OFFICE OF THE DISTRICT ATTORNEY EIGHTEENTH JUDICIAL DISTRICT OF KANSAS

NOLA TEDESCO FOULSTON District Attorney

at the SEDGWICK COUNTY JUVENILE COMPLEX 1900 E MORRIS

WICHITA, KANSAS 67211

Consumer Fraud & Economic Crime Division (316) 660-3700 FAX: 660-1865

SHARON A. WERNER

Chief Attorney, Consumer Fraud

January 25, 2011

Bob Weeks

2451 Regency Lakes Ct. http://kansasmarathon.com/ Wichita, KS 67226

Re: KORA complaint regarding Wichita Downtown Development Corporation

Dear Mr. Weeks:

I. Purpose of this Letter:

Your letter dated December 17,2009, addressed to the District Attorney, Nola Foulston, regarding your Kansas Open Records request for records to the Wichita Downtown Development Corporation ("WDDC"), was referred to me for a response.

II. Summary:

Upon review of your request, of WDDC's response, and of the law, I have concluded that WDDC did not violate the Kansas Open Records Act ("KORA") because it is not a "public agency" as defined by K.S.A. 45-217 (f) (1) and (2).

As discussed below, while the WDDC may have some of the earmarks discussed in cases that conclude an entity is a public agency for the purposes of KORA or KOMA, on balance, the vast majority of the facts establish that WDDC is an independent agency and is not subject to governmental control. While a majority of the funds received by WDDC are ultimately derived from a property tax levied on a self supporting municipal improvement district, this is not necessarily controlling as WDDC provides a service in return for the funds received. Further, the services WDDC provides are not necessarily as traditional governmental services as it has no authority to make governmental decisions and/or to act for the government. Pursuant to written agreement, WODC collects information, makes recommendations and renders advice, all of which are not traditional government functions.

!WeeksIWDDC 112512011 Page 2 of 10

III. Your KORA Request:

You requested the following records of WDDC by letter dated November 6,2009:

1. "The employment contract, with revisions or changes, for your organization's president or chief executive."

2. "The registers for all checking accounts now owned or owned in the past by your organization from January 1, 2008 to the most recently available date. I would expect that the information provided to me would include check number, date, payee, and check amount, at a minimum."

You state in your complaint that "each organization declined to fulfill my request, not on the basis of the records I requested, but on the basis that the organizations believe they are not subject to the Kansas Open Records Act."

You set forth your belief that WDDC is subject to KORA alleging that:

• WDDC is supported by public funds;

• WDDC's entire source of revenue is a self supporting municipal improvement district created by the City, which in turn is derived from a mill levy imposed upon the specific downtown development geographical area;

• "This year" WDDC raised some private funds, about one sixth its annual budget;

• The relationship between the City and WDCC is not merely one of customer and vendor as WDCC performs a governmental function that some cities decide to keep in house;

• WDDC's "only customer" is the City of Wichita;

• The stated public policy of KORA is it is to be construed liberally.

Upon receipt of your complaint, we forwarded it to the WDCC for a response. Attorney Harvey Sorenson provided a response on behalf of his client, WDDC. A copy of that response is attached.

IV. Factual Material Reviewed:

In reaching this determination, I reviewed the following:

1. City Ordnance No. 44-895 (published March 24, 2001);

2. Ordinance 47-854 (published March 21,2008 amending Ordinance 44-895);

3. "Agreement Between The City of Wichita, Kansas and Wichita Downtown Development Corporation" dated April 2, 2002 (hereinafter "Agreement");

4. "Downtown Wichita Self Supported Municipal Improvement District Annual Report, Fiscal Year 2008";

5. "Downtown Wichita Self Supported Municipal Improvement District Proposed

• WeekSJWDDC 112512011 Page 3 of 10

Fiscal Year 2010 Annual Budget";

