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OML-AO-4267

October 5, 2006

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.

Dear

I have received your letter and the materials attached to it. You indicated that you represent the Carthage Industrial Development Corporation ("the Corporation") and that you were asked to request an advisory opinion concerning its status under the Open Meetings Law. The Corporation is a not-for-profit corporation created under §1411 of the Not-for-Profit Corporation Law, which pertains to "local development corporations." You referred to and enclosed a copy of the by-laws of the Corporation, which indicates in Article III, §1, that a majority of its members are either appointed by government agencies or are officials of government agencies.

In this regard, while I know of no judicial decision concerning the status of a local development corporation under the Open Meetings Law, the Court of Appeals has considered the matter under the Freedom of Information Law. The guidance offered in that decision is, in my view, most pertinent in consideration of the issues presented here.

The Freedom of Information Law pertains to agencies, and §86(3) of that statute defines the term "agency" to mean:

"any state or municipal department, board, bureau, division, commission, committee, public authority, public corporation, council, office of other governmental entity performing a governmental or proprietary function for the state or any one or more municipalities thereof, except the judiciary or the state legislature" [§86(3)].

Section 1411 of the Not-for-Profit Corporation Law describes the purpose of local development corporations and states in part that:

"it is hereby found, determined and declared that in carrying out said purposes and in exercising the powers conferred by paragraph (b) such corporations will be performing an essential governmental function."

Therefore, due to its status as a not-for-profit corporation, it is not clear in every instance that a local development corporation is a governmental entity; however, it is clear that such a corporation performs a governmental function.

Most relevant is a decision rendered by the Court of Appeals in which it was held that a particular not-for-profit local development corporation is an "agency" required to comply with the Freedom of Information Law [Buffalo News v. Buffalo Enterprise Development Corporation, 84 NY 2d 488 (1994)]. In so holding, the Court found that:

"The BEDC seeks to squeeze itself out of that broad multipurposed definition by relying principally on Federal precedents interpreting FOIL's counterpart, the Freedom of Information Act (5 U.S.C. §552). The BEDC principally pegs its argument for nondisclosure on the feature that an entity qualifies as an 'agency' only if there is substantial governmental control over its daily operations...The Buffalo News counters by arguing that the City of Buffalo is 'inextricably involved in the core planning and execution of the agency's [BEDC] program'; thus the BEDC is a 'governmental entity' performing a governmental function of the City of Buffalo, within the statutory definition.

"The BEDC's purpose is undeniably governmental. It was created exclusively by and for the City of Buffalo to attract investment and stimulate growth in Buffalo's downtown and neighborhoods. As a city development agency, it is required to publicly disclose its annual budget. The budget is subject to a public hearing and is submitted with its annual audited financial statements to the City of Buffalo for review. Moreover, the BEDC describes itself in its financial reports and public brochure as an 'agent' of the City of Buffalo. In sum, the constricted construction urged by appellant BEDC would contradict the expansive public policy dictates underpinning FOIL. Thus, we reject appellant's arguments" (id., 492-493).

Because at least seven of the nine members of the Corporation, who also serve as its board of directors, are appointed by or are government officials, it is clear that government agencies exercise substantial control over the Corporation. Because that is so, I believe that the Corporation would constitute an "agency" required to comply with the Freedom of Information Law.

If the Corporation is an agency that falls within the scope of the Freedom of Information Law, I believe that it and its board of directors would also constitute a "public body" for purposes of the Open Meetings Law. Section 102(2) defines that phrase to mean:

"...any entity for which a quorum is required in order to conduct public business and which consists of two or more members, performing a governmental function for the state or for an agency or department thereof, or for a public corporation as defined in section sixty-six of the general construction law, or committee or subcommittee or other similar body of such public body."

By breaking the definition into its components, I believe that each condition necessary to a finding that the board of the Corporation is a "public body" may be met. It is an entity for which a quorum is required pursuant to the provisions of the Not-for-Profit Corporation Law. It consists of more than two members. Further, based upon the language of §1411(a) of the Not-for-Profit Corporation Law, which was quoted in part earlier, and the degree of governmental control reflected in the Corporation’s membership, I believe that it conducts public business and performs a governmental function for several public corporations, including two villages, a town, a county, a public authority and industrial development agency.

I hope that I have been of assistance.

Sincerely,

Robert J. Freeman
Executive Director

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