* Steve Horvath, App. V. Dbia Services Dba Metropolitan Improvement District, Res.

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IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
STEVE HORVATH,
Appellant,
v.
DBIA SERVICES DBA
METROPOLITAN IMPROVEMENT
DISTRICT,
Respondent.
DIVISION ONE
No. 85636-7-I
PUBLISHED OPINION
DWYER, J. — Steve Horvath appeals from the orders of the superior court
denying his motion for summary judgment and granting DBIA Services’ motions
for summary judgment and declaratory judgment. On appeal, Horvath asserts
that the trial court erred in determining that DBIA Services was not the functional
equivalent of a governmental entity under the Public Records Act1 with regard to
his records request. Because the trial court did not abuse its discretion in its
balancing of the multi-factor “functional equivalent” test, Horvath’s assertion fails.
Accordingly, we affirm.
I
In 1958, several private individuals filed articles of incorporation in this
state to create a nonprofit corporation named the Central Association of Seattle.
The Association’s goal was to
1 Ch. 42.56 RCW.
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No. 85636-7-I/2
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further and promote the development, beautification and
improvement of the City of Seattle, and particularly the central area
thereof, so that said city can more adequately, effectively, efficiently
and pleasantly serve the residents of King County, the state of
Washington, and all other persons having occasion to come to the
city of Seattle.
In 1971, our legislature enacted a bill authorizing a percentage of business
owners located within a geographic area of a qualifying municipality to petition
the municipality to provide specified parking and business improvement services
in that area.2 The bill authorized those municipalities to adopt a resolution
designating that geographic area as a parking and business improvement area
and to impose a special assessment levy against businesses and projects
located within that area.3 The bill further provided that, after a public hearing on
that resolution, the municipality could then adopt an ordinance setting forth, in
conformance with the services specified in the business owners’ initiation
petition, those services on which the revenues from that levy would be spent and
imposing a special assessment levy to collect revenues to fund the provision of
such services.4 The bill expressly required that municipalities spend those
revenues on the specific services identified in the parking and business
improvement area ordinance.5
2 LAWS of 1971, ch. 45, § 3. The bill also allowed qualifying municipalities to pass a
resolution to initiate the parking and improvement area designation process. LAWS of 1971, ch.
45, § 3. 3 LAWS of 1971, ch. 45, § 3-4.
4 LAWS of 1971, ch. 45, § 10.
5 LAWS of 1971, ch. 45, § 12 (“The special assessments levied hereunder must be for the
purposes specified in the ordinances and the proceeds shall not be used for any other purpose.”).
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No. 85636-7-I/3
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As pertinent here, in April 1999, a group of business owners in an area of
downtown Seattle submitted a petition to the City of Seattle (the City) requesting
that it provide certain business improvement services within that downtown area.
Several months later, representatives of the Central Association of
Seattle, now renamed the Downtown Seattle Association, filed articles of
incorporation for a subsidiary nonprofit corporation, to be named DBIA Services.
The articles of incorporation stated that the Association’s subsidiary was
incorporated to provide certain services “to improve business conditions within
business improvement areas in Seattle.”
Thereafter, in early June 1999, the Seattle City Council passed a
resolution indicating its intent to designate the petitioned area of downtown
Seattle as subject to a special assessment levy for the purpose of funding the
requested business improvement services therein.6 Two months later, the City
adopted an ordinance identifying that area as the “Downtown Parking and
Business Improvement Area,” authorizing a five-year special assessment levy
against applicable businesses and projects in that area, creating a separate fund
for the revenues generated by that levy, and mandating that revenues deposited
into the fund be spent only in furtherance of the specifically identified business
improvement services set forth in the petition.7 The ordinance also authorized
the “Director,” a city employee, to administer the special assessment program,
6 Seattle Resolution 29966 (June 7, 1999),
https://clerk.seattle.gov/search/resolutions/29966 (last visited June 20, 2024).
7 Seattle Ordinance 119541, §§ 1-2, 10 (July 26, 1999),
http://www.clerk.ci.seattle.wa.us/search/ordinances/119541 (last visited June 20, 2024). The
ordinance also identified the area in question as the “Business Improvement Area,” and the BIA.
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established an advisory board comprised of ratepayers from the downtown area
subject to the special assessment (a board which would meet periodically and
make certain recommendations to the City), and authorized the Director to sign a
contract with a program manager—recommended by vote of the special
assessment area ratepayers—which would oversee the day-to-day provision of
the authorized services within the designated area.8
The ordinance also set forth that the Seattle City Council intended, for the
initial year of the special assessment levy, that the Director contract with the
Downtown Seattle Association to provide program management services within
the designated area for a period of one year.9 After that, the ordinance provided,
whether the Director would again contract with the Association would depend on
the special assessment area ratepayers’ recommendation that the Director
continue to do so.
Thereafter, between 2000 and 2003, the special assessment area
ratepayers recommended each year that the Director contract with the
Association to provide the relevant services. The Association agreed and, during
that time, continued to seek reimbursement from the City for its provision of such
services.
