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HomeMy WebLinkAbout07-600 O'NEILLPeter C. O'Neill 11 Old Farm Lane Shrewsbury, PA 17361 Dear Mr. O'Neill: ADVICE OF COUNSEL December 18, 2007 07 -600 This responds to your letters of September 10, 2007, and October 19, 2007, and your faxed transmission of November 9, 2007, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would impose any prohibitions or restrictions upon the Executive Director of the Center for Trade Development within the Commonwealth of Pennsylvania Department of Community and Economic Development ( "DCED" ) with regard to participating in matters involving a grant from the Center for Trade Development to SEDA Council of Governments ( "SEDA- COG "), a regional multi- county developmental agency, where the Executive Director, in his private capacity, would be pursuing a loan through SEDA -COG under a loan program administered by the U.S. Small Business Administration. Facts: As Executive Director of the Center for Trade Development within DCED, you request an advisory from the State Ethics Commission. You have submitted a copy of your DCED position description, which is incorporated herein by reference. You state that you and your wife are planning to build a commercial /medical office building in Shrewsbury Township, York County, within the next twelve months. You are considering pursuing a loan under the CDC /504 loan program administered by the U.S. Small Business Administration ( "SBA "). It is administratively noted that the SBA's website describes the CDC /504 loan program as follows: The CDC /504 loan program is a long -term financing tool for economic development within a community. The 504 Program provides growing businesses with long -term, fixed - rate financing for major fixed assets, such as land and buildings. A Certified Development Company [CDC] is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA O'Neill, 07 -600 December 18, 2007 Page 2 65 Pa.C.S. § 1103(a). and private- sector lenders to provide financing to small businesses. http: / /www.sba.gov/ services /financialassistance /sbaloantopics /cdc504 /index. html. You state that the designated SBA CDC /504 loan program provider for projects in York County is the SEDA -COG Local Development District Office located at 201 Furnace Road, Lewisburg, Pennsylvania. It is administratively noted that per SEDA- COG's website, SEDA -COG is a regional multi- county development agency comprised of eleven member counties. Under the guidance of a public policy board, SEDA -COG provides leadership, expertise and services to communities, businesses, institutions, and residents. It is further administratively noted that per its website, SEDA -COG offers services to central Pennsylvania's business and industrial community, including a business development financing program and an export assistance program. You state that the Center for Trade Development provides a grant to SEDA -COG to deliver export promotion assistance to local businesses in the region under SEDA- COG's purview. In your position as Executive Director, you annually negotiate the amount of said grant and set the performance measures that the Center for Trade Development expects SEDA -COG staff to reach. You state that although SEDA -COG's business financing services and export services both fall under SEDA -COG's Business and Economic Development Program, the SBA CDC /504 loan program and the export promotion program are administered by separate and distinct staff of SEDA -COG. SEDA -COG's Finance Director administers the CDC /504 loan program on behalf of the SBA. You seek guidance as to any restrictions that would be imposed upon you under the Ethics Act as a result of applying for a loan through SEDA -COG. 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. As Executive Director of the Center for Trade Development within DCED, you are a public employee subject to the provisions of the Ethics Act. This conclusion is based upon the position description, which when reviewed on an objective basis, indicates clearly that the power exists to take or recommend official action of a non - ministerial nature with respect to one or more of the following: contracting; procurement; administering or monitoring grants or subsidies; planning or zoning; inspecting; licensing; regulating; auditing; or other activity(ies) where the economic impact is greater than de minimis on the interests of another person. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. O'Neill, 07 -600 December 18, 2007 Page 3 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. "Immediate family." A parent, spouse, child, brother or sister. "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. Sections 1103(b) and 1103(c) of the Ethics Act, pertaining to improper influence, provide as follows: § 1103. Restricted activities (b) Seeking improper influence. —No person shall offer or give to a public official, public employee or nominee or candidate for public office or a member of his immediate O'Neill, 07 -600 December 18, 2007 Page 4 family or a business with which he is associated, anything of monetary value, including a gift, loan, political contribution, reward or promise of future employment based on the offeror's or donor's understanding that the vote, official action or judgment of the public official or public employee or nominee or candidate for public office would be influenced thereby. (c) Accepting improper influence. —No public official, public employee or nominee or candidate for public office shall solicit or accept anything of monetary value, including a gift, loan, political contribution, reward or promise of future employment, based on any understanding of that public official, public employee or nominee that the vote, official action or judgment of the public official or public employee or nominee or candidate for public office would be influenced thereby. 65 Pa. C. S. §§ 1103(b), (c). 