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HomeMy WebLinkAbout08-568 MillerWendy F. McKenna, Esquire Robert L. Brant & Associates 572 West Main Street P.O. Box 26865 Trappe, PA 19426 Dear Ms. McKenna: ADVICE OF COUNSEL August 15, 2008 08 -568 This responds to your letter dated June 18, 2008, received June 24, 2008, and your faxed transmission of July 8, 2008, by which you requested an advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibitions or restrictions upon an individual who serves both as a borough council member and as a member of the borough's planning commission with regard to matters before the borough council or borough planning commission pertaining to: (1) property(ies) proposed to be purchased by the individual, the individual's father, or a family partnership that would include such individual and various immediate family members; or (2) other properties adjacent to or in proximity to the subject property(ies). Facts: You are an attorney with the law firm that serves as Solicitor to chwenksville Borough ( "Borough "). You have requested an advisory from the Pennsylvania State Ethics Commission on behalf of Ms. Lee Ann Miller ( "Ms. Miller"), who serves as a Member of Borough Council and the Borough Planning Commission ( "Planning Commission "). You have submitted extensive facts, the material portion of which may be fairly summarized as follows. In 2002, Borough Council adopted a plan to improve and revitalize certain areas of the Borough with the assistance of the Montgomery County Revitalization Program. Thereafter, the Perkiomen Valley Economic Development Corporation ( "PVEDC ") was incorporated as a non - profit corporation to advance and promote the economic and commercial development and improvement of the Borough. In 2003, PVEDC purchased properties in the Borough located at 100, 128, and 250 Main Street. At the closing on each of the aforesaid properties, PVEDC executed purchase money mortgages in favor of Union National Bank and Trust ( "Bank "). On June 21, 2007, the Bank commenced mortgage foreclosure proceedings against McKenna, 08 -568 August 15, 2008 Page 2 PVEDC due to PVEDC's default on the underlying mortgages. Representatives of Borough Council and the Bank discussed various options to prevent foreclosure with respect to the properties, including the possibility of the Borough purchasing one of the properties. You state that the properties were scheduled to be sold at a Montgomery County Sheriff's sale on July 30, 2008. Ms. Miller is interested in acquiring the property located at 128 Main Street. Ms. Miller has engaged in discussions with Bank representatives concerning purchasing that property at sheriff's sale or following sheriff's sale if the Bank takes title to the property, or purchasing the Bank's lien position. Ms. Miller's father, Al Manning, a real estate developer, has expressed interest in purchasing the property located at 250 Main Street or the underlying note and mortgage from the Bank. You have been advised that there is a possibility that a family partnership ( "Family Partnership "), in which Ms. Miller and her brother would serve as limited partners and Ms. Millers mother and father would serve as general partners, would hold title to one or both of the aforesaid properties located at 128 Main Street and 250 Main Street (hereinafter collectively referred to as the "Properties "). You have requested an advisory regarding the propriety of Ms. Miller and the Family Partnership purchasing the Properties, or purchasing the notes and lien positions of the Bank and subsequently purchasing the Properties directly from PVEDC, negotiating a Deed in Lieu of Foreclosure with PVEDC, or proceeding with taking the Properties to sheriff's sale as the executing creditors. You also seek advice as to the effect Ms. Miller's positions as a member of Borough Council and a member of the Planning Commission would have as to matters related to the Properties that would come before Borough Council or the Planning Commission. You seek advice as to the procedures that must be followed in the event Ms. Miller and /or the Family Partnership would obtain title to the Properties and would proceed with pursuing land development plans, seeking permits or approvals from the Borough, or engaging in any other dealing with the Borough as to the Properties or surrounding properties owned by the Borough. Based upon the above submitted facts, you ask the following specific questions: (1) Whether Ms. Miller may communicate or engage in formal or informal discussions regarding the Properties with Borough Council, the Planning Commission, or Borough staff; (2) Whether Ms. Miller may appear before the Borough Council or the Planning Commission to represent herself and /or the Family Partnership with respect to any development plans, permits or approvals or any other official action by the Borough as to the Properties; Whether Ms. Miller may take action or engage in discussions as a Borough Council member or Planning Commission member with respect to any properties adjacent to or in proximity to the Properties, when action as to such adjacent or nearby properties would have a direct or indirect effect upon Ms. Miller's and /or the Family Partnership's Properties; and (4) Whether Ms. Miller as a Member of Borough Council or the Planning Commission would be permitted to engage in discussions or policy making that would generally affect the Properties as well as other properties located in the Borough. 