Warren County Supervisors Dispute SLI’s Ownership Claims Over Public Library Assets

This press release is from Chairman Jay Butler, Vice Chairman John Stanmeyer, and Supervisors Vicky Cook and Richard Jamieson, four of the five duly elected Warren County Supervisors (the “Majority Supervisors”).  

Synopsis

As Warren County negotiates a new contract for public library services, Samuels Library, Inc. (“SLI”) has claimed ownership of library assets purchased primarily with taxpayer funding while refusing to provide documentation to support these claims. The Majority Supervisors dispute these ownership assertions based on established nonprofit law and transparency principles.

SLI has blocked Freedom of Information Act requests through restrictive legal interpretations and prohibitive fees exceeding $10,000, attempting to charge over $100 an hour to respond to such requests.  A smart person would question why no SLI librarian earning less than $100 an hour cannot process the requests. Virginia’s requirement is that FOIA be “liberally construed” to promote transparency: this is not transparency. SLI’s claims contradict fundamental legal principles: the Charitable Trust Doctrine requires nonprofit assets be held for public benefit, unrestricted public funds cannot be arbitrarily segregated after receipt, and SLI’s removal of Warren County from its dissolution clause may constitute an improper contingent asset transfer.

SLI has threatened to hold public library assets hostage while misinformation has been spread about replacement costs, while refusing to participate in the County’s lawful procurement process for a library services provider. The Majority Supervisors maintain that assets purchased with unrestricted taxpayer funds should remain public property and be available for continued library services under any new provider contract expected within 30-60 days.

Library Asset Ownership Claims

As Warren County is in the midst of negotiating a contract for public library services, the Majority Supervisors are addressing SLI claims of library asset ownership. To begin with, we will establish the basic fact that SLI is a private provider of public services paid for primarily with public funds.  The purpose of establishing the Warren County Library Board was to provide public governance for public services, which in this case are provided by a private provider. This brings Warren County into alignment, with respect to public governance, with many if not most other counties in the Commonwealth and the country.

FOIA Requests Sought to Verify Asset Claims

Warren County’s recent Freedom of Information Act requests to SLI. were designed to allow SLI to substantiate its repeated public claims of owning all assets within the library building. Despite these claims being made to SLI’s supporters and amplified by the Save Samuels Political Action Committee in a public multi-media campaign, SLI refused the FOIA request to provide documentation that could verify this claim, and answer other legitimate questions.

Warren County gave SLI the opportunity to prove its case through the transparent process required by Virginia FOIA law. Instead, SLI chose to block access to records that should be available to the public through self-serving narrow legal interpretation and prohibitive cost estimates designed to discourage inquiry, and delay or deny discovery.

Virginia Code § 2.2-3700 explicitly states that FOIA “shall be liberally construed to promote an increased awareness by all persons of governmental activities,” and that “any exemption allowing public records to be withheld must be interpreted narrowly.” This foundational principle of Virginia’s transparency law stands in direct contradiction to SLI’s highly restrictive interpretation. Instead of promoting access as the law requires, SLI has chosen the most restrictive possible reading of who qualifies as a requester and coupled it with prohibitive fees that create an additional barrier to access. In doing so, SLI is maneuvering the County into a situation requiring litigation for access of information that SLI should freely divulge. To date, the BOS have refrained from that expense.  What is SLI hiding?  What does SLI not want the public to know?  Why would SLI risk litigation expense to hide it?  A smart person should ask these questions.

Examining Ownership Claims

Based on common sense, publicly available financial records, and easily discoverable legal principles, the Majority Supervisors question SLI asset ownership claims on several grounds.

Charitable Trust Doctrine: Assets held by charitable nonprofit organizations are generally understood to be held in trust for public benefit. IRS Form 990 filings spanning the past 20 years demonstrate that SLI has received 94% of its funding from public sources (i.e., county and state), creating a likely charitable trust obligation for these taxpayer-funded assets. When SLI claims to “own” these assets to further its own interests and block lawful County procurement for services, SLI is likely violating that obligation.  SLI’s new 2024 articles of incorporation provide that SLI, in the event of dissolution, can “distribute all Library assets to such organizations organized and operated exclusively for charitable or educational purposes as shall at the time quality as an exempt organization or organizations under section 501(c)(3) of the Code….  Why would SLI purport to enable itself to give away library assets that were paid for with primarily Warren County funding to a charitable institution based in New Jersey?  Or, to send all of the books to Afghanistan? This is what SLI has attempted to give itself the power to do.  A smart person would question: Why?  Why is it right that library assets paid for by primarily Warren County be sent outside of Warren County, never to benefit our community again?  Who does SLI really care about?  A smart person may conclude that SLI cares about SLI, not Warren County citizens.  A smart person may conclude that SLI would rather send assets outside of Warren County than lose its library contract.  A smart person may conclude that, to SLI, SLI survival is paramount, even if Warren County citizens suffer.

Unrestricted Public Funding: State and County funds provided to SLI are documented as “unrestricted” grants. Under nonprofit law, fund restrictions must be established by donors at the time of giving and cannot be imposed after receipt. SLI claims that County funds were used “only for payroll” and not on assets represent post-hoc allocations without valid legal foundation. This would be like depositing paychecks and gift money into the same bank account, then claiming the rent payment came only from the gift money while groceries were paid only with paycheck funds. Once unrestricted funds are received, they become part of the organization’s general assets and cannot be arbitrarily segregated by the organization after the fact.

Improper Asset Transfer: When SLI amended its articles of incorporation last December to remove Warren County from the dissolution clause, this amendment may be used to effectively contingency transfer taxpayer-funded assets away from the public in Warren County to another county, state, or even country with no good reason to do so. It is a tactic to attempt to prevent the County from a lawful procurement process for library services.

Obstruction to County Taxpayers

SLI’s claim to own library assets represents an attempted obstruction to Warren County’s ability to transition to an alternative library service provider. By claiming private ownership of assets purchased with at least 94% unrestricted public funding, while simultaneously refusing to provide access to records that could either verify or discredit these claims, SLI has effectively threatened to hold these community assets hostage. While SLI makes these dubious claims publicly and with certitude, they simultaneously propagate speculation that the County will need to undertake considerable expense to purchase replacement assets of books and furniture. This purposeful narrative has misinformed the public with speculative costs associated with changing library service providers. The Majority Supervisors believe the assets in the library are public assets, and no new assets will need to be purchased.

SLI willingly chose not to participate in the lawful public procurement process conducted by the County. Initially it claimed it could not engage the WCLB due to pending litigation (its own suit to dismantle the WCLB). When that suit was entirely dismissed, SLI then claimed its non-profit status would be jeopardized if it engaged the WCLB and RFP process, which is likely in-correct, and the most narrow and self-serving legal interpretation possible (again). The WCLB would not govern SLI itself, but a library services contract with SLI.  A smart person would ask: Why did SLI really not respond to the RFP?  A smart person may ask: is SLI afraid someone else would do it better, for less?

Moving Forward with a New Provider

The BOS expects to finalize a contract with a new library services provider within 30-60 days. Common sense dictates that assets purchased with unrestricted taxpayer funds for public use should not be claimed for exclusive private control (SLI is a private non-stock corporation) but should remain available for continued public library services provided by the County under a lawful service contract.

The taxpaying public has invested over $24 million on Warren County library services and assets since 2007, and over $30 million including the beautiful Criser Road library facility. These should be Warren County PUBLIC library assets, and the public deserves continued access to the assets and to library services regardless of the service provider chosen. The Majority Supervisors will not allow these community resources to be held hostage by a private organization that refuses transparency while claiming ownership of publicly funded property.