In 2004, the Seattle City Council adopted another ordinance, which
disestablished the 1999 business improvement area, identified another area of
downtown Seattle as the Metropolitan Improvement District (MID), and
8 Seattle Ordinance 119541, §§ 1-2, 10.
9 Seattle Ordinance 119541, § 13.
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established a new 10-year special assessment therein.10 As applicable here, the
2004 ordinance operated similarly to the 1999 ordinance and stated that, “[i]t is
the intent of the City Council that the Director renew the contract with the
Downtown Seattle Association (DSA), and its management subsidiary, DBIA
Services.”11 Thereafter, between 2004 and 2013, the special assessment area
ratepayers again recommended each year that the Director contract with DBIA
Services to provide the improvement services within that area, and DBIA
Services did so, continuing to seek reimbursement from the City for such
services.
In 2013, the Seattle City Council adopted the ordinance that created the
business improvement area in question.12 That ordinance, similar to the prior
ordinance, disestablished the existing business improvement area, identified a
specific area of downtown Seattle as the Metropolitan Improvement District,
identified the services to be provided in that area, and established a 10-year
special assessment therein. The services identified in the ordinance included
supplemental cleaning services, safety outreach, hospitality, supplemental law
enforcement, marketing and communications services, business development
10 Seattle Ordinance, 121482 (May 26, 2004),
http://www.clerk.ci.seattle.wa.us/search/ordinances/121482 (last visited June 20, 2024).
11 Seattle Ordinance 121482, § 13.
12 Seattle Ordinance, 124175 (May 14, 2013),
http://www.clerk.ci.seattle.wa.us/search/ordinances/124175 (last visited June 20, 2024). A
subsequent ordinance adopted in 2013, Ordinance 124235, amended the original ordinance to
correct several drafting errors, which, according to DBIA Services, are not relevant to the issues
on appeal. In addition, in 2023, the City reauthorized the MID for another 10 years. The parties
agree that the 2013 Ordinance applies to this case.
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No. 85636-7-I/6
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and market research services, and transit, bike, and parking services and
management.
The 2013 ordinance again indicated the Seattle City Council’s intent that
the Director renew DBIA Services’ contract to “manage the day-to-day operations
of the MID and to administer the projects and activities.”13 Thereafter, through
the time in question, the special assessment area ratepayers continued to
annually recommended that the City contract with DBIA Services, the Director so
contracted, DBIA Services provided the authorized services, and DBIA Services
sought reimbursement from the City for its provision of those services, which the
City dutifully disbursed to DBIA Services.
Thereafter, more than eight years after the City adopted the business
improvement area ordinance in question, Horvath submitted a public records
request to the Seattle Office of Economic Development, seeking public records
regarding the Metropolitan Improvement District. The City provided Horvath with
certain responsive records and indicated that it did not have records that were
responsive to the remainder of his request.
Horvath later sent an e-mail to the chief operating officer of the Downtown
Seattle Association with the subject line “[Metropolitan Improvement District
Business Improvement Area] Public Disclosure Request.” Horvath’s e-mail
indicated that he was redirecting his public records request from the City to the
Association on the basis that the nonprofit was “a responsible party working on
behalf of the [Metropolitan Improvement District Business Improvement Area] in
13 Seattle Ordinance 124175, § 17.
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No. 85636-7-I/7
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your role as [Downtown Seattle Association’s Chief Operating Officer].” Attached
to Horvath’s e-mail was a document setting forth requests for documents
separated into two sections, “Items for City of Seattle” and “Items for [Downtown
Seattle Association].”
The Association’s chief operating officer responded to Horvath’s e-mail
and stated that the Association was not a public agency subject to the Public
Records Act. Nevertheless, over the next nine months, the Association
voluntarily provided over 100 documents to Horvath in four installments.
Thereafter, the Association notified Horvath that it would not be sending “any
documents or information in response to the request for compensation
information” regarding the Association’s employees.
Horvath then filed a complaint in King County Superior Court, with the
defendant captioned as “DBIA SERVICES DBA METROPOLITAN
IMPROVEMENT DISTRICT.” Horvath alleged that the Metropolitan
Improvement District, “a ‘business improvement area’ that covers much of
downtown Seattle,” had failed to comply with the Public Records Act. Horvath
argued that the Metropolitan Improvement District was the functional equivalent
of a governmental entity and that the District had violated the Public Records Act
in responding to his public records request.14 DBIA Services later filed a motion
for summary judgment dismissal and a motion for declaratory judgment, arguing
that DBIA Services was not a governmental entity for the purpose of the Public
14 Horvath did not allege that the Downtown Seattle Association or DBIA Services had
violated the Public Records Act but, rather, focused his allegations and arguments on what he
characterized as the Metropolitan Improvement District.
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No. 85636-7-I/8
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Records Act. Horvath also filed a motion for summary judgment against DBIA
Services arguing that the Metropolitan Improvement District violated the Public
Records Act and requesting that the court impose monetary penalties against the
District. The parties agreed “that no contested issues of material fact prevent
summary judgment and that the Court should resolve on summary judgment the
issue whether Defendant is subject to the Public Records Act, chapter 42.56
RCW (‘PRA’).”
The trial court granted DBIA Services’ motions and denied Horvath’s
motion. In so doing, the court issued an extensive written order concluding that
the Metropolitan Improvement District was a geographic area, not an actor
capable of creating or possessing records, and that DBIA Services was not the
functional equivalent of a governmental entity for the purpose of Horvath’s public
records request.
Horvath now appeals.
II
Horvath asserts that the trial court erred in determining that DBIA Services
was not the functional equivalent of an agency for the purpose of his Public
Records Act request. Horvath is incorrect.
