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HomeMy WebLinkAbout10-597 Deetz ADVICE OF COUNSEL July 15, 2010 Richard E. Deetz, Esquire 1222 North Fifth Street Stroudsburg, PA 18360 10-597 Dear Mr. Deetz: This responds to your letter dated May 27, 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 member and chairperson of the board of commissioners of a county housing authority, who in a private capacity owns a one-third interest in a rental dwelling unit located in a borough within the county, with regard to participating as a landlord of such rental dwelling unit under the Housing Choice Voucher Program of the U.S. Department of Housing and Urban Development as administered by the county housing authority. Facts: As Solicitor for the Housing Authority of Monroe County (“Housing Authority”), you have been authorized by Sharon M. Taylor (“Ms. Taylor”), a Member and Chairperson of the Board of Commissioners (“Board”) of the Housing Authority, to request an advisory from the Pennsylvania State Ethics Commission on her behalf. You have submitted facts that may be fairly summarized as follows. You state that Ms. Taylor serves as a volunteer on the Housing Authority Board and that she is not compensated by the Housing Authority in any manner. Housing Authority staff administer and operate the Section 8 Housing Program, also known as the Housing Choice Voucher Program, (hereinafter referred to as “the Voucher Program”) of the U.S. Department of Housing and Urban Development (“HUD”). Pursuant to the Voucher Program, an income eligible person is qualified for the issuance of a Section 8 Voucher (“Voucher”) that enables the person to lease a rental dwelling unit (“Unit”) in the private market with rental support from the Housing Authority. A proposed lease under the Voucher Program is reviewed by Housing Authority staff, and if the Unit is found to qualify, the tenant or Voucher holder pays thirty percent of the Unit rent to the landlord, and the federal government, through the Housing Authority, pays the remaining seventy percent of the Unit rent to the landlord. You state that the Housing Authority administers approximately 687 Vouchers and deals with approximately 456 landlords. Deetz, 10-597 July 15, 2010 Page 2 Ms. Taylor owns a one-third interest in a Unit (“the Rental Unit”) located in Stroudsburg Borough, Monroe County, Pennsylvania. It has been proposed that the Rental Unit be leased under the Voucher Program to a tenant at rent of $700 per month, including heat. You state that the proposed rent is fair market value for a Unit such as the Rental Unit. You further state that Ms. Taylor has fully disclosed the proposed lease of the Rental Unit to the entire Board and the Housing Authority staff. Based upon the above submitted facts, you ask whether the Ethics Act would permit Ms. Taylor to participate as a landlord of the Rental Unit under the Voucher Program. You express your view that the leasing of a single Unit under the Voucher Program could have a de minimis economic impact. 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 Member and Chairperson of the Housing Authority Board, Ms. Taylor is a public official as that term is defined in the Ethics Act, and therefore she 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. Deetz, 10-597 July 15, 2010 Page 3 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. 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. 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. The Commission has determined the applicability of the de minimis exclusion on a case-by-case basis, considering all relevant circumstances. In the past, the Commission has found amounts ranging from $2 to approximately $500 to be de minimis. In Bixler v. State Ethics Commission, 847 A.2d 785 (Pa. Cmwlth. 2004), the Commonwealth Court Deetz, 10-597 July 15, 2010 Page 4 of Pennsylvania held that a net profit in the amount of $561.77 resulting from business transactions between a township supervisor’s employer and the township would fall within the de minimis exclusion. 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: § 1102. Definitions "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. 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. Section 1103(f) of the Ethics Act also provides 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. Deetz, 10-597 July 15, 2010 Page 5 In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. The Ethics Act itself would not prohibit Ms. Taylor, in her private capacity, from participating as a landlord of the Rental Unit under the Voucher Program. However, in her public capacity as a Member and Chairperson of the Board of the Housing Authority, Ms. Taylor would have a conflict of interest under Section 1103(a) of the Ethics Act in matter(s) pertaining to the leasing of the Rental Unit. Additionally, Ms. Taylor generally would have a conflict of interest under Section 1103(a) of the Ethics Act in matter(s) pertaining to Housing Authority staff member(s) involved in administering the Voucher Program as to the