Suits argue DIA is subject to open records, meeting laws
Pontiac — A citizens group is suing the Detroit Institute of Arts, arguing that the museum's reliance on a regional tax makes it subject to the state's Open Meetings and Freedom of Information acts.
The lawsuit, filed Feb. 21, in Oakland Circuit Court by the group Mr. Sunshine, comes as the DIA is asking voters in Oakland, Macomb and Wayne counties to renew the 10-year, 0.2-mill levy on the March 10 ballot. When it proposed the tax, which voters approved in 2012, the museum said it would be self-sufficient once it expired after 10 years.
“Mr. Sunshine is just a group of citizens,” said Steve Emsley of Lyon Township, who is named as one of its plaintiffs
“Let me be clear. We all love the DIA and respect the work they do,” said Emsley. “The DIA receives a lot of tax dollars and makes the claim that they are not a public body and will not comply with open meetings allowing people to know what decisions they make and have a say in that.”
The complaint alleges the “secrecy” of meetings has resulted in more than $3 million in investment fund fees to a company in the past two years.
“Why were these made? To what end? How was the company selected? Were there open bids?” said Roland Jersevic, the attorney who filed the complaint. “These are the types of questions we would like answered and feel we have a right to know. But the minutes of their meetings don’t explain any of it.”
Earlier this month, a similar lawsuit was filed in Wayne Circuit Court by Macomb County businessman Edward Amyot, who said he has been rebuffed in his efforts to obtain information from the DIA under the Freedom of Information Act.
Both complaints argue that as the recipient of more than $25 million annually from Metro Detroit taxpayers, the DIA should be required to comply with state laws encouraging transparency.
In a statement, DIA spokeswoman Christine Kloostra said the museum is not covered by FOIA or the Open Meetings Act.
“The Detroit Institute of Arts is a private not-for-profit entity that is not subject to the Freedom of Information Act or the Open Meetings Act,” Kloostra wrote.
“The DIA provides regular updates on its operations, finances and other matters to the Art Institute Authorities of the counties of Macomb, Oakland and Wayne, which it does both in accordance with its obligations under the respective agreements with each county’s Art Institute Authority and also voluntarily as a matter of responsible and transparent partnership with those counties,” she wrote.
Kloostra did not respond to questions regarding investment fees or related questions “due to pending litigation.”
Amyot, CEO and the owner of Set In Stone, a stone remodeling company in Richmond, said he received a similar written response from Kloostra.
Amyot’s lawsuit had asked for a wide range of documents from the DIA, including invoices from producing, processing and mailing DIA brochures to Macomb, Oakland and Wayne county addresses in 2017, 2018, 2019, and 2020; invoices of any social media, digital, radio, display TV advertising for the same four years; contracts of DIA executives; the ethics policy for DIA board members and staff; the contract with the current investment adviser, and board communications regarding the selection of the current investment contractor.
He also requested several years of DIA audits and related statements; travel, conventions and training requests; budgets for DIA management staff and board members; and full DIA board of directors minutes including member packets and materials for 2011-2020.
“I absolutely support the DIA and its mission,” Amyot said Friday. “Transparency and sunlight is the best solution. We want some transparency.
"I want the DIA to exist another 20 years or more,” he said. “But the way things are going, I’m not confident that’s going happen, or that it is being managed properly. For that reason, I’m voting no on the renewal in March.”
Frank A. Cusumano Jr., Amyot’s attorney who filed the Wayne County lawsuit, said his client represents a growing number of Macomb County taxpayers “frustrated by the DIA’s stonewalling of requests for information under FOIA."
Amyot is also questioning the DIA’s management of funds, Cusumano said, “after breaking the promise not to seek renewal of the controversial tax."
“Huge revenues have poured into the DIA from the tax, more than enough to protect the culturally significant DIA and build a generous endowment,” Cusumano said. “It appears it is never enough, and sunshine is the best disinfectant.”
More than 60% of DIA funding come from the regional millage, which generated $25.9 million in 2019 and $25.2 million in 2018.
The renewal, if approved, would cost taxpayers in Oakland County $13.6 million annually; Macomb County $5.8 million and Wayne taxpayers $8.5 million, according to the Oakland County suit. Those funds represent 67% of the DIA’s revenue, Jersevic said.
To be a public body subject to the FOIA, the body must be funded "primarily" by a state or local authority,” he said. “Here, the DIA is exercising legislative and government authority over the tri-county funds — it appropriates every penny of those funds levied and collected from taxpayers — a governmental function.”
Jersevic cited a case involving the EMU Foundation, “a nonprofit corporation, just like the DIA, which was established to make expenditure on behalf of" Eastern Michigan University.
Financial dealings of the nonprofit, created in 1990, were questioned by Eric Jackson who eventually sued and lost in an effort to obtain information. He took his case to the Michigan Court of Appeals, which overturned the lower court decision and ordered documents released.
“It was also tax-exempt, like the DIA,” Jersevic said. “In that case, the question was whether the foundation was a public body defined and subject to the Freedom of Information act and the open meetings act. The court found that the foundation was a public body under the Freedom of Information act because it was primarily funded by Eastern Michigan University.
"Furthermore, the court concluded that the foundation was a public body as defined by the open meetings act because the foundation was empowered by a resolution to exercise proprietary authority,” he said.
Ryan Jarvi, a spokesman for the Michigan Attorney General’s Office, said legal rulings on nonprofits have varied.
“There are past court decisions and attorney general opinions that have found FOIA and OMA generally do not apply to private nonprofit and non-governmental entities,” he said. “However, there are exceptions, particularly when it pertains to how those groups are funded.”
Michigan Appeals Court decisions in 1988 and 2003 found that a private, non-governmental organization may be a public body subject to FOIA if it receives 50% or more of its funding through state or local governmental grants or subsidies
Emsley said he is “not out to defund anyone” and will be personally voting “yes” to approve the DIA question on the March ballot and “would hope public supports it.”
“No one is looking for retribution,” he said, stressing the complaint was not timed with next month’s vote in mind. “I want them to continue but would like to see them be more accountable about what they are doing.”
Oakland County Commissioner Robert Hoffman, R-Highland, is not as diplomatic. Hoffman, who said he supported the initial tax “to save the DIA and pensions of Detroiters” in the wake of the city's bankruptcy filing, has sent letters to several Oakland County newspapers urging voters to reject the renewal.
“It was supposed to be a one-time thing but now they come back two years before it is even set to expire,” said Hoffman. “Watch. If it fails, it will be back on the ballot in August and if that fails, back on the November ballot."
Hoffman said Friday he plans his own FOIA request to the DIA.
“They should have to comply with the law and the Open Meetings Act,” he said. “Regardless of whether they are required to provide it, by principle alone they should do everything to be transparent and show how they are using our money.”