A
As an initial matter, both of the parties in this matter assert that the trial
court’s summary judgment orders should be reviewed de novo. For the following
reasons, we disagree.
Our Supreme Court has stated as follows:
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As a general rule, we review summary judgment orders de
novo and engage in the same analysis as the trial court. Keck [v.
Collins], 184 Wn.2d [358, ]370[, 357 P.3d 1080 (2015)]; Crisostomo
Vargas v. Inland Wash., LLC, 194 Wn.2d 720, 728, 452 P.3d 1205
(2019). Summary judgment is appropriate only when “there is no
genuine issue as to any material fact and . . . the moving party is
entitled to a judgment as a matter of law.” CR 56(c).
Borton & Sons, Inc. v. Burbank Props., LLC, 196 Wn.2d 199, 205, 471 P.3d 871
(2020) (alteration in original). Nevertheless, the court continued, the summary
judgment “standard of review depends on the question presented.” Borton &
Sons, 196 Wn.2d at 206. For instance, the court instructed, appellate courts
apply the abuse of discretion standard of review when considering a case
decided on summary judgment when the trial court had discretion in making its
determination. Borton & Sons, 196 Wn.2d at 206 (trial court had discretion in
determining whether to confer an equitable grace period at summary judgment
(citing SAC Downtown Ltd. P’ship v. Kahn, 123 Wn.2d 197, 204, 867 P.2d 605
(1994))); see also Cornish Coll. of the Arts v. 1000 Va. Ltd. P’ship, 158 Wn. App.
203, 221, 242 P.3d 1 (2010) (trial court had discretion in determining whether to
grant specific performance at summary judgment) (citing SAC Downtown Ltd.
P’ship, 123 Wn.2d at 204). Accordingly, in this matter, the standard of review
depends on the question that the parties presented to the trial court at summary
judgment.
Here, the parties asked the trial court to determine whether DBIA Services
was the functional equivalent of a public agency for the purpose of Horvath’s
records request under the Public Records Act. Because, as set forth below,
asking a trial court to apply the “functional equivalent” test constitutes a request
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No. 85636-7-I/10
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for the trial court to exercise its discretion, the standard of review applicable to
this question is that of abuse of discretion.
Our Supreme Court has identified a certain circumstance in which our
legislature has intended to confer discretion to trial courts in construing an
enactment: when the legislature expressly provides that an enactment be broadly
construed but does not provide further guidance as to the manner in which such
provisions are to be construed. Yousoufian v. Off. of Ron Sims, 168 Wn.2d 444,
465, 229 P.3d 735 (2010) (“noting the Consumer Protection Act [chapter 19.86
RCW] ‘provide[d] no specific indication of how attorney fees [were] to be
calculated,’ but exhorted courts ‘to liberally construe the act, “that its beneficial
purposes may be served”.’” (quoting Bowers v. Transamerica Title Ins. Co., 100
Wn.2d 581, 594, 675 P.2d 193 (1983))). In that circumstance, appellate courts
have
frequently set forth multifactor frameworks to provide guidance to
trial courts exercising their discretion so as to render those
decisions consistent and susceptible to meaningful appellate
review. See, e.g., Bowers v. Transamerica Title Ins. Co., 100
Wn.2d 581, 595, 675 P.2d 193 (1983) (adopting an analytical
framework to calculate reasonable attorney fees under the
Consumer Protection Act, chapter 19.86 RCW); Glover v. Tacoma
Gen. Hosp., 98 Wn.2d 708, 717, 658 P.2d 1230 (1983) (identifying
factors as proper considerations for trial judges to use in
determining whether settlement agreements involving multiple
defendants and contributory fault are “reasonable” under RCW
4.22.060), overruled on other grounds by Crown Controls, Inc. v.
Smiley, 110 Wn.2d 695, 756 P.2d 717 (1988).
Yousoufian, 168 Wn.2d at 465.
Our Supreme Court has identified the Public Records Act as one such
circumstance. For instance, in Yousoufian, our Supreme Court interpreted the
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No. 85636-7-I/11
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act, found that it did not provide adequate guidance to trial courts in the exercise
of their discretion, and, in response, adopted a multi-factor balancing test to aid
trial courts in their calculation of monetary penalties resulting from a violation of
that act:
Here, as mentioned, the PRA provides no specific indication
of how a penalty is to be calculated. It does, however, provide a
“strongly worded mandate for broad disclosure of public records.”
Hearst Corp.[ v. Hoppe], 90 Wn.2d [123, ]127[, 580 P.2d 246
(1978)]. The PRA directs us to liberally construe it “to assure that
the public interest will be fully protected.” RCW 42.56.030. Its
command is unequivocal: “Responses to requests for public
records shall be made promptly by agencies . . . .” RCW 42.56.520
(emphasis added). Additionally, where the PRA is violated, trial
courts must award penalties “at not less than $5 [per day] but not
more than $100 [per day].” Yousoufian[ v. Office of King County
Executive], 152 Wn.2d[ 421,] 433, 98 P.3d 463 (2004). The PRA is
a forceful reminder that agencies remain accountable to the people
of the State of Washington:
The people of this state do not yield their sovereignty
to the agencies that serve them. The people, in
delegating authority, do not give their public servants
the right to decide what is good for the people to know
and what is not good for them to know. The people
insist on remaining informed so that they may
maintain control over the instruments that they have
created. This chapter shall be liberally construed and
its exemptions narrowly construed to promote this
public policy and to assure that the public interest will
be fully protected. In the event of conflict between the
provisions of this chapter and any other act, the
provisions of this chapter shall govern.
