Opinion
Opinion By: Jack Conway, Attorney General; Amye L. Bensenhaver, Assistant Attorney General
Open Records Decision
The question presented in this appeal is whether the Lake Forest Community Association is a public agency for purposes of open records analysis and its records subject to public inspection under the mandate of the Open Records Act found at KRS 61.872. 1 Homeowner associations generally, and the Lake Forest Community Association specifically, do not fall within the definition of the term "public agency" found at KRS 61.870(1)(a) through (k), and are therefore not subject to the requirements of the Open Records Act. The association's failure to adhere to the provisions of KRS 61.870 to 61.884 did not violate the Act.
On January 14, 2013, William D. Bivins requested copies of "all [Lake Forest Community Association] meeting minutes, email and written communication regarding: board member elections, expenditures, recent lodge remodel/decoration, financial audit, and speed bump survey." In succeeding paragraphs, Mr. Bivins posed a series of questions relating to each of these topics. Association President David Randall denied Mr. Bivins' request, explaining that the association "is not, in any sense, a public agency" subject to the requirements of the Open Records Act. Shortly thereafter, Mr. Bivins initiated this appeal, asserting that homeowner associations "operate, govern, and derive revenue in the same manner as Class 5 and 6 city corporates, school districts, and public body corporates" insofar as they:
1. derive 100% of revenue from local dues or taxes
2. have the power to elect a governing body in partisan elections
3. have the power to govern themselves by any ordinances and resolutions
4. enter into contracts, sue and [can] be sued
5. hold property in [their] name, manage/improve and lease said property
6. perform governmental functions for instance waste collection [and]
7. operate solely for the interest of its members/public just as a city corporate
In Mr. Bivins' view, such associations are "the functional equivalent of a public agency, " 2 and "must be compelled to comply with KY Open Records Laws."
In supplemental correspondence directed to this office after Mr. Bivins initiated his appeal, association counsel Dennis J. Stilger described his client as a "nonprofit association established . . . to administer the homeowner association in Jefferson County, Kentucky," and contested Mr. Bivins' claim that it receives any tax money. Mr. Stilger explained that the association:
Collects homeowner assessments pursuant to covenants, conditions and restrictions which are of record for the homeowner association. Those are assessed on a fixed price basis per lot, regardless of whether there is a home located on the lot or not, and regardless of the value. Certainly this is not a tax, and Lake Forest is not established in any way by any governmental entity.
In closing, Mr. Stilger advised that Mr. Bivins was afforded access to the association's records at its Lake Forest offices but sought to compel the association to create a report by answering numbered questions relating to the subjects described in his request. It was his position that neither the association covenants, the statutes pertaining to nonprofit corporations, nor the Open Records Act, if it applied, require the creation of such reports. Mr. Stilger is correct on all points.
In a letter issued by this office in May 1999, we informally assessed the applicability of the Open Records and Open Meetings Laws to records of homeowner associations and association meetings. While we expressed the expectation "that a homeowner association would voluntarily comply with the spirit, if not the letter, of the Open Records and Open Meetings Laws, " we could find no legal basis for concluding that it is statutorily obligated to do so. 3 Considerable time has elapsed since we examined the issue and modifications in the law have occurred, but our conclusion remains the same. The only definition in KRS 61.870(1) 4 which might apply to homeowner associations, KRS 61.870(1)(h) , requires an infusion and expenditure of state or local authority funds. The "funds" derived from, and expended by, homeowner associations are "annual assessments specified in private covenants and restrictions running with and burdening each individual lot." 5 Such funds are not the "functional equivalent" of state or local authority funds that can be factored into the twenty-five percent equation found in KRS 61.870(1)(h). Compare,
Citizens for a Better Environment, Inc. v. Ohio County Industrial Foundation, Inc., 156 S.W.3d 307 (Ky. 2004) (private, nonprofit corporation that received funds obtained through imposition by county fiscal court of one percent occupational tax in county, and that was contractually obligated to pay funds to private employer with the aim of encouraging private employer to open a plant in the county, was a public agency within the meaning of KRS 61.870(1)(h)). The Lake Forest Community Association neither derives nor expends state or local authority funds, and it is therefore not a public agency for purposes of open records analysis.
The General Assembly has established a comprehensive body of law applicable to condominium associations in Chapter 381 of the Kentucky Revised Statutes. KRS 381.9197 invests condominium unit owners, and authorized agents of the owner, with the right to examine "all financial and other records" of the association. It also imposes a corresponding duty on the association to make the records "reasonably available for examination." 6 No similar body of law has been enacted for homeowner associations in Chapter 381 or elsewhere. The only references to homeowners associations that otherwise appear in the statutes are found at KRS 141.010(14)(c), defining the term "taxable net income" in the case of homeowner associations for purposes of the chapter dealing with revenue and taxation, and KRS 324.2812, excluding homeowner associations from the jurisdiction of the Kentucky Real Estate Commission. Notwithstanding the absence of a statutory obligation to make association records "reasonably available for examination," the Lake Forest Community Association apparently opened its books to Mr. Bivins to enable him to locate answer to the numerous questions he raised in his January 14 request. Its decision to do so comported with the spirit of the Open Records Law, and it was not obligated to comply with the letter of the Open Records Law.
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.
Distributed to:
William D. BivinsDavid RandallDennis J. Stilger
Footnotes
Footnotes
1 KRS 61.872(1) states that "[a]ll public records shall be open for inspection by any person . . . ."
2 Mr. Bivins attributes this statement to the Connecticut Supreme Court but does not provide a case citation supporting the attribution.
3 May 12, 1999, letter from Assistant Attorney General Amye L. Bensenhaver to Legislative Research Commission Director Bobby Sherman, p. 3 (enclosed).
4 KRS 61.870(1)(h) defines the term public agency as "[a]ny 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 competitive procurement process shall not be included in the determination of whether a body is a public agency under this subsection[.]"
5 Patrick K. Hetrick, "'Private Governments' and the Regulation of Neighborhoods: The North Carolina Planned Community Act," 22 Campbell L. Rev. 1, 7 (1999).
6 KRS 381.9177 through KRS 381.9181 address meetings of a condominium association and include notice requirements and provisions relating to quorums and voting.