Opinion
Opinion By: Jack Conway, Attorney General; James M. Herrick, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Bluegrass Industrial Foundation, Inc. ("BIF"), violated the Open Records Act in the disposition of Herald-Leader reporter Linda Blackford's July 1, 2013, request for copies of certain BIF records. For the reasons that follow, we conclude that BIF is a "public agency" subject to the requirements of the Act, and therefore was obligated to respond to the request.
In her July 1 letter to BIF President Jas Sekhon, Ms. Blackford requested the following records:
. Copies of all income and expense records for the Bluegrass Industrial Foundation for the past two years, including all receipts and paychecks and travel expenses.
. Copies of all contracts currently held by the Bluegrass Industrial Foundation.
. Copies of minutes for all meetings held by the Bluegrass Industrial Foundation board of directors for the past two years.
She explained: "I am filing this open records request because most of our [ sic ] income appears to be from a public agency, making BIF subject to the state's open records law."
On July 8, 2013, President Jas Sekhon replied that BIF Chairman John Bowling had "instructed me to let you know that it is the opinion of the BIF Board that Bluegrass Industrial Foundation is not a public agency and receives no public funds for its operation; it is not subject to KY Open Records Act. " On behalf of the Herald-Leader, attorney Robert F. Houlihan, Jr., initiated this appeal to the Attorney General on October 9, 2013. BIF's counsel, Christine N. Westover, responded to the appeal in writing on October 28, 2013, and the parties have since exchanged further replies.
The parties agree that BIF is a non-profit corporation founded in 1982 for the purpose expressed in its Articles of Incorporation:
The purpose for which the corporation is organized shall be for the attraction of new industry and assistance or expansion of existing industry in the Commonwealth of Kentucky, with particular reference to the Central Kentucky area; and to recognize and promote local industry efforts; to assist new or existing industry; to secure and maintain an adequate labor force; to assist with transportation problems encountered by industry; to assist industry in obtaining financing for re-location or expansion; to assist industry in the interpretation of government regulations; to assist industry in the developing and improving of industrial buildings and sites, which function shall include the power to purchase, lease rent, hold, manage, property or real estate and the development or construction of industrial facilities thereon; and generally to provide technical and professional assistance reasonably necessary or incidental to any of the foregoing purposes and consist[e]nt with those purposes set forth in KRS 273.167.
BIF is the owner of a building located in Lexington and known as the "Bluegrass Development Center." This building houses the offices of the Bluegrass Area Development District (ADD), which rents the space from BIF.
Since the Bluegrass ADD is a public agency, the Herald-Leader has used the Open Records Act to obtain the lease agreement between the ADD and BIF. Additionally, the newspaper has obtained recent annual Form 990 tax returns filed by BIF pursuant to its obligations as a nonprofit corporation. The Herald-Leader represents, and BIF does not dispute, that rent payments from Bluegrass ADD to BIF amounted to $ 279,558 in 2009, $ 303,748 in 2010, $ 298,368 in 2011, and $ 291,965 in 2012. From the tax returns, the newspaper calculates BIF's total expenditures for those years as $ 376,192 in 2009, $ 362,834 in 2010, $ 344,120 in 2011, and $ 337,276 in 2012. As a percentage of BIF's total expenditures, the Herald-Leader calculates the funds received from Bluegrass ADD as 74% in 2009, 84% in 2010, 87% in 2011, and 83% in 2012. 1
This rental income makes up the vast majority of the funds BIF receives from Bluegrass ADD every year. The ADD also has a consulting contract with BIF to assist the city of Paris and Bourbon County with industrial development issues, but the amount BIF receives under that contract is a relatively negligible $ 5,000 per year. BIF acknowledges that "[m]ost of BIF's annual revenue derives from BGADD's lease payments."