RCW 42.56.030. It is therefore proper for us to identify factors that
trial courts may appropriately consider in determining PRA
penalties.
168 Wn.2d at 465-66 (second alteration in original). In so doing, our Supreme
Court identified that the enactment had conferred discretion to trial courts with
regard to penalty determinations and the court instructed that an abuse of
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discretion standard of review was appropriate for reviewing such determinations.
Yousoufian, 168 Wn.2d at 458-59.15
As applicable here, the “functional equivalent” test applied by the trial
court in this matter also arose from our interpretation of the Public Records Act.
With regard to that test, our Supreme Court has stated as follows:
The PRA is “a strongly-worded mandate for open government,”
Rental Hous. Ass’n of Puget Sound v. City of Des Moines, 165
Wn.2d 525, 527, 199 P.3d 393 (2009), that “must be ‘liberally
construed . . . ’ to ensure that the public’s interest [in broad
disclosure] is protected[.]” Yakima County v. Yakima Herald–
Republic, 170 Wn.2d 775, 791, 246 P.3d 768 (2011) (quoting RCW
42.45.030). Our Court of Appeals has therefore interpreted the
statutory word “agency” to include private entities when they act as
the functional equivalent of government agencies. In Telford v.
Thurston County Bd. of Commissioners, 95 Wn. App. 149, 162-63,
974 P.2d 886 (1999), Division Two of the Court of Appeals adopted
a four-factor test to determine whether a private or quasi-private
entity is an “‘agency’” for purposes of the PRA. The other two
divisions later adopted that “Telford test.”[16]
Fortgang v. Woodland Park Zoo, 187 Wn.2d 509, 512-13, 387 P.3d 690 (2017)
(first alteration in original) (footnote omitted). The court then approved of the
“functional equivalent” test as “an appropriate way to decide whether a private
entity must comply with PRA disclosure requirements.” Woodland Park Zoo, 187
15 Although agency action under the Public Records Act is generally reviewed de novo,
RCW 42.56.550(3), we have recognized that certain trial court determinations related to the act
are reviewed for abuse of discretion. See, e.g., Yousoufian, 152 Wn.2d at 430-31 (citing King
County v. Sheehan, 114 Wn. App. 325, 350-51, 57 P.3d 307 (2002)) (“the trial court’s
determination of appropriate daily penalties is properly reviewed for an abuse of discretion”);
Sanders v. State, 169 Wn.2d 827, 866-67, 240 P.3d 120 (2010) (abuse of discretion for reviewing
the trial court’s determination concerning the amount of award of costs and attorney fees arising
from violation of the enactment); see generally Cedar Grove Composting, Inc. v. City of
Marysville, 188 Wn. App. 695, 724-33, 354 P.3d 249 (2015) (reviewing trial court’s determinations
as to daily monetary penalties and award of attorney fees for abuse of discretion).
16 See, e.g., Cedar Grove Composting, Inc., 188 Wn. App. at 720 (Division One);
Spokane Rsch. & Def. Fund v. W. Cent. Cmty. Dev. Ass’n, 133 Wn. App. 602, 609, 137 P.3d 120
(2006) (Division Three).
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Wn.2d at 513.17 Notably, however, in approving of the use of, and applying, the
“functional equivalent” test, neither our Supreme Court nor the three divisions of
this court have substantially analyzed the question of the proper standard of
review of a trial court’s determination in reliance on that multifactor balancing
test.
Nevertheless, given the foregoing, we conclude that abuse of discretion is
the proper standard of review for a trial court’s determination regarding whether a
private entity is an “agency” under the Public Records Act. Our Supreme Court
has repeatedly recognized that our legislature intended for the Public Records
Act to be broadly construed. See, e.g., Woodland Park Zoo, 187 Wn.2d at 512;
Yakima Herald-Republic, 170 Wn.2d at 791; Rental Hous. Ass’n of Puget Sound,
165 Wn.2d at 527. Division Two of this court, cited approvingly by our Supreme
Court, recognized that the legislature did not provide further guidance to courts
as to whether it intended for the term “agency” “to include or exclude” private
entities from the public records laws. Telford, 95 Wn. App. at 161-63); see also
Woodland Park Zoo, 187 Wn.2d at 513 (citing Telford 95 Wn. App. at 162-63). In
response to that absence of guidance, Washington appellate authority adopted
the “functional equivalent” test, a multi-factor balancing test for trial courts to
apply. Furthermore, our Supreme Court has recognized that the legislature
intended to confer discretion to the trial court in construing certain of the Public
Records Act’s provisions that did not provide guidance to the courts as to the
17 Our Supreme Court also explained that the “functional equivalent” test “is not designed
to sweep within Public Records Act coverage every private organization that contracts with
government. This remains true even if the contracts in question are governed or authorized by
statute.” Woodland Park Zoo, 187 Wn.2d at 532.
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manner in which those provisions should be construed. See Yousoufian, 168
Wn.2d at 465.
Given all of this, it is a reasonable reading of the act that the legislature
intended to confer discretion to the trial court in determining whether a private
entity is an “agency” pursuant to the act. Thus, the question for the trial court in
its “agency” determination is a discretionary one, arising from the court’s
consideration of a multifactor balancing test. Accordingly, the standard of review
for such a trial court determination is abuse of discretion.
