State agency will review Beaver Dam records case

Monday, March 13, 2006 1:01 PM CST

BEAVER DAM (AP) - The state Department of Justice will appeal a recent circuit court ruling involving this city's secret deal with Wal-Mart in an attempt to strengthen the state's open meetings and public records laws.

A judge rejected Attorney General Peg Lautenschlager's argument that the Beaver Dam Area Development Corp., which coordinates the city's economic growth, is a quasi-governmental body subject to the freedom of information laws.

The ruling came in her lawsuit against the organization after a local citizens group argued that the city illegally reached an agreement in secret with Wal-Mart to build a massive $55 million, 1.2-million-square-foot distribution center on about 400 acres north of the city. It's now under construction.

Lautenschlager and Assistant Attorney General Monica Burkert-Brist argued in the case against the Beaver Dam group that it should be subject to those laws because it is funded by a city tax; the mayor and another city official serve on its board of directors; the city provides office space and other clerical support; and it has no clients other than the city.

“Hopefully, the appeal will give us some binding case law” to help regulate such economic development groups, said Burkert-Brist, who heads the state Justice Department's Public Integrity Unit, charged with investigating open meetings and records violations and other governmental ethics issues.

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Local economic development groups, common in Wisconsin municipalities, help guide future growth and typically negotiate agreements with developers without taxpayers' knowing that such negotiations are taking place until it's time for the agreements to be approved by government officials.

In Beaver Dam's case, the Wal-Mart deal didn't come to the public's attention until the Common Council approved in open session and without discussion a memorandum of understanding with Wal-Mart.

For the previous 11 months, the Beaver Dam Area Development Corp. held secret negotiations with Wal-Mart and city officials committed to $6.18 million in incentives.

That incentive package was renegotiated in summer, reducing the city's financial commitment to the project to $4.5 million, Beaver Dam Mayor Jack Hankes said.

Later, the citizens group filed its own open records lawsuit against the city and the development group. That suit was settled in June 2004, with the development group turning over about 1,000 pages of documents.

Local government and business leaders argue that subjecting groups such as the one in Beaver Dam to open government laws would squelch economic development by hindering their negotiating strategies.

“Some portion of the economic development process requires some confidentiality on behalf of the (developer), up to the point of spending public dollars, that is,” Hankes said.

“One has to have some shred of trust that the corporation is going to act in the best interests of the city,” Hankes said.

But open government advocates, such as Bill Lueders, president of the Wisconsin Freedom of Information Council, argue that gives developers preferential treatment over the rights of the public to know about the business in which the government is engaged.

“At some point, public officials ought to focus beyond what they can get away with and focus on what's right,” he added.

Lueders and others also point out that the function of economic development corporations can largely be fulfilled by local government committees manned by elected officials and their appointees, which are subject to public meeting laws.

State law allows such public bodies to go into closed session for competitive negotiations.

Since Lautenschlager's suit was filed, the development group moved out of City Hall as part of an effort “to keep things a little cleaner,” Hankes said.

“But the city has felt all along that there was a sufficient wall there” between the city and the development corporation, the mayor added.

Circuit Judge Richard O. Wright of Marquette County, where the case had been moved from Dodge County, agreed, ruling against the attorney general by concluding that the development group was not created by city ordinance, does not make decisions on behalf of the city and operates independently from the city.