Secret committees influence big Louisville development deals
Government ethics experts say the Fischer administration's refusal to identify the committee members who recommended projects in the Paristown and Russell neighborhoods raises concerns about a unique type of decision making that involved private citizens endorsing plans that are likely to use public funds or control public assets.
LOUISVILLE, Ky. (WDRB) – After organizers abruptly canceled the FoodPort project in 2016, Mayor Greg Fischer's administration sought new uses for 24 acres of city-owned land in the Russell neighborhood.
In September, Fischer announced that the Louisville Urban League would transform the vacant site, known as Heritage West, into a $30 million track-and-field complex at 30th Street and Muhammad Ali Boulevard. The mayor since has said he envisions city-backed bonds will help cover the cost.
But the Urban League, a nonprofit whose CEO is a former top aide to Fischer, was not the only organization to offer a new vision for the property. Three other developers expressed interest and submitted proposals.
To decide which plan was best, Fischer relied on the advice of a “review committee” of city staff and citizens, he said at a September 19 news conference in Metro Hall.
Months after the Urban League was chosen, however, the Fischer administration refuses to disclose who served on the committee. Revealing its members could open them to undue influence from others vying for the award, Metro government officials say.
Meanwhile, there are no meeting minutes, agendas or other records identifying the panel’s members because the city doesn’t believe the committee had to follow Kentucky’s open meetings law.
For those same reasons, Metro officials are also declining to reveal the members of a committee that in December selected Louisville’s Marian Group as the preferred developer for the 12-acre Urban Government Center site on Barret Avenue. Plans call for turning the complex into new housing and office and commercial space – possibly including a “boutique” hotel.
Government ethics experts say those refusals raise troubling questions about a unique type of decision making that involved private citizens endorsing plans that are likely to use public funds, such as city-issued debt, or control public assets.
A better practice would be disclosing the committee members “to determine whether they are acting in the public’s best interest or if they are acting in their own personal interest,” said Hana Callaghan, director of the government ethics program at Santa Clara University’s Markkula Center for Applied Ethics.
While not formal committees, the panels amounted to public bodies doing public business, said Stephen Larrick, Open Cities Director for the Sunlight Foundation, a Washington, D.C. group that promotes government transparency.
“Making a recommendation on how the public should allocate its resources or use its vacant land – this is the public’s business, and the public has a right to information about the rationale for why a recommendation is made,” Larrick said. “And I think also of critical important is who is making that recommendation.”
In the case of the Heritage West venture, Metro government officials have declined to provide an evaluation sheet and other documents that detail how the competing proposals were ranked, citing part of Kentucky’s open records law that lets “preliminary” records be withheld. They cite the same protections for the Urban Government Center work.
The Fischer administration’s stance echoes a case in Frankfort, where a Kentucky Finance and Administration Cabinet committee held private meetings before choosing a developer to raze and rebuild the Capital Plaza Tower. In response to an appeal from The State Journal newspaper, Kentucky Attorney General Andy Beshear ruled in October that the finance cabinet violated the state’s open meetings law by failing to meet in public.
By holding open meetings, the committee’s membership likely would have been revealed before moving into closed, “executive” sessions that are allowed under state law for candid discussions about proposals.
The Bluegrass Institute Center for Open Government advised the State Journal during its appeal. Asked about the Louisville cases, center director Amye Bensenhaver said, “The Bluegrass Institute has expressed concern about this idea of government by secret committee, and the apparent practice of state and local government to avoid public scrutiny by delegating duties to committees that they believe are exempt from the requirements of the open meetings law.”
City defends closed meetings
But Louisville’s top economic development officials argue that the committee meetings aren’t required to be public, noting that Kentucky law requires committees specifically created by law to hold open meetings.
Unlike the finance cabinet committee, the panels that evaluated the proposals for the Russell and Paristown projects weren’t established by any statute or ordinance.
But it’s unclear if other aspects of the state law would make the committee a “public agency” whose meetings must be open to the public.
Seeking clarification, WDRB News asked Beshear’s office to determine if the committee that evaluated the Heritage West bids must follow the open meetings law. The attorney general declined because the station had not first filed a complaint with the committee’s “presiding officer” – whose identity is not publicly known.
The Fischer administration officials pledged to release documents related to the track-and-field project’s selection – including the names of the committee members – once the city has signed a development agreement with the Urban League. That is expected to happen within the next two months, according to the city.
The entire process had “a lot of sunlight,” said Mary Ellen Wiederwohl, chief of Louisville Forward, metro government's economic development agency. For example, she noted that all proposals and public comments were posted online, and the city held several public forums for neighbors.
“Once it's done it will be in the public light. And before any type of incentives or any financial transactions are processed, all of this will be in the daylight,” she said in an interview. “Ultimately, it will come before the Metro Council, which in and of itself is a naturally public process.”
Nevertheless, city officials have offered shifting explanations about their decision not to reveal the committee members’ names.
“We will not be providing the names of those individuals,” Will Ford, spokesman for the Develop Louisville planning agency, said in an email the afternoon of Fischer’s September 19 announcement about Heritage West. “We made a commitment to those individuals as citizen volunteers that their identities would not be revealed.”
The city’s decision to withhold those names is in keeping with a longtime policy, Chris Poynter, a Fischer spokesman, said that same day.
