Long v. City of Burlington

• Decision Date: 21 September 2018
• Docket Number: No. 2017-434,2017-434
• Citation: 2018 VT 103
• Court: Vermont Supreme Court
• Parties: Michael Long, Lynn Martin, Steven Goodkind and the Coalition for a Livable City v. City of Burlington and BTC Mall Associates, LLC.

2018 VT 103

Michael Long, Lynn Martin, Steven Goodkind and the Coalition for a Livable City v. City of Burlington and BTC Mall Associates, LLC.

No. 2017-434

Supreme Court of Vermont

April Term, 2018

September 21, 2018

NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.

On Appeal from Superior Court, Chittenden Unit, Civil Division

Robert A. Mello, J.

John L. Franco, Jr., Burlington, for Plaintiff-Appellant Coalition for a Livable City.

Richard W. Haesler, Jr. and Justin St. James, Burlington, for Defendant-Appellee City of Burlington.

Jonathan T. Rose and Brian S. Dunkiel of Dunkiel Saunders Elliott Raubvogel & Hand, PLLC, Burlington, for Defendant-Appellee BTC Mall Associates, LLC.

PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll, JJ.

¶ 1. ROBINSON, J. Plaintiff Coalition for a Livable City (CLC) appeals the trial court's summary judgment denying its Public Records Act (PRA) request to the City of Burlington for an unredacted financial feasibility study provided by a private developer to a contractor hired by the City of Burlington to help the City assess the viability of the developer's plans. The development plans included some public improvements to be financed with tax dollars. We do not decide whether the documents qualify as public records under the PRA because we conclude that, assuming without deciding that they do, the redacted information falls under the PRA trade-secrets exemption. Accordingly, we affirm.

¶ 2. The undisputed facts are as follows. In December 2014, the Burlington City Council took its first steps toward redevelopment of several downtown city blocks then home to the Burlington Town Center Mall (Project) by approving a process to create a public-private partnership with the property's owners, Devonwood Investors, LLC and BTC Mall Associates, LLC (collectively BTC). The City contracted with an economic consulting firm called ECONorthwest to help the City analyze the Project and structure a public-private partnership. ECONorthwest is an independent Seattle-based consulting firm that has experience providing economic and technical expertise to state and local governments on economic redevelopment projects.

¶ 3. Over the next seventeen months, the City, with technical assistance from ECONorthwest, worked with BTC to conceptualize and refine the Project. This effort led to a Predevelopment Agreement (PDA) to memorialize the basic Project concept and identify the next steps in bringing it to fruition. BTC's proposed redevelopment included, among other things, residential, retail, and commercial office components, as well as parking. The PDA contemplated up to $222 million in public improvements and acquisitions financed by tax increment financing. The City Council approved this PDA in May 2016.

¶ 4. The PDA included a provision requiring BTC to provide the City with copies of any market studies and feasibility analysis prepared for the benefit of BTC's lenders or investors and available to BTC. The PDA recited:

The Parties agree that such reports customarily include data that analyze whether a market exists for the retail, commercial and residential components of a project, and whether the anticipated market demand for the retail, commercial and residential components of a project is sufficient to support the anticipated costs of developing, constructing and operating it.

This provision involved disclosures of information "that if disclosed to BTC's competitors, could harm BTC commercially." The City sought this information to test the assumptions in BTC'sfinancial projections. The agreement further provided that BTC would work cooperatively with ECONorthwest to provide a range of customary financial underwriting information, and stated, "The parties agree to cooperate as needed to facilitate the completion of these disclosures and assessments, including appropriate treatment of proprietary or confidential information."

¶ 5. In August 2016, BTC and ECONorthwest purported to enter into a nondisclosure agreement (NDA) pursuant to which BTC agreed to provide confidential business information to ECONorthwest so it could do its own assessment of the project, and ECONorthwest agreed that it would not disclose that confidential business information to anyone, including the City. Whether this agreement created any enforceable rights or obligations is disputed.¹

¶ 6. Soon thereafter, BTC provided ECONorthwest with a copy of a Market Feasibility Assessment (Study) prepared by its own consultants. The Study concluded that the Project was economically feasible and represented a viable investment for the developer. In September 2016, ECONorthwest issued its own analysis of the Study, concluding that the Study was generally well conceived and agreeing with its findings.