6. Information provided on WDDC's website: www.downtownwichita.org;

7. Letter provided by attorney Harvey Sorensen for and on behalf of the WODC;

8. Specific budget information provided by Mr. Sorenson in response to our request regarding 2009 budget;

9. The Kansas Secretary of State website: www.kssos.org/business/business.html; and

10. Kansas Statutes Annotated 12-1794 et seq. and 45-215 et seq.

V. Factors Considered In This Case:

Pertinent to this determination is K.S.A. 45-217 and three Attorney General Opinions, Nos. 04-341, 94-93, and 94-99, copies of which are also enclosed. The two 1994 opinions deal exclusively with the Kansas Open Meetings Act ("KOMA"), but are useful because KOMA analyses parallel a KORA analysis. Using these guidelines, the factors to determine the application of the general KORA provisions are: (1) the extent of public funding, (2) whether there is a specific service provided for the funds, (3) whether the entity was created by a governmental entity or statute, and (4) whether it is providing a traditionally government service. (Attorney General Opinion No. 04-34.)

a. Facts Specific as to whether WDDC was created by a governmental entity or statute:

1. WDDC was not created by a statute or ordinance but rather was formed and organized by members of the downtown business community to promote business in downtown.

2. WDCC was incorporated under the law of Kansas in 2001 and is in good standing.

3. Membership in the WDDC is open to any interested citizen who lives, works or owns property or a business downtown.

4. WDDC is an independent body and not subordinate to another governmental body. (See Attorney General Opinion No. 94-99).

1 In Kansas Attorney General Opinion No. 04-34, the Attorney General opined that a 501(c) corporation called Sheltered Living, Inc., was not subject to the Kansas Open Meeting Act nor to the Kansas Open Records Act. Sheltered Living Inc was a not for profit corporation, not created by a governmental entity or by specific legislation, and it's by-laws stated that it would operate at all times as a nonprofit, nonpolitical sectarian organization. The board of directors managed the affairs of the corporation and no governmental entity had any role in the selection of the directors. The majority of funding came from federal or state sources, with 87% provided by or through some governmental entity or involvement with a governmental program. Of that 87%, 75% of the funds were obtained through services contracts with various public agencies.

• WeeksIWDDC 1125/2011 Page 4 of 10

5. WDDC Articles of lncorporatlorr' state:

This Corporation is organized as a not-for-profit corporation, and the purposes of this Corporation are to conduct the following activities in a manner which is exempt from tax under Section 501 (c) (3) of the Internal Revenue Code of 1985, as amended ("Code"):

a. Perform and assist in performing, the functions of the City of Wichita, Kansas and the Downtown Wichita Self Supported Municipal Improvement District;

b. Develop, promote, and provide supplemental services and

improvements which will make Downtown Wichita, Kansas more attractive and vital; and

c. Promote such other charitable and educational endeavors as may be permitted under Section 501 (c) (3) Of the Code.

6. WDDC's Board of Directors manages the affairs of the corporation. WDDC's original Board of Directors was elected by the incorporators and subsequent boards have been elected by the voting members of the corporation. In particular, no governmental. entity has any role in the selection or election of WDDC's directors.

7. The WDDC Board consists of 25 voting members plus 7 ex-officio members.

The ex officio members have no legal standing to be present, no right to vote, no right to speak and can be removed at any time. The Board also includes the 7-9 SSMID members but not the 2 potential ex-officio members. The WDDC includes the SSMID members as a matter of convenience, but has no obligation to include the SSMID members on its board. The SSMID advisory members in 2009 were all private citizens/business owners/property owners:

Joe Johnson, Mary Wright, John Belford, Alan Banta, Bill Livingston, Gary Schmidt and Larry Weber.

b. Facts specific as to the extent ofWDDC's public funding:

1. WDDC's total revenue consists of reimbursements, private contributions and/or investments, and contract revenue. The contract revenue comes from its written contractual agreement with the City of Wichita.

2 The corporate documents provide a factual basis to discern whether KORA applies. Attorney General Opinion No. 04-34 regarding Sheltered Living, Inc. noted:

The Corporation's by-laws state that it 'shall at all times operate as a nonprofit, nonpolitical, sectarian organization.' The board of directors manages the affairs of the corporation. The original board of directors was elected by the incorporators, and subsequent boards have been elected by the voting members of the corporation, which is made up of the directors. No governmental entity has any role in the selection or election of directors. There are currently no public officials who sit on this corporation's board of directors, and we have been informed that this has always been the case.

·WeekSJWDDC 112512011 Page 5 of 10

2. WDCC receives no government grant/levy funds directly. It only receives contractual payments from the City of Wichita pursuant to an openly negotiated contract (the "Agreement"). The original source of these funds is a mill levy, but the funds are transferred to WDDC only as per the contract.

