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HomeMy WebLinkAbout10-540 Confidential ADVICE OF COUNSEL January 28, 2010 10-540 This responds to your letter dated December 1, 2009, by which you requested a confidential advisory from the Pennsylvania State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., would present any prohibitions or restrictions upon a [type of political subdivision] A who, in a private capacity, resigned from serving as a member of the board of directors of a non-profit B corporation prior to assuming office as a [type of political subdivision] A, with regard to making a motion or voting on: (1) the extension of the term and scope of a lease of a [type of political subdivision] building to the corporation; (2) the [type of political subdivision]’s purchase of a C, the approval for having an additional C holder, and approval of the corporation as an additional C holder; or (3) a request by the corporation to hold fundraising events on property owned by the [type of political subdivision]. Facts: You have requested a confidential advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You were elected in 2009 as an A for [name of political subdivision] (“the Political Subdivision”), located in [name of county], Pennsylvania. Your term of office will begin in January 2010. The Political Subdivision is governed by a D of As pursuant to the Political Subdivision’s Home Rule Charter. You state that prior to announcing your candidacy for office in [month, year], you were involved in various capacities with a non-profit B corporation named [name of corporation] (“the Corporation”). You were a founding member of the Corporation, which was incorporated in E in [month, year]. You have served as a Member and Treasurer of the Corporation’s Board of Directors and in the position of interim Executive Director. You state that you did not accept any pay for serving as the interim Executive Director and that you have never held a paid position with the Corporation. Confidential Advice, 10-540 January 28, 2010 Page 2 The Corporation works with the Political Subdivision to [perform certain activities]. The Corporation works closely with the Political Subdivision and assists the Political Subdivision in [performing certain tasks]. The Political Subdivision often provides technical support for Cs, Fs, and other Gs of the Corporation. In [year], the Political Subdivision awarded the Corporation a grant of [amount]. You state that the Corporation has not requested and does not expect to receive any further direct financial support from the Political Subdivision. You state that although the Corporation has received small grants from government entities, private donations account for most of the Corporation’s funding, and that fundraising events are essential to the continuing operation of the Corporation. The Corporation currently holds H Cs over [amount] Is in the Political Subdivision and hopes to acquire more Cs. You state that unlike the Political Subdivision, the Corporation does not pay for H Cs. However, the Corporation occasionally pays [certain costs] to facilitate the donation of Cs. The Corporation also sponsors programs to [perform a certain activity]. You state that municipalities which secure H Cs on J often ask non-profit Bs to serve as additional C holders to [perform a certain function]. You further state that a municipality often gives such an additional C holder a K to cover the expenses of performing such function. You state that when you decided to run for elective office in the Political Subdivision, you resigned from the Corporation’s Board of Directors. You state that while you will not hold a paid or leadership position with the Corporation during your term on the Political Subdivision D of As, you hope to remain active with the Corporation by volunteering your professional services and providing financial and other support. Based upon the above submitted facts, you pose the following specific questions: 1. Whether you would be permitted to make a motion or vote on the extension of the term and scope of a lease of a Political Subdivision building to the Corporation; 2. Whether you would be permitted to make a motion or vote on the purchase by the Political Subdivision of a C, the approval for having an additional C holder, and approval of the Corporation as an additional C holder; and 3. Whether you would be permitted to make a motion or vote on a request by the Corporation for permission to hold fundraising events on property owned by the Political Subdivision. 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. Upon taking office as an A for the Political Subdivision, you would become a “public official” subject to the provisions of the Ethics Act. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1. Sections 1103(a) and 1103(j) of the Ethics Act provide: Confidential Advice, 10-540 January 28, 2010 Page 3 § 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 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 related to Section 1103(a) 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. Confidential Advice, 10-540 January 28, 2010 Page 4 "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 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. In each instance of a conflict of interest, the public official/public employee would be required to abstain fully from participation. The abstention requirement would not be limited merely to voting, but would extend 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. Subject to certain statutory exceptions, 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. Having established the above general principles, your specific questions shall now be addressed. Based upon the submitted facts, you are advised that Section 1103(a) of the Ethics Act would not prohibit you from making a motion or voting on the extension of the term and scope of a lease of a Political Subdivision building to the Corporation, the purchase by the Political Subdivision of a C, the approval for having an additional C holder, approval of the Corporation as an additional C holder, or a request by the Corporation for permission to hold fundraising events on property owned by the Political Subdivision, subject to the conditions that: (1) you would not be a director, officer, owner, or employee of the Corporation or have a financial interest in the Corporation; and (2) there would be no private pecuniary benefit to you, a member of your immediate family, or a business with which you or a member of your immediate family is associated. The propriety of the proposed conduct has only been addressed under the Ethics Act. Specifically not addressed herein is the applicability of the Political Subdivision’s Home Rule Charter. Conclusion: Upon taking office as an A for [name of political subdivision] (“the Political Subdivision”), located in [name of county], Pennsylvania, you would become a public official subject to the provisions of the Public Official and Employee Ethics Act Confidential Advice, 10-540 January 28, 2010 Page 5 (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. Based upon the submitted facts that: (1) your term of office will begin in January 2010; (2) prior to announcing your candidacy for office in [month, year], you were involved in various capacities with a registered non- profit B corporation named [name of corporation] (“the Corporation”); (3) you have served as a Member and Treasurer of the Corporation’s Board of Directors and in the position of interim Executive Director; (4) the Corporation works with the Political Subdivision to [perform certain activities]; (5) the Corporation currently holds H Cs over [amount] Is in the Political Subdivision and hopes to acquire more Cs; (6) municipalities which secure H Cs on J often ask non-profit Bs to serve as additional C holders to [perform a certain function]; (7) a municipality often gives such an additional C holder a K to cover the expenses of performing such function; (8) when you decided to run for elective office in the Political Subdivision, you resigned from the Corporation’s Board of Directors; and (9) while you will not hold a paid or leadership position with the Corporation during your term on the Political Subdivision D of As, you hope to remain active with the Corporation by volunteering your professional services and providing financial and other support, you are advised as follows. Section 1103(a) of the Ethics Act would not prohibit you from making a motion or voting on the extension of the term and scope of a lease of a Political Subdivision building to the Corporation, the purchase by the Political Subdivision of a C, the approval for having an additional C holder, approval of the Corporation as an additional C holder, or a request by the Corporation for permission to hold fundraising events on property owned by the Political Subdivision, subject to the conditions that: (1) you would not be a director, officer, owner, or employee of the Corporation or have a financial interest in the Corporation; and (2) there would be no private pecuniary benefit to you, a member of your immediate family, or a business with which you or a member of your immediate family is associated. 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