State v. Beaver Dam Area Development Corp.

• Citation: 2008 WI 90,752 N.W.2d 295
• Decision Date: 11 July 2008
• Docket Number: No. 2006AP662.,2006AP662.
• Parties: STATE of Wisconsin, Plaintiff-Appellant, v. BEAVER DAM AREA DEVELOPMENT CORPORATION, Eric Becker, Jeff Kitchen, Al Schwab, Les Frinak, Jr., John Landdeck, Doug Mathison, Tom Olson, Greg Steil, Ron Thompson, Steven Baldwin, Nancy Zieman, Gina Staskal, Brian Busler, and Jack Hankes, Defendants-Respondents, Myrtle Clifton, Laine Meyer, Duane Foulkes, and Philip Fritsche, Defendants.
• Court: United States State Supreme Court of Wisconsin

752 N.W.2d 295

2008 WI 90

STATE of Wisconsin, Plaintiff-Appellant, v. BEAVER DAM AREA DEVELOPMENT CORPORATION, Eric Becker, Jeff Kitchen, Al Schwab, Les Frinak, Jr., John Landdeck, Doug Mathison, Tom Olson, Greg Steil, Ron Thompson, Steven Baldwin, Nancy Zieman, Gina Staskal, Brian Busler, and Jack Hankes, Defendants-Respondents Myrtle Clifton, Laine Meyer, Duane Foulkes, and Philip Fritsche, Defendants.

No. 2006AP662.

Supreme Court of Wisconsin.

Argued November 6, 2007.

Decided July 11, 2008.

For the plaintiff-appellant the cause was argued by Monica Burkert-Brist, Assistant Attorney General, with whom on the briefs was J.B. Van Hollen, Attorney General.

For the defendants-respondents there was a brief by Michael J. Cieslewicz, Patti J. Kurth, and Kasdorf, Lewis & Swietlik, S.C., Milwaukee, and oral argument was by Michael J. Cieslewicz.

An amicus curiae brief was filed by Edward R. Garvey, Christa Westerberg, and Garvey McNeil & McGillivray, S.C., Madison, on behalf of the Citizens for Open Government and Jack Domann, the Wisconsin Newspaper Association, the Wisconsin Broadcasters Association, and the Wisconsin Freedom of Information Council.

An amicus curiae brief was filed by Eric M. McLeod, Paul D. Barbato, and Michael Best & Friedrich LLP, Madison, on behalf of the Wisconsin Economic Development Association, the Wisconsin REALTORS® Association, the National Association of Industrial and Office Properties, the Wisconsin Chapter, and the Wisconsin Manufacturers and Commerce.

¶ 1 ANN WALSH BRADLEY, J

Preserving an open government and promoting economic development represent two defining principles which we value as a people and strive to accomplish as a state. This case represents the intersection of these two principles.

¶ 2 The legislature has declared that we are dedicated to preserving an open and transparent government. "[I]t is declared to be the policy of this state that the public is entitled to the fullest and most complete information regarding the affairs of government as is compatible with the conduct of governmental business."¹ Additionally, the legislature has declared that we are committed to promoting economic development. We must "foster the growth and diversification of the economy of the state"² so that Wisconsin is "an attractive place to live and work...."³

¶ 3 We are presented with the question of whether the Beaver Dam Area Development Corporation (BDADC) is a "quasi-governmental corporation" which is subject to Wisconsin's open meetings and public records laws. In addressing the question, we must interpret provisions of the state's open meetings and public records statutes and apply those provisions so that the legislative directives can be fulfilled and the two principles may best coexist.

¶ 4 On one hand we cannot countenance a government body circumventing the legislative directive for an open and transparent government by paying an entity to perform a governmental function. On the other hand, we have to be cognizant of the realities of economic development and the need, at times, for flexibility and confidentiality.

¶ 5 This opinion should not be read as disfavoring the desire to engage in economic development without being subject to open meetings and public records law. Indeed many private entities operate throughout this state without being subject to those laws and successfully promote economic development to the benefit of us all.

¶ 6 Likewise, there are many governmental economic development corporations that have for years operated successfully while being subject to the open meetings and public records laws. We take no position as to what is the best structure for the enhancement of economic development in a particular area.

¶ 7 Rather, this opinion should be read as setting forth the circumstances when an entity so resembles a governmental corporation, that it is treated as a quasi-governmental corporation for purposes of open meetings and public records laws. If an entity does not want to be subject to the open meetings and public records laws, then it should change the circumstances under which it operates.

