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HomeMy WebLinkAbout08-513 GuteliusHonorable Dave Gutelius, Mayor Mifflinburg Borough 288 North Eighth Street Mifflinburg, PA 17844 Board of Directors Dave Gutelius Excavating, Inc. 291 North Eighth Street Mifflinburg, PA 17844 ADVICE OF COUNSEL February 6, 2008 Dear Mayor Gutelius and Directors of Dave Gutelius Excavating, Inc.: 08 -513 This responds to your respective letters received January 4, 2008, and January 7, 2008, 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 permit an excavating business to contract with a borough where: (1) the president and controlling stockholder of the aforesaid business serves as the borough mayor; and: (2) an employee of the aforesaid business serves as a borough council member; and whether the Ethics Act would impose any prohibitions or restrictions upon a borough mayor, whose son -in -law is employed by the borough police force, with respect to the performance of his mayoral duties. Facts: Requester Dave Gutelius (hereinafter, "Mayor Gutelius ") is Mayor of Mifflinburg Borough ( "the Borough "), having initially been appointed Mayor in February 2007, and subsequently elected to a two -year term as Mayor at the November 2007 election. The first and second specific inquiries that have been submitted for an advisory are based upon the following submitted facts. In his private capacity, Mayor Gutelius is President and a part owner of a company named "Dave Gutelius Excavating, Inc." (hereinafter referred to as the Corporation "), a business located in the Borough. Of the six stockholders in the Corporation, Mayor Gutelius is the controlling stockholder. The Corporation has been doing business with the Borough since 1986. One of the Corporation's employees (hereinafter referred to as "Individual A ") is a newly - elected Member of Borough Council. Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 2 All requesters have posed the following two specific inquiries: 1. Whether the Ethics Act would impose any prohibitions or restrictions upon the Corporation with regard to bidding on Borough contracts that have been publicly advertised; and 2. Whether the election of Individual A to Borough Council would affect the Corporation in reference to working in the Borough. Mayor Gutelius has also posed a third specific inquiry, specifically, whether the Ethics Act would restrict him from performing any of his duties as Mayor, given that his son -in -law currently serves on the Borough police force. 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 noted that, pursuant to the same aforesaid Sections of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), an opinion /advice may be given only as to prospective (future) conduct. To the extent that your inquiries relate to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent your inquiries relate to future conduct, your inquiries may and shall be addressed. As Borough Mayor, Mayor Gutelius is a public official 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 approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 3 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. "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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5 % of the assets of the economic interest in indebtedness. 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 Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 4 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. 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: "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. Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 5 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 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 /public 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 the instant matter, it is noted that Section 1103(a) of the Ethics Act pertaining to conflicts of interests 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, staff, 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 or private clients(s). Miller, Opinion 89- 024; Kannebecker, Opinion 92 -010. If a business with which the public official /public employee or immediate family member is associated or a private customer /client would have a matter pending before the governmental body, the public official /public employee would generally have a conflict of interest as to such matter. Kannebecker, Opinion 92 -010; Miller, Opinion 89- 024. 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. In each instance of a conflict of interest, the public official /public employee would be required to abstain fully from participation and, with respect to voting conflicts, 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 the first and second specific inquiries, you are advised as follows. The Corporation is a business with which Mayor Gutelius is associated in his capacity as President and controlling stockholder. Pursuant to Section 1103(a) of the Ethics Act, in his public capacity as Borough Mayor, Mayor Gutelius would generally have a conflict of interest in matters that would financially impact him, the Corporation, or the Corporation's customer(s) /client(s). See, Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 6 Kannebecker, supra; Miller, supra. In each instance of a conflict of interest, Mayor Gutelius would be required to abstain fully from participation. The abstention requirement would not be limited to voting, but rather, would extend to any use of authority of office. In the event of a voting conflict, Mayor Gutelius would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. You are advised that the Ethics Act would not prohibit the Corporation from continuing to do business with the Borough while Mayor Gutelius serves as Mayor and /or Individual A serves as a Borough Council