Wednesday, December 02, 2009

How the BALDC seemingly flouts the state Open Meetings Law, and why it probably doesn't scotch the AY bond deal

When the Brooklyn Arena Local Development Corporation (BALDC) adopted several resolutions in September--including a predicate to the issuance of tax-exempt arena bonds--without a public meeting, it seemingly violated the state's Open Meetings Law.

However, that seeming violation likely had no impact on the issuance of those bonds because another clause in the law says its provisions won't affect the validity of bond issues.

Official concerns

The issue was first raised in a report on WNYC radio, quoting Robert Freeman, executive director of the state Committee on Open Government (COOG):
REPORTER: Robert Freeman, a state official overseeing freedom of information law, says the September decision was apparently invalid anyway, given that it took place not in an open meeting, but by written consent.
(This report concerned only the now-abandoned plan to issue $400 million in tax-exempt bonds for infrastructure.)



Arena bonds invalid?

If that September decision was invalid, was not the rest of that Inducement Resolution--adopted by unanimous written consent in lieu of a meeting--in which the BALDC resolved to issue up to $1.1 billion in bonds for the arena?

If so, was the invalid decision superseded by the BALDC open meeting last week?

Freeman, in an interview, said that the BALDC, which he called a "dummy not-for-profit corporation," should not be allowed to avoid meeting in public. However, he backed off from assertions that decisions made by the BALDC regarding bonds were thus invalid.

What's a meeting?

The BALDC Inducement Resolution (click on excerpt to enlarge) asserts that it operates subject to Section 708(b) of the state's Not-for-Profit Corporation Law, which allows for business to be conducted inprivate, by writing:
(b) Unless otherwise restricted by the certificate of incorporation or the by-laws, any action required or permitted to be taken by the board or any committee thereof may be taken without a meeting if all members of the board or the committee consent in writing to the adoption of a resolution authorizing the action. The resolution and the written consents thereto by the members of the board or committee shall be filed with the minutes of the proceedings of the board or committee.
Meanwhile, Section 102 of the Open Meetings Law, requires meetings to be viewable by the public:
1. "Meeting" means the official convening of a public body for the purpose of conducting public business, including the use of videoconferencing for attendance and participation by the members of the public body.
So, which applies? Freeman says the latter, noting that the Not-for-Profit Corporation law is aimed at organizations that have nothing to do with government.

"Dummy not-for-profit"

The BALDC is among those Freeman calls "dummy not-for-profit corporations," which are formally not-for-profits but essentially operate as the equivalent of government agencies or authorities. After all, the BALDC board consists of state officials and staffers from the Empire State Development Corporation (ESDC) work for and answer questions about the BALDC.

"My understanding is this particular corporation acts under the umbrella and functions under the umbrella of the ESDC," said Freeman, who acknowledged he was providing an unofficial verbal opinion. "It is government, irrespective of its corporate status. I believe it is required to comply with both the [Freedom of Information Law] and the Open Meetings Law."

He pointed to a unanimous 1994 Court of Appeals decision, Buffalo News v. Buffalo Enterprise Development Corporation , in which the latter was determined to be an "agency" within the meaning of the Freedom of Information Law. The decision stated:
The BEDC, a Not-For-Profit local development corporation, channels public funds into the community and enjoys many attributes of public entities. It should therefore be deemed an "agency" within FOIL's reach in this case.
Impact of meeting?

So, would the failure to hold an open meeting in September have any impact on the issuance of bonds approved at an open meeting in November?

Freeman said he wasn't sure, but agreed that another part of the Open Meetings Law seems to offer a pass. Section 107 states:
The provisions of this article shall not affect the validity of the authorization, acquisition, execution or disposition of a bond issue or notes.
Court oversight?

Freeman said there's virtually no case law on the latter issue, so any effort to enforce the seemingly conflicting provisions--the need for a public meeting and the apparent trump card given to bond issues--would be up to the courts.

In other cases, the most stringent penalty for violations of the Open Meetings Law is invalidation of the action taken by the public body, he said. But courts have a great deal of discretion.

(My bet is that the courts would let this one go, given that they've failed to look closely at other issues, such as blight/eminent domain and the project's environmental review.)

Who could go to court? "Any aggrieved person," he said.

The COOG, he said, has no authority to initiate litigation but does "prepare advisory legal opinions at the request of anybody."

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