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August 20, 1999

Mr. Douglas A. Kellner
Kellner, Chehebar & Deveney
One Madison Avenue
New York, NY 10010

The staff of the Committee on Open Government is authorized to issue advisory opinions.
The ensuing staff advisory opinion is based solely upon the information presented in your
correspondence.

Dear Mr. Kellner:

I have received your letter of July 22 in which you sought an advisory opinion
concerning a denial of your request for records by the New York City Educational
Construction Fund ("ECF").

You indicated that it is your belief that "115-87 Owners Corp. has made proposals to
ECF and the City of New York to acquire ownership of the building or in some way to
modify the ground lease for the apartment building" in which your client resides. That
building "is run as a cooperative by 115-87 Owners Corp. which has a long-term lease from
the City of New York and ECF." Consequently, on behalf of the client, you requested:

"Any proposal made by 115-87 Owners Corp., or anyone
acting on their behalf, since January 1, 1998 relating to the
sale, lease, refinancing or any other type of financial
transaction regarding the property at 113-123 East 87th Street,
New York, New York, also known as 108-118 East 88th
Street, Block 1516, Lots 7 and 9007 (PS 169)."

The request was denied in its entirety by the Director of Finance of the ECF on the basis of
§87(2)(c) of the Freedom of Information Law.

From my perspective, if 115-87 Owners Corp. is the only entity involved with the ECF
in a possible sale, lease, refinancing or other financial transaction concerning the property at
issue, the denial of the request would appear to be inappropriate and inconsistent with law.
In this regard, I offer the following comments, some of which will reiterate contentions
offered in advisory opinions previously rendered and with which you are familiar.

First, according to §451 of the Education Law, the ECF is "a corporate governmental
agency of the state, constituting a public benefit corporation..." Since a public benefit
corporation is a kind of public corporation (see General Construction Law, §66), and since
a public corporation is an "agency" as that term is defined in §86(3) of the Freedom of
Information Law, I believe that is an "agency" required to comply to the with that statute.

Second, as a general matter, the Freedom of Information Law is based upon a
presumption of access. Stated differently, all records of an agency are available, except to the
extent that records or portions thereof fall within one or more grounds for denial appearing
in §87(2)(a) through (i) of the Law.

The provision upon which the ECF has relied permits an agency to deny access to
records to the extent that disclosure "would impair present or imminent contract awards or
collective bargaining negotiations." The key word in that provision in my opinion is "impair",
and the question under that provision involves whether or the extent to which disclosure
would "impair" a contracting or bargaining process by diminishing the ability of the
government to reach an optimal agreement on behalf of the taxpayers. That an agreement has
not been signed or consummated, in my view, is not determinative of rights of access or,
conversely, an agency's ability to deny access to records. Rather, I believe that consideration
of the effects of disclosure is the primary factor in determining the extent to which §87(2)(c)
may justifiably be asserted.

As I understand its application, §87(2)(c) generally encompasses situations in which
an agency or a party to negotiations maintains records that have not been made available to
others. For example, if an agency seeking bids or proposals has received a number of bids,
but the deadline for their submission has not been reached, premature disclosure for the bids
to another possible submitter might provide that person or firm with an unfair advantage vis
a vis those who already submitted bids. Further, disclosure of the identities of bidders or the
number of bidders might enable another potential bidder to tailor his bid in a manner that
provides him with an unfair advantage in the bidding process. In such a situation, harm or
"impairment" would likely be the result, and the records could justifiably be denied.
However, after the deadline for submission of bids or proposals are available after a contract
has been awarded, and that, in view of the requirements of the Freedom of Information Law,
"the successful bidder had no reasonable expectation of not having its bid open to the public"
[Contracting Plumbers Cooperative Restoration Corp. v. Ameruso, 105 Misc. 2d 951, 430
NYS 2d 196, 198 (1980)]. Similarly, if an agency is involved in collective bargaining
negotiations with a public employee union, and the union requests records reflective of the
agency's strategy, the items that it considers to be important or otherwise, its estimates and
projections, it is likely that disclosure to the union would place the agency at an unfair
disadvantage at the bargaining table and, therefore, that disclosure would "impair" negotiating
the process.

