Herndon Opinion by Jasbinder Singh and friends

by

Jasbinder Singh

An Opinion, issued by the VA Advisory Council on the Freedom of Information Act pursuant to my request for a written opinion, has shown that closed-door meetings are not sacrosanct, that councilmembers can disclose information to which they have been made privy and that “…the FOIA is not to be construed to prevent discussions of public matters between government and citizens.”  This article discusses three disclosure issues that arose during the Town’s purchase of the Ashwell property.

 BACKGROUND

Freedom Of Information Act (FOIA) allows a public body to withhold [a]ppraisals and cost estimates of real property subject to a proposed purchase, sale or lease, prior to the completion of such purchase, sale or lease. It is generally accepted that an appraisal (s) should be kept confidential important prior to the negotiations; however, in the case of the purchase of Ashwell’s property, the Town Council had already discussed the two appraisals, the staff had negotiated the purchase price and an “as is” contract had been prepared. The proposed contract was the subject of a forthcoming public hearing. Nothing could possibly affect the negotiations at this stage.[1]

The public knew nothing about the appraisals and had no basis for making comments during the public hearings. How could they possibly comment on the fairness of the purchase price? The then town attorney, Richard Kaufman, did not respond meaningfully when I asked him, “ On what basis can a resident comment on the purchase price?” Mr. Kaufman asked me not to say anything about the appraisals during the public hearing. However, I wanted the public to know the facts and make informed comments regarding the purchase. At the time of this discussion with Mr. Kaufman, I was aware that the VA Freedom of Information Advisory Council (FOIA Council) had been charged with giving FOIA advisory opinions to the public at large. I decided to seek their advice. Pursuant to their verbal advice I decided to write and publish two articles, one just before the approval of the contract and other shortly thereafter, without disclosing the appraised values. Shortly thereafter, against the wishes of Mr. Kaufman, I decided to take the FOIA Council up on their offer to provide a written opinion. [2]

Click FOIA Letter – July 2015 to see my communication

THE OPINION

On September 2, 2015, the FOIA Council issued its opinion. It provided detailed answers to the seven questions I had raised in my letter.   The opinion emphasized that the purpose of FOIA is to enable citizens to witness meetings of public bodies so that they know what their government is doing. Closed meetings are exceptions to that purpose that must be given narrow construction (Emphasis Added) and it continued by saying that FOIA is not to be construed to prevent discussions of public matters between government and citizens.

Take a look at the FOIA Council opinion. 

The following paragraphs highlight three issues discussed in the Opinion. The applicability of the Opinion to this case is given in italics.

1. No Prohibition on Speaking Publicly: “As a general rule FOIA does not prohibit you from speaking publicly or disclosing public records to which you have been made privy^.[3] The General Assembly has chosen not to set out prohibitions on the disclosure of public records or limits on free speech in FOIA itself.”^[4] (Emphasis Added)

 This means FOIA does not prohibit a councilmember from speaking publicly. The fact that the General Assembly must have chosen not to set out the prohibitions means that it wanted to give legislators the freedom to have public discourse without fear of legal penalties. The question is “What information can a councilmember discuss in public?”. In my first article, I chose to discuss the factors affecting appraised values. Using these factors, I showed that the purchase price was excessive, if we wanted to develop the downtown to the density approved by the town council in 2011. In the second article, I discussed the unwholesome administrative process by which the Town Council had established the range for negotiating a purchase price with Mr. Ashwell. These articles contributed greatly to public discourse even though they were written after the negotiations for the purchase price had already been completed. The articles did not violate the spirit or the letter of FOIA. On the contrary, they served the public interest by informing our residents.

 Neither article disclosed the appraised values; therefore, the articles can’t possibly affect the resale value of the property. A developer will probably do his own appraisals^[5]. If, in his mind, the Town paid too much, he will offer to purchase the property for a lower price. The town would lose money in that case. On the other hand, if the Town paid too little (that is, if the land is worth more than the price town paid), the developer would probably keep quiet, offer to buy it for the price the town paid and build to the highest density allowed. He will pocket the excess profits generated by the development. It would not matter what the first or the second appraisals were and what my articles said about them.

2. Protection of the Public Purse: “The General Assembly has allowed certain records and portions of meetings to be withheld or discussed outside the public view based on principles related to privacy, public safety, protection of the public purse, and similar concerns.” (Emphasis Added)

The principle of the “protection of the public purse” deserves some discussion. The underlying assumption here is that a Town Manager, Mayor and/or the council, would always protect the public purse. That is not necessarily true in all cases. They may well be using the public purse to satisfy their personal and political interests.  

Consider the case in which the first appraisal comes in much lower than the asking price; however, rather than walking away, the Manager and the Mayor decide to do whatever it takes to “make a deal”. They order another appraisal and reach an advance understanding with the appraiser that the property is worth at least a certain amount. Lo and behold, the second appraisal ends up close to or higher than the seller’s demand! Now they can make their deal with the seller. To protect themselves from a variety of allegations, they exempt both appraisals from disclosure under FOIA.