“We have a policy,” Poynter said. “We’ve had it for many years that we don’t divulge (the names of) people who are on selection committees or bid committees or procurement committees. …. The committee simply makes a recommendation to the mayor.”
But Metro government was unable to produce a copy of any such written policy, which WDRB News requested under Kentucky’s open records law.
Once home to a National Tobacco Co. complex, the land at 30th Street and Muhammad Ali Boulevard sat vacant for years before the city chose the nonprofit Seed Capital in 2014 to create a complex of food-related businesses there. The FoodPort project halted unexpectedly in August 2016.
The following spring, the Fischer administration sought new proposals for the property. It held meetings, took public input and created a hybrid panel of city staff and citizens to evaluate the plans.
“This is really a new process for us and one we that we wanted to undertake with the specific goal of providing as much transparency and public opportunity for engagement as possible,” said Theresa Zawacki, senior policy adviser at Louisville Forward.
The citizens who served on the panel were recruited based on recommendations from Metro Council members, Zawacki said. She declined to identify the council members.
Metro Council member Barbara Sexton Smith, a Democrat whose district includes the Urban Government Center on Barret Avenue, acknowledged that she appointed members of that project’s review committee.
“I was pleased that Metro Louisville formed that committee and included citizens in the community as opposed to just making the decision on their own,” she said. “I was very pleased that they opened up that review process and included the public in the discussion.”
She said she was told to look for potential conflicts of interest among possible committee members.
“I felt comfortable with the diligence that was being paid to making sure that there would not be a conflict of interest,” she said. “Is there an opportunity for improving the process or more transparency? I think every day we have an opportunity for continuous improvement.”
Urban League, Marian Group plans chosen
Metro government announced December 20 that a review committee had chosen the Marian Group to oversee the Paristown project. That came about three months after Fischer selected the track-and-field proposal.
In both cases, the Fischer administration has signed letters of intent allowing further negotiations with both developers. Final agreements are expected in the coming weeks.
The nonprofit Urban League’s proposal was backed by prominent Louisville residents and civic leaders, including former Louisville Arena Authority chairman Jim Host; Stephen Reily, a leader of Seed Capital’s FoodPort project and director of the Speed Art Museum; Republic Bancorp chairman Steve Trager; and Tim Mulloy, a public relations executive and investor in the Louisville City FC professional soccer club.
Urban League President and CEO Sadiqa Reynolds, a former Jefferson County district court judge and inspector general in Kentucky state government, was Fischer’s chief of community building until 2015, when she left to become the organization’s first woman president.
In all, supporters of and consultants on the Urban League venture have donated $21,562 to Fischer’s political campaigns and inaugurals, according to a review of Kentucky Registry of Election Finance data.
By comparison, those listed in public documents as backing a proposed biotechnology research park also under consideration gave $3,075.
Asked if any of the affiliations or connections played a role in his decision making, Fischer said: “All I can tell you is any decision I make here is what’s in the best interest of the city. As you go and take a look at all the progress we’ve had over the past seven years, that’s what you will see and that’s what you’ll continue to see.”
In public comments submitted during the summer, western Louisville residents and others overwhelmingly backed the research park plan. It received 71 favorable comments; the track-and-field project got 22, according to WDRB’s review of public documents.
The University of Louisville’s executive vice president for research and innovation, William M. Pierce Jr., endorsed it. So did Ty Handy, president of Jefferson Community and Technical College, who suggested his college’s graduates could help meet potential workforce needs.
“The West Louisville region is a region of untapped talent and potential,” Handy wrote in an April letter to organizers. “A vision such as the one you have developed will be a major first step in developing that talent and potential.”
Plans also called for retail outlets, a farmer’s market and grocery store. It had an estimated cost of $241.4 million, according to its proposed budget.
Louisville businessman Clifford Turner, the research park’s lead organizer, said he has been approached by public officials in Kentucky and elsewhere about his proposal since Fischer chose the Urban League plan. He declined to identify them.
Turner said he’s hopeful about the track-and-field project, even if he still doesn’t understand how it was chosen.
“How they were selected is still puzzling to me,” he said. “I’ve always asked the question, but I’m not going to be negative about that (Urban League) project, because I hope it does go,” Turner said.
A ‘terrific project’
The indoor track and field center would anchor the Urban League’s proposed $30 million, mixed-use development that also could feature restaurants, retail space and a hotel.
Reynolds and Fischer told reporters in September that a mix of funds is being considered to pay for the project, including tax increment financing, naming rights, private fundraising and city-backed bonds.
Reynolds did not return a message at her office seeking comment.
The project has the backing of Max Siegel, CEO of USA Track & Field, which has advised on the design of the sports complex to ensure it meets the standards for large events. Organizers are eying NCAA and other events during the mostly wintertime indoor track and field season.
“This is a terrific project,” said Karl Schmitt, president and CEO of the Louisville Sports Commission. “And we continue to hear from people who would be very supportive of this.”
NOTE: An initial broadcast version of this story incorrectly described who had donated $21,562 to Mayor Greg Fischer's campaigns and inaugurals. The contributors were people listed in public documents as supporters of and advisers to the Louisville Urban League's track and field proposal. The donations were not from the Urban League.