I point out that that the Court of Appeals has sustained the assertion of §87(2)(c) in
a case that did not clearly involve "contract awards" or collective bargaining negotiations.
In Murray v. Troy Urban Renewal Agency [56 NY2d 888 (1982)], the issue pertained to real
property transactions where appraisals in possession of an agency were requested prior to the
consummation of a transaction. Because premature disclosure would have enabled the public
to know the prices the agency sought, thereby potentially precluding the agency from
receiving optimal prices, the agency's denial was upheld [see Murray v. Troy Urban Renewal
Agency, 56 NY 2d 888 (1982)].

In each of the kinds of the situations described earlier, there is an inequality of
knowledge. In the bid situation, the person who seeks bids prior to the deadline for their
submission is presumably unaware of the content of the bids that have already been submitted;
in the context of collective bargaining, the union would not have all of the agency's records
relevant to the negotiations; in the appraisal situation, the person seeking that record is
unfamiliar with its contents. As suggested above, premature disclosure of bids would enable
a potential bidder to gain knowledge in a manner unfair to other bidders and possibly to the
detriment of an agency and, therefore, the public. Disclosure of an records regarding
collective bargaining strategy or appraisals would provide knowledge to the recipient that
might effectively prevent an agency from engaging in an agreement that is most beneficial to
taxpayers.

In a case involving negotiations between a New York City agency and the Trump
organization, the court referred to an opinion that I prepared and adopted the reasoning
offered therein, stating that:

"Section 87(2)(c) relates to withholding records whose release
could impair contract awards. However, here this was not
relevant because there is no bidding process involved where an
edge could be unfairly given to one company. Neither is this
a situation where the release of confidential information as to
the value or appraisals of property could lead to the City
receiving less favorable price.

"In other words, since the Trump organization is the only
party involved in these negotiations, there is no inequality of
knowledge between other entities doing business with the
City" [Community Board 7 v. Schaffer, 570 NYS 2d 769, 771
(1991); Aff'd 83 AD 2d 422; reversed on other grounds 84
NY 2d 148 (1994)].

Based on the foregoing, assuming that the records at issue are known to both parties
and there are no other potential parties to a transaction, the rationale described above and
the judicial decisions rendered to date suggest that §87(2)(c) could not justifiably have been
asserted to withhold the records.

On the other hand, if 115-87 Owners Corp. is one among other entities that have
made similar proposals to the ECF, the response may be different. In that event, if the ECF
as owner of the property is considering the sale or lease of the parcel to others, and disclosure
to your client would impair its ability to reach an agreement optimal to taxpayers, §87(2)(c)
would likely serve as a basis for withholding some aspects of the documentation sought.
Again, however, if there is no other entity that may be involved in the kind of transaction to
which you referred, there would appear to be no basis for a denial of access to the records
sought.

Even if entities other than that identified in your letter may be potentially be involved
in a transaction, it is unlikely in my view that a denial of the request in its entirety would have
been appropriate. The Court of Appeals has stressed that the Freedom of Information Law
should be construed expansively. Most recently, in Gould v. New York City Police
Department [87 NY 2d 267 (1996)], the Court reiterated its general view of the intent of the
Freedom of Information Law, stating that:

"To ensure maximum access to government records, the
'exemptions are to be narrowly construed, with the burden
resting on the agency to demonstrate that the requested
material indeed qualifies for exemption' (Matter of Hanig v.
State of New York Dept. of Motor Vehicles, 79 N.Y.2d 106,
109, 580 N.Y.S.2d 715, 588 N.E.2d 750 see, Public Officers
Law § 89[4][b]). As this Court has stated, '[o]nly where the
material requested falls squarely within the ambit of one of
these statutory exemptions may disclosure be withheld'
(Matter of Fink v. Lefkowitz, 47 N.Y.2d, 567, 571, 419
N.Y.S.2d 467, 393 N.E.2d 463)" (id., 275).

