2) of 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," which appears at KRS 61.870(1)(h) of the Open Records Act, we concluded that TSDC was not a public agency for open meetings purposes, notwithstanding that large infusion of state funds it received through the City of Danville in 2001.
It is this provision, KRS 61.870(1)(h), which brings TSDC within the reach of the Open Records Act and compels disclosure of "any records owned or maintained by [TSDC] that are . . . related to functions, activities, programs, or operations funded by state or local authority. " KRS 61.870(2). The Advocate-Messenger documents payments of $ 96,000 to TSDC on July 10, 2001, $ 864,000 to TSDC on July 26, 2001, and $ 5023.75 to TSDC on August 17, 2001, and questions "the use of the remaining . . . $ 10,000." TSDC acknowledges receipt of $ 960,000 in 2001, but offers no explanation for the $ 5023.75 it also received, or for the nearly $ 10,000 for which there is no accounting. TSDC's financial records, which were provided to this office under authority of KRS 61.880(2)(c), reflect current revenues consisting of a line of credit and nominal proceeds from window rentals, but do not reflect whether all or any of the five thousand plus dollars it received from the city in 2001, or the additional nearly ten thousand dollars it may have received from the city, remain in its coffers or have since been expended by it. TSDC is silent on this issue.
Clearly, records generated by TSDC in 2001 that relate to functions, activities, programs, or operations funded by the infusion of $ 960,000 from the state through the city are accessible to the public under the Open Records Act. Accord, 02-ORD-222; 94-ORD-13; OAG 90-63; OAG 89-46; OAG 80-633; compare, 94-ORD-98. If the remaining state funds channeled to TSDC through the city represent at least 25% of its total funds in any subsequent year, records generated by TSDC that relate to functions, activities, programs, or operations funded by those remaining funds and in those years are accessible under the Open Records Act. As we noted in an early open records decision involving application of KRS 61.870(1)(h)'s predecessor statute, "As far as open records are concerned, it is apparently the policy of the legislature that wherever public funds go, public interest follows." OAG 80-633, p. 2, citing OAG 76-648. At its inception, TSDC's funding was primarily, if not exclusively, derived from state funds. "This makes the use of its funds a matter of public stewardship . . . and we can see no justification for keeping its records secret from the public." OAG 80-633, p. 2. TSDC is accountable, through its records, for the expenditure of public funds.
Consistent with this position, we find that The Advocate-Messenger is entitled to any records owned or maintained by TSDC that document expenditure of any state funds it received in 2001 and that may have remained in its coffers in subsequent years. If this includes financial statements during 2003, these records must be disclosed.
A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), 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.
John A. Nelson The Advocate Messenger 330 S. Fourth StreetP. O. Box 149Danville, KY 40423-0149
Janet Hamner, PresidentThird Street Development Corporation, Inc.304 S. Fourth StreetDanville, KY 40422
Edward Hays, City Attorney114 S. Fourth StreetP. O. Box 1517Danville, KY 40423-1517
Footnotes
Footnotes
1 Throughout the correspondence relating to this appeal, the building for which redevelopment funds were obtained is alternatively referred to as the Hub-Frankel Building and the Hub-Gilcher Building.
2 If the Community Development Council is itself a public agency, and if a majority of TSDC's current Board members were originally appointed by the Chairman of the Council, TSDC may also qualify as a public agency for open records purposes under Subsection (1)(i) providing that "[a]ny entity where a majority of its governing body is appointed by a public agency, as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (j), or (k) or [KRS 61.870(1)]; by a member or employee of such a public agency; or by any combination thereof" is a public agency under the Act.