B
“A trial court abuses its discretion if its decision is manifestly unreasonable
or based on untenable grounds or reasons.” O’Dea v. City of Tacoma, 19 Wn.
App. 2d 67, 85, 493 P.3d 1245 (2021) (citing Yousoufian, 168 Wn.2d at 458).
“A court’s decision is manifestly unreasonable if it is outside the
range of acceptable choices, given the facts and the applicable
legal standard; it is based on untenable grounds if the factual
findings are unsupported by the record; it is based on untenable
reasons if it is based on an incorrect standard or the facts do not
meet the requirements of the correct standard.”
In re Dependency of Z.A., 29 Wn. App. 2d 167, 192, 540 P.3d 173 (2023)
(quoting In re Marriage of Littlefield, 133 Wn.2d 39, 47, 940 P.2d 1362 (1997)).
In addition, “ʻ[a] judge abuses his discretion when no reasonable judge would
have reached the same conclusion.’” State v. Comcast Cable Commc’ns Mgmt.,
LLC, 16 Wn. App. 2d 664, 676, 482 P.3d 925 (2021) (quoting Sofie v. Fibreboard
Corp., 112 Wn.2d 636, 667, 711 P.2d 711, 780 P.2d 260 (1989)). Furthermore,
“‘[a]n unchallenged finding of fact is a verity on appeal.’” Nearing v. Golden State
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Foods Corp., 114 Wn.2d 817, 818, 792 P.2d 500 (1990) (quoting Metro. Park
Dist. v. Griffith, 106 Wn.2d 425, 433, 723 P.2d 1093 (1986)).
With regard to the “functional equivalent” test, our Supreme Court has
instructed that,
the factors relevant to deciding when a private entity is treated as
the functional equivalent of an agency are (1) whether the entity
performs a government function, (2) the extent to which the
government funds the entity’s activities, (3) the extent of
government involvement in the entity’s activities, and (4) whether
the entity was created by the government. Clarke v. Tri-Cities
Animal Care & Control Shelter, 144 Wn. App. 185, 192, 181 P.3d
881 (2008) (citing Telford, 95 Wn. App. at 162). Courts applying
the test consider whether “the criteria on balance . . . suggest that
the entity in question is the functional equivalent of a state or local
agency.” Id.
Woodland Park Zoo, 187 Wn.2d at 517-18.
C
Here, the trial court issued a 12-page order setting forth its findings of fact
and conclusions of law with regard to the “functional equivalent” test. The trial
court noted that the parties did not contend that a genuine issue of material fact
existed at summary judgment. The parties do not dispute the trial court’s findings
on appeal.
With regard to whether DBIA Services performs a government function,
the trial court found and concluded as follows:
DBIA Services does not perform functions unique or essential to
government. Providing and arranging the services and activities to
support beautification, hospitality, entertainment, retail trade,
maintenance, security, transportation, and parking within the
boundaries of the MID is not an inherently governmental function
like running an urban zoo is not a core government function. See
Fortgang v. Woodland Park Zoo, 187 Wn.2d 509 (2017). Plaintiff
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No. 85636-7-I/16
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concedes that business development efforts are not inherently
governmental functions. Plaintiff’s Reply 3. Plaintiff’s strongest
argument that DBIA Services performs a “core” government
function relates to policing, because DBIA Services engages
Seattle Police Department (“SPD”) for supplemental enforcement
activities (including “emphasis patrols”) in the boundaries of the
MID. On its face, Plaintiff’s argument acknowledges that DBIA
Services is not doing the enforcement—unlike the entity in Clarke v.
Tri-Cities Animal Care & Control Shelter, 144 Wn. App. 185 (2008),
which performed animal control services, including enforcement
activities implicating due process—because, in this case, SPD itself
is performing the services. SPD is the government agency
exercising police powers. DBIA Services arranges for additional
enforcement by SPD, it does not displace SPD as the entity
responsible for the policing activities. See Shavlik v. Dawson
Place, 11 Wn. App. 2d 250[, 452 P.3d 1241] (2019) (conducting
forensic interviews not inherently governmental where investigatory
and charging decisions remained exclusively with law enforcement
agencies). See also Decl. of Elisabeth James in Support of DBIA
Services’ Motion for Summary Judgment, Exhibit H (Contract with
SPD).
Similarly, the City—not DBIA Services—assesses and
collects funds from persons located in the MID. The City controls
the assessment process. The City, not DBIA Services, may audit
Ratepayers. The City pays expenditures from its dedicated MID
account when invoices are submitted, including invoices submitted
by the DBIA Services as the Program Manager. These
governmental finance functions remain with the City.
Thus, the undisputed facts show that the primary
government functions raised by Plaintiff are not, in fact, performed
by DBIA Services but remain with the government. The Court is
not persuaded that DBIA Services performs traditional
governmental functions, i.e. inherently public functions that may not
be delegated. This factor strongly weighs against functional
equivalency.
