HomeMy WebLinkAbout07-571 StaniszewskiMatt Staniszewski
City Councilman
City of Washington
55 West Maiden Street
Washington, PA 15301
Dear Mr. Staniszewski:
ADVICE OF COUNSEL
August 17, 2007
07 -571
This responds to your letter of July 11, 2007, by which you requested advice from
the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
§ 1101 et seq., would present any prohibitions or restrictions upon a city
councilman with regard to voting on matters pertaining to the city chamber of
commerce, a non - profit organization for which the city councilman is an executive board
member.
Facts: You are a City Councilman for the City of Washington ( "City "). You also
are currently a member of the executive board of the City of Washington Chamber of
Commerce ( "Chamber "). You state that the Chamber is a volunteer, non - profit
organization in which you have no financial interest.
You seek guidance from the State Ethics Commission as to whether, in your
capacity as a City Councilman, the Ethics Act would permit you to vote on three specific
matters involving the Chamber as detailed below.
Your first specific inquiry is whether the Ethics Act would permit you to vote on a
lease agreement that the Chamber would like to enter into with the City for an office
located at City Hall.
Your second specific inquiry is based upon the following submitted facts.
The Chamber would like to enter into a cooperation agreement with the City to
assist in managing festivals and city events as well as donations and expenses. The
Chamber would use the donations to cover expenses directly related to those festivals
and events. You state that the Chamber would not profit from this because of its non-
profit status.
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August 17, 2007
Page 2
Based upon the above facts, you ask whether the Ethics Act would permit you to
vote on the proposed cooperation agreement between the City and the Chamber.
Your third specific inquiry is based upon the following submitted facts.
The City has collected some donations for an upcoming festival. These donations
are currently stored in the City's coffers. You state that the City would like to transfer or
donate these monies to the Chamber to cover expenses directly related to the
upcoming festival.
Based upon the above facts, you ask whether the Ethics Act would permit you to
vote on the transfer of the aforesaid donations to the Chamber.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester
based upon the facts that the requester has submitted. In issuing the advisory based
upon the facts that the requester has submitted, the Commission does not engage in an
independent investigation of the facts, nor does it speculate as to facts that have not
been submitted. It is the burden of the requester to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a
defense to the extent the requester has truthfully disclosed all of the material facts.
It is further initially noted that, pursuant to the same aforesaid Sections of the
Ethics Act, an advice may be given only as to prospective (future) conduct. If the activity
in question has already occurred, the Commission may not issue an advice but any
person may then submit a signed and sworn complaint, which will be investigated by the
Commission if there are allegations of Ethics Act violations by a person who is subject
to the Ethics Act. To the extent you have inquired as to conduct that has already
occurred, such past conduct may not be addressed in the context of an advisory
opinion. However, to the extent you have inquired as to future conduct, your inquiry
may, and shall be addressed.
As a City Councilman, you are a public official as that term is defined in the
Ethics Act, and hence you are subject to the provisions of the Ethics Act.
Sections 1103(a) and 1103(j) of the Ethics Act provide:
§ 1103. Restricted activities
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
(j) Voting conflict. - -Where voting conflicts are not
otherwise addressed by the Constitution of Pennsylvania or
by any law, rule, regulation, order or ordinance, the following
procedure shall be employed. Any public official or public
employee who in the discharge of his official duties would be
required to vote on a matter that would result in a conflict of
interest shall abstain from voting and, prior to the vote being
taken, publicly announce and disclose the nature of his
interest as a public record in a written memorandum filed
with the person responsible for recording the minutes of the
meeting at which the vote is taken, provided that whenever a
governing body would be unable to take any action on a
matter before it because the number of members of the body
required to abstain from voting under the provisions of this
section makes the majority or other legally required vote of
Staniszewski, 07 -571
August 17, 2007
Page 3
approval unattainable, then such members shall be
permitted to vote if disclosures are made as otherwise
provided herein. In the case of a three - member governing
body of a political subdivision, where one member has
abstained from voting as a result of a conflict of interest and
the remaining two members of the governing body have cast
opposing votes, the member who has abstained shall be
permitted to vote to break the tie vote if disclosure is made
as otherwise provided herein.
