Court: Court of Appeals of Wisconsin; January 28, 2019; Wisconsin; State Appellate Court
Kemper Center, Inc. and Gary Vaillancourt appealed a summary judgment favoring Annette Flynn, representing the State of Wisconsin, in a case concerning the enforcement of Wisconsin's Public Records Law. The primary legal question was whether Kemper Center, Inc. qualifies as a "quasi-governmental corporation" and thus an "authority" under Wisconsin law. The court determined, based on undisputed facts, that Kemper Center, Inc. does not meet this definition, leading to the reversal of the circuit court's judgment and a directive to dismiss the complaint.
Kemper Center, Inc., established in 1975 by former students of the now-closed Kemper Hall, aimed to fund the acquisition and upkeep of the former school property for public benefit. After an unsuccessful referendum for the City of Kenosha to purchase the property, Kenosha County acquired it in 1977, funded partially by Kemper Center, Inc. The County executed a 25-year lease with Kemper Center, Inc. on the same day, allowing it to use the property for cultural and recreational purposes in exchange for a nominal annual rent of one dollar. The lease, renewed in 1998, granted Kemper Center, Inc. the right to retain income generated at the site while also obligating it to cover operational and maintenance costs.
Kemper Center, Inc. was designated a tax-exempt charitable organization in 1976. The property has been recognized for its historical significance, being added to national and state registers of historic places. A management agreement with the Kenosha County Park Commission in 1982 provided funding for maintenance, though it has not been renewed, and the County has continued to make annual grants to Kemper Center, Inc., totaling nearly $3 million since 1978.
In November 2016, Annette Flynn requested records from Kemper Center, Inc. under the Public Records Law, seeking documents related to its formation, tax-exempt status, employee records, meeting minutes, events at Kemper Park in 2016, and the status of Victoria's Catering as its preferred caterer. Kemper Center denied the request, claiming it was not a "quasi-governmental corporation" subject to the law. Flynn subsequently filed a lawsuit asserting that Kemper Center was indeed subject to the Public Records Law and had unlawfully withheld the records. She sought declaratory and mandamus relief, alongside damages and attorney fees.
The parties engaged in cross-motions for summary judgment, leading the circuit court to grant summary judgment in favor of Flynn, ruling that Kemper Center was a quasi-governmental corporation subject to the Public Records Law. Kemper Center appealed this decision. The appeal focuses on whether Kemper Center qualifies as a "quasi-governmental corporation" under the law, which aims to enhance transparency regarding government affairs. The determination involves statutory interpretation, which is reviewed de novo, using the common and ordinary meanings of the statutory language.
The term "quasi-governmental corporation" lacks a definition in the Public Records Law, but a 2008 supreme court ruling established criteria for classifying an entity as such, based on its resemblance to a governmental corporation regarding function, effect, or status. Each case must be evaluated on its specific facts, considering a nonexhaustive list of factors, none of which is solely determinative. The five key factors identified are: 1) source of funding (public vs. private); 2) public function served; 3) public perception as a government entity; 4) degree of government control; and 5) access by governmental bodies to the entity's records.
In the analysis of funding, it was deemed crucial that the economic development corporation in question was primarily funded by public tax dollars, supported by cooperative agreements with the City of Beaver Dam. This included annual contributions and government-provided office space and clerical support, indicating a strong reliance on public resources.
The case of Kemper Center, Inc. presents a dispute regarding its classification as a quasi-governmental corporation based on funding. Kemper Center claims only direct County contributions should be considered public funding, while Flynn argues that indirect contributions through programming and rentals should also count. The court rejects Flynn's position, noting that while Kemper Center has received County donations since 1978, these contributions have not been mandated. The County has consistently contributed substantial amounts annually since 1982, with a recent earmarked contribution of at least $100,000 for operations since 2004, alongside additional funding for capital improvements.
A memorandum of understanding from a 1998 restoration project outlines the agreement between the County and Kemper Center, Inc. to make the Kemper Center self-sustaining by funding its operational and maintenance costs through rentals and user fees, with a gradual phase-out of County subsidies. Despite this agreement, it is undisputed that Kemper Center, Inc. has not achieved self-sufficiency. Between 2006 and 2016, County contributions accounted for less than 20% of Kemper Center, Inc.'s total income annually, with specific figures highlighting that in 2008, County contributions represented approximately 23% of total revenue, and similar percentages were observed in subsequent years. Flynn contends that revenue generated from the leasehold interest of Kemper Park should be considered indirect County funding, estimating that this would elevate the County's contribution to between 65% and 87% of total revenue. However, it is clarified that as a tenant, Kemper Center, Inc. retains its revenue without the County having a claim unless stated in the lease, negating Flynn's assertion. The legal precedent cited reinforces that a lessee's revenue generation does not automatically equate to landlord contributions.
