Request By:
Rebecca Dial
Editor
Central Kentucky News-Journal
P.O. Box 1138
Campbellsville, KY 42719Paul Patton
Taylor County Judge Executive
Taylor County Courthouse
203 N. Court Street, Suite 4
Campbellsville, KY 42718Craig Cox
Taylor County Attorney
P.O. Box 155
Campbellsville, KY 42719-1155
Opinion
Opinion By: Gregory D. Stumbo, Attorney General; Michelle D. Harrison, Assistant Attorney General
Open Meetings Decision
At issue in this appeal is whether the Taylor County Fiscal Court violated the Kentucky Open Meetings Act by going into closed session at its meeting of January 25, 2005, for the purpose of discussing "the future acquisition or sale of specific real estate, " because "open deliberation might affect the value of the property being considered for acquisition or sale." Because the record reflects that publicity "would be likely to affect" the value of the specific piece or pieces of property to be acquired or sold, and the record does not contain sufficient evidence to support the allegation that a vote on the proposal submitted by the Taylor County Public Health Board was the sole purpose for conducting the closed session, it is the decision of this office that the Fiscal Court properly relied upon KRS 61.810(1)(b).
By letter dated January 26, 2005, Rebecca Dial, Editor, submitted a complaint concerning the Fiscal Court meeting held on January 25, 2005, to Taylor County Judge Executive Paul Patton on behalf of the Central Kentucky News-Journal . Citing KRS 61.810(1)(b), Ms. Dial correctly argued that the "council cannot legally go into a closed or executive session to discuss real estate" with the exception of "deliberations on the future acquisition or sale of real property . . . 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 the News-Journal's view, "with a written offer of $ 280,000 from the Taylor County Health Board, the only discussion would have been whether the Court agreed to accept or reject" the offer. According to the News-Journal , "the discussion had no bearing on the offered price." To remedy the alleged violation, the News-Journal requests that the Court discuss "at a future meeting, in an open and public session, those matters that were discussed" during the "improperly called" closed session with any action taken as a result of the closed session declared "null and void."
In a timely written response, Taylor County Attorney Craig Cox advised Ms. Dial as follows: 1
There may be some misinterpretation of the purpose of the closed session undertaken by the Court. It appears from the letter that the media believes the sole discussion or purpose of the closed session was to consider an "up or down" response to a letter written to the Court by the Health Department Board. That was not the sole purpose of, nor does it reflect the actual motion made and conduct of, the executive session.
However, even assuming the letter was the impetus for the discussion, it was clearly relevant and necessary for the Court to first determine whether it wished to sell the property at all, and secondly to formulate some idea of its value. This by necessity included consideration of factors such as initial investment, improvements, comparable sales of adjacent or similar property, potential uses, and the highest and best use of the property. All, or many of, these factors would potentially have an effect on the value of the specific real estate in question. That potential effect, is sufficient to authorize executive session. This perceived value is then a factor in deciding whether to sell the specific piece of property or not, and at what price. This is especially true regarding the possibility of further negotiation or discussion of a later sale.
That being said, Mr. Cox reiterated that acceptance or rejection of the "offer" was not the stated purpose of the session, nor did the motion address the letter or specify any such limitation on the discussion. To the contrary, a motion was made to go into closed session pursuant to KRS 61.810(1)(b) for the purpose of discussing "the future acquisition or sale of specific real estate by the Court where open deliberation might affect the value of the specific property to be sold." According to Mr. Cox, the motion "was not only to go into session to consider its response to the letter, and some of the Court members were not privy at that time to the letter or the amount of the offer." In fact, the Court discussed "its ownership, acquisition or sale of several (multiple) pieces of real estate. " Discussion did include "only specific real estate, including several owned parcels" and other real estate which the Court might be interested in acquiring, as well as the "potential value and/or investment in these tracts, improvements and potential comparable prices of similar real estate in the immediate area to the various specific tracts" being discussed. In the Court's estimation, "open discussion of these items would impact the value of these specific tracts and potentially impede the County's ability to buy or sell as the case may be."
Also included in the subject discussion regarding the parcels was a "general discussion of whether the County was ready to price and sell the ten acre [bypass] property," and the different factors considered by the county in determining the value of that real estate. Publication of these factors would "most certainly" have affected the value of the specific real estate in question. Upon concluding the closed session, a motion was made to decline the offer made by the Health Board and "and the Court took an open vote on the matter."
Arguing that the Court violated "both the letter and the spirit" of the Open Meetings Act at its meeting of January 25, 2004, Ms. Dial initiated this appeal by letter dated February 10, 2005. More specifically, the News-Journal contends that the Court acted in violation of KRS 61.810(1)(b). Not only did the Court fail to cite a "specific exemption at the time" it went into closed session, any public discussion of the factors mentioned in the Court's denial "would not have adversely affected the price of the property being considered" when viewed in context. To the contrary, "the previous purchase price and its improvements have been well documented in the newspaper for more than four years, making the Health Board's offer simply that -- an offer of a specific amount. " Accordingly, the News-Journal does not believe that public discussion of the offer would affect the price or the Court's decision.