65 Pa.C.S. §§ 1103(a), (j).
The following terms are defined in the Ethics Act as follows:
§ 1102. Definitions
"Conflict" or "conflict of interest." Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate
family or a business with which he or a member of his
immediate family is associated. The term does not include
an action having a de minimis economic impact or which
affects to the same degree a class consisting of the general
public or a subclass consisting of an industry, occupation or
other group which includes the public official or public
employee, a member of his immediate family or a business
with which he or a member of his immediate family is
associated.
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
"Business." Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self - employed individual, holding company,
joint stock company, receivership, trust or any legal entity
organized for profit.
"Business with which he is associated." Any
business in which the person or a member of the person's
immediate family is a director, officer, owner, employee or
has a financial interest.
65 Pa.C.S. § 1102.
Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is
prohibited from using the authority of public office /employment or confidential
information received by holding such a public position for the private pecuniary benefit
of the public official /public employee himself, any member of his immediate family, or a
business with which he or a member of his immediate family is associated.
The use of authority of office is not limited merely to voting, but extends to any
use of authority of office including, but not limited to, discussing, conferring with others,
and lobbying for a particular result. Juliante, Order 809.
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August 17, 2007
Page 4
In each instance of a voting conflict, Section 1103(j) of the Ethics Act requires the
public official /public employee to abstain and to publicly disclose the abstention and
reasons for same, both orally and by filing a written memorandum to that effect with the
person recording the minutes. In the event that the required abstention results in the
inability of the governmental body to take action because a majority is unattainable due
to the abstention(s) from conflict under the Ethics Act, then voting is permissible
provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion
02 -005.
Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows:
§ 1103. Restricted activities
(f) Contract. - -No public official or public employee or
his spouse or child or any business in which the person or
his spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with
which the public official or public employee is associated or
any subcontract valued at $500 or more with any person
who has been awarded a contract with the governmental
body with which the public official or public employee is
associated, unless the contract has been awarded through
an open and public process, including prior public notice and
subsequent public disclosure of all proposals considered and
contracts awarded. In such a case, the public official or
public employee shall not have any supervisory or overall
responsibility for the implementation or administration of the
contract. Any contract or subcontract made in violation of
this subsection shall be voidable by a court of competent
jurisdiction if the suit is commenced within 90 days of the
making of the contract or subcontract.
65 Pa.C.S. § 1103(f).
The term "contract" is defined in the Ethics Act as follows:
§ 1102. Definitions
"Contract." An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as
one party and a public official or public employee as the
other party, concerning his expense, reimbursement, salary,
wage, retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
65 Pa.C.S. § 1102.
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official /public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the governmental body, or
subcontracting with any person who has been awarded a contract with the
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August 17, 2007
Page 5
governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an
"open and public process" be observed as to the contract with the governmental body.
Pursuant to Section 1103(f), an "open and public process" includes:
(1) prior public notice of the employment or contracting possibility;
(2) sufficient time for a reasonable and prudent competitor /applicant to be
able to prepare and present an application or proposal;
(3) public disclosure of all applications or proposals considered; and
(4) public disclosure of the contract awarded and offered and accepted.
Section 1103(f) of the Ethics Act also requires that the public official /employee
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
In applying the above provisions of the Ethics Act to your inquiry, it is noted that
Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit
public officials /public employees from having outside business activities or employment;
however, the public official /public employee may not use the authority of his public
position - -or confidential information obtained by being in that position- -for the
advancement of his own private pecuniary benefit or that of a business with which he is
associated. Pancoe, Opinion 89 -011. Examples of conduct that would be prohibited
under Section 1103(a) would include: (1) the pursuit of a private business opportunity in
the course of public action, Metrick, Order 1037; (2) the use of governmental facilities,
such as governmental telephones, postage, equipment, research materials, or other
property, or the use of governmental personnel, to conduct private business activities,
Freind, Order 800; Pancoe, supra; and (3) the participation in an official capacity as to
matters involving the business with which the public official /public employee is
associated in his private capacity (Gorman, Order 1041; Rembold, Order 1303; Wilcox,
Order 1306), or private customer(s) /client(s) (Miller, Opinion 89 -024; Kannebecker,
Opinion 92- 10).