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 92-010). A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion 89 -002. Having established the above general principles, your specific inquiry shall be addressed. First, you are advised that Section 1103(a) of the Ethics Act would not prohibit you from acting in your private capacity to apply for a loan through the SBA CDC /504 loan program where such loan would be administered by SEDA -COG. As for whether the Ethics Act would impose restrictions upon you in your public capacity with respect to matters involving the aforesaid grant from the Center for Trade Development to SEDA -COG, you are advised as follows. Under some circumstances, "reciprocity of power" may form the basis for a conflict of interest under Section 1103(a) of the Ethics Act. In Confidential Opinion, 05 -004, the Commission held that a school director would have a conflict of interest pursuant to Section 1103(a) of the Ethics Act in matters pertaining to the appointment /employment of a middle school principal for the school district when one of the candidates for the position exercised some administrative authority and influence over the school director as to the latter's employment as a teacher in a different school district. O'Neill, 07 -600 December 18, 2007 Page 5 In Elisco, Opinion 00 -003, the Commission held that where a city council member was an assistant principal and another city council member's spouse was a principal in a certain school district, both council members would have a conflict of interest with regard to voting to invest pension funds through an investment company and its sales representative who was a school director in that school district. In Woodrinq, Opinion 90 -001, where the chairman of a redevelopment authority had applied for a federal rehabilitation grant, and the executive director of the redevelopment authority also served as the city community development coordinator with authority to administer the grant program for the city, review applications, and determine eligibility, the Commission held, inter alia, that the chairman of the redevelopment authority would have a conflict of interest and would be required to abstain as to matters involving such individual if the chairman's grant application would be approved and he would receive benefits under the grant program. In Bassi, Opinion 86- 007 -R, the Commission held that a county commissioner could not enter into a lease with a municipal authority where one of the members of the authority was a county employee directly responsible to the commissioners of the county, unless the execution of the lease was accomplished after an open and public process with the authority member abstaining from participating in the review and award of the lease and the county commissioner abstaining from participating in any matter relating to the authority member in his position as a county employee. Where a "reciprocity of power" would result in a conflict of interest, the public official /public employee with the conflict would be required to abstain from participation and, when applicable, to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In the instant matter, your official duties as a public employee include annually negotiating the amount of SEDA -COG's grant from the Center for Trade Development and setting the performance measures that the Center for Trade Development expects SEDA -COG staff to reach. Meanwhile, SEDA -COG administers the CDC /504 loan program from which you and your wife plan to seek a loan. If SEDA -COG were a private entity, a conflict of interest might be found to exist based upon such circumstances. However, SEDA -COG is a council of governments. It is comprised of political subdivisions, and it performs a governmental function for the SBA. It is governmental in nature. Cf., Stone, Advice 93 -557; DePaola, Advice 92 -503. Although SEDA -COG receives a grant from DCED relative to the export promotion program, SEDA -COG itself would not appear to have any private, non - governmental interest as to such grant that would result in a conflict of interest for you based upon reciprocity of power. Additionally, there is no indication in the submitted facts that SEDA -COG staff would have such a private, non - governmental interest in the SEDA -COG grant from DCED. Therefore, you are advised that where you, in your private capacity, would apply for a loan through the CDC /504 loan program administered by SEDA -COG, the Ethics Act would not prohibit you from participating in your public capacity as Executive Director of the Center for Trade Development in matters involving the Center for Trade Development's grant to SEDA -COG's export promotion program, subject to the following strict conditions: (1) The CDC /504 loan program through which you would apply for a loan would be completely unrelated to the SEDA -COG's aforesaid grant from the Center for Trade Development, such that your actions with respect to the SEDA -COG grant would in no way benefit you, a member of your O'Neill, 07 -600 December 18, 2007 Page 6 immediate family, or a business with which you or a member of your immediate family is associated; (2) Neither SEDA -COG nor any of its staff with input or influence as to the CDC /504 loan program would have any private, non - governmental interest as to the aforesaid grant from the Center for Trade Development; and There would be no improper understanding(s) contrary to Section 1103(b) or Section 1103(c) 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 Governor's Code of Conduct. Conclusion: As Executive Director of the Center for Trade Development within the Commonwealth of Pennsylvania Department of Community and Economic Development ( "DCED "), you are a public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Section 1103(a) of the Ethics Act would not prohibit you in your private capacity from applying for a loan under the CDC /504 loan program administered by the U.S. Small Business Administration ( "SBA ") where such loan would be administered by SEDA Council of Governments ("SEDA-COG"), a regional multi- county developmental agency comprised of eleven member counties, which receives export promotion grants from the Center for Trade Development. Where you, in your private capacity, would apply for a loan through the CDC /504 loan program administered by SEDA -COG, the Ethics Act would not prohibit you from participating in your public capacity as Executive Director of the Center for Trade Development in matters involving the Center for Trade Development's grant to SEDA -COG's export promotion program, subject to the following strict conditions: (1) the CDC /504 loan program through which you would apply for a loan would be completely unrelated to the SEDA -COG's aforesaid grant from the Center for Trade Development, such that your actions with respect to the SEDA - COG grant would in no way benefit you, a member of your immediate family, or a business with which you or a member of your immediate family is associated; (2) neither SEDA -COG nor any of its staff with input or influence as to the CDC /504 loan program would have any private, non - governmental interest as to the aforesaid grant from the Center for Trade Development; and (3) there would be no improper understanding(s) contrary to Section 1103(b) or Section 1103(c) of the Ethics Act. (3) 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 O'Neill, 07 -600 December 18, 2007 Page 7 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