Rental Unit. Cf., Woodring, Opinion 90- 001, Elisco, Opinion 00-003, and Confidential Opinion, 05-004 (involving reciprocity of power). The de minimis exclusion would not be applicable because, based upon the submitted facts, Ms. Taylor owns a one-third interest in the Rental Unit, and the Rental Unit would be rented at the rate of $700 per month including heat. In each instance of a conflict of interest, Ms. Taylor 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. Based upon the submitted facts, it cannot be determined whether Section 1103(f) would be applicable. Therefore, you are advised that the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed when applicable. It is administratively noted that the Code of Federal Regulations provides in pertinent part: § 982.161 Conflict of interest. (a) Neither the PHA nor any of its contractors or subcontractors may enter into any contract or arrangement in connection with the tenant-based programs in which any of the following classes of persons has any interest, direct or indirect, during tenure or for one year thereafter: (1) Any present or former member or officer of the PHA (except a participant commissioner); (2) Any employee of the PHA, or any contractor, subcontractor or agent of the PHA, who formulates policy or who influences decisions with respect to the programs; (3) Any public official, member of a governing body, or State or local legislator, who exercises functions or responsibilities with respect to the programs; or (4) Any member of the Congress of the United States. (b) Any member of the classes described in paragraph (a) of this section must disclose their interest or prospective interest to the PHA and HUD. Deetz, 10-597 July 15, 2010 Page 6 (c) The conflict of interest prohibition under this section may be waived by the HUD field office for good cause. 24 C.F.R. § 982.161. Because this Advice may not interpret the above quoted provision of the Code of Federal Regulations, it is suggested that Ms. Taylor seek legal advice in that regard. 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 Housing Authorities Law or the Code of Federal Regulations. Conclusion: As a Member and Chairperson of the Board of Commissioners (“Board”) of the Housing Authority of Monroe County (“Housing Authority”), Sharon M. Taylor (“Ms. Taylor”) 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) Housing Authority staff administer and operate the Section 8 Housing Program, also known as the Housing Choice Voucher Program, (hereinafter referred to as “the Voucher Program”) of the U.S. Department of Housing and Urban Development; (2) pursuant to the Voucher Program, an income eligible person is qualified for the issuance of a Section 8 Voucher (“Voucher”) that enables the person to lease a rental dwelling unit (“Unit”) in the private market with rental support from the Housing Authority; (3) a proposed lease under the Voucher Program is reviewed by Housing Authority staff, and if the Unit is found to qualify, the tenant or Voucher holder pays thirty percent of the Unit rent to the landlord, and the federal government, through the Housing Authority, pays the remaining seventy percent of the Unit rent to the landlord; (4) Ms. Taylor owns a one-third interest in a Unit (“the Rental Unit”) located in Stroudsburg Borough, Monroe County, Pennsylvania; (5) it has been proposed that the Rental Unit be leased under the Voucher Program to a tenant at rent of $700 per month, including heat; (6) the proposed rent is fair market value for a Unit such as the Rental Unit; and (7) Ms. Taylor has fully disclosed the proposed lease of the Rental Unit to the entire Board and the Housing Authority staff, you are advised as follows. The Ethics Act itself would not prohibit Ms. Taylor, in her private capacity, from participating as a landlord of the Rental Unit under the Voucher Program. However, in her public capacity as a Member and Chairperson of the Board of the Housing Authority, Ms. Taylor would have a conflict of interest under Section 1103(a) of the Ethics Act in matter(s) pertaining to the leasing of the Rental Unit. Additionally, Ms. Taylor generally would have a conflict of interest under Section 1103(a) of the Ethics Act in matter(s) pertaining to Housing Authority staff member(s) involved in administering the Voucher Program as to the Rental Unit. 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 not be applicable because, based upon the submitted facts, Ms. Taylor owns a one-third interest in the Rental Unit, and the Rental Unit would be rented at the rate of $700 per month including heat. In each instance of a conflict of interest, Ms. Taylor 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. The restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed when applicable. It is suggested that Ms. Taylor seek legal advice as to the applicability of the Code of Federal Regulations to the proposed conduct. 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 Deetz, 10-597 July 15, 2010 Page 7 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