You are advised that under the submitted facts, the Chamber would be
considered a "business" as that term is defined in the Ethics Act. Based upon prior
rulings of the State Ethics Commission, the submitted fact that the Chamber is a non-
profit corporation would not disqualify it from being encompassed within the aforesaid
definition of "business." See, Soltis - Sparano, Order 1045; McConahy, Opinion 96 -006.
The State Ethics Commission is aware of the ruling of the Supreme Court of
Pennsylvania in In re Nomination Petition of Carroll, 586 Pa. 624, 896 A.2d 566 (2006).
In Carroll, in the narrow context of a challenge to a candidate's nomination petition, the
Supreme Court held that a candidate's omission from his Statement of Financial
Interests of his presidency of a non - profit corporation from which he received no
compensation was not a fatal defect to his nomination petition. In reaching this
conclusion, the Court reviewed the definition of the term "business" as set forth in the
Ethics Act. (See, definition of the term "business" set forth above).
The Court noted that the "organized for profit" reference at the end of the
definition was subject to two possible interpretations —an interpretation that would
construe the reference as modifying all preceding forms of business listed in the
definition (such that only for - profit entities would qualify as "businesses ") and another
interpretation that would construe it as applying only to the last antecedent example
(such that non - profit entities would qualify as "businesses "). Having apparently been
erroneously informed that the State Ethics Commission had no rulings as to whether
non - profit entities would be considered "businesses" under the Ethics Act, the Court
construed the definition in the way most favorable to the candidate, such that the
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August 17, 2007
Page 6
candidate was viewed as not having been required to list his presidency of the non-
profit corporation on his Statement of Financial Interests.
Contrary to the inaccurate information that was apparently supplied to the
Supreme Court in the Carroll case, the Commission has long held that a non - profit
corporation is a "business" as that term is defined in the Ethics Act. In Soltis - Sparano,
Order 1045 (decided in 1997) the Commission specifically interpreted the language at
the end of the definition of the term "business" and concluded that:
The word "or" is disjunctive, and furthermore, the
repeated use of the word "any" precludes any interpretation
that the final phrase "legal entity organized for profit"
modifies the initial word "corporation:" Any corporation, ... or
any legal entity organized for profit." The clear and
unambiguous statutory language is that any corporation,
including a non - profit corporation, is a "business."
Soltis - Sparano, Order 1045, at 31. The following are additional decisions in which the
Commission has held that a non - profit corporation is a "business" within the meaning of
that term as defined by the Ethics Act: Confidential Opinion, 89 -007 (decided in 1989);
McConahy, Opinion 96 -006 (decided in 1996); Maduka, Order 1277 (decided in 2003).
In reviewing Carroll, supra, the State Ethics Commission has stated that
challenges to candidate nomination petitions involve unique considerations, and that at
this time, there is no indication that the Supreme Court's ruling in the Carroll case would
have any applicability outside the scope of election - related challenges. Kravetsky,
Order 1420.
In the instant matter, which is not an election - related case, the necessary
conclusion under the aforementioned Commission rulings is that the Chamber would
qualify as a "business" under the Ethics Act. Given that you serve as an executive
board member for the Chamber, the Chamber is a business with which you are
associated.
Pursuant to Section 1103(a) of the Ethics Act, in your public capacity as a City
Councilman, you would generally have a conflict of interest in matters that would
financially impact the Chamber. You would specifically be prohibited from using the
authority of your public position as a City Councilman, or confidential information
received by being a City Councilman, for the private pecuniary benefit of the Chamber.
In each instance of a conflict of interest, you would be required to abstain fully from
participation (including but not limited to voting) and to satisfy the disclosure
requirements of Section 1103(j) of the Ethics Act.
Having established the above general principles, your specific inquiries shall be
addressed.