KRS 61.870(1)(h), upon which the Herald-Leader relies, provides that the definition of "public agency" for purposes of the Open Records Act includes
Any body which, within any fiscal year, derives at least twenty-five percent (25%) of its funds expended by it in the Commonwealth of Kentucky from state or local authority funds. However, any funds derived from a state or local authority in compensation for goods or services that are provided by a contract obtained through a public procurement process shall not be included in the determination of whether a body is a public agency under this subsection[.]
While admitting that " most of [its] annual income derives from BGADD's lease payments" (emphasis added), BFI insists in a reply dated November 18, 2013, that "income is not relevant" and "[t]here is no evidence that more than 25% [of] the Foundation funds expended by it within the state derived from state or local authorities during a given fiscal year. "
We disagree, inasmuch as the figures presented by the Herald-Leader, which demonstrate that the vast majority of BIF's total expenditures are derived from Bluegrass ADD funds, represent a prima facie showing that BIF's expenditures in Kentucky are chiefly derived from Bluegrass ADD funds. Unless BIF can show that it somehow segregates the funds received from Bluegrass ADD and uses them almost exclusively for out-of-state expenditures (which is unlikely given the local purposes for which it was incorporated), 2 we conclude that the Herald-Leader has established the 25% threshold necessary to render BIF a public agency under KRS 61.870(1)(h) if the rent payments are included.
The question of whether BIF is a public agency, therefore, turns on whether money received as rent from a state or local authority is to be included or disregarded in the calculation under KRS 61.870(1)(h). BIF does not claim that its lease of the office space to Bluegrass ADD constitutes "goods or services that are provided by a contract obtained through a public procurement process." Therefore, the narrowly drawn exception to KRS 61.870(1)(h) for such contracts does not apply.
BIF still argues, however, that the ADD's rent should not be included among the "state or local authority funds" received by BIF. Yet, at the same time, BIF admits that its $ 5,000-per-year contract to perform services for the ADD should be included. The argument is essentially that as a matter of public policy rent payments should not count:
The lease payments merely fund the ordinary and routine upkeep of the premises and in no way is [ sic ] a payment for any program, function, operation or activity undertaken for BGADD in furtherance of its public purpose. To come to any other conclusions would lead to the absurd and inequitable result that all private landlords leasing space in Kentucky to publicly funded bodies could be required to provide their documents and accounts for public inspection, even though the landlords carry out no public program or function merely by leasing space to the state or local authority, if the landlords expend more than 25% of their funds in a fiscal year from such funds in Kentucky. This is not what the General Assembly intended and it furthers no public purpose to determine if or how well the state or local authority operates their programs with public monies.
It is theoretically possible that the members of the General Assembly, in drafting and subsequently amending KRS 61.870(1)(h), did not specifically and subjectively intend to make an entity a public agency by virtue of renting office space to a state or local authority. Nevertheless, "where a statute on its face is intelligible, [we] are not at liberty to supply words or insert something or make additions which amount, as sometimes stated, to providing for a casus omissus, or cure an omission, however just or desirable it might be to supply an omitted provision."
Hatchett v City of Glasgow, 340 S.W.2d 248, 251 (Ky. 1960). Furthermore, "[e]ven if the language of the statute is not abundantly clear, the ? analysis of legislative intent must refer to 'the words used in enacting the statute rather than surmising what may have been intended but was not expressed.'"
Mohammad v. Com., 202 S.W.3d 589, 590 (Ky. 2006) (quoting
Com. v. Allen, 980 S.W.2d 278, 280 (Ky. 1998)).
Moreover, the fact that the legislature in 2012 amended KRS 61.870(1)(h) to add the sentence specifically excepting contracts for goods or services "obtained through a public procurement process" suggests that no other contractual exceptions were intended. "As a general rule of statutory construction, expressio unius est exclusio alterius provides that an enumeration of a particular thing demonstrates that the omission of another thing is an intentional exclusion."
