January 3, 2005
The staff of the Committee on Open Government is authorized to issue advisory opinions. The ensuing staff advisory opinion is based solely upon the facts presented in your correspondence.
As you are aware, I have received your letter in which you sought an advisory opinion concerning the Freedom of Information Law.
According to your letter, the City of Ithaca is reviewing a proposal under which the City would obtain title to several parcels in order to apply for benefits under the brownfields restoration program, "with title ultimately vesting in a private developer." Under the proposal, the City would take title by means of an assignment of an existing option to purchase between the current owner and a developer. It is your view that "public disclosure of the option agreement prior to such acceptance and exercise by the City might alert other potential purchasers to the terms and conditions therein thereby creating a de facto bidding situation to the City’s detriment." Further, should the parcels be purchased by a private party, "the environmental remediation desired by the City could not be accomplished since the particular program involved is available only to municipalities and their agencies."
You have asked whether the terms of the option to purchase must be disclosed. In this regard, I offer the following comments.
First, 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 to which you referred in your letter, §87(2)(c), 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 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.
The situation that you described is, in my view, most analogous to the facts in Murray. If, as you suggested, disclosure of the option agreement would potentially result in a "de facto bidding situation" or encourage the current owner of the property to withhold consent to the assignment and seek another purchaser that offers a higher price than the City may be willing or able to pay, I would agree that disclosure at this juncture would "impair" the City’s ability to engage in an optimal contractual agreement on behalf of its taxpayers. In consideration of the effect of disclosure, I believe that the record at issue may be withheld on the basis of §87(2)(c).
I hope that I have been of assistance.
Robert J. Freeman