Concerning the extent to which the City of Seattle funds DBIA Services,
the trial court found and concluded as follows:
Two considerations are generally material to an inquiry into
government funding: the percentage of funding from public funds
and the nature of the funding. See Fortgang, 187 Wn.2d at 527-
528. Here, the majority—but not all—of DBIA Services’ funding
comes from MID assessments. Based on their submissions, the
parties generally agree that in both 2021-2022 and 2022-2023,
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No. 85636-7-I/17
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approximately 93% of DBIA’s funding came from MID ratepayer
assessments. Other sources of income include private donations
and other fees for services. In Washington, when the funds
attributable to public sources are in the majority, this consideration
weighs in favor of PRA coverage. Id., citing Cedar G[r]ove, Clarke,
and Telford. DBIA Services argues that, in this case, the Court
should consider whether this consideration truly weighs in favor of
government equivalency because the source of public funds is not
general funds but assessments specifically authorized and intended
to provide for services in the MID, i.e., the assessments are from,
and for the benefit of, ratepayers in the MID. The Court is not
persuaded that this distinction justifies a different calculus in the
context of the Telford analysis. The percentage-of-funding
component of this factor weighs in favor of PRA coverage.
As to the nature of the funding, the facts establish a fee-for-
services model, not a fixed allocation funding scheme. In other
words, the government funds collected by the City by assessment
are only paid to DBIA Services for services rendered. See
Fortgang at 528, note 11, citing Domestic Violence Servs. [o]f
Greater New Haven, Inc. v. Freedom of Information Commission,
704 A.2d 827 (Conn. App. 1998) (even though entity received
“substantial funds” from local, state, and federal government, the
funds were fees for services, in the form of grants, and therefore
did not weigh in favor of functional equivalency), and Envirotest
Systems Corp. v. Freedom of Information Com’n, 757 A.2d 1202
(Conn. App. 2000) (amount of government funding irrelevant where
payment is fee-for-services pursuant to contract; in such cases, the
funding factor weighs against a finding of functional equivalency).
As demonstrated in Envirotest Systems, a model is considered
“fee-for-services” when payments made to the entity at issue are in
consideration for the services it provided pursuant to a contract for
the administration of a program. In contrast, block grant funding
was present in Telford where the agency’s funds were collected via
dues based on an annual operating budget and were paid before
services were rendered. See Telford, 985 [Wn]. App. at 164. Here,
the City does not simply transfer all assessed funds to DBIA
Services; rather, the Director pays out portions of the funds as
DBIA Services submits invoices reflecting services that have been
performed over a specified period, including its own services.
Plaintiff’s Corrected Motion 16: 11-18 (“The MID is required to
submit documentation of allowable expenses to the City’s Finance
Director for review . . . . [T]he City reimburses the MID for broad
expenditure categories such as ‘salaries and benefits’; ‘professional
services’; general and administrative’; and ‘program expenses.[’]”),
citing Horvath Declaration, Exhibits 7 and 8. This reimbursement
system represents a fee-for-services model, which weighs against
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No. 85636-7-I/18
18
functional equivalency. See Fortgang, 187 Wn.2d at 528.
Additionally, DBIA Services receives no benefits from the City such
as use of a government building, insurance, or employee benefits.
The Supreme Court stated that the percentage-of-funding
consideration is the foremost consideration to evaluate
governmental funding. Fortgang, at 529. In Fortgang, the
Supreme Court noted the funding factor was inconclusive where
the two considerations were split, but in that case the percentage-
of-funding consideration weighed against functional equivalency.
Here, that specific consideration weighs in favor of functional
equivalency. Thus, the Court concludes that, while the two
considerations could be considered to counterbalance, this factor
weighs more towards functional equivalency.
(Footnote omitted.)
Regarding the extent to which the City of Seattle is involved in the
activities of DBIA Services, the trial court found and concluded the following:
Evidence of City involvement in DBIA Services’ activities is scant.
The City has almost no involvement in the day-to-day operations.
Additionally, the Ratepayer Advisory Board has almost no
involvement in the day-to-day operations. Regulation by the
government does not weigh in favor of PRA applicability. See
Fortgang, 187 [Wn].2d at 530-531, including footnote 14 cited by
Plaintiff. The fact that DBIA Services provides an annual report and
work plan to the Board and the City about its activities and costs,
for example, does not establish government control. This type of
transparency, to the contrary, indicates that government is not
operating in secrecy. See id. Plaintiff emphasizes that the City
Finance Director retains responsibility for the assessment process,
Plaintiff’s Motion for Summary Judgment 16-17, which underscores
DBIA Services’ separation from the City regarding assessments;
this situation does not show enmeshment of the City in DBIA
Services’ operations. To the contrary, it establishes a clear
delineation. Plaintiff also argues that the City gave discretionary
authority to DBIA [Services], including “to make discretionary
decisions about the MID’s programming,” Reply 4:21-23, and “over
how to implement its programs.” Reply 5:1. These statements
amount to admissions weighing in favor of the conclusion that DBIA
Services runs its day-to-day operations without City involvement or
oversight. DBIA Services’ autonomy in this regard does not show
what Plaintiff is obligated to prove: that the City, not DBIA Services,
in reality exercises this discretion. The situation is unlike Clarke
because in Clarke the delegated authority concerned governmental
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No. 85636-7-I/19
19
functions, i.e., police power enforcement. That is not the case
here. Here, the delegation and lack of governmental control
regarding functions that private parties can perform (in contrast to
nondelegable public functions) weighs against application of the
PRA.
Day-to-day control is also not shown by DBIA Services’
contractual obligation to support all costs expended for the benefit
of the MID with official documentation or the City’s contractual right
to audit DBIA Services’ records “as they relate to the work.” As
previously noted, regulation is to be distinguished from control.
