PADUCAH — Kentucky's attorney general says the city of Paducah violated the Open Records Act by redacting a hotel market study that Local 6 had requested.
Local 6 had sent an open records request on behalf of the public to the city on Oct. 22, 2019, asking to see the hotel market study, which was done to recommend where a hotel would be a good fit in the city's TIF (tax increment financing) district.
The request was made several months after the city had entered into a preliminary development agreement with Weyland Ventures. The firm was tasked with creating a plan to develop the municipal parking lot at 2nd Street and Broadway into a site for a new hotel, mixed-use buildings, and a public open space.
The hotel market study, conducted by ConsultEcon, Inc., shows that from 2012 to 2015, hotel occupancy in Paducah went up from 58.9% to 65.3% full. But from 2015 to 2017, the rate dropped to 58.2%. The numbers came from STR Global, Inc., a company that tracks supply and demand data in the hotel industry.
When the city of Paducah gave a copy of the hotel study to Local 6, the city had redacted the portion of the study that shows the drop in occupancy rates. But Local 6 was able to obtain a full copy of the report through a reliable source.
In a letter sent to Local 6 and the city of Paducah dated Feb. 5, 2020, the Office of Attorney General Daniel Cameron said the city "violated the Open Records Act ("the Act") because it did not meet its burden to support redacting a hotel market study under KRS 61.878(1)(c)1."
The city had given the following explanation for why it provided a redacted copy of the hotel study: "Portions have been redacted in accordance with KRS 61.878(c)(1) [sic] which refers to records confidentially disclosed to an agency or required by an agency to be disclosed to it, generally recognized as confidential or proprietary, which if openly disclosed would permit an unfair commercial advantage to competitors of the entity that disclosed the records. We have redacted the tabular data that is proprietary to STR, Inc."
The city reiterated its original response after Local 6 requested that the city explain the redactions further. The city added that the decision to redact a portion of the hotel study was made after consulting with ConsultEcon.
The city also cited page I-2 of the hotel study, which states that, "Possession of this report does not carry with it the right of publication. This report incorporated tabular data that is proprietary to STR, Inc. The data is not for public distribution. This report will be presented to third parties in its entirety and no abstracting of the report will be made without first obtaining permission of ConsultEcon, Inc., which consent will not be unreasonably withheld.
"Neither all nor any part of the contents of this study shall be disseminated to the public through advertising media, news media or any other public means of communication without prior consent of ConsultEcon, Inc."
Local 6 appealed to the Office of the Attorney General on Nov. 7, 2019.
In its decision, the AG's office stated that under Kentucky law, a public agency must bear the burden of proof when denying access to public records. As a result, the city of Paducah must prove that the redacted information:
1) Was confidentially disclosed to the city.
2) Is generally recognized as confidential or proprietary.
3) Would allow competitors of the disclosing entity (ConsultEcon) an unfair commercial advantage if the information is released.
The AG's office ruled that for point No. 1, the evidence does not show that the redacted information was confidentially disclosed to the city. The AG's office references the proposal for the hotel study that ConsultEcon gave to the city on Oct. 2, 2018. The proposal includes an attachment detailing ConsultEcon's standard terms and conditions.
"Neither the proposal nor the attachment mentions ConsultEcon's acquisition of data from STR or any obligation for the city to keep this data confidential," the AG Office's ruling says. "The 'Confidentially' section in the Standard Terms and Conditions mentions only that ConsultEcon agrees to keep confidential information so designated "by the client" (i.e., the city). There is no reciprocal obligation for the city to keep confidential any information so designated by ConsultEcon."
The AG's office also says there is no "underlying duty of confidentially owed by ConsultEcon to STR."
The AG's office adds, "The city admits that the mayor, a city commissioner and a city employee made 'unauthorized' disclosures of the unredacted (hotel) study to two private citizens and a 'potential developer' prior to appellant's (Local 6's) open records request."
The AG's office says while unofficial voluntary disclosures do not automatically result in the waiver of exemptions from inspection, "the conduct of high-level officials is indicative of the efforts made by the parties to ensure confidentially. Since the totality of the circumstances does not indicate a confidential disclosure, the city has not established the first element of KRS 61.878(1)(c)1."
As for point No. 2, the AG's office says the redacted tabular data on the hotel occupancy rates are "mainly aggregate data about the hotel industry in Paducah." The AG's office says the city of Paducah has no evidence that this type of information is "generally recognized as confidential or proprietary."
In addition, the AG's office says these types of information do not "disclose the inner workings or financial status of ConsultEcon, STR, or any other entity. Thus, the city has not met its burden of proof for the second element of KRS 61.878(1)(c)1."
Finally, for point No. 3, the city argued that releasing the redacted information on hotel occupancy rates would allow ConsultEcon's competitors an unfair commercial advantage because ConsultEcon paid a membership fee for its subscription to STR, which provided the data.
But the AG's office says, "the city has not shown how the particular data sets included in the study would be substantially advantageous to any hypothetical competitors of ConsultEcon, particularly after the study had been paid for and completed. Based on such minimal information, this office cannot conclude that public disclosure of the STR data ConsultEcon provided to the City would permit competitors of ConsultEcon 'substantially more than a trivial unfair advantage'."
Because the city did not meet its burden of proof in any of the three elements of KRS 61.878(1)(c)1, the AG's office says it finds that the city violated the Open Records Act by redacting a portion of the hotel market study.
AG office says its decision can be appealed in circuit court.
Local 6 reached out to the city of Paducah for comment on the decision. Pam Spencer, the city's public information officer, sent the following statement:
"The City of Paducah is in receipt of the Attorney General’s Opinion concerning WPSD’s request for an unredacted copy of the Paducah TIF District Hotel Market Study. The City initially provided WPSD a redacted copy of the Study because ConsultEcon, who performed the study, prohibited disclosure of much of the data contained therein as a condition of the work performed for the City. To that end, the Study included the following conditions:
"'Possession of this report does not carry with it the right of publication. This report incorporates tabular data that is proprietary to STR, Inc. The data is not for public distribution. . . . Neither all nor any part of the contents of this study shall be disseminated to the public through advertising media, news media or any other public means of communication without the prior consent of ConsultEcon, Inc.'
"In accordance with this provision and out of an abundance of caution, the City redacted the proprietary tabular data before producing a copy to WPSD. However, the Attorney General’s Office considered this language and determined that it was not necessary for the City to redact the tabular data. The City prides itself on being open with information to the extent allowed by law. Because the Attorney General’s Office has determined that the City is not bound by the quoted language in the Study, an unredacted copy of the Study will be made available to the public. It is the City’s understanding that the media previously obtained an unredacted copy of the Study. However, if that is not the case, an unredacted copy will be made available."