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Court of Appeals Victory for Government Transparency

November 8, 2006: By unanimous decision on November 8, 2006, the Maryland Court of Appeals issued a strong decision requiring government transparency and accountability in the case of Baltimore Development Corporation v. Carmel Realty, et al.  The court ruled that the Baltimore Development Corporation – Baltimore’s economic development arm that manages the City's urban renewal projects -- is a “public body” subject to Maryland’s Open Meetings Act and it is an “instrumentality” of government subject to Maryland’s Public Information Act.

During BDC’s decision-making process on a west side development project, Carmel Realty attempted to review the documents in BDC's possession concerning the development of their properties under the Maryland's Public Information Act and to attend BDC's meetings regarding that development pursuant to Maryland's Open Meetings Act.  BDC, however, denied access to the documents and meetings, asserting that as a private, nonprofit corporation, it is not obligated to permit public access to any of its documents or meetings.  Carmel Realty challenged this position, and appealed to the Maryland Court of Special Appeals and then the Court of Appeals.

In the Court of Appeals, the City argued that the BDC was a private entity and not required to follow Maryland’s laws on transparency for governmental agencies. On July 24, 2006, the Public Justice Center and the American Civil Liberties Union of Maryland filed an amicus brief to the Court of Appeals in support of Carmel Realty and the other Appellees.  Our brief urged the Court to preserve open and accountable government, so critical to a well-functioning democracy.  David Rocah, Deborah Jeon, Jonathan Guy and Kathleen Orrick represented the American Civil Liberties Union of Maryland. Suzanne Sangree, Appellate Director, and Roscoe Jones, Jr., last year’s Murnaghan Fellow, handled the case for PJC.

Following are articles on this decision in the Baltimore Sun and the Daily Record.
From the Baltimore Sun

Open books to public, BDC is told
Development agency has to disclose details of deals

By John Fritze
Sun Reporter
November 4, 2006

In a decision that could have broad implications for the public's right to inspect the workings of government, Maryland's highest court ruled yesterday that the agency overseeing Baltimore's economic development must open its meetings and its paperwork for public review.

Writing that the Baltimore Development Corp. has previously been able "to cloak the business of the citizens of the city of Baltimore behind the veil of a supposedly private corporation," the Court of Appeals dismissed city arguments that the agency's closed-door meetings are legal and crucial to the agency's work.

Though the decision focuses only on the city's development agency, a nonprofit corporation, its impact could prove far reaching, potentially opening up dozens of quasi-public agencies that are technically separate from government but perform public functions. Most of them, like the BDC, have operated behind closed doors for years.

"I have yet to meet anybody who has been to a Baltimore Development Corporation meeting, and that's going to have to change," said John C. Murphy, the attorney who filed the lawsuit. "By itself, that's going to be a great first step."

Created in 1991, the BDC has engineered many of the city's largest land deals, including the $305 million convention center hotel, scheduled to open in 2008. It is responsible for choosing contractors and acquiring land for those projects. It technically does not have the power of eminent domain, but it influences the public agencies that do.

Advocates and journalists have complained that the agency does not release details of its operations. It does not disclose, for instance, the names and salaries of its employees, the minutes of its meetings or the development proposals it receives from private companies.

The court wrote that the BDC receives as much as 87 percent of its budget from the city, meaning from taxpayers.

Murphy sued on behalf of nine businesses that were to be condemned as part of a redevelopment on the west side of downtown in an area known as the "superblock." The business owners argued that a decision by the BDC's board of directors to recommend a developer for the project was illegal because it was made behind closed doors.

Baltimore's Circuit Court ruled against the business owners last year. They appealed to the Court of Special Appeals, which in January overturned the lower court. The BDC, whose board members are appointed by Baltimore Mayor Martin O'Malley, appealed to the Court of Appeals in March, and arguments were heard less than a month ago.

It is not clear how the ruling will affect the BDC's practices. City officials, including BDC President M.J. "Jay" Brodie, have said that some level of secrecy is needed to orchestrate major development deals with private companies, and the state's open-meetings law allows the board to hold closed-door meetings if the topics include the purchase of property or efforts to locate, expand or retain a business in the state, which encompasses a large part of what BDC does.

Joshua N. Auerbach, the city's assistant solicitor, who represented the agency, said that the BDC will comply with the court's ruling. Auerbach said he could not comment on whether the agency would try to alter its corporate structure - for example, by relinquishing the mayor's power to appoint its board - as a way to appear less public.

"The Baltimore Development Corp. accepts the results of the decision," Auerbach said. "This will be a change, as we said to the court. It will make the BDC work a bit more difficult, but BDC will go on."

The decision also might delay the west-side redevelopment. The BDC selected New York-based Chera Feil Goldman Group last year to develop the 3.6-acre area with 225 apartments and 64,500 square feet in retail space. Now, a court must decide whether the developer will stay on the project or whether the city's agency must go back through the process of picking a developer, this time in public.

Many of the business owners said they want to stay. They submitted a proposal to the BDC that would have allowed them to keep their businesses in the superblock, but they were never allowed to attend board meetings to make their case.

"It's always about the big guys pushing the small guys around," said Scott Mun, who owns Wig House on Lexington Street. "At the very least, they should consider the merchants and the people that are already here and not just push them aside."

