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 Boyle County Industrial Foundation, Inc. ("BCIF"), violated the Open Records Act in the disposition of Bernie Hunstad's 1 April 2, 2013, request for copies of the BCIF's 2012 Annual Audit Report and its federal and state tax returns for fiscal years 2009-10 through 2011-12. The threshold issue is whether the BCIF is a "public agency" subject to the requirements of the Act. For the reasons that follow, we conclude that it is not.
BCIF President Jody A. Lassiter responded to Mr. Hunstad's request on April 8, 2013, stating simply that the BCIF "is not a 'public agency' as defined by KRS 61.870(1) to which the Kentucky Open Records Act applies. ? Therefore, I must respectfully deny your request."
Mr. Hunstad, in his appeal letter dated April 11, 2013, argues that the BCIF is a "public agency" under KRS 61.870(h) because it receives more than twenty-five percent (25%) of its funds expended by it in the Commonwealth from state or local authority funding. He bases this argument essentially on the fact that the BCIF receives services from the Danville/Boyle County Economic Development Partnership, Inc. ("EDP"), which he alleges to be equivalent to "state or local authority funds." We need not decide in this appeal whether the EDP is a "public agency" or a "state or local authority, " and therefore we do not decide that issue, but merely assume it to be true for purposes of the present analysis. 2
KRS 61.872(1) provides that "[a]ll public records shall be open for inspection by any person." As defined in KRS 61.870(2), "public record" means:
all books, papers, maps, photographs, cards, tapes, discs, diskettes, recordings, software, or other documentation regardless of physical form or characteristics, which are prepared, owned, used, in the possession of or retained by a public agency. "Public record" shall not include any records owned or maintained by or for a body referred to in subsection (1)(h) of this section that are not related to functions, activities, programs, or operations funded by state or local authority.
The threshold issue is whether the BCIF is a public agency within the meaning of KRS 61.870(1), which broadly defines "public agency" to include:
(a) Every state or local government officer;
(b) Every state or local government department, division, bureau, board, commission, and authority;
(c) Every state or local legislative board, commission, committee, and officer;
(d) Every county and city governing body, council, school district board, special district board, and municipal corporation;
(e) Every state or local court or judicial agency;
(f) 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;
(g) Any body created by state or local authority in any branch of government;
(h) Any 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;
(i) Any entity where the 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) of this subsection; by a member or employee of such a public agency; or by any combination thereof;
(j) Any board, commission, committee, subcommittee, ad hoc committee, advisory committee, council, or agency, except for a committee of a hospital medical staff, established, created, and controlled by a public agency as defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (k) of this subsection; and
(k) Any interagency body of two (2) or more public agencies where each public agency is defined in paragraph (a), (b), (c), (d), (e), (f), (g), (h), (i), or (j) of this subsection.
Other than Mr. Hunstad's argument about KRS 61.870(1)(h) in the context of services received from the EDP, there is no basis in the record upon which to base a conclusion that the BCIF is a public agency within this definition.
The arrangement between the BCIF and the EDP can be described as follows. The BCIF, a private corporation, is considered "the lead Partner within the EDP for the primary mission of business development. In its role, the BCIF (1) manages and improves existing real estate assets for sale or lease for industrial and/or commercial development; (2) monitors, assesses, and responds to opportunities for acquisition of additional land and/or buildings to maintain a competitive stock of real estate assets for industrial and/or commercial prospects; and (3) facilitates and supports the activities of the Danville/Boyle County Industrial Council." (Memorandum of Agreement among the Partners of the Danville-Boyle County Economic Development Partnership, Inc., July 1, 2012, Section 3(B).) The BCIF maintains its own governing body in the form of a Board of Directors, 3 and it has representation on the EDP's Board of Directors. ( Id., Section 4.) Pursuant to the MOA currently in effect,
The BCIF agrees to provide to the EDP during the EDP's fiscal year a negotiated annual subsidy for compensation of a shared President/Chief Executive Officer that shall be paid in quarterly disbursements.
(Section 5(E)(1).) In consideration, the EDP provides the following services:
The EDP President/Chief Executive Officer shall serve as President of the Boyle County Industrial Foundation, and the EDP shall provide to BCIF (a) administrative services for the BCIF's operations, and (b) marketing services for the BCIF's sites and parks.
(Section 6(A)(1).) The President of the EDP is to serve as an ex officio member of the BCIF Board of Directors. (Section 6(B)(2).)
Mr. Hunstad points out the following in light of the fact that the BCIF and EDP both contribute funds toward a shared President's salary:
The BCIF CEO, Mr. Jody Lassiter, and Board Chairman, Mr. John Albright, are also the CEO and Chairman respectively of the EDP. ?
Both the BCIF and the EDP share the same offices, phones, staff, utilities, and other administrative services all paid for with public funds. Public funds also pays [ sic ] for marketing of the local area and travel and recruiting activities of the BCIF CEO [who is also CEO of the EDP].