Most people would consider their actions to be “suspect”, illegal and un-protective of the public purse. In other words, most people would believe that they had violated one of the primary principles of the FOIA exemption – protection of the public purse.

Under such circumstances, it can be argued that a councilmember would be protecting the public purse more than the Manager, the Mayor and their supporters on the council, if he discloses some of the information to his constituents to initiate public discussion or to merely inform the public. His actions may even put the transaction on hold or help hold the dealmakers accountable at a future date. It appears that the General Assembly was aware of situations where the protection of the public purse and the public interest would be necessary in unusual ways and chose not to set out prohibitions on the disclosure of public records or put limits on free speech in FOIA itself.

 3. Exemption From Disclosure Until Resale of the Property: According to the Opinion, FOIA provides an exemption from mandatory disclosure for [a]ppraisals and cost estimates of real property subject to a proposed purchase, sale or lease, prior to the completion of such purchase, sale or lease. Therefore the time period during which the record may be withheld is not a specific term, but lasts until the completion of such purchase, sale or lease. In this case, it appears that the development plan includes both the initial purchase and subsequent sale of the property, and that the same appraisals are being used in both transactions. This does not mean an appraisal used in purchasing a property may be withheld indefinitely until some vague, hypothetical sale is completed at some unknown future date. (Emphasis Added)

If we apply the terms of the Opinion to the Ashwell property, it appears that the Town Manager and the Mayor are construing FOIA to prevent discussions of public matters between the government and its citizens as discussed below.

On September 30th, the Town completed the purchase of the Ashwell property. The next phase is the preparation and issuance of a Request for Proposal for the development. Even before a draft purchase contract was ready, the Town Manager asked and the then-Town Attorney exempted the two appraisals from disclosure under FOIA (essentially) indefinitely. The Town is not developing the town-owned parcels in accordance with any specific development plan. There is only a general plan to sell the parcels as a part of the winning proposal.

It is likely that the current phase of issuing the RFP will be followed by an extended period of (1) submission of proposals by developers, (2) initial and final proposal selection, (3) negotiations of the details of the development (4) finalizing the design and (5) negotiating the terms of the final contract. Depending on the type of financing involved, final decisions may not be made for at least another year. Therefore, not only is the future date of the sale of the town owned-properties not known, but the buyer is also not known.

It is more likely than not that the developer, in exchange for the value of the property, will propose to, among other things:

• Build an Art Center for the Town
• Underground the Utilities
• Build Internal Roads, and
• Build a Parking Garage

 Accordingly, the discussion of the terms of the sale promises to become much more complicated. It would shift from “Whether the Town paid a fair price for the Ashwell property” to “Whether the Developer’s proposed deal is fair”. The Town may lose on both ends – lose money on the Ashwell deal and lose money as a part of a development proposal; no one would be able to tell easily. Depending on the costs involved, the sale may not take place or if it does, the Town may pay a heavy price for its actions.

 Regardless, by the time the sale of the town-owned parcels is finalized, the two appraisals would not be of much interest to the public. The Mayor and the Town Manager would have successfully avoided the discussion of the purchase price (for the Ashwell property) until well after the next election. And, they would have violated the spirit, if not of the letter of the FOIA. Accordingly, I believe, it is important to disclose both appraisals to the public immediately.

 In summary, this Opinion, issued pursuant to my request for a written opinion, has shown that the closed-door meetings are not sacrosanct, that councilmembers can disclose information to which they had been made privy and that the FOIA is not to be construed to stifle discussions of public interest.

CLICK HERE TO DOWNLOAD AND PRINT THIS ARICLE

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Post Script:

After reading this article, the Town Manager expressed several concerns about what he considers unflattering insinuations about his integrity and asked me to remove the so called unacceptable language. After careful consideration, I have decided to make the following clarification:

“Based on my experience with him over the last 5 years, I believe the Town Manager does not entertain personal financial gains in making his official decisions. Further, I believe that he has impeccable integrity in this regard.”

Notwithstanding this endorsement, I am not willing to change the substance or tenor of this article in any manner.

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Notes:-

[1] The Town Attorney had also approved the Town Manager’s request to keep the appraisals confidential not only until the then current-purchase had been formally completed, but also until the purchased property was resold to an unknown developer on an unknown date in the future. This implied that the public would not know anything about the appraisals for at least another 18 months. See Part 3 of the following discussion.

[2] Mr. Kaufman wanted me to accept his word on this matter; however, I could not rely on his advice, because he had often given conflicting advice to me in the past. His advice had changed with circumstances. He told me many times that his job was to support the majority of the council, the Mayor and the town staff no matter who they were or what they wanted to do.

[3] There is only one such prohibition contained within FOIA itself, and it is not relevant to the issues presented in this opinion. Subdivision A 3 of § 2.2-3706 provides as follows: The identity of any individual providing information about a crime or criminal activity under a promise of anonymity shall not be disclosed.

[4] But see n. 4, id.

 [5] In this case, the two appraisals did not take into the environmental contamination of the property and assumed a density of development that may not materialize in practice. For these reasons alone, developers must do their own appraisals.

Tagged: Ethics in Government, Open Government