As the BDC case worked its way through appeals this year, it presented O'Malley with a conundrum. Running for governor in part on a platform of making government more open and accessible, O'Malley had to simultaneously justify using tax money to defend the BDC's policy of keeping meetings and records closed.

On Feb. 2, after the ruling by the Court of Special Appeals, The Sun filed a request for more than a dozen BDC records, including minutes from the agency's meetings, a calendar of future meetings, the salaries of employees and proposals submitted by developers on a number of projects, all documents that are made available by other city departments. Auerbach said he did not know the status of that request.

In its arguments, the city said that the BDC is not public because it is a separate, nonprofit corporation. State law defines a public body as an entity with at least two individuals that is created by law, such as by the Constitution, a statute or a city ordinance.

The state law then lists a number of examples of public bodies, such as "any multimember board, commission, or committee appointed by the governor" or a mayor. Baltimore lawyers said the BDC was created by a contract with the city, rather than by law. But the court said the board nevertheless qualifies as a public body because its members are appointed by the mayor. Such an interpretation might be applied to similar economic-development agencies across the state.

For example, the Baltimore Area Convention and Visitors Association board is appointed by the mayor. Officials there did not return a phone call last night.

Millie Tyssowski, past president of the League of Women Voters of Baltimore City and head of a committee that was studying the BDC, applauded the court's decision.

"People are suspicious of government agencies that operate in the dark," she said. "I think there is greater confidence if they operate in the sunshine."

Cities and states across the country have used nonprofit organizations for years to skirt laws that would usually apply to public agencies.

But state courts are increasingly taking a critical look at such arrangements, especially in cases in which the organization has the power to confiscate property, said William R. Maurer of the the Institute for Justice.

"Since the advent of public records and open-meetings acts, there has been an attempt by local governments to hide a lot of governmental actions by transferring them to private entities," Maurer said. "It was clear to the court that this was simply the government with a different letterhead."

Sun reporters Eric Siegel and Doug Donovan contributed to this article.
Copyright © 2006,The Baltimore Sun

Court ruling could change how BDC works

November 6, 2006
Daily Record Business Writer
Friday’s court ruling that the Baltimore Development Corp. is a public body could drastically alter the way the city does business.

The unanimous decision by the Maryland Court of Appeals ends a nearly two-year debate over whether the city’s economic development arm should be subject to the state’s public information, or sunshine, rules.

In 2004, a group of business owners on the city’s West Side filed suit against the BDC, saying it violated sunshine rules by refusing to reveal how it chose developers for an urban renewal project. The business owners worked in a West Side shopping district known as the superblock. Many of them would be forced to relocate because of the city’s use of eminent domain to amass properties for the project.

In the court rulings that followed for Carmel Realty Associates v. City of Baltimore Development Corp., the superblock issue itself got lost amid the larger question of whether the BDC was a public or private entity.

With the top court’s ruling it is a public body, “the BDC will be complying with the opinion and bringing its process into conformity with the statutes,” said Joshua N. Auerbach, the assistant city solicitor who represented the BDC in the case.

Exactly how the BDC will perform in its new role — such as opening board meetings or allowing documents to be viewed by the public — remains to be seen.

BDC President M.J. “Jay” Brodie has long stressed that his agency’s privacy is in the best interest of city development. The public process often prolongs development activity, he has said during interviews with The Daily Record.

Donald C. Fry, president of the Greater Baltimore Committee, said that the BDC’s new status could complicate development.

“Private companies are not going to want to have all of their books opened up just because they are looking to explore a development opportunity,” Fry said. “The reality is that economic development authorities do have to have some level of being able to protect proprietary information.”

“I think that there certainly is a public interest in having transparency,” he added. “But at the same time though there needs to be protection so that not everything from the private companies is an open book.”

Prior to the Court of Appeals’ decision, the Baltimore City Circuit Court ruled early last year that the BDC was a private entity, and therefore not subject to the state’s Open Meetings and Public Information acts. It said the agency did not fit the state’s definition of public bodies because it was not created by the constitution, a statute or other government order.

The business owners appealed. Their attorney, John C. Murphy, argued that the BDC should be considered public because it gets most of its operating budget from city coffers, has a board that consists of mayoral appointees and was represented in court by a city attorney, among other reasons.

The Court of Special Appeals sided with Murphy’s arguments, reversing in January 2006 the circuit court’s decision and ruling that the BDC was public. The BDC appealed that decision.

Friday, the state’s highest court reached a definitive judgment that the BDC is, in fact, a public body and therefore subject to state sunshine rules.

“An entity that possesses as many public traits as does the BDC is a public body for the purposes of the Open Meetings Act,” the court said.

The Court of Appeals remanded the business owners’ original lawsuit to the circuit court, instructing it to reconsider the case with the BDC defined as a public body. The businesses owners wanted the court to void the closed-door meeting in which the BDC chose a developer for the superblock, saying it violated open meetings laws. The city would have to respond again to the complaint by the business owners, this time likely using a different tactic.

“This is a big victory, and it’s important,” said Bobbie Walton, executive director of Common Cause Maryland, a group that advocates for open government. “This makes [Baltimore development] a much more open process. There is a potential for abuse when the public isn’t able to view what’s going on.”

Murphy called the court decision “just a recognition of reality.”

“The amount of authority they [BDC board members] exercise over peoples lives … is just enormous … and it’s just common sense that people ought to be able to attend their meetings and that their documents are public documents,” Murphy said.

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