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HomeMy WebLinkAbout1592 Yates In Re: Terri Yates, : File Docket: 10-035 Respondent : X-ref: Order No. 1592 : Date Decided: 9/27/11 : Date Mailed: 10/6/11 Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Raquel K. Bergen Nicholas A. Colafella Mark Volk This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding possible violation(s) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., by the above-named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegations. Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an “Investigative Complaint.” A Stipulation of Findings and a Consent Agreement waiving an evidentiary hearing were subsequently submitted by the parties to the Commission for consideration. The Stipulated Findings are set forth as the Findings in this Order. The Consent Agreement has been approved. I. ALLEGATIONS: That Terri Yates, a (public official/public employee) in her capacity as a Member of the School Board of Directors of the Pennridge School District, Bucks County, violated [Sections 1103(a) and 1103(f)] of the State Ethics Act (Act 93 of 1998), when she participated in discussions and actions of [the] School Board of Directors resulting in the contracts being entered into with DelVal Soil & Environmental Consultants, a business with which a member of her immediate family is associated, when the contracts valued at in excess of $500.00 were awarded without an open and public process; and when she participated in Board actions to approve payments to DelVal Soil & Environmental Consultants. II.FINDINGS: 1. Terri Yates has served as a Member of the Pennridge School District Board of School Directors (“Board”) from May 17, 1999, through 2005, and from March 30, 2006, to the present. a. Yates has served on the Facilities Committee during her tenure as a Member of the Board. 2. Terri Yates is married to Stephen Yates. Yates, 10-035 Page 2 a. Stephen Yates is a professional engineer by trade. 3. Stephen Yates is a 15% shareholder and employee of DelVal Soil & Environmental Consultants, 4050 Skyron Drive, Suite A1, Doylestown, PA 18902. a. Other current shareholders are Joseph Valentine 15%, Thomas Cordrey 15% and William Palkovics 55%. 4. DelVal Soil & Environmental Consultants, Inc. provides laboratory testing and environmental and business consulting services. 5. The Pennridge School District covers eight municipalities, including the Boroughs of Dublin, Perkasie, Sellersville, and Silverdale and the Townships of Bedminster, East Rockhill, Hilltown, and West Rockhill in Bucks County. a. The District has seven (7) elementary [schools], three (3) middle [schools] and one (1) high school. 6. Members of the Pennridge Board of School Directors have the opportunity to serve on various committees. a. Committee assignments are made on an annual basis by the Board President based on Board Members’ personal preferences and areas of expertise. b. District committees generally include, but may not be limited to, activities, curriculum, facilities, finance, personnel, policy review, ad hoc negotiating team, legislative, Upper Bucks Technical School, IU, PACC, Act 48 and Technology. c. Committees are comprised of between one (1) and four (4) Board Members. 7. The District’s Facilities Committee is responsible for overseeing the District’s twelve (12) buildings, administrative office, support center and Capitol [sic] Projects. a. The Business Manager works closely with the Chair of the Facilities Committee. b. The Facilities Committee holds monthly meetings, which are open to the general public. c. The Facilities Committee makes non-binding recommendations to the entire Board. 8. Terri Yates served on the Facilities Committee throughout her tenure on the Pennridge School Board. a. Yates has served as Facilities Committee Chair since 2010. b. Linda Gaito served as the Facilities Committee Chair during 2008 and 2009. c. The Facilities Committee typically consisted of (3) Board Members. 1. During 2010, the Committee consisted of four (4) Board Members. 9. DelVal Soil & Environmental Consultants has performed services for the Pennridge School District since approximately 1996. Yates, 10-035 Page 3 a. DelVal Soil & Environmental Consultants’ initial business dealings with the Pennridge School District involved the design of an elevated sand mound septic system at the District’s Grasse Elementary School around 1996. b. This initial work predated Terri Yates’ tenure on the Pennridge School Board by approximately three (3) years. c. Stephen Yates was the DelVal Soil & Environmental Consultants’ employee who designed this system. d. Subsequent services provided by DelVal Soil & Environmental Consultants were provided in 2009 and 2010. 10. Neither of the services provided by DelVal Soil & Environmental Consultants to the Pennridge School District in 2009 and 2010 was publicly advertised or bid. a. Work performed by DelVal Soil & Environmental Consultants for the Pennridge School District was viewed as a professional service and as a result was not bid. b. Work performed by DelVal Soil & Environmental Consultants for the Pennridge School District had a value in excess of $500.00 during 2009 and 2010. 11. By 2008, the onsite septic system at the District’s Bedminster Elementary School was failing to meet environmental standards. a. The system required daily maintenance checks to ensure it remained operational. b. The District was faced with the decision [of whether] to repair the system to bring it into compliance with environmental standards or replace it with a new system. c. Tapping into a public sewer system was not a viable option for the District. 