3. All revenue raised as a result of the tax levy by the City on real property within the Self Supporting Municipal Improvement District (the "SSMID") is the subject of an "Agreement" between the City and WDDC dated April 2, 2002.

4. The total revenue for WDDC for 2009 was $765,311.00 consisting of $637.487 from property assessment; $93,150 in contributions; $4,798 in interest; $29,876 in reimbursed income. Thus, in 2009 the City's tax levy on real property within the SSMID represents 83.3% of WDDC's total revenue. This appropriation was paid to WDDC for consulting services rendered to SSMID as per the Agreement between the City and WDDC.

5. Pursuant to the Agreement between WDCC and the City, WDDC establishes and maintains records with respect to matters covered by the Agreement between the WDDC and the City. The WDDC does submit periodic reports, at such times and in such form as requested from time to time by the SSMID Advisory Board and the City Council concerning tasks undertaken and completed. Pursuant to the Agreement, the WDDC agrees to establish accounting procedures and conduct an annual audit of all funds subject to the reasonable approval of the City. WDDC also agrees to make available to the City for examination of all its records and data with respect to all matters covered by the Agreement and to permit the City or its designated representative to audit and inspect all invoices and materials, etc. which are related to matters covered by the Agreement.

6. The City, with or without cause, has authority to terminate the Agreement, but not until the City Council repeals Section 12 of Ordinance No. 44-895.

c. Facts specific as to whether a specific service is provided by WDDC for the funds:

1. WDCC contracts with the City to provide consulting services in the form of economic development and downtown promotion. It further provides marketing services to the SSMID and to the Advisory Board of the SSMID in return for payments from the City, all as set forth in the Agreement.

2. WDDC's duties and services as a consultant to the SSMID and its Advisory Board are also set forth in Section 12 of Ordinance 44-895:

• WeeksllNOOC 112512011 Page 6 of 10

... to provide feasibility reports, to assist in the determination of the improvements or services proposed, together with preliminary cost estimates, and to assist the governing body in obtaining the preparation of plans and specifications, estimates of cost of improvements or services, and ... to manage the delivery of services and employment of any personnel. The cost of all such consulting and management services is assessed against the SSMID and included within the budget limitations set forth in the Ordinance.

3. Based on the SSMID's Advisory Board's recommendation, the City annually negotiates with WDDC to establish a budget for the scope of services to be provided for WDDC pursuant to an umbrella 10 year contract. Each year the City amends the "scope of work" portion of the WDDC contract to provide for current year scope of work and negotiated budget.

4. WDDC's activities are divided into 3 categories: business retention and development (50%), urban vitality (10%) and image and marketing (40%). These categories and percentage totals mirror those of the SSMID's operating budget.

5. The decision as to how WDDC's funds (received from the City for consulting services) are expended is made exclusively by the WDDC's board and staff.

6. Pursuant to the Agreement, the WDDC warrants that, for the duration of the Agreement, it does or will employ or retain professionals capable of providing the services required under the Agreement. In order to carry out its contractual consulting duties, the WDDC has 4 paid staff members. In addition, there are volunteers for various projects and events and if expertise is required and it is more efficient to hire an outside expert on a specific aspect of a particular project, WDDC does so.

d. Facts specific as to whether WDDC is providing a traditional governmental service:

1. To accomplish its economic development activities, the WDDC receives confidential and proprietary information for evaluation and comment and is privy to non-public information. Routinely the WDDC enters into confidentiality agreements in connection with the receipt of this information.

2. The WDDC does not determine for the City or for the SSMID what course of action the WDDC should pursue nor are any of WDDC's actions binding upon elected officials (See Memorial Hospital Assoc., Inc. v Knutson et al. 239, Kan. 663 (1986)).

• WeeksIWDDC 1125/2011 Page 7 of 10

3. WDDC does not have authority to make governmental decisions or act for the City. See Attorney General Opinion No. 94-93 ("The group has no authority to make governmental decisions to bind any state office or official . . . ") The Agreement between WDDC and the City specifically provides that:

This Agreement contains no authorization for Corporation [WDDC] to sign any papers or documents in the name of the City or SSMID. Further, WDDC has no authority to contract or incur any liability, cost or expense on the part of the City or SSMID, except as may be specifically authorized by the Agreement and in accordance with K.S.A. 12-17,101a.