Just as significant, the Court in Gould repeatedly specified that a categorical denial
of access to records is inconsistent with the requirements of the Freedom of Information Law.
In that case, the Police Department contended that "complaint follow up reports" could be
withheld in their entirety on the ground that they fall within the exception regarding intra-
agency materials, §87(2)(g), an exception separate from that cited in response to your
request. The Court, however, wrote that: "Petitioners contend that because the complaint
follow-up reports contain factual data, the exemption does not justify complete nondisclosure
of the reports. We agree" (id., 276), and stated as a general principle that "blanket
exemptions for particular types of documents are inimical to FOIL's policy of open
government" (id., 275). The Court also offered guidance to agencies and lower courts in
determining rights of access and referred to several decisions it had previously rendered,
stating that:

"...to invoke one of the exemptions of section 87(2), the
agency must articulate 'particularized and specific justification'
for not disclosing requested documents (Matter of Fink v.
Lefkowitz, supra, 47 N.Y.2d, at 571, 419 N.Y.S.2d 467, 393
N.E.2d 463). If the court is unable to determine whether
withheld documents fall entirely within the scope of the
asserted exemption, it should conduct an in camera inspection
of representative documents and order disclosure of all
nonexempt, appropriately redacted material (see, Matter of
Xerox Corp. v. Town of Webster, 65 N.Y.2d 131, 133, 490
N.Y.S. 2d, 488, 480 N.E.2d 74; Matter of Farbman & Sons
v. New York City Health & Hosps. Corp., supra, 62 N.Y.2d,
at 83, 476 N.Y.S.2d 69, 464 N.E.2d 437)" (id.).

In short, even if an exception is pertinent, the records sought must be reviewed
individually by an agency for the purpose of ascertaining the extent to which they might fall
within the scope of one or more of the grounds for denial of access. As the Court stated later
in the decision, an agency may deny access records under an exception only "as long as the
requisite particularized showing is made" (id., 277).

Lastly, I note that the denial of your request failed to inform you of your right to
appeal. The provision dealing with the right to appeal a denial of access to records is found
in §89(4)(a) of the Freedom of Information Law, which states in relevant part that:

"any person denied access to a record may within thirty days
appeal in writing such denial to the head, chief executive or
governing body of the entity, or the person therefor designated
by such head, chief executive, or governing body, who shall
within ten business days of the receipt of such appeal fully
explain in writing to the person requesting the record the
reasons for further denial, or provide access to the record
sought."

Further, the regulations promulgated by the Committee on Open Government (21
NYCRR Part 1401), which govern the procedural aspects of the Law, state that:

"(a) The governing body of a public corporation or the head,
chief executive or governing body of other agencies shall hear
appeals or shall designate a person or body to hear appeals
regarding denial of access to records under the Freedom of
Information Law.

(b) Denial of access shall be in writing stating the reason
therefor and advising the person denied access of his or her
right to appeal to the person or body established to hear
appeals, and that person or body shall be identified by name,
title, business address and business telephone number. The
records access officer shall not be the appeals officer" (section
1401.7).

It is also noted that the state's highest court has held that a failure to inform a person
denied access to records of the right to appeal enables that person to seek judicial review of
a denial. Citing the Committee's regulations and the Freedom of Information Law, the Court
of Appeals in Barrett v. Morgenthau held that:

"[i]nasmuch as the District Attorney failed to advise petitioner
of the availability of an administrative appeal in the office (see,
21 NYCRR 1401.7[b]) and failed to demonstrate in the
proceeding that the procedures for such an appeal had, in fact,
even been established (see, Public Officers Law [section]
87[1][b], he cannot be heard to complain that petitioner failed
to exhaust his administrative remedies" [74 NY 2d 907, 909
(1989)].

In an effort to resolve the matter, a copy of this opinion will be sent to the ECF.


I hope that I have been of assistance.

Sincerely,

 

Robert J. Freeman
Executive Director

RJF:tt

cc: Andrew J. Maniglia