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Foundation that spends public money must release records

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    News Media Update         KENTUCKY         Freedom of Information    

Foundation that spends public money must release records

  • An economic development foundation must respond to open records requests because it spends public money, subjecting it to the state’s open records law, a Kentucky appellate court ruled.

Dec. 22, 2004 — A foundation formed to promote economic development in one Kentucky county must release documents relating to a deal it struck with a chicken slaughterhouse, the Kentucky Court of Appeals ruled Dec. 17 in Frankfort. The Ohio County Industrial Foundation’s disbursement of publicly funded business incentives to the slaughterhouse qualified it as a public agency, the court held.

The Wisconsin-based Citizens for a Better Environment had asked the private non-profit foundation for documents relating to a program that awarded Perdue Farms Inc. $500,000 in taxpayers’ money every year.

In 1994, the foundation and the county offered Perdue Farms Inc. contractually guaranteed benefits if it opened a chicken processing plant in Ohio County. Upon opening the plant, Perdue would receive $500,000 every year its operations significantly contributed to employment in the county.

A county tax was imposed to pay the $500,000 and initially, that money was channeled to a bank account held by the foundation. The foundation then forwarded the money to Perdue once it had certified that the plant was meeting job creation goals.

By 2000, the foundation had paid Perdue $2 million in publicly funded corporate incentives. But when CBE requested related documents, the foundation claimed that it was not a public agency and refused to respond to the citizens’ group.

A trial court agreed with the foundation, likening it to an escrow agent for the public funds.

Judge Laurance VanMeter, writing for a three-judge panel of the Kentucky Court of Appeals, reversed. State open records law defines a public agency as a body that expends public money and the foundation’s annual expenditure of $500,000 in taxpayer money clearly met that definition, VanMeter said.

The foundation argued that it only passed the money to Perdue, but did not expend it. VanMeter noted that Webster’s Dictionary definition for “expend” is “to pay out.”

(Citizens for a Better Environment, Inc v. Ohio County Industrial Foundation, Inc.; Media Counsel: M. Thurman Senn; Frankfort, Ky.) RL

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