VI. Legal Analysis:

You correctly recite that an entity is not included under KORA solely because it receives public funds in exchange for good or services. See K.S.A. 45-217 (e) (2) (A). That being said, KORA can apply to a not-for-profit corporation under certain circumstances. The outcome is entirely dependent upon the facts surrounding the specific corporation's creation, powers, and funding. (Attorney General Opinion No. 04-34). Most private not-for-profit entities are not subject to KORA. Where public funding is the only link and there is a lack of significant government control or ties, then the not-for-profit corporations have been found to not fall under KORA. See K.S.A. 45-217(f)(2)(A)(,,'Public agency' shall not include: (A) Any entity solely by reason of payment from public funds for property, goods or services of such entity ... ) and Attorney General Opinion No. 04-34 ("However, as with the KOMA, not-for-profit corporations have also been found to not fall under the KORA where public funding is the only link and there is a lack of significant governmental control or ties.")(Footnote omitted).

The legal analysis is contingent upon the factual core of each of the four areas described in the preceding section.

Focusing upon the first factor (whether WDDC was created by a government entity or statute) we conclude that (1) the WDDC was not created by a governmental entity nor is it controlled by a governmental entity, and that (2) the WDDC was not created by statute. To reach this conclusion, we note that the WDDC's Board of Directors manages the direct affairs of the corporation and no governmental entity has any direct role in the selection of the directors. In 2009, 83.3% of its total revenue was the result of its contract with the City to provide consulting services to the Self Supporting Municipal Improvement District (SSMID).

• WeekslWDDC 1125/2011 Page 8 of 10

Our analysis of this factor acknowledges the role played by the SSMID, which was created by the City under the provision of the Self Supported Municipal Improvements District Act, K.S.A. 12-1794etseq. Specifically, K.S.A.12-17,102 (a) provides in part:

If the governing body of the city establishes a self-supported municipal improvement district under the provisions of this act it may provide by ordinance for an advisory board for such district, the members of which shall be representative of businesses located within the district. The board shall perform such duties as may be prescribed by ordinance .... (b) The governing body of the district may levy taxes annually within the district to carry out the purposes of such district. ..

The City enacted Ordinance 44-895 consistent with that statute and the ordinance provides that the "[tjhe governing body, subject to compliance with the procedures of K.S.A. 12-17,101 a, as may required appoints the Wichita Downtown Development Corporation or its successors as a consultant to the district [SSMID] and to the Advisory board."

This statutory framework affects the legal analysis under the third factor as prescribed by Attorney General Opinion No. 04-34, which is a factual inquiry as to whether a specific service is provided by WDDC for the public funds. Kansas Statutes Annotated 17,101 a provides that:

Upon the adoption of the ordinance establishing a district, the governing body of the city shall be the governing body of the district. The district shall be a body corporate and politic and shall be vested with all the power and authority necessary to effectuate the purposes of this act. Officers of the city shall be the officers of the district where appropriate and shall have duties as provided by law and direct by the governing body of the district.

As to the second factor--whether a specific service is provided for in exchange for the funds--the "Agreement" between the City and the WDDC sets forth that the WDDC "shall perform the duties and services established in Section 12 of the Ordinance" [referring to Ordinance No. 44-895, effective March 24, 2001]. The Agreement sets forth the services WDDC is contractually required to perform in exchange for payment. The payment is made pursuant to this agreement and the municipal revenues are not directly turned over to WDDC. Thus, there is a specific service provided for pursuant to a contractual arrangement by and between the City of Wichita and WDDC.

Fourth, we examine the facts presented as they relate to whether WDDC is providing a traditional government service. The Agreement specifically sets forth that WDDC has no authority to contract or incur any liability, cost or expense on the part of the City or SSMID except as specifically authorized by Agreement and in accordance with KSA 12-17,101 a. The Wichita Downtown Development Corporation has no governmental decision-making authority to expend public funds Further,WDDC does not have the authority to make governmental

~ WeekSIWDDC 112512011 Page 90f10

decisions or act for the City; it only collects information, makes recommendations and/or renders advice. See Attorney General Opinion No. 94-99 (Attorney General referred to one criteria to determine whether KaMA applies is "[I]f the agency has the authority to make governmental decisions and act for the state, it is covered by an open meetings law. If it only collects information, makes recommendations or renders advice, it is not.")(citing McLarty v. Board of Regents, 231 Ga. 22, 200 S.E. 2d 117, 119 (1973».