Here, the moderate examples of interaction or regulation do not
support a conclusion that the City directs DBIA Services regarding
how to conduct daily business in the MID. Because no evidence
persuasively shows City participation in day-to-day management of
services provided in the MID, this factor strongly weighs against
PRA coverage.
Lastly, with regard to whether DBIA Services was created by the
government, the trial court found and concluded that
[p]rivate parties formed DBIA Services when the City enacted
legislation to form the MID. The purpose of the examination of an
entity’s “origin” is to determine if the entity is a masked arm of the
government. There is no evidence that formation of DBIA Services
reflects any intent by the City to avoid the PRA by establishing
another entity in name. Rather, the evidence shows that a pre-
existing organization, the Downtown Seattle Association, which
represents key, private interests in the MID, formed the subsidiary
entity to seek a fee-for-services management role. Since
formation, DBIA Services has accepted other fee-for-service roles,
supporting a conclusion that it is not an alter ego of the City to run
the MID, but is a private nonprofit corporation fulfilling contractual
obligations. Plaintiff argues that DBIA Services “was created by
city ordinance,” Reply 5-9, but this is inaccurate. The MID was
created by ordinance. DBIA Services was incorporated under
Washington law as a nonprofit. Even if private incorporators
“envisioned procuring a government contract when they formed the
entity at issue,” this does not demonstrate creation of the entity as
an alter ego of the government. Fortgang, at 532, citing Oriana
House, Inc. v. Montgomery, 854 N.E.2d 193 (Ohio 2006). The
timing of incorporation, upon which Plaintiff heavily relies, does not
persuasively weigh in favor of a conclusion that the origin factor
supports PRA coverage. Thus, this factor weighs against PRA
coverage.
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No. 85636-7-I/20
20
(Footnote omitted.)
The trial court then ruled as follows:
Having considered the factors on balance, even construing
the [PRA] liberally in favor of the fullest possible public records
access, the Court concludes the factors do not weigh in favor of
PRA coverage. The factors regarding governmental function and
city involvement in day-to-day functioning are the most persuasive
to the Court. They strongly weigh against PRA coverage. This
conclusion is also supported by the last factor, government
creation, which also weighs against PRA coverage. Finally, while
the Court finds the funding factor weighs in favor of functional
equivalency, it does not do so convincingly. The Court is
persuaded that the factors demonstrate that DBIA Services is not a
private surrogate for the City, but is a government contractor not
subject to the PRA. Overall, the Court is satisfied that
impermissible avoidance of the PRA is not shown.
The trial court therefore ordered that
1. For purposes of Plaintiff’s requests for public records,
Defendant DBIA Services is not a state or local “agency” as defined
in RCW 42.56.010 of the Public Records Act.
2. Applying the test adopted by the Washington
Supreme Court in Fortgang v. Woodland Park Zoo, 187 Wn.2d 509,
387 P.3d 690 (2017), including all four Telford factors, the Court
holds that Defendant DBIA Services is not the functional equivalent
of a public agency.
3. Defendant DBIA Services is not subject to the Public
Records Act, Chapter 42.56 RCW, for purposes of Plaintiff’s
requests.
D
The trial court did not abuse its discretion. Overall, the trial court issued a
well-reasoned order, provided the facts that the court considered and the law that
the court applied to those facts, and properly applied the law to those facts.
For instance, in considering the performance of a government function
factor, the trial court concluded that the policing authority remained with the City,
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No. 85636-7-I/21
21
not with DBIA Services, because DBIA Services was only contracting for
additional enforcement in the improvement area while the authority to perform
the law enforcement in question remained with the Seattle Police Department.
The trial court also concluded that the levying authority remained with the City,
not DBIA Services, because the City retained the power to collect the revenues
in question, control the assessment process, audit the special assessment
ratepayers, and pay DBIA Services expenditures from a dedicated subaccount.
The court also noted that Horvath did not contest the provision of business
improvement as an inherently governmental function. Given all that, the trial
court found that the performance of a government function factor weighed
strongly against DBIA Services being functionally equivalent to a public agency.
The trial court’s reasoning was plainly tenable.
The trial court’s consideration of the government funding factor was not
untenable. The trial court concluded that almost 93 percent of DBIA Services’
funding came from the revenues generated by the special assessment levy,
which the court found weighed in favor of DBIA Services’ functional equivalence
to a public agency. The trial court also concluded that DBIA Services’ contract
with the City was a fee-for-services model, which the court concluded weighed
against functional equivalence. Given the trial court’s reference to our Supreme
Court’s preference for the source of funding over the nature of the funding as set
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No. 85636-7-I/22
22
forth in Woodland Park Zoo, the trial court’s determination that such factor
weighed in favor of functional equivalence was not untenable.18
Additionally, the trial court’s consideration of the level of the City’s
involvement in DBIA Services’ activities was reasonable. The trial court
determined that the evidence of the City’s involvement in the nonprofit’s activities
was scant, finding that neither the City nor the advisory board were involved in
DBIA Services’ day-to-day activities and that the City had delegated significant
discretionary authority to DBIA Services over the manner in which the nonprofit
managed the provision of the relevant services in the improvement area. The
court’s determination that such an absence of involvement strongly weighed
against DBIA Services’ functional equivalence to a public agency was tenable.19
Furthermore, the trial court’s consideration of the government creation
factor was reasonable. Simply put, the trial court found that private citizens, not
18 Although it does not change the outcome of this matter, we conclude that the trial court
erred in its determination that the agency funding factor weighed in favor of considering DBIA
Services as a public agency.
