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HomeMy WebLinkAbout11-520 Felder ADVICE OF COUNSEL April 21, 2011 Paul D. Felder, AIA The Architectural Studio 732 Turner Street Allentown, PA 18102-4038 11-520 Dear Mr. Felder: This responds to your letter dated March 8, 2011, 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 of the board of commissioners of a city housing authority, who in a private capacity is employed part-time with an architectural firm, with regard to: (1) participating in any vote(s) by the city housing authority board to select an architectural firm; or (2) participating, as an employee of the architectural firm, in presentations to the commissioners and/or staff of the city housing authority. Facts: You request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. You have been a Member of the Board of Commissioners (“Board”) of the Housing Authority of the City of Easton (“the Housing Authority”) since 2006. Until 2010, you owned approximately twenty percent of the shares of stock in an architectural firm named “The Architectural Studio” (“TAS”). You state that in September 2010, you sold all of your ownership interest in TAS, partially retired, and became a part-time employee for TAS, working about ten hours per week. You state that the Housing Authority occasionally requires the services of an architectural firm. You further state that TAS never requested to be and never was retained as a provider of any services to the Housing Authority during the years that you were both a Member of the Housing Authority Board and an owner of TAS. Based upon the above submitted facts, you pose the following questions with respect to TAS prospectively responding to Requests for Proposals or similar efforts by the Housing Authority to retain an architectural firm: Felder, 11-520 April 21, 2011 Page 2 (1) Whether you would be prohibited from participating in any vote(s) by the Housing Authority Board to select an architectural firm; and (2) Whether you would be permitted, in your capacity as a TAS employee, to participate in presentations by TAS to the Commissioners and/or staff of the Housing Authority. 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 of the Housing Authority Board, you are a public official as that term is defined in the Ethics Act, and therefore you are 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: Felder, 11-520 April 21, 2011 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. 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 conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 1103(a) of the Ethics Act 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, Felder, 11-520 April 21, 2011 Page 4 Metrick, Order 1037; (2) the use of governmental facilities, such as governmental telephones, postage, 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 client(s). Miller, Opinion 89-024; Kannebecker, Opinion 92-010. 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. 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 Felder, 11-520 April 21, 2011 Page 5 “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. In applying the above provisions of the Ethics Act to the instant matter, you are advised that TAS is a business with which you are associated in your capacity as an employee. Subject to the statutory exceptions 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, in your capacity as a Member of the Housing Authority Board, you would have a conflict of interest in matters that would financially impact you, TAS, or TAS’ customer(s)/client(s). See, Kannebecker, supra; Miller, supra. In particular, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between the Housing Authority and TAS. At such times as there would be a reasonable and legitimate anticipation that the Housing Authority would award a contract to TAS, you would have a conflict of interest in related matters, such as preparing or approving the specifications for such contract. Where TAS would bid for a Housing Authority contract, you would have a conflict of interest as to such contract and could not participate in reviewing or selecting bids or proposals or awarding the contract. You would also be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a Member of the Housing Authority Board, to effectuate a private pecuniary benefit to TAS through a detriment to a business competitor. See, Pepper, Opinion 87-008. Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity as a TAS employee, from participating in presentations by TAS to the Commissioners and/or staff of the Housing Authority. However, you generally would have a conflict of interest in your official capacity in matters pertaining to Housing Authority staff member(s) involved in: (1) preparing contract specifications, reviewing, recommending, or selecting proposals, or performing other duties as to contract(s) sought by TAS; or (2) administering contracts awarded to TAS. Cf., Elberti, Advice 92-566. In addition, you generally would have a conflict of interest with respect to approving the payment of any bills or invoices that would be submitted by TAS to the Housing Authority. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever applicable. If, while serving as a Member of the Housing Authority Board, TAS would enter into a contract with the Housing Authority, or would subcontract with a person awarded a contract with the Housing Authority, and the value of the contract/subcontract would be $500 or more, the restrictions of Section 1103(f) of the Ethics Act 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 Housing Authorities Law. It is administratively noted that the Housing Authorities Law provides in pertinent part: Felder, 11-520 April 21, 2011 Page 6 § 1548. Interested members or employes No member or employe of an Authority shall acquire any interest, direct or indirect, in any housing project or in any property included or planned to be included in any project, nor shall he have any interest, direct or indirect, in any contract or proposed contract for materials or services to be furnished or used in connection with any housing project. If any member or employe of an Authority owns or controls an interest, direct or indirect, in any property included or planned to be included in any housing project of the Authority, or has any such interest in any contract for material or services to be furnished or used in connection with any housing project, he shall immediately disclose the same in writing to the Authority, and such disclosure shall be entered in writing upon the minute books of the Authority. Failure so to disclose such interest shall constitute misconduct in office. Any such undisclosed profit, which results to any member or employe of an Authority, shall render such member or employe liable to surcharge in favor of the Authority to the full amount of such profit. Such profit need not be realized in order to fall within the meaning of this section. Proceedings to surcharge any member or employe may be instituted by an Authority or by the State Planning Board on its behalf with or without its consent. 35 P.S. § 1548. Because this Advice may not interpret the above quoted provision of the Housing Authorities Law, it is suggested that you 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. Conclusion: As a Member of the Board of Commissioners (“Board”) of the Housing Authority of the City of Easton (“the Housing Authority”), you are a public official subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. The architectural firm named “The Architectural Studio” (“TAS”) is a business with which you are associated in your capacity as an employee. Subject to the statutory exceptions 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, in your capacity as a Member of the Housing Authority Board, you would have a conflict of interest in matters that would financially impact you, TAS, or TAS’ customer(s)/client(s). In particular, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters pertaining to actual or anticipated contract(s) between the Housing Authority and TAS. At such times as there would be a reasonable and legitimate anticipation that the Housing Authority would award a contract to TAS, you would have a conflict of interest in related matters, such as preparing or approving the specifications for such contract. Where TAS would bid for a Housing Authority contract, you would have a conflict of interest as to such contract and could not participate in reviewing or selecting bids or proposals or awarding the contract. You would also be prohibited from using the authority of your public position, or confidential information accessed or received as a result of being a Member of the Housing Authority Board, to effectuate a private pecuniary benefit to TAS through a detriment to a business competitor. Felder, 11-520 April 21, 2011 Page 7 Section 1103(a) of the Ethics Act would not prohibit you, in your private capacity as a TAS employee, from participating in presentations by TAS to the Commissioners and/or staff of the Housing Authority. However, you generally would have a conflict of interest in your official capacity in matters pertaining to Housing Authority staff member(s) involved in: (1) preparing contract specifications, reviewing, recommending, or selecting proposals, or performing other duties as to contract(s) sought by TAS; or (2) administering contracts awarded to TAS. In addition, you generally would have a conflict of interest with respect to approving the payment of any bills or invoices that would be submitted by TAS to the Housing Authority. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. The requirements of Section 1103(f) of the Ethics Act would have to be observed whenever 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 Housing Authorities Law, and therefore, it is suggested that you seek legal advice in that regard. 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