We also address your concern as to the extent of the public funding provided to WDDC.

Even though a majority of its budget (in 2009, 83% of its budget) based upon funds derived from a property tax levied by the SSMID. Such funds are not directly turned over to the WDDC. Instead, the WDDC provides specific consulting services in exchange payment of the funds. Moreover, despite WDDC's receipt of public funds, it is not a public agency as it has no authority to make governmental decisions and act for the state; it has no authority to levy any tax but only collects information and renders advice.

VII. Conclusion:

In conclusion, WDDC is an independent body, not created or given authority by statute, and it is not subordinate to another governmental body and does not provide a traditional governmental function. Accordingly, the only applicable KORA statute is K.S.A. 45-240.

Pursuant to K.S.A. 45-240, each not for profit entity which receives public funds in an aggregated amount of $350 or more per year, shall, upon request, make available to any requester a copy of documentation of the receipt and expenditure of such public funds received by such not for profit entity. Pursuant to K.S.A. 45-240 (b) (1), if the not for profit entity that receives public funds is required by law or the terms of the contract to file a written financial report which includes its receipt and expenditure of the same, with an agency of the United States, or of this state or any political or taxing subdivision thereof, the not for profit is deemed to have fulfilled the requirements of K.S.A. 45-240 (b) (1) upon the filing of the same. To the extent your letter dated November 6, 2009 directed to WDDC requesting a copy of 'The register for all checking accounts now owned or owned in the past by your organization from January 1, 2008 to the most recently available date" can be interpreted as a request for a copy of the documentation of WDDC's receipt and expenditure of public funds, I asked Mr. Sorensen to provide a copy of Form 990. A copy is enclosed.

• WeekstWDDC 112512011 Page 10 of 10

If you have any other additional information you wish to be considered, please submit the same within 7 days of the date of this letter. Absent further information, this letter will conclude this investigation. Thank you for the opportunity to review this matter.

R~gprds,"/!

L//~:~£(?J ~

Chief Attorney

Office of the District Attorney, Sedgwick County

Consumer Fraud & Economic Crime Division 316.660.3655

cc. Harvey Sorensen

Enclosures: Letter dated January 12, 2010 from Attorney Sorensen to Sharon Werner Attorney General Opinions: 1994-93; 1994-99; 2004-34

WDDC's Form 990

'" .-

FOULSTONlDslEFKIN

LLP

Bank of America Tower, Suite 1400 534 South Kansas Ave.

Topeka, Kansas 66603-3436 785.233.3600

Fax 785.233.1610

ATTORNEYS AT LAW

9 Corporate Woods, Suite 450 9200 Indian Creek Parkway Overland Park, Kansas 66210-2017 913.498.2100

co· A913.498 .. 2101

~g, Advl.o.y

Group ernat!onal

MEMBER

LEX MUNDt:THE WORLD'S LEADING ASSOCIATION OF Ir~DEPENDENT LAW FIRMs

1551 N. Waterfront Parkway, Suite 100 Wichita, Kansas 67206-4466 316.267.6371

Fax 316.267.6345 www.foulston.com

WICHITA

MIKEL L. STOUT STANLEY G. ANDEEL DARRELL L. WARTA HARVEY R. SORENSEN JAMES M. ARMSTRONG CHARLES P. EFFLANDT GARY L. AYERS

LARRY G. RAPP

JAY F. FOWLER sTEPHEN M. KERWICK CHRISTOPHER M. HURST TERRY C_ CUPPS

WYATT M. WRIGHT

JIM H. GOERING WYATIA.HOCH

AMY S. LEMLEY

DOUGLAS L. HANISCH DOUGLAS L. STANLEY TIMOTHY B. MUSTAINE JEFFERY A. JORDAN TRISHA A. THELEN WILLIAM R. WOOD II KEVIN J. ARNEL

