Davidson County Chancellor Russell T. Perkins issued a ruling minutes ago that records for the controversial TNInvestco tax credit program can be sealed for a period of five years by Tennessee Economic & Community Development Commissioner Matt Kisber.
The ruling is a defeat for investment firm executive Larry Coleman, who sought the scoring matrices showing how Kisber and state Revenue Commissioner Reagan Farr chose the six winning TNInvestco companies – firms allowed to sell some $120 million in tax credits to insurance companies and then use the proceeds to invest in Tennessee small businesses.
Perkins ruling may be the first in state court to uphold the little known privilege of the ECD commissioner’s office to seal files in his department deemed “sensitive” if the state attorney general concurs.
Perkins ruling did strike down a secondary argument by the state asserted by Farr, that the TNInvestco matrices and other documents sought in the suit are tax administration and tax information. Perkins ruled they are not as they are not submitted directly to Farr’s office.
Finally, Perkins also struck down a third argument by the state, asserting a deliberative process privilege that is ground in federal common law. Perkins ruled he could find no such precedent in Tennessee backing up this claim and chose not to apply it himself.
“The Court has attempted to balance the public’s right to know as provided in the Public Records Act, and the broad discretion possessed by public officials charged with the responsibility of implementing and administering complex statutory schemes designed to promote Tennessee’s economy and to maximize the recovery and investment of Tennessee’s tax revenue,” Perkins stated in his ruling.
TNInvestco is a state program enabled by a law passed in 2009, the Tennessee Small Business Investment Company Credit Act. The law established a base of $120 million of insurance premium tax credits that six investment firms certified by the state can sell to insurance companies who then invest the proceeds into Tennessee small businesses.
The law also gives Kisber and Reagan sole discretion to choose the TNInvestco participants.
Coleman’s suit sought the completed matrix documents used by Kisber and Farr to grade the 25 TNInvestco applicants as well as the “solicitation” documents showing the chosen investment companies had successfully raised the capitol required by law through selling the tax credits.
The state filed dozens of records related to TNInvestco under seal.
Deputy Attorney General Janet Kleinfelter argued before Perkins that laws governing sensitive economic development information trumped Tennessee’s Open Records Act.
“This is not really an appropriate forum for Mr. Coleman to challenge the commissioners for the decisions that were made,” Kleinfelter said, adding later “It is not a privilege. I is a law passed by the Tennessee General Assembly saying the commissioner of economic and community development has the ability to make such documents confidential.”
TNInvestco has become controversial on several fronts in state government. The law was originally sponsored in part by legislators with deep ties to the insurance industry and insurance companies that have taken place in similar tax credit plans in other states.
Furthermore, legislative sources say there is building pressure in the legislature among Republicans to expand the TNInvestco program with another $40 million in tax credits though the program is not even a year old and has produced no tangible results.
To read Tennessee Watchdog’s comprehensive coverage of the TNInvestso open records suit, our initial investigation into the program’s legislative beginnings and to access public records in the case follow this link.
To download Perkins’ ruling in the TNInvestco case as a PDF courtesy of Tennessee Watchdog, follow this link.