¶ 7. BTC provided a redacted copy of the Study to the City and the public. BTC asserts that the redactions include figures showing estimated rents, revenues, costs, and other proprietary financial information associated with the Project. CLC contends that since the unredacted document has not been made available, it has no basis to admit or deny BTC's assertion as to the nature of the redactions. The document itself undisputedly includes the following redactions made by BTC²:

[T]he analysis indicates that the project achieves a Net Operating Income of $[REDACTED] million in year 2020, resulting in a Yield on Cost of [REDACTED] percent.

. . . .

As of the time of this writing, monthly rental rates [in the 139 market rate rental units] were projected as following: Efficiencies - $[REDACTED] per month; One Bedroom - $[REDACTED] per month, Two Bedroom - $[REDACTED] per month.

. . . .

. . . Triple Net [retail] leases under negotiation range from $[REDACTED] to $[REDACTED] per square foot.

. . . .

Based on current retail rents in the Church Street Marketplace and the developer's ongoing negotiations with potential commercial tenants in pre-lease negotiations, significant retailers and service providers are expected to lease in the $[REDACTED] - $[REDACTED] PSF NNN range,[³] and the project overall is expected to achieve toward the high end of downtown core retail rates.

. . . .

. . . For pro forma purposes . . . a blended retail lease rate of $[REDACTED] PSF NNN has been assumed.

. . . .

An executed Letter of Intent between the University of Vermont Medical Center and Devonwood Investors LLC commits the Medical Center to lease 110,000 square feet of office space at a triple net rate of $[REDACTED] per square foot. The lease has a [REDACTED]-year term, with two [REDACTED] year options to extend.

Negotiations are underway for an additional 105,000 square feet of office space, at rents of $[REDACTED] NNN.[⁴]

. . . .

Based upon the negotiated lease and leases under the negotiation and the time that will pass between now and initial office occupancy,the smaller size of remaining office units and the quality of the Class A space, we estimate lease rates [for office space] to range from $[REDACTED] to $[REDACTED] NNN.

. . . .

. . . As of this writing, monthly fees [for on-site parking] are projected at $[REDACTED].

. . . .

The 555 parking spaces rented on monthly leases ($[REDACTED])/Month) will reach full occupancy and demand will remain at a high level.

In addition, various tables were redacted, including "[a] detailed construction cost estimate," a table reflecting loan sources, and tables showing projected five-year returns from the residential, retail, office, and parking components of the Project.

¶ 8. In October 2016, Lynn Martin, on behalf of CLC, requested a copy of the unredacted Study and related documents from the City pursuant to the PRA. The Burlington City Attorney denied the request, explaining that: the City did not have an unredacted copy of the document and thus it had no responsive public records; the document was shared with the City's economic consultant, ECONorthwest, pursuant to an NDA that prohibited its disclosure to others; and even if the document were a public record, it would be exempt from disclosure pursuant to 1 V.S.A. §317(c)(9)—the trade-secrets exemption to the PRA. The Burlington mayor denied CLC's appeal on essentially the same grounds.

¶ 9. Several individual plaintiffs and CLC filed suit against the City alleging that it violated the PRA by failing to disclose the unredacted Study.⁵ In addition to naming the City, plaintiffs sued BTC claiming if the unredacted study is a public record subject to disclosure, BTC would be a necessary party because only BTC held the record.

¶ 10. Considering the above undisputed facts, the trial court granted the City summary judgment and dismissed the claim against BTC. First, the court reasoned that the study is not a public record under the PRA. See 1 V.S.A. § 317(b) (defining "public record" as "any written or recorded information . . . which is produced or acquired in the course of public agency business"). The court concluded that the City neither produced nor acquired the unredacted Study in the course of public agency business, and it had no legal right to obtain the unredacted copy pursuant to the NDA.

¶ 11. The court rejected the argument that the unredacted Study is a public record because it was disclosed to an agent of the City pursuant to City business. The court questioned the applicability of agency law to the analysis, noting that some trial courts in Vermont have applied a "functional equivalence" test, considering whether the private entity from which records are sought is the "functional equivalent of a public agency" and whether the records sought "are within the scope of that equivalency." The court implicitly...