Flynn's argument hinges on the assumption that if Kemper Center, Inc. vacates the premises, the County would be obligated to take over its operations, which is unsupported by logic, law, or evidence. As the property owner, the County has the right to use the property as it sees fit upon lease termination, including the option to close Kemper Park. Flynn has not provided evidence that the County has any obligation to operate Kemper Park after Kemper Center, Inc.'s tenancy ends. This lack of foundational support undermines Flynn's claims regarding hypothetical obligations for the County.
Additionally, Flynn's claim that the revenues generated by Kemper Center, Inc. effectively belong to the County overlooks the historical context of the County's acquisition of Kemper Park. The land was privately owned prior to 1977 and was obtained by the County through grassroots efforts without public funds. While the County has invested significantly in improving the property, these funds are managed by the County, not Kemper Center, Inc., which is responsible for its operational costs as per the lease. Although Kemper Center, Inc. retains the revenue from its operations, it must use those funds primarily for maintaining the property and supporting its programs. Moreover, Kemper Center, Inc. has raised substantial funds from external sources for the park's maintenance, making Flynn's assertion that the County is subsidizing Kemper Center, Inc. untenable and failing to recognize the mutual benefits of their leasing arrangement.
Kemper Center, Inc. differs significantly from the economic development corporation in Beaver Dam regarding funding and asset management. Unlike Beaver Dam, Kemper Center, Inc. is not primarily taxpayer-funded; most of its revenue comes from leasing its property and fundraising. Although the County provides some funding, it is not obligated to do so and can withdraw support at any time. There are no substantial agreements involving public funds between the County and Kemper Center, nor is there any provision in the lease for taxpayer-funded resources.
Concerns raised by Flynn about the County's "reversionary" interest in the event of lease termination are exaggerated. The lease mandates that Kemper Center, Inc. maintain a trust fund with a minimum balance of $100,000, with income designated for the operation and maintenance of the premises. In the case of substantial non-compliance with the lease terms, Kemper Center has a sixty-day period to remedy the issue before the County can terminate the lease. If the lease is terminated, only funds designated for maintenance and operation are subject to transfer to the County, unlike the complete asset reversion seen in Beaver Dam. Upon dissolution, any remaining assets of Kemper Center, Inc. are to be distributed to other charitable organizations, reflecting a distinct difference in asset handling compared to the Beaver Dam case. The termination of the lease and surrendering of rights to the park are standard in landlord-tenant relationships.
The "source of funding" factor indicates that Kemper Center, Inc. does not qualify as a quasi-governmental entity, as the County's contributions constitute only a minority of its funding. The assertion that all revenue from Kemper Park should be viewed as County contributions is rejected, as is the claim regarding the County's "reversionary" interest in Kemper Center, Inc.'s funds under the lease. The funding structure of Kemper Center, Inc. aligns more closely with a private, nonprofit organization rather than a governmental body.
Regarding public function, Kemper Center, Inc. asserts that its activities—preserving Kemper Park, providing recreational and educational programs, and promoting local history and arts—do not constitute governmental functions despite offering public benefits. The organization argues that maintaining a cultural center in historic buildings is not inherently governmental and also serves private interests, particularly of the Kemper alumni who wished to preserve their alma mater. Kemper Center, Inc. compares itself to other nonprofits managing historical sites, referencing a prior legal opinion that determined a similar organization was not a quasi-governmental entity under Wisconsin law.
Flynn contends that Kemper Center, Inc. operates functions similar to those of publicly owned parks, noting that it offers services akin to private entities like golf courses and museums but argues these are traditional public functions. She claims Kemper Center, Inc. was established specifically to relieve the County of managing these functions at the park. However, the analysis indicates that the "public purpose" factor does not decisively indicate whether Kemper Center, Inc. is quasi-governmental, as its activities are not exclusively governmental; both public and private entities engage in preserving historical properties and providing recreational and educational opportunities. Furthermore, it is acknowledged that Kemper Center, Inc. independently manages its operations.
