Taxpayers paid $22 million for renovation of courthouse. But its finances aren’t public.
A group that oversees the former Fayette County courthouse and managed a $32 million renovation of the building has “willfully” violated the state Open Records Act by refusing to release information regarding its finances, the Lexington Herald-Leader alleges in a lawsuit filed Wednesday.
The newspaper asked a Fayette Circuit Court judge to determine if Historic Courthouse LLLP is a public agency and must comply with the state Open Records Act.
Kara Read Marino, a lawyer representing Historic Courthouse LLLP, declined to comment on the lawsuit.
The lawsuit also alleges Historic Courthouse LLLP improperly redacted financial information from documents it provided the newspaper, including the amount each tenant in the courthouse pays in rent. Those leases are with Breeders’ Cup; LexEffect, which runs the event space known as Limestone Hall; VisitLex; The Thirsty Fox; and Zim’s.
The Herald-Leader requested a variety of financial information from Historic Courthouse LLLP through a series of Open Records Act requests between March 27 and May 10.
In its responses to the Herald-Leader, a lawyer for Historic Courthouse LLLP said the group was not a public agency and did not have to comply with the newspaper’s requests but would voluntarily provide some of the information requested. Those responses, though, were incomplete and much of the information was blacked out.
For example, the for-profit company claimed the amount each tenant pays in rent is proprietary information and that disclosing those figures would give competitors an unfair commercial advantage. Proprietary business information does not have to be disclosed under state law.
The lawsuit contests the group’s assertion that lease information is proprietary.
“The Historic Courthouse is fully leased and so disclosing the terms of the tenants’ leases, including annual rent amounts, will not provide any commercial advantage to its competitors,” the lawsuit said.
In addition, the Herald-Leader requested a break down of all the group’s expenses and other financial information.
The company responded by providing checks and some of its financial information through Dec. 30, 2017, but claimed that it has not spent any public money since that date.
In its lawsuit, the newspaper argues that the group’s financial information should be public and contends Historic Courthouse LLLP is a public agency.
The group’s “insistence that it is not a public agency subject to the Open Records Act and its refusal to disclose the requested documents except in redacted form constitute willful violations of the Act,” wrote Tom Miller, a lawyer for the Herald-Leader.
Historic Courthouse LLLP’s board members are current or former city employees, although records don’t indicate how they were chosen for the job. The current board members include CAO Sally Hamilton, deputy CAO Glenn Brown and former General Services Commissioner Geoff Reed. According to state statute, anytime the majority of an agency’s board members are appointed by a public agency, it is considered public and must comply with the Open Records Act.
The statute also says any agency that was created “by state or local statute, executive order, ordinance resolution or another act” is also considered a public agency. A resolution approved by the Lexington-Fayette Urban County Council in March 2016 created Historic Courthouse GP Inc., which is the general partner of Historic Courthouse LLLP, and a related nonprofit called Historic Courthouse Square Development Inc.
In addition, state law says any organization that receives 25 percent or more of its funding from taxpayers is a public agency. More than half of the reported $32 million renovation project was paid for with city money, according to financial information provided to the Lexington-Fayette Urban County Council on July 9.
The city spent $22 million on the project and helped secure up to $11 million in state and federal historic tax credits to finance the renovation.
Cities and counties can not receive tax credits directly, which is why Historic Courthouse LLLP and its related entities were created.
Officially rededicated and opened in November 2018, the former courthouse has won several historic preservation awards. The project has been lauded for turning the once-dark and vacant building in the center of downtown into restaurant, bar, event and office space.
City officials have said the leases generate a combined $285,000 annually, but it’s not clear how that money is spent. The group pays CRM Companies $30,000 a year to manage the courthouse, according to CRM’s management contract, plus an additional sum to provide security for the building. City officials have said the remaining money pays for utilities, insurance and other costs, but no detailed information has been provided.