Mr. Hunstad regards these services as in-kind contributions which should be treated as "funds" received from a public entity.
On April 26, 2013, attorney W. Banks Hudson, representing the BCIF, responded to Mr. Hunstad's appeal. Mr. Hudson points out that while the EDP provides services to the BCIF and allows it to share the use of facilities and personnel, "funds with regard to EDP flow out of BCIF to the EDP and not into the BCIF." He provides financial statements to show that no amounts are transferred from the EDP to the BCIF. Since the BCIF receives no actual money from the EDP, but in fact contributes money to the EDP, he argues that there is no basis for declaring the BCIF a public agency under KRS 61.870(1)(h).
As we stated in 09-ORD-033, KRS 61.870(1)(h) entails an analysis of an entity's expenditures in Kentucky and what portion of that amount is derived from Kentucky state or local government funds. The question, then, is whether the receipt of services, use of facilities, sharing of employees, or other non-monetary benefits from a public body 4 is to be considered as receipt of "state or local authority funds" for purposes of determining whether an entity is a public agency.
The analysis of "funds" under KRS 61.870(1)(h) has, thus far, been limited to the sources and expenditures of money. See, e.g.,
Citizens for a Better Environment, Inc. v. Ohio County Industrial Foundation, Inc., 156 S.W.3d 307 (Ky. App. 2004) (fiscal court paid more than $ 2,000,000 to industrial foundation over four years, which industrial foundation then paid to Perdue Farms under an agreement). In 94-ORD-1, this office considered the status of a private, nonprofit corporation called RiverPark Center, Inc., which was responsible under a lease agreement for managing the RiverPark Center facility. The facility was constructed by a combination of private contributions and state or local funding, but "[t]he City of Owensboro provided the land and prepared the site at a cost of $ 1.2 million." Arguably, the city's contribution of the land and work to prepare the site might have been characterized as inuring to the benefit of RiverPark Center, Inc., even in the absence of any monetary transfer from the city to the corporation. Our analysis, however, focused strictly on "funds" as commonly understood:
[B]ecause the corporation known as RiverPark Center, Inc. receives no funds from state or local authority funds in the form of management fees or any other compensation, the corporation is not a public agency within the meaning of KRS 61.870(1)(h).
?
[I]t appears that the Corporation is entirely self-sustaining, generating income through programming, rentals for nonperformance events, rentals for performances, and "other Departmental income." We must rely on [counsel's] repeated assurances that the Corporation "has never received, owned or controlled any ? public funds. " Instead, it appears that any funds which are exchanged flow from the Corporation to the City to retire the Facility's debts.
This is essentially the same situation presented here, insofar as any actual monies exchanged are transferred from the BCIF to the EDP, not the reverse.
All words and phrases in the Kentucky Revised Statutes are to be "construed according to the common and approved usage of language" unless otherwise defined. KRS 446.080(4) . We see no reason to depart from the common understanding of "funds" as referring to actual money by expanding it to include services or anything of value. In varying degrees, all entities benefit from state or local government services in ways that may or may not be quantifiable. KRS 61.870(1)(h), however, is aimed at the flow of money and whether an entity's monetary expenditures consist of a certain amount of governmental funding. This analytical framework compels us to reject Mr. Hunstad's argument and conclude that the BCIF is not a public agency because it does not derive any discernible amount of its funds expended in the Commonwealth from state or local authority funds. 5
The obligation to comply with the Open Records Act "presumes jurisdiction over the public agency involved." 03-ORD-251; see also 08-ORD-064 (overruled in part on other grounds by 09-ORD-033). Since the BCIF was not a public agency under 61.870(1), it was not required to comply with the provisions of the Open Records Act. See 96-ORD-197.
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:
Hon. Bernie R. HunstadJody A. Lassiter, J. D.W. Banks Hudson, Esq.
Footnotes
Footnotes
1 Bernie Hunstad is Mayor of Danville, but did not identify himself as such in his request. The BCIF argues that Mr. Hunstad lacks authority to pursue this appeal because he now identifies himself as the mayor, but we do not deem his appeal to be brought on behalf of the City of Danville and shall hereinafter refer to him as "Mr. Hunstad."
2 The EDP is an entity composed of various public and private "partners," namely the BCIF; the Danville-Boyle County Chamber of Commerce, Inc.; the Danville-Boyle County Convention & Visitors Bureau; Heart of Danville, Inc.; Main Street Perryville; the Boyle County Fiscal Court; and the Cities of Danville, Junction City, and Perryville.
3 There is no reason in the record to doubt that the BCIF's Board of Directors consists, at least primarily, of private citizens.
4 Again, we merely assume without concluding that the EDP would qualify as a "state or local authority" or a "public agency."
5 Mr. Hunstad also argues that the BCIF is not properly designated as a nonprofit corporation. Since this issue is not within our jurisdiction under KRS 61.880, we make no conclusion as to the propriety of the BCIF's claiming nonprofit status.