The excerpt references a prior court ruling involving an economic development corporation that was regarded as quasi-governmental due to its public perception, noting similarities in physical location and governance structure with the municipality. The circuit court's evaluation focused on the 2017 Activity Guide, which lists Kemper Center as a County park, but Flynn argues additional documents reinforce the public perception of Kemper Center, Inc. as a governmental entity. These include its identification on the County's official website, a description linking it to County parks, and planning documents that label it as a County-owned site and a cultural institution. These documents suggest that the County maintains Kemper Center and recognizes it as part of its recreational and cultural offerings.
Publicly available materials do not convincingly indicate that Kemper Center, Inc. is a governmental corporation. While documents accurately describe Kemper Center as a County-owned park, they fail to clarify that "Kemper Center" refers both to the park and to the nonprofit managing it under a lease. This dual naming diminishes any suggestion that the nonprofit operates as an arm of the County. The County’s provision of Kemper Center, Inc.'s contact information on its website further underscores their distinct identities, directing inquiries away from the County to the nonprofit.
Kemper Center, Inc. acknowledges an error in a planning document that incorrectly states the County "operates" the facilities at Kemper Park. However, this misstatement, found in a lengthy report not solely authored by the County, is deemed insufficient to legally classify Kemper Center, Inc. as a quasi-governmental entity based solely on public perception. In fact, the overall context indicates to the public that the two entities are separate, despite their affiliation with Kemper Park.
Flynn argues that the public might perceive Kemper Center, Inc. as synonymous with the government due to its inclusion in County ordinances governing parks. These ordinances grant the director of Kemper Center, Inc. specific authority over permit applications, including fee waivers and revocation of permits, and allow for the sale and consumption of alcohol at Kemper Center Park. However, the ordinances do not support the view that Kemper Center, Inc. is a governmental corporation. The naming of "Kemper Center" in the ordinances does not substantiate Flynn's claim; instead, the ordinances suggest a clear distinction between Kemper Center, Inc. and the County, indicating that Kemper Center, Inc. is a tenant with some shared authority but not a part of the government or a quasi-governmental entity.
The degree of control the County has over Kemper Center, Inc. is contested, drawing parallels to the Beaver Dam case where the court found some level of city control due to the presence of city officials on the board of an economic development corporation. In this instance, one member from the Kenosha County Board of Supervisors has been on Kemper Center's board since 2010, and the director of Kenosha County Parks is part of a committee within Kemper Center. These factors suggest some level of County control, though the inference is weaker compared to Beaver Dam. Unlike Beaver Dam, where specific city officials were mandated to serve on the board, there is no evidence that the County-associated member on Kemper Center's board represents the County Board rather than acting as a private citizen. Additionally, the Kemper Center board consists of nineteen members, diluting any potential control. The parks director's role on a specific committee does not indicate broader County control, as it pertains to a distinct landlord-tenant relationship.
The lease between the County and Kemper Center further emphasizes this landlord-tenant dynamic. It designates the Kenosha County Highway and Park Committee as a liaison, obligates Kemper Center to meetings upon request, and allows the County access for inspections. The lease outlines permitted uses of the park and requires Kemper Center to maintain safety standards. Moreover, it allows Kemper Center to make minor repairs under specific conditions, but any significant changes require County consent, and any improvements made remain County property post-lease. Kemper Center has adhered to these terms, not undertaking structural alterations without County approval, even when funding sources were independent of the County.
Kemper Center, Inc. is solely responsible for the program development and daily operations of Kemper Park, with no evidence indicating that its approximately twenty employees or two hundred volunteers are under the County's control. The County does not direct Kemper Center, Inc.'s fundraising, management, or operational activities, despite a County official sitting on its board. The appellate record shows that the County's oversight is minimal, particularly concerning Kemper Center, Inc.'s principal functions.
Regarding government access to records, while the lease allows the County access to Kemper Center, Inc.'s records related to the property, it does not require the corporation to maintain specific documents. This access is limited to activities pertaining to the leased premises, but most of Kemper Center, Inc.'s records would likely still be available to the County.