Member. However, the requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. To the extent the Corporation would contract with the Borough, or would subcontract with a person awarded a contract with the Borough, and the value of the Corporation's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) would be applicable. Parenthetically, although the contracting in question would not be prohibited under the Ethics Act itself where the requirements of Sections 1103(a), 1103(f), and 1103(j) of the Ethics Act would be satisfied, a problem could exist as to such contracting under the Borough Code. It is administratively noted that the Borough Code provides in pertinent part: § 46404. Penalty for personal interest in contracts or purchases Except as otherwise provided in this act, no borough official either elected or appointed, who knows or who by the exercise of reasonable diligence could know, shall be interested to any appreciable degree either directly or indirectly in any purchase made or contract entered into or expenditure of money made by the borough or relating to the business of the borough, involving the expenditure by the borough of more than one thousand dollars ($1000) in any calendar year, but this limitation shall not apply to cases where such officer or appointee of the borough is an employe of the person, firm or corporation to which the money is to be paid in a capacity with no possible influence on the transaction, and in which he cannot be possibly benefited thereby either financially or otherwise. But in the case of a member of council or mayor, if he knows that he is within the exception just mentioned he shall so inform council and shall refrain from voting on the expenditure or any ordinance relating thereto, and shall in no manner participate therein. Any official or appointee who shall knowingly violate the provisions of this section shall be subject to surcharge to the extent of the damage shown to be thereby sustained by the borough and to ouster from office, and shall be guilty of a misdemeanor, and upon conviction thereof shall be sentenced to pay a fine not exceeding one thousand dollars ($1000), or not exceeding one hundred eighty days' imprisonment, or both. 53 P.S. § 46404. Because this Advice may not interpret the above quoted provision of the Borough Code, it is suggested that you seek legal advice in that regard. Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 7 In response to Mayor Gutelius' third specific inquiry, Mayor Gutelius is advised as follows. Because a son -in -law is not a member of "immediate family" as that term is defined in the Ethics Act, Mayor Gutelius would not have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact his son -in -law but that would not financially impact Mayor Gutelius, a member of his immediate family, or a business with which he or a member of his immediate family is associated. Absent some basis for a conflict of interest other than the son -in -laws employment with the Borough police force, Section 1103(a) of the Ethics Act would not restrict Mayor Gutelius from performing his mayoral duties. 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. Conclusion: As Mayor of Mifflinburg Borough ( "the Borough "), Dave Gutelius (hereinafter, "Mayor Gutelius ") is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Dave Gutelius Excavating, Inc. ( "the Corporation ") is a business with which Mayor Gutelius is associated in his capacity as the Corporation's President and controlling stockholder. Pursuant to Section 1103(a) of the Ethics Act, in his public capacity as Borough Mayor, Mayor Gutelius would generally have a conflict of interest in matters that would financially impact him, the Corporation, or the Corporation's customer(s) /client(s). In each instance of a conflict of interest, Mayor Gutelius would be required to abstain fully from participation. The abstention requirement would not be limited to voting, but rather, would extend to any use of authority of office. In the event of a voting conflict, Gutelius would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The Ethics Act would not prohibit the Corporation from continuing to do business with the Borough while Mayor Gutelius serves as Mayor and /or while a Corporation employee referred to above as "Individual A" serves as a Borough Council Member. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. To the extent the Corporation would contract with the Borough, or would subcontract with a person awarded a contract with the Borough, and the value of the Corporation's contract /subcontract would be $500 or more, the restrictions of Section 1103(f) would be applicable. Although the contracting in question would not be prohibited under the Ethics Act itself where the requirements of Sections 1103(a), 1103(f), and 1103(j) of the Ethics Act would be satisfied, a problem could exist as to such contracting under the Borough Code, and therefore, it is suggested that you seek legal advice in that regard. Because a son -in -law is not a member of "immediate family" as that term is defined in the Ethics Act, Mayor Gutelius would not have a conflict of interest under Section 1103(a) of the Ethics Act in matters that would financially impact his son -in -law but that would not financially impact Mayor Gutelius, a member of his immediate family, or a business with which he or a member of his immediate family is associated. Absent some basis for a conflict of interest other than the son -in -law's employment with the Borough police force, Section 1103(a) of the Ethics Act would not restrict Mayor Gutelius from performing his mayoral duties. 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. Gutelius /Directors, Dave Gutelius Excavating, Inc., 08 -513 February 6, 2008 Page 8 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