The York County museum foundation is a public body under the state open records law and should not keep its records secret, according to a media law attorney and the state Press Association's executive director.
County and state leaders have asked the Culture and Heritage Foundation to hand over detailed financial records about a failed plan to build a museum and a residential-commercial development near the Catawba River. Because the deal fell through, the foundation and its subsidiary owe $3.78 million on 400 acres that initially were donated to the foundation.
The foundation has responded to the requests with financial summaries, claiming they don't have to open their books completely because the foundation is private. Foundation leaders say neither it, nor a subsidiary, have received county taxpayer funds or county property.
But attorney Jay Bender and the press association say the foundation should open its books because it is a "public body" under the state Freedom of Information Act. That law says an agency is public if it is supported "in whole or in part by public funds" or if it spends public funds.
Bender and Bill Rogers, executive director of the S.C. Press Association, say the foundation has received financial and other support from the York County Culture and Heritage Commission, a county government agency. That support meets the "whole or in part" provision of the FOI law.
Among the support received by the foundation from the commission:
The commission loaned nearly $200,000 to the foundation.
"Financial support from either the county or the commission ... would make the foundation a public body," said Bender, a University of South Carolina professor and attorney for the S.C. Press Association and The Herald.
The loan counts as public support, especially if the foundation paid no interest on it, he said.
In 2003, the commission loaned the foundation $190,000 to start a fundraising campaign and hire a firm to manage it, according to a 2003 agreement between the county, commission and foundation. In the agreement, the county approved the loan of $190,000 to be paid back less than a year later to the commission.
It doesn't matter that the foundation repaid the commission, Bender said. "It's public money."
The agreement also makes no mention of interest payments on the loan.
Van Shields, executive director of the Culture and Heritage Museums, said he believes no interest payment was required, although he was uncertain, he wrote in an email to The Herald. Attempts to reach the museum's finance director on Friday were unsuccessful.
If the loan came at no cost to the borrower, it was "free money," and "money always costs something," Bender said.
"If you borrow money from the bank, they expect you to pay interest," he said.
The commission and foundation have been sharing employees since 2003 to avoid duplication of fundraising efforts. The staff members are commission employees, and the foundation reimburses the commission for the time they spend with the foundation.
But if the foundation pays no interest on the reimbursements, the foundation is receiving free support, Bender said.
Each year, the commission estimates the time its staff will spend on foundation duties and asks the foundation for approval, said Andrew Tucker, commission finance director.
The foundation reimburses the commission only for salaries, payroll taxes, health benefits, and retirement.
Every week this year, 12 employees are spending 102 hours combined working for the foundation. Their duties include fundraising, accounting, organizational development, and other tasks, according to the commission's 2010-2011 budget request to the county.
Four of those employees spend an estimated 10 hours or more a week on foundation duties.
Shields spends an estimated 16 hours of a 40-hour week on foundation duties this year. In 2008, he spent an estimated 20 hours a week working for the commission and 20 for the foundation, tax documents show.
His duties include managing staff support for the foundation, assisting volunteers in communicating to donors, maintaining donor relations, and communicating between the commission and the foundation board, among other duties, he said in an email.
The "comingling" of personnel and other resources also makes it difficult to see the foundation as independent, said Rogers of the press association.
"I can imagine an hour or two a week, but when it's a significant part of their time, that's a far different matter," he said.
Sharing staff isn't unusual in these situations, County Manager Jim Baker said. Foundations often want the directors of public organizations to help raise donor support because they are the best advocates, he said.
However, sometimes "it's difficult to discern where one organization stops and another starts."
County space is rent-free
The foundation's rent-free use of county space also counts as public support, Bender said.
Commission staff carry out the foundation's daily office and administrative functions in museum facilities, which are owned by the county.
While the foundation reimburses the commission for staff support and "all hard costs associated with its activities, it pays no rent because the CHC pays no rent," Shields said.
For several years, during its push for the new museum, the commission fundraising team moved to vacant space in downtown Rock Hill courtesy of Bank of America. The team later moved back to the museum.
"The more you can pin down that the activities of the foundation are being operated out of commission facilities using commission employees, the more you can make the argument that it's a public body," Bender said.
Matter of public trust
County Manager Jim Baker has said that the foundation is private and therefore not obligated to open its books. But recently he said "it's not clear cut" whether the loan the foundation received could make it a public body.
Whether the foundation is legally public, county officials may already have authority to force open the books. A 2003 agreement between the county and the foundation gives county officials the "right to review and audit all books, records and financial ledgers" of the commission and the foundation at any time.
The York County Council voted to terminate the agreement earlier this year, wanting to eliminate its relationship with the foundation and any related liabilities.
But the agreement is still in force, Baker said, until the county officially notifies the commission and foundation. The council could change its mind and use the agreement to audit the foundation, he said.
He hopes the foundation opens up on its own.
"It's in the best interest for everybody for the foundation to take an open book policy, not that they're acknowledging wrongdoing," Baker said. "It's a good idea for everybody to say how was the money spent."
The foundation board of trustees meets April 26 to discuss whether to provide details, said Carol Maroska, the foundation's president.
Maroska has said she plans to ask the foundation's attorney whether support the foundation receives would subject it to open records laws. Attempts last week to reach her were unsuccessful.
Whether the foundation believes itself to be private or public, it should open its books as "matter of public trust," Rogers said.
"If they expect people to donate money to them, they should be forthcoming. Otherwise, who knows what rabbit hole the money is going down," he said.