Ultimately, Kemper Center, Inc. does not function as a governmental entity. It originated from the grassroots efforts of Kemper Hall alumnae and was not established by the County, which acquired the property through those fundraising efforts. The County's nominal rent lease in exchange for upkeep efforts does not categorize Kemper Center, Inc. as a public authority under the Public Records Law. Its revenue is not viewed as a County subsidy, and its functions do not distinctly align with either public or private sectors, indicating that it does not present itself as a County government arm, nor does the County exert significant control over it.
Kemper Center, Inc. is required to make its records available to the County, but the application of the Beaver Dam factors establishes that it is not a quasi-governmental corporation. Flynn's argument emphasizes that taxpayer funds should not be shielded from public scrutiny by being funneled through a private entity, but this view is deemed an overstatement. The County is recognized as an "authority" under the Public Records Law, allowing access to documents related to County expenditures, thus ensuring accountability through elected officials. Flynn has not provided legal grounds for asserting that receiving government payments automatically qualifies an entity as quasi-governmental. The core issue remains whether Kemper Center, Inc. fits this classification, and the public policy arguments do not address this legal question. Consequently, the court concludes that Kemper Center, Inc. was entitled to summary judgment, leading to the reversal of the judgment and remand for the dismissal of the complaint. The articles of incorporation outline its purposes, including fundraising for the City or County of Kenosha to support the maintenance and development of properties for public benefit. The lease associated with Kemper Center, initially executed in 1977 and renewed in 1992, allows the County to fund its maintenance and operational costs. Flynn's ownership of a catering business serving Kenosha County is noted, but this does not influence the legal analysis. The decision will remain stayed pending appeal.
Funding terms will be specified in a separate management agreement between Kemper Center, Inc. and the County. The County was required by a 1982 management agreement to make monthly contributions for property maintenance, which included salaries, utilities, and office expenses; however, this agreement was only in effect for one year, and no other agreements obligate the County to make payments before or after that year. In 2003, the County did not directly contribute to Kemper Center, Inc. but allocated $50,000 for capital projects at Kemper Park. Financial data from this excerpt, derived from Gary Groenke's affidavit and other records, reveals that while annual revenue figures vary slightly across documents, the total contributions from the County and Kemper Center, Inc.’s annual revenue are undisputed. Discrepancies in specific revenue amounts do not impede summary judgment, and the primary contention revolves around the characterization of these revenues. The County's capital improvement funds for Kemper Park are classified as contributions to Kemper Center, Inc., but are more accurately seen as maintenance expenditures for County property. The relationship between Kemper Center, Inc. and the County, discussed in the context of funding sources as per State v. Beaver Dam Area Development Corp., also serves to evaluate whether Kemper Center, Inc. qualifies as a quasi-governmental entity. The lease relieves the County of property maintenance responsibilities, placing those duties on Kemper Center, Inc., which must maintain safety standards and carry liability insurance naming the County as an additional insured. Flynn's assertion that most funds of Kemper Center, Inc. are subject to forfeiture under the lease lacks a developed argument based on the lease's specific terms.
Flynn does not establish that Kemper Center, Inc.'s entire income, including fundraising revenue, must be allocated for maintenance and operations. The neutrality of the court will be maintained, refraining from creating arguments for any party, as referenced in Industrial Risk Insurers v. American Eng'g Testing, Inc. Attorney general opinions are not binding but can be persuasive, as noted in Beaver Dam. The County's website describes Kemper Center as a cultural and recreational facility featuring historic landmarks and open spaces for various events. A brief excerpt from "A Multi-Jurisdictional Comprehensive Plan for Kenosha County: 2035" is included in the record, but lacks complete context due to missing pages, particularly regarding a footnote about Kemper Center's classification. The documents referenced by Flynn generically refer to "Kemper Center," not the specific operating entity, Kemper Center, Inc. The comprehensive plan was prepared by the Southeastern Wisconsin Regional Planning Commission and the County's Planning and Development department. The appellate record does not indicate that County-affiliated individuals possess more authority than their individual votes in Kemper Center, Inc. matters.
According to the lease, Kemper Center, Inc. is responsible for the costs of any desired alterations or repairs to the premises, provided they do not compromise structural integrity and comply with local building ordinances. All modifications will remain the property of the County upon lease termination. Proposed changes must maintain the historic integrity of the premises and align with the County's master plan and National Register of Historic Places' guidelines. The County must approve any structural changes, and Kemper Center, Inc. cannot build new structures without County consent. Although the lease permits Kemper Center, Inc. to demolish buildings at its expense, the County retains veto power over such actions.