In response to your first specific inquiry, you are advised as follows. Pursuant to
Section 1103(a) of the Ethics Act, you would have a conflict of interest as a City
Councilman as to matters pertaining to the proposed lease agreement between the
Chamber and the City. In each instance of a conflict of interest, you would be required
to abstain fully from participation (including but not limited to voting) and to satisfy the
disclosure requirements of Section 1103(j) of the Ethics Act.
Turning to Section 1103(f) of the Ethics Act, the requirements of Section 1103(f)
would have to be observed whenever applicable. You are advised that a lease
agreement between the City and the Chamber for office space would constitute a
"contract" as that term is defined in the Ethics Act. Therefore, if a lease agreement
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August 17, 2007
Page 7
between the City and the Chamber would be valued at $500 or more, the requirements
of Section 1103) of the Ethics Act would have to be observed.
In response to your second specific inquiry, you are advised as follows. To the
extent that the proposed cooperation agreement between the City and the Chamber
would result in a financial benefit to the Chamber —for example, by paying expenses
that the Chamber would otherwise pay —you would have a conflict of interest under
Section 1103(a) of the Ethics Act as to matters pertaining to said cooperation
agreement, even if such financial benefit would not be considered a "profit." In each
instance of a conflict of interest, you would be required to abstain fully from participation
(including but not limited to voting) and to satisfy the disclosure requirements of Section
1103(j) of the Ethics Act.
In response to your third specific inquiry, you are advised as follows. To the
extent that the proposed transfer /donation to the Chamber of monies collected by the
City for an upcoming festival would result in a financial benefit to the Chamber —for
example, by paying expenses that the Chamber would otherwise pay —you would have
a conflict of interest under Section 1103(a) of the Ethics Act as to matters pertaining to
said transfer /donation of monies to the Chamber, even if such financial benefit would
not be considered a "profit." In each instance of a conflict of interest, you would be
required to abstain fully from participation (including but not limited to voting) and to
satisfy the disclosure requirements of Section 1103(j) of the Ethics Act.
The propriety of the proposed conduct has only been addressed under the Ethics
Act; the applicability of any other statute, code, ordinance, regulation or other code of
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the Third Class City Code.
Conclusion: As a City Councilman for the City of Washington ( "City "), you are a
public official subject to the provisions of the Public Official and Employee Ethics Act
( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The City of Washington Chamber of
Commerce ("Chamber"), for which you serve as an executive board member, is a
business with which you are associated. Pursuant to Section 1103(a) of the Ethics Act,
in your public capacity as a City Councilman, you would generally have a conflict of
interest in matters that would financially impact the Chamber.
You would have a conflict of interest as a City Councilman as to matters
pertaining to a proposed lease agreement between the City and the Chamber for an
office located in City Hall. To the extent that a proposed cooperation agreement
between the City and the Chamber would result in a financial benefit to the Chamber —
for example, by paying expenses that the Chamber would otherwise pay —you would
have a conflict of interest under Section 1103(a) of the Ethics Act as to matters
pertaining to said cooperation agreement, even if such financial benefit would not be
considered a "profit." To the extent that a proposed transfer /donation to the Chamber of
monies collected by the City for an upcoming festival would result in a financial benefit
to the Chamber —for example, by paying expenses that the Chamber would otherwise
pay —you would have a conflict of interest under Section 1103(a) of the Ethics Act as to
matters pertaining to said transfer /donation of monies to the Chamber, even if such
financial benefit would not be considered a "profit." In each instance of a conflict of
interest, you would be required to abstain fully from participation (including but not
limited to voting) and to satisfy the disclosure requirements of Section 1103(j) of the
Ethics Act.
The requirements of Section 1103(f) of the Ethics Act would have to be observed
whenever applicable. A lease agreement between the City and the Chamber for office
space would constitute a "contract" as that term is defined in the Ethics Act. If a lease
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August 17, 2007
Page 8
agreement between the City and the Chamber would be valued at $500 or more, the
requirements of Section 1103(f) of the Ethics Act would have to be observed.
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act.
Pursuant to Section 1107(11), an Advice is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith
conduct in any other civil or criminal proceeding, provided the requester has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717 - 787 - 0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Robin M. Hittie
Chief Counsel