CRAIG W. WEST

ERIC K. KUHN

JAY M. RECTOR STEWARTT.WEAVER MARKA.81BERSTEIN BOYD A_ SYERS

DAVID E. ROGERS TODD N. TEDESCO HOll Y A. DYER

T ~OTHY P. O'SULLIVAN DONALD D. BERNER WILLIAM P. MATTHEWS SHANNON D. WEAo KARL N. HESSE MICHAEL J. NORTON SCOTT C. PALECKI

PATRICIA VOTH BLANKENSHIP CAROLYN L. MATTHEWS ANDREW J. NOLAN

FORREST T. RHODES, JR JASON P. LACEY

KYLE J. STEADMAN

BROOKE BENNETT AZIERE ANDREW P. THENGVALL

C. EQINARDWATSON, II

CHRISTOPHER L. ARELLANO FRANCIS BAALMANN SHANNON L. BELL MATTHEWW. BISH

AUCIA E. BOOECKER CHARLES R. CURRAN CHRISTINE A. LOUIS CHARLEs MCCLELLAN BRADLEy C. MIRAKIAN MINDY J. OLSON

ERIC M. PAULY

BRADLEY D. SERAFINE JUSTAN R. SHINKLE

TERESA L. SHULDA

F. ROBERT SMITH

OF COUNSEL CHARLES J. WOODIN

OVERLAND PARK JAMES D. OLIVER

R. DOUGLAS REAGAN VAUGHN BURKHOLDER WYATT M. WRIGHT WiLLIAM P. TRENKLE, JR. SAMUEL P. LOGAN

SCOTT C. NEHRBASS WENDELL F_ (BUD) COWA.N lSSAKU YAMAASHI

TOPEKA JAMES P. RANKIN THOMAS L. THEIS CHARLES R. HAY

SPECIAL COUNSEL OAVID M. TRASTER

A. JACK FOCHT GORDON G. KIRSTEN, II JEFFREY B. HURT

JEREMY l. GRABER JOHNATHAN A. RHODES

MARTA. FISHER LINENBERGER

TARA S. EBERlINE JOSHUA T. HILL

MATTHEW D. STROMBERG

RETIRED

JOHN C. PECK TOBY CROUSE CYDNEY D. BOLER

MARY KATHLEEN BABCOCK WfLlIAM H. Dye

RICHARD D. EWY

PHILLIP S. FRICK FREDERICKl. HAAG RICHARD C. HARRIS ROBERT L. HOWARD

JAMES K. LOGAN

GERALD SAWATZKi

January 12, 2010

Ms. Sharon A. Werner, Chief Attorney Office of the District Attorney

1900 East Morris

Wichita, Kansas 67211

R£CEiV'ED District Attorney 18th Judicial Di8txid

Re:

Wichita Downtown Development Corporation

Consumer Fraud Division

.~ l1f2_-,--.----.

Dear Sharon:

Our law firm represents the Wichita Downtown Development Corporation ("WDDC"), a not-for-profit 501(c)(3) organization. On its behalf, thank you for the opportunity to respond to the demand from Mr. Bob Weeks regarding the application of the Kansas Open Records Act to the WDDC. For the reasons set forth below, we do not believe the WDDC is subject to the general provisions of KORA. We believe that the WDDC is in full compliance with K.S.A. § 45-240 and Mr. Weeks' demand should be dismissed.

BACKGROUND.

The organization of the WDDC is fairly straightforward but its relationship with the City of Wichita is more complex than usual and may have led to some confusion on Mr. Weeks' part. The WDDC is a private not-for-profit organization formed and organized by members of the downtown business community to promote businesses in downtown and to advance economic development of downtown Wichita. The WDDC was incorporated under the laws of Kansas on April 12, 2001. A list of the board of directors is attached and a description of the organization's activities is available on its website at www.downtownwichita.org. All board members are private citizens, although some City and County staff and elected officials are invited to serve as ex officio members. WDDC membership is open to any interested citizen who lives, works, or owns property or a business downtown. The WDDC conducts an extensive list of

January 12,2010

Ms. Sharon A. Werner Page 2

programs for enhancing downtown living; marketing downtown as a place to live, work and eat; and economic development projects to improve downtown business.