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 (3) McKenna, 08 -568 August 15, 2008 Page 3 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, 65 Pa.C.S. §§ 1107(10), (11), an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /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 member of Borough Council, Ms. Miller is a public official subject to the provisions of the Ethics Act. Based upon the submitted facts, it cannot be determined whether in her capacity as a Member of the Planning Commission Ms. Miller would be considered a public official subject to the Ethics Act. The submitted facts do not indicate whether the Planning Commission is a purely advisory body that would fall within the exclusion to the Ethics Act's definition of the term "public official ": § 1102. Definitions "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. § 1102 (Emphasis added); cf., Kerstetter, Advice 08 -559; McGlynn, Advice 08 -554. Therefore, this advisory does not determine whether Ms. Miller is a "public official" subject to the Ethics Act in her position as a Member of the Planning Commission. 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 McKenna, 08 -568 August 15, 2008 Page 4 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 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. McKenna, 08 -568 August 15, 2008 Page 5 "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 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. The above statutory definition of "conflict" or "conflict of interest" contains two exclusions, referred to herein as the "de minimis exclusion" and the "class /subclass exclusion." The de minimis exclusion precludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburq, Order 900. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" (in no way differently) than the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Kablack, Opinion 02 -003; Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90- 017); Rubenstein, Opinion 01 -007. The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, supra. 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. 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 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 McKenna, 08 -568 August 15, 2008 Page 6 under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 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 No. 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 client(s). Miller, Opinion 89- 024; Kannebecker, Opinion No. 92 -010. In the instant matter, Ms. Miller's father is a member of Ms. Miller's "immediate family" as that term is defined in the Ethics Act. The Family Partnership would be a business with which Ms. Miller and various of her immediate family members would be associated. In her capacity as a public official, Ms. Miller would generally have a conflict of interest in matters that would financially impact herself, a member of her immediate family such as her father, or a business with which she or any member of her immediate family would be associated such as the Family Partnership. Subject to the de minimis exclusion and the class /subclass exclusion, at such times as Ms. Miller, her father, or the Family Partnership would have an interest in the Properties or would reasonably expect to acquire such an interest: (1) Ms. Miller would have a conflict of interest in her capacity as a Borough Council Member as to matters before Borough Council involving the Properties; and (2) if Ms. Miller would be considered a public official in her capacity as a Member of the Planning Commission, Ms. Miller would have a conflict of interest as to matters before the Planning Commission involving the Properties. In each instance of a conflict of interest, Ms. Miller would be required to abstain fully from participation, and in each instance of a voting conflict, Ms. Miller would be required to abstain and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Your specific questions shall now be addressed. In response to your first and second specific questions, you are advised as follows. To the extent Ms. Miller would have a conflict of interest as to matters involving the Properties, she would be prohibited from acting in her capacity as a public official as to such matters, including communicating or engaging in formal or informal discussions regarding the Properties with Borough Council or Borough staff. If Ms. Miller would be considered a public official in her capacity as a member of the Planning Commission, she would likewise be prohibited from acting in her capacity as a Planning Commission Member to communicate or engage in formal or informal discussions regarding the Properties with the Planning Commission. However, Section 1103(a) of the Ethics Act would not prohibit Ms. Miller from acting in her private capacity as a citizen in matters pertaining to the Properties, including appearing before Borough Council or the Planning Commission in her private capacity as a citizen, subject to the condition that her conduct /communications would clearly and unequivocally establish that Ms. Miller was acting in her private capacity rather than in her capacity as a public official. Cf., Confidential Advice, 08 -531; Braun, Advice 00 -633. In response to your third specific question, you are advised as follows. Unless the de minimis exclusion or class /subclass exclusion would be applicable, Ms. Miller