Although the Court "insists in its denial that such open discussion would indeed affect the price," the News-Journal contends "there was no mention in [the Court's] closed meeting call" that additional topics would be discussed. Attached to News-Journal's letter of appeal in support of this position is a copy of the Court's meeting agenda. 2 Because the Health Board mailed its letter on January 7, 2005, "nearly 2 1/2 weeks prior to the meeting," the News-Journal contends that the Judge Executive had ample opportunity to notify all members. In conclusion, Ms. Dial reiterates the proposed remedy.
Upon receiving notification of Ms. Dial's appeal from this office, Mr. Cox elaborated upon the Court's position. To begin, the Court does not believe that the News-Journal has framed the issue correctly, but is confident that it acted properly from either viewpoint. While it is apparent from the News-Journal's letter that its appeal is premised on the belief that the Court went into closed session solely for the purpose of considering the Health Board's offer, it is "less clear" whether the News-Journal also believes that the Court could "only do just that, namely, vote "yes" or "no" without further discussion." 3 As reflected by the minutes of the Court's meeting, a copy of which is attached to the Court's supplemental response, a magistrate moved for the Court to go into closed session at the meeting, specifically citing KRS 61.810(1)(b) as authority. 4 At that point, Mr. Cox explained "that in order to go into executive session, the purpose must be for the future acquisition or sale of specific real estate and only then when open discussion might or would likely affect the value of the property being considered for sale or purchase." Once the magistrate clarified those were "the exact parameters of his motion" and the criteria had been met, a vote was taken and the motion passed.
As correctly observed by Mr. Cox, the ability of the magistrates to effectively perform their duties "depends on being fully informed and exchanging pertinent information." Whether "accepted by the media or not," Mr. Cox has been advised that all of the magistrates were not privy to the letter containing the offer which was addressed to the Judge. In addition, the majority of the Fiscal Court members were not members at the time the property was acquired, and "[there] had been no recent formal attempt by the Court to 'value' and/or 'price' this particular tract" or review all relevant factors in so doing. Accordingly, the Court believes the discussion was "relevant and proper," so the question becomes whether such discussions must be held publicly. The statute, "by its very existence," recognizes there are situations where the opportunity to "weigh, evaluate, discuss, and negotiate relative to the purchase or sale of real estate is a highly sensitive matter." Although the News-Journal "seems to imply" that the only factor to be considered by the Court in determining whether to sell this specific piece of property is cost, including improvements, cost is but one factor, "not the only factor in determining the value of property."
Citing OAG 93-56, a copy of which is attached to its response, the Court contends that public disclosure of the magistrates' opinions as to the value of the property would assure "that no other person would ever offer a higher price" for a significant period notwithstanding the fact that the property value might increase with time. "It is fortunately axiomatic" that real estate in a prime location which is properly maintained appreciates in value. Contrary to the News-Journal's assertion, discussing "publicly obtainable information as to the purchase price or the cost of improvements to the real estate some four to five years previous," does not constitute all of the many factors which assist the Court in assessing the value of the property. In other words, "a take it or leave it vote on this specific offer, without also formulating an opinion" as to the true value of the property, or considering a counteroffer, would be "quite inefficient." We agree.
Analogizing the facts presented to those which culminated in OAG 93-56, the Court correctly notes that the operative word in KRS 61.810(1)(b) is "likely." It is very likely that publicly discussing "real estate owned for a number of years and [revealing] discussions as to the highest and best use of that real estate and of its perceived value," would affect the value of the property by limiting the amount offered by potential buyers, including the Board. However, the Fiscal Court's discussion was not confined to this specific real estate, but also included "acquisition of an additional and unrelated specific tract of real estate. " Public discussion of the Court's interest in acquiring this real estate would definitely have an impact on the price at which the Court could acquire the property in Mr. Cox's view. To portray this matter as "only an up or down vote on the specific letter from the [H]ealth [D]epartment" is therefore an improper characterization of the actions taken by the Court on January 25, 2005. Having considered the arguments advanced by the Court in support of the closed session at issue, and keeping in mind that the exceptions to the Open Meetings Act "must [be] narrowly construe[d] and appl[ied] . . . 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), this office affirms the actions of the Court on the basis of KRS 61.810(1)(b).
In 00-OMD-64, this the Attorney General analyzed KRS 61.810(1)(b) in considerable depth, affirming the Henderson City Commission's reliance on this provision to hold a closed session for the purpose of discussing the acquisition of a specific 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. In so doing, the Attorney General distinguished the facts presented from those culminating in 95-OMD-57 and 99-OMD-104.
