CIRCUIT COURT OF FREDERICK COUNTY
Lee Jackson Motel, Inc., et al
Industrial Development Authority of the County of Frederick, et
Law No. 4157
October 3, 1983
By Judge Robert K. Woltz
This opinion letter is supplemental to that rendered in this
case August 16, 1983. Afterwards further argument resulted from the
plaintiffs' assertion the Court in its first opinion covered two
points raised by them only by implication, obliquely or not at
The first point is that action of the Authority in authorizing
the bond issue was invalid for failure to comply with
ÃŸ2.1-344(c) appearing in the Freedom of Information Act. That
section as a whole deals with executive or closed meetings.
Subsection (c) provides that no resolution or the like adopted in
executive meeting shall:
become effective unless the public body . . . reconvenes in open
meeting and takes a vote of the membership on the resolution . . .
Nothing in this section shall be construed to require the board of
directors of any [industrial development] authority to identify a
business or industry to which subsection (a)(4) of this section
applies. However, such business or industry must be identified as a
matter of public record at least thirty days prior to the actual
date of the board's authorization of the sale or issuance of such
Subsection (a)(4) of ÃŸ2.1-344 permits executive meetings
for "discussion concerning a prospective business or industry when
no previous announcement has been made of the business' or
industry's interest in locating in the community."
As noted in the original opinion, there was no evidence that the
Authority adopted the inducement resolution in other than an open
meeting. The final sentence of subsection (c) requiring
identification "as a matter of public record" thirty days prior to
authorization of the bond issue refers to "such business or
industry," i.e., the business or industry the identity of which was
not known because discussion of it took place in an executive
meeting. Here there was no discussion or action in executive
meeting and hence there was no "such business or industry" whose
identity is required to be made on the public record thirty days
prior to "authorization of the sale or issuance of such bonds," or
to which subsection (a)(4) could apply.
Further, the identity of the business has been a matter of
public record for months and the evidence does not disclose that
"authorization of sale or issuance" has yet taken place.
Now to the second point the plaintiffs say was not resolved by
the original opinion: The tract to be purchased is not reasonably
necessary for the project described in the application to the
The intervening Partnership as part of its application filed "A
Brief Overview" which set forth that it had a contract to purchase
a twelve-acre tract at a named price, that as a first step three
parcels of this tract would be sold and on the remainder of the
tract a motel and office complex were to be constructed. The second
or corrected inducement resolution of the Authority defined the
project as "a motel and office complex." Later in the overview the
Partnership indicated sources of financing for "the enterprise,"
namely, capital of the partnership, proceeds from the sale of the
three parcels mentioned above and Authority bonds.
The Partnership's description of the proposed project and its
description in the inducement resolution make the identify of the
project to which the issuance of bonds relates clear. It is obvious
that the entire tract was not necessary for the particular project
as portions of it were to be sold off to help finance the project.
This does not mean that the bonds in this case could not be validly
issued. It is not unusual for a purchaser to be faced with the
necessity of buying a piece of land larger than he needs in order
to get a smaller area necessary to his purposes. If plaintiffs'
contention were correct, then no project involving the purchase of
real estate could qualify under the Act unless the square area of
the real estate was no greater than the precise amount needed to
carry out the proposed project.
Plaintiffs' concern may be that because the Partnership intends
to buy land in excess of the needs of its project the proceeds of
the bonds may be devoted to some purpose other than those of the
project. This overlooks a fair presumption from usual and ordinary
business practices that the Authority's resolution authorizing sale
and issuance of the bonds, conditions contained in the bonds and
related documents and fiscal controls on the disbursal of bond
proceeds, will be designed to prevent diversion of those proceeds
for any purpose other than the described project. The Court is
constrained to indulge this reasonable presumption, especially
where public bonds are involved, else the proceeds from any issue
might be devoted to unauthorized purposes.
In summary, the procedure used in this case was not in
contravention of the Freedom of Information Act, and under the
circumstances here the size of the real estate involved being
excessive to the needs of the project will not invalidate the