Politics & Government

Lexington foundation wrong to withhold records from Herald-Leader, state rules

A Lexington-based economic development foundation violated Kentucky's Open Records Act when it refused to release its spending records to the Herald-Leader last year, according to a ruling issued Friday by Attorney General Jack Conway's office.

The non-profit Bluegrass Industrial Foundation had turned down the newspaper's request for records on July 1, arguing that it was not a public agency under state law. The paper appealed that decision in October, arguing that the foundation's documents are public records because it gets more than 25 percent of its income from a taxpayer-funded agency, the Bluegrass Area Development District.

The foundation owns the building at 699 Perimeter Drive that houses the development district, which is under investigation by State Auditor Adam Edelen after the forced resignation of its executive director, Lenny Stoltz II, in July amid questions about spending.

The attorney general's office agreed with the newspaper, saying in its opinion that the foundation "was obligated to make its records available in response to the Herald-Leader's open-records request," and had violated state law in failing to do so.

Christine Westover, an attorney for the foundation, said Monday that she had not yet seen the opinion and could not comment on it. The group has 30 days from the date of the opinion to turn over the documents or appeal the decision in Fayette Circuit Court.

According to the foundation's annual tax returns and financial statements from the development district, the district's rental payments have made up more than 70 percent of the foundation's income since 2009 — more than $1 million in total.

Most entities that receive at least 25 percent of their funding from state or local money are considered public agencies under state law.

In letters to the attorney general's office, Westover argued that rental payments should not be considered when determining whether an entity is subject to the Open Records Act.

The Herald-Leader's attorney, Robert Houlihan, called the decision "clear and correct."

"The public has a right to examine the workings of entities that receive 25 percent of their money from the state," he said Monday. "In recent years, BIF has received from 74 percent to 87 percent of income from the state. This opinion follows the clear statutory law and the existing decisional authority."

The foundation's president is Jas Sekhon, who ran the development district from 1971 to 2005. The foundation bought the Perimeter Drive property in 1993 for $1.6 million. It's now valued at $2.2 million, according to the Fayette Property Valuation Administrator's office.

According to tax documents, the Perimeter Drive building generated profits of between $60,000 and $70,000 a year from 2009 to 2011, but the foundation reported an overall deficit each year after accounting for other expenses, including about $115,000 for travel over three years.

The foundation's expenses for those years include $60,000 in compensation for Sekhon and the foundation's seven-member board, most of whom are former Bluegrass ADD board members, $25,000 for conferences and almost $50,000 for "prospect development," according to its tax returns.