would have a conflict of interest in her capacity as a public official as to matters involving properties adjacent to or in proximity to the Properties, to the extent such matters would financially impact Ms. Miller, a member of her immediate family, or a business with which she or a member of her immediate family would be associated such as the Family Partnership. In response to your fourth specific question, you are advised as follows. Unless the de minimis exclusion or class /subclass exclusion would be applicable, Ms. Miller would be prohibited in her public capacity from engaging in discussions or policy making McKenna, 08 -568 August 15, 2008 Page 7 that would financially impact the Properties as well as other properties located in the Borough, to the extent such matters would financially impact Ms. Miller, a member of her immediate family, or a business with which she or a member of her immediate family would be associated such as the Family Partnership. In each instance of a conflict of interest, Ms. Miller would be required to abstain fully, and in each instance of a voting conflict, Ms. Miller would be required to abstain and satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The ropriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Borough Code. Conclusion: As a member of the Schwenksville Borough ( "Borough ") Council, Ms. Lee Ann Miller ( "Ms. Miller ") 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. Based upon the submitted facts, it cannot be determined whether in her capacity as a Member of the Borough Planning Commission ( "Planning Commission') Ms. Miller would be considered a public official subject to the Ethics Act. Based upon the submitted facts that: (1) properties located in the Borough at 100, 128, and 250 Main Street are owned by the Perkiomen Valley Economic Development Corporation subject to mortgages in favor of Union National Bank and Trust ( "Bank "); (2) the aforesaid properties are in mortgage foreclosure proceedings; (3) Ms. Miller is interested in acquiring the property located at 128 Main Street and has engaged in discussions with Bank representatives concerning purchasing that property at sheriff's sale or following sheriffs sale if the Bank takes title to the property, or purchasing the Bank's lien position; (4) Ms. Miller's father, Al Manning, a real estate developer, has expressed interest in purchasing the property located at 250 Main Street or the underlying note and mortgage from the Bank; and (5) there is a possibility that a family partnership ( "Family Partnership "), in which Ms. Miller and her brother would serve as limited partners and Ms. Miller's mother and father would serve as general partners, would hold title to one or both of the aforesaid properties located at 128 Main Street and 250 Main Street (hereinafter collectively referred to as the "Properties "), you are advised as follows. Subject to the de minimis exclusion and the class /subclass exclusion to the definition of "conflict" or "conflict of interest" at Section 1102 of the Ethics Act, at such times as Ms. Miller, her father, or the Family Partnership would have an interest in the Properties or would reasonably expect to acquire such an interest: (1) Ms. Miller would have a conflict of interest in her capacity as a Borough Council Member as to matters before Borough Council involving the Properties; and (2) if Ms. Miller would be considered a public official in her capacity as a Member of the Planning Commission, Ms. Miller would have a conflict of interest as to matters before the Planning Commission involving the Properties. To the extent Ms. Miller would have a conflict of interest as to matters involving the Properties, she would be prohibited from acting in her capacity as a public official as to such matters. However, Section 1103(a) of the Ethics Act would not prohibit Ms. Miller from acting in her private capacity as a citizen in matters pertaining to the Properties, subject to the condition that her conduct /communications would clearly and unequivocally establish that she was acting in her private capacity rather than in her capacity as a public official. Unless the de minimis exclusion or class /subclass exclusion would be applicable, Ms. Miller would have a conflict of interest in her capacity as a public official as to matters involving properties adjacent to or in proximity to the Properties, to the extent such matters would financially impact Ms. Miller, a member of her immediate family, or a business with which she or a member of her immediate family would be associated such as the Family Partnership. Unless the de minimis exclusion or class /subclass exclusion would be applicable, Ms. Miller would be prohibited in her public capacity from engaging in discussions or policy making that would financially impact the Properties as well as other properties located in the Borough, to the extent such matters would financially impact Ms. Miller, a member of her immediate family, or a business with which she or a McKenna, 08 -568 August 15, 2008 Page 8 member of her immediate family would be associated such as the Family Partnership. In each instance of a conflict of interest, Ms. Miller would be required to abstain fully from participation, and in each instance of a voting conflict, Ms. Miller would be required to abstain and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, 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