Palmer v. Com., 3 S.W.3d 763, 764 (Ky. App. 1999). It would have been a simple matter for the General Assembly to add an exception for all lease agreements in the 2012 amendment; the fact that it did not stands against any argument for such exception based on public policy. "[A]s far as open records are concerned, it is apparently the policy of the Legislature that wherever public funds go, public interest follows." OAG 76-648.
BIF cites 00-ORD-91, a decision based on 93-ORD-90, in which we held that Medicaid reimbursements to private physicians for services rendered to patients on a fee basis should not be treated as "state or local authority funds." We reasoned in that decision that if "private physicians and hospitals were treated as 'public agencies,' subject to the Open Records Law, because they receive government funds as direct payment for services rendered to patients, they would be discouraged from serving senior citizens and the poor, who benefit from the Medicare and Medicaid programs."
In this case, by contrast, there are no services being provided to private individual patients on a fee basis, but merely office space being furnished to a public agency on a rental basis. None of the public-policy reasons for the decision in 93-ORD-90 apply here. There is no vulnerable class of citizens at risk if the language of KRS 61.870(1)(h) is simply interpreted as written. Nor do we foresee any widespread difficulty on the part of agencies seeking buildings to rent, since the situation of an entity which derives such a large portion of its operating income from rental to a public agency would seem the exception rather than the rule. We therefore find 93-ORD-90 and 00-ORD-91 inapplicable.
BIF additionally cites Kentucky Central Life Insurance Co. by and through
Stephens v. Park Broadcasting, 913 S.W.2d 330 (Ky. App. 1996), for the proposition that a four-prong test should be used focusing on factors such as "whether the entity is performing a governmental function" and "substantial governmental control over its day to day operation." This test is irrelevant to KRS 61.870(1)(h). The arguments in the Kentucky Central case were made under the entirely different definitions of "public agency" appearing in subsections (a), (e), and (i) of KRS 61.870(1), not subsection (h). Under subsection (h), the only factor is the 25% funding threshold, along with (since 2012) the exception for public procurement contracts. Whether an entity performs a "government function" makes no difference under KRS 61.870(1)(h), but only whether it derives the funds it expends in Kentucky from a public agency. 3 Cf. 97-ORD-140 (Seven Counties Services, Inc., held "accountable for all publicly funded operations by means of records access" (emphasis added)). 4
Since BIF evidently derives over 25% of its funds expended by it in Kentucky from the rent payments it receives from Bluegrass ADD, and those funds are not received under a public procurement contract for goods or services, we find that Bluegrass Industrial Foundation, Inc., is a "public agency" under the definition in KRS 61.870(1)(h) and was obligated to make its records available in response to the Herald-Leader's open records request. Accordingly, BIF violated KRS 61.872(1) 5 by failing to do so.
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 proceedings.
Distributed to:
Robert F. Houlihan, Esq.Christine N. Westover, Esq.Jas Sekhon, President
Footnotes
Footnotes
1 The total funds received by BIF from the ADD, including amounts for "Renovations" and "GIS Equipment" in addition to the rent payments and the annual $ 5,000 under the contract, are given as follows: $ 279,550 in 2009, $ 303,748 in 2010, $ 298,368 in 2011, and $ 291,965 in 2012.
2 Although BIF's president, Jas Sekhon, swears in an affidavit that "[t]he Foundation does not in any fiscal year derive twenty-five (25%) percent or more of its funds expended by it in Kentucky from state or local authority funds," given the lack of any accompanying explanation as to how this can be true, it is probable that this denial is premised upon BFI's argument that the ADD's lease payments should be excluded from the calculation.
3 In 93-ORD-90 and 94-ORD-13, we determined that the terms "state or local authority" and "public agency" within the Open Records Act should be treated as synonymous.
4 The test for a "public record" is whether it is "related to functions, activities, programs, or operations funded by state or local authority." KRS 61.870(2) (emphasis added).
5 KRS 61.872(1) provides that "[a]ll public records shall be open for inspection by any person."