Contrary to the trial court’s determination, the statutory and municipal framework
surrounding the creation and administration of a business improvement area, including the
Metropolitan Improvement District, significantly reduces the quantum of control that a municipality
maintains over the funding of that district. Indeed, pursuant to such framework, a municipality
cannot legally spend a district’s special assessment funds toward a purpose other than those
purposes expressly identified in the initiation petition (or municipal resolution) and the resulting
ordinance. This, in turn, reduces municipal oversight, control, and supervision over the
improvement area, thereby reducing the monetary control retained by the municipality. Indeed,
although a municipality has some discretion in how and when the services in question might be
provided or in whether those services correspond to the identified purposes, the municipality’s
judgment is bounded by the legislative scheme, initiation petition, and municipal resolution and
ordinance.
Given that, the trial court’s reasoning underlying its determination of the government
funding factor was, in this regard, erroneous. However, because the trial court properly
considered and balanced the remainder of the factors herein, this error in the trial court’s
reasoning does not dictate an opposite result.
19 Further supporting the trial court’s determination is that, pursuant to the enabling
legislation and adopting ordinance discussed herein, the private citizens’ initiation petition, not the
City of Seattle nor DBIA Services, determined the reasonable range of the specific services that
the City could delegate to DBIA Services.
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No. 85636-7-I/23
23
the City, created DBIA Services. Given that, the trial court’s determination that
the government creation factor weighs against DBIA Services’ functional
equivalence to a public agency was also tenable. Finally, the trial court’s
conclusion arising from its balancing of the functional equivalence factors reflects
that the court individually weighed and properly balanced the factors in question.
Therefore, the court’s conclusion after balancing those factors was not
manifestly unreasonable and was within the range of acceptable choices that a
reasonable judge could make. Thus, the trial court did not abuse its discretion in
concluding that, pursuant to the functional equivalence test, DBIA Services was
not a public agency for the purposes of Horvath’s Public Records Act requests.
Accordingly, Horvath does not establish an entitlement to appellate
relief.20
III
Horvath next contends that the trial court erred by determining that the
Metropolitan Improvement District was not an agency as defined by the Public
Records Act. Horvath is incorrect.
The trial court herein determined as follows:
The [Metropolitan Improvement District] in this case, and any
[Parking and Business Improvement Area (PBIA)] in Washington, is
a geographic area and not an actor. Evidence regarding DBIA
Services’ use of terms “MID” or “Metropolitan Improvement District”
20 For reference, in the event the trial court herein had abused its discretion (again, we
conclude that it had not), the remedy would be a reversal of the trial court’s order and a remand
for the court to properly exercise its discretion. See, e.g., Ralph v. Weyerhaeuser Co., 187
Wn.2d 326, 334-35, 386 P.3d 721 (2016) (“We therefore reverse and remand for the trial court to
exercise its discretion in a manner consistent with this opinion.”); Barker v. Mora, 52 Wn. App.
825, 831-32, 764 P.2d 1014 (1988) (“We reverse and remand for the trial court to exercise its
discretion on the motion to substitute the personal representative for the deceased plaintiff.”).
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No. 85636-7-I/24
24
and “dba” terminology referencing the MID, or reference to “MID
leadership” or “MID employees” in documents is not highly
probative of the substance—over form—of DBIA Services’ activities
or proper application of the Telford factors generally. As noted, a
MID cannot “do business” because it is a geographic area, not an
actor. Business conducted to achieve the goals for the MID must
be performed by others; in this scenario, either by the City as the
government agency in whose jurisdiction the MID exists or by a
contracted private party as authorized in the enabling legislation.
The trial court did not err. By concluding that the Metropolitan
Improvement District is a geographic area, and is not an actor, the trial court
determined that the District was not an entity capable of taking action and
therefore was not itself capable of creating or possessing public records as
defined by the Public Records Act. Moreover, the party identified in both
Horvath’s complaint and the case caption in this matter further suggest that the
entity that was alleged to be “acting in the shoes of the government” was DBIA
Services, not the geographic area identified by ordinance as the Metropolitan
Improvement District. Thus, the trial court did not err by analyzing this case
based on the actor in question—DBIA Services—rather than based on a
business improvement area incapable of creating or possessing public records.
Horvath next contends that “[a]ny argument focused solely on DBIA
Services’ status under the Telford test is simply not relevant in resolving this
issue.” Reply Br. of Appellant at 8. However, given that Horvath submitted the
records request in question to the Downtown Seattle Association requesting
records about the Metropolitan Improvement District from DBIA Services,
whether DBIA Services is an agency under the act—and thus must respond to
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No. 85636-7-I/25
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Horvath’s requests or else face imposition of penalties—is plainly relevant on
appeal.
Accordingly, Horvath again fails to establish an entitlement to appellate
relief.
IV
Horvath requests an award of attorney fees should he prevail on appeal.
The Public Records Act authorizes an award of attorney fees to a prevailing
party. RCW 42.56.550(4). However, as analyzed herein, Horvath is not the
prevailing party in this matter. Accordingly, we deny his request for such an
award.
Affirmed.
WE CONCUR:
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