The URL can be used to link to this page

Home My WebLink About10-586 RACUNAS ADVICE OF COUNSEL June 9, 2010 Matthew D. Racunas, Esquire Law Offices of Patricia L. McGrail, LLC 1714 Lincoln Way White Oak, PA 15131 10-586 Dear Mr. Racunas: This responds to your letters dated April 16, 2010, and May 7, 2010, 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.C.S. § 1101 et seq., would impose any prohibitions or restrictions upon a borough council member, who in a private capacity serves as a member of the board of directors of a non-profit organization, with regard to voting on a motion to permit the non-profit organization to use a vacant parcel of property owned by the borough, where: (1) the non-profit organization would install a small log cabin structure or kiosk on the property; (2) the intended use of the structure would be to provide information promoting the borough and its local businesses; (3) the non-profit organization would pay for the structure; and (4) the non-profit organization would not pay any compensation to the borough for the use of the parcel of property but would agree to indemnify the borough should any claims arise. Facts: As Solicitor for the Borough of Harmony (“Borough”), located in Butler County, Pennsylvania, you have been authorized by Borough Council Member Frank Luek (“Mr. Luek”) to request an advisory from the Pennsylvania State Ethics Commission on his behalf. You have submitted facts that may be fairly summarized as follows. The Borough owns a triangular shaped parcel of property (“the Parcel”) that is bounded by two roads. The Parcel is approximately 9,400 square feet in size and is currently vacant. Mr. Luek sits on the board of directors of a local non-profit organization named “Historic Harmony, Inc.” (“Historic Harmony”). You state that Historic Harmony recently approached the Borough for permission to install a small log cabin structure or kiosk (“the Structure”) on the Parcel. The intended use of the Structure would be to provide information that would promote the Borough and its local businesses. You state that Racunas, 10-586 June 9, 2010 Page 2 Historic Harmony would pay for the Structure. You further state that Historic Harmony does not intend to pay any compensation to the Borough for the use of the Parcel but would agree to indemnify the Borough should any claims arise. You ask whether the Ethics Act would permit Mr. Luek to vote on a motion to allow Historic Harmony to use the Parcel. You express your view that Historic Harmony would gain no pecuniary benefit or a de minimis pecuniary benefit from the use of the Parcel. 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 a Borough Council Member, Mr. Luek is a public official as that term is defined in the Ethics Act, and therefore he is 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 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: Racunas, 10-586 June 9, 2010 Page 3 § 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. A non-profit entity is a “business” as that term is defined by the Ethics Act. Rendell v. State Ethics Commission, ___ Pa. ___¸ 983 A.2d 708 (2009). 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 advocating 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. Racunas, 10-586 June 9, 2010 Page 4 It is noted that the above statutory definition of the term "conflict" or "conflict of interest" contains, in pertinent part, an exclusion referred to herein as the "de minimis 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; Schweinsburg, Order 900. In the instant matter, Historic Harmony is a business with which Mr. Luek is associated in his capacity as a member of Historic Harmony’s board of directors. See, Rendell, supra. Subject to the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, Mr. Luek would have a conflict of interest in matters before Borough Council that would financially impact Historic Harmony. In each instance of a conflict of interest, Mr. Luek would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. In response to your specific question, you are advised as follows. It would appear that Historic Harmony would realize some pecuniary benefit through using the Parcel without paying rent or other compensation to the Borough. Based upon the submitted facts, the amount of such pecuniary benefit cannot be determined. You are advised that unless the de minimis exclusion would be applicable, Section 1103(a) of the Ethics Act would prohibit Mr. Luek from voting on the proposed motion to permit Historic Harmony to use the Parcel. The propriety 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 Council for the Borough of Harmony (“Borough”), Frank Luek (“Mr. Luek”) 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 that: (1) the Borough owns a triangular shaped parcel of property (“the Parcel”) that is bounded by two roads; (2) the Parcel is approximately 9,400 square feet in size and is currently vacant; (3) Mr. Luek sits on the board of directors of a local non- profit organization named “Historic Harmony, Inc.” (“Historic Harmony”); (4) Historic Harmony recently approached the Borough for permission to install a small log cabin structure or kiosk (“the Structure”) on the Parcel; (5) the intended use of the Structure would be to provide information that would promote the Borough and its local businesses; (6) Historic Harmony would pay for the Structure; and (7) Historic Harmony does not intend to pay any compensation to the Borough for the use of the Parcel but would agree to indemnify the Borough should any claims arise, you are advised as follows. Historic Harmony is a business with which Mr. Luek is associated in his capacity as a member of Historic Harmony’s board of directors. Subject to the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, Mr. Luek would have a conflict of interest in matters before Borough Council that would financially impact Historic Harmony. In each instance of a conflict of interest, Mr. Luek would be required to abstain from participation, and in the instance of a voting conflict, to abstain and fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Unless the “de minimis exclusion” to the definition of “conflict” or “conflict of interest” as set forth in Section 1102 of the Ethics Act, 65 Pa.C.S. § 1102, would be applicable, Section 1103(a) of the Ethics Act would prohibit Mr. Luek from voting on the proposed motion to permit Historic Harmony to use the Parcel. Racunas, 10-586 June 9, 2010 Page 5 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