News
Officials with the company and collaborating leaders from economic development and local and state government announced May 6 in Chicago the planned 400-job wind-turbine equipment plant to be built here.
However, the contract between Siemens and the participating parties - to include Reno County and the cities of Hutchinson and South Hutchinson - continues to be finalized in secret.
The draft of a contract between a private party and local unit of government is not an open record. However, virtually all discussion about the financial incentives government is willing to offer is required to take place in an open meeting, according to a 1988 Kansas attorney general opinion.
That has not happened.
Reno County Counselor Joe O'Sullivan, Hutchinson City Attorney Carolyn Patterson and South Hutchinson City Attorney Donald Gottschalk all defended the actions of their respective boards.
"I am very, very careful about not abusing the executive privilege to the open meetings law," Patterson said.
"You're fishing in a dry hole," said Gottschalk, in response to questions about a possible violation.
"All in open session"
Siemens did not want to reveal in 2008 and early 2009 that it had Hutchinson on its radar for a regional plant to manufacture nacelles, the gear box attached to large wind turbines, said Hutchinson City Manager John Deardoff.
"From day one, back when there were 80 communities they were looking at, all the way down to the end," Deardoff said.
The Kansas Open Meetings Act affords limited secrecy for such companies even if they are negotiating with public boards. Confidentiality prevents the price of land from skyrocketing or a rival company from taking advantage of a competitor's exposed plan.
But the public board's discussion about its role and the spending of taxpayer money is supposed to occur in open session.
It can be awkward talking about potential public financing while not naming the prospect, but that is the law, said attorney Michael Merriam, a specialist in media law and a legal consultant to the Kansas Press Association.
This is the scenario he described for a government board that is approached by a prospect desiring public money:
"They put it on their agenda, and they talk about it. 'Should we give this company what they want? Or should we make a counter offer? If so, what are the terms of the counter offer? Where's the money going to come from? Who are the partners going to be in this deal?' That's all in open session," Merriam said.
Attorney general opinion
When The News asked the Kansas Attorney General's Office specifically about the discussion of financial incentives, Assistant Attorney General Michael Smith pointed to Attorney General Opinion No. 88-148, issued in October 1988 by then-Attorney General Robert Stephan.
That opinion, involving the Geary County Economic Development Commission, stated that a board could discuss in executive session the use of public money to acquire land for business sites but that the exception did not extend to all discussions about financial incentives.
O'Sullivan questioned what a "discussion" entailed. He has represented the county in contract talks, and he has briefed county commissioners about Siemens.
But he was the one talking, O'Sullivan said, in those presentations.
O'Sullivan and Patterson also noted that, on behalf of their clients, they are dealing with the attorney representing Siemens.
"I could have asked for an executive session on attorney-client privilege, because I'm communicating with an attorney about proposals," Patterson said.
"I think when I'm communicating with an attorney for the company, that's a legitimate use of executive session."
To Merriam, those sound like excuses.
"If anybody is talking, that is a discussion," he said.
Also, he noted, the attorney-client relationship has no bearing on the Kansas Open Meetings Act.
"They simply don't have the justification for going into executive session on that topic," Merriam said.
But Patterson argues that to "just say blanket, that you can't discuss financial incentives, I think that's reading that too broadly."
It is now known that on April 20, representatives for Siemens, including its attorney, were in Hutchinson for talks and work on the agreement. The following day, O'Sullivan talked to the Reno County Commission in a meeting closed "for the discussion of financial affairs and trade secrets of a corporation."
The Hutchinson City Council also convened in a closed session April 21, "for the purpose of discussing attorney/client matters and confidential data relating to financial affairs of second parties," according to the meeting minutes.
Discussion of the confidential data related to a corporation or its trade secrets is an allowable exception under the Kansas Open Meetings Act and may be dealt with in closed session. But the public board would not have been able to venture onto the topic of financial incentives, in the view of Merriam and according to the 1988 attorney general opinion.
The County Commission met in another closed session April 28 "to discuss the financial affairs of a corporation." The next week, the Siemens announcement was made.
Lawrence lesson
In 2007, the Lawrence City Commission drew a reprimand after complaints were raised about its handling of an economic development project in light of the open meetings law.
The lesson learned from that incident, Patterson said, is that the governing board must have a public discussion about incentives.
"At some point, we have to come out and have a public discussion about the financial terms that are in the contract," she said. "You can't make this decision in executive session. You have to come out and have a public discussion.
"But I don't think it prohibits you from discussing the proposals in executive session."
Patterson said she has mentioned the Lawrence case to the Hutchinson City Council "more than once" and stressed that the Lawrence City Commission "got in trouble" because of the absence of the public discussion. In Lawrence, multiple complaints regarding different facets of the commission's dealings with a prospect were raised. Commissioners avoided prosecution by attending a training course on the Kansas Open Meetings Act as required in a settlement agreement with then-Attorney General Paul Morrison.
"You don't just show up and say, 'Oh, I know all this,' and have a motion to approve it. That's how I try to approach it," Patterson said of her advice to council members to hold a public discussion when a contract is ready for a vote.
But in Merriam's view, conducting the public discussion about government financial incentives after the contract is drafted and on the table represents "a complete misunderstanding of executive session."
Financial incentives are not intended to be revealed in the first public discussion following secret negotiations, he said.
"It's not available to be discussed in executive session; they have to discuss it in an open meeting," Merriam said.
Potential implications
An attorney general opinion is nonbinding on non-state agencies, but none of the local attorneys questioned the nonbinding status of the 1988 opinion. O'Sullivan previously has requested an attorney general opinion on other matters and has used the issued opinion to advise Reno County commissioners.
Some open meeting violations are intentional, Merriam said. In other instances, though, he suspects the law is broken inadvertently or out of ignorance.
Asked if the draft contract might have to be thrown out if a violation of the open meetings act occurred, Merriam answered, "They might, if they took action."
"Sounds to me like they took action, if they instructed their attorney to negotiate a contract," he said.
Work continues behind the scenes on the Siemens contract, and some details have been announced, such as a planned donation of land for the plant in Hutchinson's Salt City Business Park.
Local officials expected the contract would be ready to be revealed before the public presentation of the Siemens project May 12 at the Historic Fox Theatre, Patterson said, but "things kept getting held up."
"A couple things seem to have taken longer than anyone anticipated," she said.
The Hutchinson City Council doesn't meet again until July 7.
"I don't know when we're going to discuss it," Patterson said.
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