In 2001, the City of Wichita formed the Wichita Downtown Self-Supporting Municipal Improvement District ("SSMID") in response to a petition for its formation, signed by approximately 65% of the downtown property owners and representing nearly 70% of the property assessed valuation. A copy of the SSMID ordinance is attached. The City of Wichita imposes a tax levy on real property within the SSMID boundaries which the SSMID uses for downtown development projects. The activities of the SSMID and the City of Wichita are all conducted in public and their records are available for review from the City of Wichita.

CONSULTING.

One of the actions of the City of Wichita and the SSMID is to contract with the WDDC to provide certain consulting services to the City of Wichita and the SSMID. Annually the City of Wichita, based on the recommendation of the members of the SSMID advisory board and in negotiation with the WDDC, establishes a budget for the scope of services to be provided for WDDC pursuant to the existing 10-year contract. The contract itself, copy attached, was approved by the City of Wichita in an open meeting. Annually, the City of Wichita, in public at an open meeting, amends the "scope of work" portion of the WDDC contract to provide for the current year scope of work and negotiated budget. Annually the WDDC reports on its contract compliance and expenditures to its stakeholders, the SSMID and the City of Wichita, complying with K.S.A. § 45-240.

Activities of the WDDC generally are divided into three categories: Business retention and development (50%), urban vitality (10%), and image and marketing (40%). The proposed 2010 annual budget including the scope of work is attached. The decision as to how the funds are expended is made exclusively by the WDDC board and staff. A full report of these expenditures is made annually.

To accomplish its economic development activities, the WDDC receives confidential and proprietary information for evaluation and comment and is privy to nonpublic information. Routinely, the WDDC enters into confidentiality agreements in connection with the receipt of this information.

As you may be aware, when determining whether KORA applies to a private nonprofit organization like the WDDC, the Kansas Attorney General's office considers several factors such as:

January 12,2010

Ms. Sharon A. Werner Page 3

• The extent of public funding (WDDC receives reimbursements, private contributions/investments, and contract revenue from the City of Wichita);

• Whether a specific service is provided in return for the public funds (WDDC provides economic development and downtown promotion and marketing services in return for the payments by the City of Wichita. The nature of the services is contractually agreed, the manner performed is solely within the discretion of the WDDC);

• Whether the entity was created by a governmental entity or statute (WDDC was created by private persons and not pursuant to a statute), and

• Whether the entity provides a traditional governmental service (economic development, image and marketing, and promotion services like those provided by WDDC are traditionally provided by private organizations such as merchant associations, business improvement districts, or other community advancement organizations).

When these factors are considered, especially in light of the overarching consideration that WDDC was neither created by nor is it controlled by governmental bodies, the general provisions of KORA applicable to public agencies clearly should not apply to WDDC. Instead, only the limited provisions of K.S.A. § 45-240 which apply to private non-profit organizations should apply to WDDC. WDDC is in full compliance with K.S.A. § 45-240.

A recent example involving the application of these factors can be found in Kansas Attorney General Opinion 2004-34, in which the Attorney General concluded that KORA did not apply to an organization that received nearly 90% of its funding from governmental sources. Opinion 2004-34 involved a private non-profit social services organization that received substantially all of its funding from public sources in the course of providing living services for special populations (an activity which is highly regulated by SRS).

In Opinion 2004-34, as is the case with WDDC, the organization's programs, policies, and budget were developed and administered by the organization and not by public bodies. Noting that most private entities are not subject to KORA, and concluding that the organization at issue was likewise not subject to KORA even though it received 10% of its funding from governmental grants/levies (WDDC receives no government grant/levy funds, only contract payments) and the balance of its very substantial governmental funding for services, the Attorney General focused on the fact that the

January 12,2010

Ms. Sharon A. Werner Page 4

organization was not created or controlled by a governmental entity. Also, the Attorney General noted that the organization provided services "that may be provided by the private sector as well as by a governmental entity."

I trust the foregoing explanation is helpful and responsive to your request. We respectfully request your concurrence that WDDC is not subject to the general provisions

of KORA and is complying with the limited provisions of KO which apply to WDDC

as a private non-profit corporation. Of course, if you have a questions or would like

additional information, please feel free to contact m

mlb

Exhibits: 1. 2. 3. 4. 5. 6.

List of WDDC Board of Directors

City of Wichita Ordinance establishing SSMID Agreement between City of Wichita and WDDC Kansas Attorney General's Opinion No. 2004-34 2008 Annual Report

Proposed 2010 Annual Budget

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