¶ 8 Each case has to be decided on the particular facts presented. We must examine the totality of circumstances. There is no one factor which is outcome determinative. Today we set forth some of the factors to be examined in determining what constitutes a "quasi-governmental corporation" subject to open meetings and public records laws.

¶ 9 We determine that an entity is a quasi-governmental corporation within the meaning of Wis. Stat. §§ 19.82(1) and 19.32(1) if, based on the totality of circumstances, it resembles a governmental corporation in function, effect, or status. Such a determination requires a case-by-case analysis. Considering the facts of this case we conclude that BDADC is a quasi-governmental corporation subject to open meetings and public records laws.

¶ 10 A primary consideration in reaching our conclusion is that BDADC is funded exclusively by public tax dollars or interest on those tax dollars. Additionally, we consider that at the time the complaint was filed, its office was located in the City of Beaver Dam ("City") municipal building and it was listed on the City website, with a web address of http://www.cityofbeaver dam.com/EconomicDept/index.cfm. The City provided BDADC with clerical support and all of its office supplies, including paper, pencils, and postage.

¶ 11 Under the terms of an agreement, all of BDADC's assets revert to the City if it ceased to exist. It is obligated to open its books for City inspection and it has to submit its annual management plan to the City. The mayor and another City official serve on its board of directors. BDADC has no clients other than the City. Its exclusive function is to promote economic development in and around the City, a function that prior to its creation had been performed by the City.

¶ 12 We apply our determination prospectively such that the defendants in the present case are not subject to forfeitures for past violations of the open meetings laws⁴ and we decline to void any actions taken at past meetings not open to the public. Accordingly, we reverse the circuit court and remand to the circuit court to address the remaining request for attorney fees and costs and to enter judgment consistent with this opinion.

I

¶ 13 This case is before the court on certification from the court of appeals pursuant to Wis. Stat. § 809.61 (2005-06). The plaintiff, State of Wisconsin, asserts that the circuit court erred in dismissing the State's complaint.⁵ The State seeks declaratory judgment that the Beaver Dam Area Development Corporation (BDADC) is a "quasi-governmental corporation" subject to Wisconsin's open meetings and public records laws. The complaint also seeks forfeitures against BDADC and individual defendants for violations of open meetings laws, and requests that we void action taken at past BDADC meetings and award attorney fees and costs. The case involves no specific requests for records.

¶ 14 The background facts of this case are not in dispute. The circuit court set forth most of these facts in its Findings of Fact, Conclusions of Law and Order for Judgment. We reference additional facts as necessary.

¶ 15 BDADC is a nonprofit corporation organized under Wisconsin law in January 1997. It was not created by any constitution, statute, or ordinance, and the City did not through any of its officers incorporate BDADC. The bylaws of BDADC state that its exclusive purpose is to engage in economic development and business retention within the corporate limits and lands that could become part of the corporate limits of the City.

¶ 16 The officers of BDADC are private individuals who are elected by the BDADC board of directors. Under BDADC bylaws, the president of the City's chamber of commerce is a non-voting member of the board of directors. The mayor of the City and chairperson of the City Community Development Committee serve on the BDADC board by virtue of their positions as City officials and not in their capacity as private citizens. The other ten members of the board of directors are private citizens.

¶ 17 When a director's term at BDADC ends, the board of directors elects a replacement. The City does not direct this process, except insofar as the mayor and chair of the City Community Development Committee serve as ex officio members of the board of directors.

¶ 18 Up to the time this litigation commenced, BDADC has had only one paid employee, the executive vice president, who is appointed by the BDADC board of directors. Trent Campbell served in this position from April 1997 to January 2005. Prior to BDADC's incorporation, the City had an economic development office, which Campbell directed. He left his job as director of the economic development office and became executive vice president of BDADC.

¶ 19 Until May 2005, BDADC's offices were in the City's municipal building, though it conducted no meetings in City facilities. From the time of BDADC's inception until the start of this litigation, the City included BDADC on the City's website at the web address of http://www. cityofbeaverdam.com/EconomicDept/index. cfm.

¶ 20 BDADC and the City entered into cooperation agreements in April 1997 and January 2004. The City agreed that it will provide BDADC with office space, clerical support, copy and fax machine use, telephone use, and postage. The agreements provided that City representatives may examine BDADC's accounting records and finances, and that the City may make funds available to BDADC for economic development.

¶ 21 Under the first cooperation agreement, the City agreed to pay BDADC an annual contribution and to allocate a large percentage of the proceeds from its room tax to BDADC. Under the second cooperation agreement, the City agreed to pay BDADC 90 percent of the City's room tax proceeds and no annual contribution. BDADC's income for the...