In 95-OMD-57, this office held that the Lexington-Fayette Urban County Government improperly relied upon KRS 61.810(1)(b) since the LFUCG was obligated to reimburse the state for a specific amount on a specific date under a previously released memorandum of understanding with the state, for property acquired by the state. In 99-OMD-104, the Attorney General held that the Marion City Council was not justified in discussing the purchase of property during closed session when a purchase price had been agreed upon, included in the budget, and publicized. In both decisions, this office was unable to discern how the price of the property at issue could be affected by public discussion since the terms of the purchase had previously been disclosed. Under such circumstances, "confidentiality could afford no material advantage to the public interest. " 00-OMD-64, p. 5.
In 00-OMD-64, the Attorney General analogized the facts presented to those in a series of Open Meetings decisions 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 construing this provision, the Attorney General has long recognized:
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 [pursuant to this exception]. Confidentiality is only permissible when the public interest will be directly affected financially.
OAG 80-530, p. 3. See, e.g., 93-OMD-56 (holding that Allen County War Memorial Hospital Board of Commissioners did not violate the Open Meetings Act by going into closed session to deliberate over the proposed sale of the hospital building and the property on which it was located since publicity would likely affect the value); 5 94-OMD-22 ( holding that Anderson County Board of Education properly conducted a closed session to discuss the acquisition of property since publicity would be likely to affect the value of the property); 98-OMD-147 (holding that City of Sebree properly relied upon KRS 61.810(1)(b) in discussing the sale price offered in settlement negotiations during closed session) ; 02-OMD-166 (holding that Georgetown City Council properly relied upon the exemption, when previously undisclosed offer to purchase subject property was being considered, offer was contingent on Council's approval, and discussion of various options in open session might have stimulated interest in the purchase of the property by competing buyers) ; compare 03-OMD-047 (holding that Eddyville Riverport and Industrial Development Authority failed to demonstrate that public discussion was likely to affect the value of the specific piece of property to be sold); 04-OMD-127 (holding that record on appeal did not support the City of Falmouth's position that public discussion is likely to affect the value of a specific piece of property, because the price of the property has been agreed upon and will culminate in a sale, or no sale, based on studies which are underway).
In our estimation, the facts of the instant appeal are more closely akin to the facts of the referenced appeals which were resolved in favor of the public agencies, namely, 93-OMD-56, 94-OMD-22, 98-OMD-147, 00-OMD-64, and 02-OMD-166. Here, as in 02-OMD-166, all members of the public agency were not privy to the specific terms of the subject offer prior to the meeting, hence the need to engage in a discussion on related issues, exchange information and ideas, and consider all relevant factors before reaching a determination. Another commonality is that the Board's offer was subject to the Court's approval. More to the point, the Court has clarified that a "yes" or "no" vote on the offer submitted by the Health Board was not the sole purpose of the closed session, nor did the motion place any such limitation on the discussion, and the record supports this assertion. Even assuming the Court went into closed session solely for the purpose of discussing the Board's offer, the Court has further clarified that it had to determine whether to sell the property before attempting to estimate its value. As in 00-OMD-64 and 02-OMD-166, the Court could have returned to open session and voted to accept, reject, or modify the offer. Public discussion of these options might well have compromised the public's financial interests, which the Court is charged with protecting, by weakening the Court's bargaining position in the event that the Court voted to reject the offer, as the Court did upon returning to open session.
In arguing that the Court had no intention of discussing another piece of real estate, the News-Journal relies solely upon Item No. 4 of the Court's agenda, "Real Estate Transaction." While the singular form of this reference could be so construed, it is by no means clear that the Court intended to discuss only the real estate at the center of this debate. To the contrary, the Court has since advised this office that acquisition of "an additional and unrelated specific tract of real estate" was also discussed consistent with the Court's original intention. Again, public discussion of the Court's interest in acquiring the unidentified real estate would almost certainly have an adverse effect on negotiations from the Court's perspective, which is precisely the scenario which KRS 61.810(1)(b) was designed to prevent. In short, the actions of the Court on January 25, 2005, as perceived and depicted by the News-Journal , arguably constitute a violation of KRS 61.810(1)(b), but the record simply does not support such a result.
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 Judge Executive Paul Patton also signed the response.
2 Following the "Call to Order and Welcome" by Judge Patton, theagenda consists of a section entitled "Business," which includes the following items:
1. Roll Call
2. Amendments
3. Appointment of Constable
4. Real Estate Transaction
"Announcements" and "Adjournment" are the remaining categories listed.
3 By way of background, Mr. Cox explains that the Fiscal Court purchased a ten acre tract of land approximately four years ago, and subsequently made improvements to the property, including the infrastructure. In addition, Judge Patton received a letter from the Health Department which contains a specific offer to purchase the tract of land in question.
4 InJefferson County Board of Education v. Courier-Journal, Ky. App., 551 S.W.2d 25, 28 (1977), the Kentucky Court of Appeals made the following declaration with specific reference to invocation of KRS 61.810(1)(b), then codified as 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.
Because the minutes of the meeting in question reflect that the Court observed fulfilled its duty in this respect, further elaboration as to this issue is unwarranted.
5 More specifically, the Board feared that public deliberations might cause the buyer to adopt a "take it or leave it" stance in negotiations.