12. Addressing issues such as failing septic systems was the responsibility of the District’s Facilities Committee. a. The Facilities Committee, along with the Business Manager and Maintenance Director, participated in discussions in an effort to come to a consensus on the best way to resolve the issue with the Bedminster septic system. b. During 2008, the Facilities Committee consisted of Board Members Linda Gaito (Chair), William Sarnese and Terri Yates. 13. Terri Yates had private discussions about the Bedminster Elementary School septic issues with Stephen Yates prior to discussing any possible solutions with other Board Members or District administrators. a. Facilities Committee meeting minutes confirm the Committee reviewed the septic issues on November 10, 2008. Yates, 10-035 Page 4 b. Stephen Yates informed her that an elevated sand mound septic system like the one previously built at Grasse Elementary School could be a possible solution to the problem at Bedminster Elementary School. c. Terri Yates shared that information with District Business Manager Robert Reinhart. 14. In or about October or November 2008, Terri Yates informed then District Business Manager Robert Reinhart that she felt a sand mound style septic system could be installed at the District’s Bedminster Elementary School. a. Terri Yates advised Reinhart that her husband had previously designed a sand mound system for the Grasse Elementary School, which was still functioning properly. b. Reinhart was not employed by the Pennridge School District at the time of the Grasse Elementary School project. 15. Terri Yates based her recommendation to Reinhart that a sand mound septic system be considered for Bedminster Elementary School on information she received from Stephen Yates. a. Stephen Yates was a 15% shareholder of DelVal Soil & Environmental Consultants at the time. b. Stephen Yates/DelVal Soil & Environmental Consultants did not charge the District a fee for this initial assessment. 16. Based on information received from Terri Yates, Reinhart initiated conversations with Stephen Yates and Doug Taylor about the possible installation of a sand mound septic system at Bedminster Elementary. a. These conversations also occurred around October or November 2008. b. Doug Taylor was an employee of D’Huy Engineering, the District’s consulting engineer. c. Taylor was responsible for evaluating solutions to the septic problem at Bedminster for the Facilities Committee. 17. Terri Yates publicly disclosed that Stephen Yates was her husband at a Facilities Committee meeting held on May 10, 2010, when prompted by a question about their relationship. a. Pennridge School Board Members and District administrators were aware of the marital relationship from at least November 2008 when project discussions began. b. Stephen Yates often accompanied Terri Yates to Board functions prior to this time. 18. The entire Pennridge Board of School Directors was made aware of Yates’ relation with Stephen Yates by then Business Manager Robert Reinhart by way of correspondence dated November 21, 2008, regarding the “Bedminster Elementary School Sand Mound Proposal.” Yates, 10-035 Page 5 19. Terri Yates participated in Facilities Committee meetings when the septic issue was discussed, including utilizing her husband’s company for services. 20. Minutes from the meetings of the District’s Facilities Committee include discussions and/or recommendations to the entire Board regarding the Bedminster Elementary School project, which reference Yates, Stephen Yates and/or DelVal Soil & Environmental Consultants. 21. Minutes from the Pennridge Board of School Directors meetings confirm that no public bidding was sought regarding the hiring of DelVal Soil & Environmental Consultants to provide services relating to the Bedminster Elementary School project. a. The District administration viewed the services as a professional service not subject to bidding requirements. 1. Yates did not participate in the decision to not solicit bids for engineering services. b. DelVal Soil & Environmental Consultants did provide cost estimates to the District for services provided. 22. Pennridge School District business records include correspondence and a quote relating to services to be provided by DelVal Soil & Environmental Consultants for a sand mound septic system at Bedminster Elementary School. a. Correspondence dated December 19, 2008, from Joseph A. Valentine, qualified soil scientist, DelVal Soil & Environment Consultants to Robert Reinhart (Business Manager) Pennridge School District, regarding “preliminary soil evaluation, on-lot sewage disposal feasibility, Bedminster Elementary School TMP #1-8-23, Bedminster Township, Bucks Co., DelVal job #08-439” explained the soil testing process and preliminary findings. 1. Preliminary findings were that the two potential sites on the subject property would be suitable for an on-lot sewage disposal system utilizing an elevated sand mound. Final site suitability would be dependent upon detailed testing conducted by the Bucks County Department of Health. b. Correspondence dated January 8, 2009, from Stephen C. Yates, P.E. of DelVal Soil & Environment Consultants to Robert Reinhart outlined DelVal’s proposal and costs for the Bedminster Elementary project. Yates explains the permitting process, outlines the entities which will be involved in the process and required soil testing, and requests a check in the amount of $1,800.00 payable to BCHD (Bucks County Health Department). Also included were cost estimates for the project broken down into seven phases. 23. By correspondence dated September 16, 2009, Robert Reinhart outlined to the Pennridge School Board various expenses recommended by the Facilities Committee, including in item number 14 expenses for the Bedminster sand mound. a. Reinhart wrote, “This item was discussed during the September 15, 2009 Facilities Committee Meeting. Attached is a copy of the cost summary that Mr. Yates discussed. Please understand that the costs associated with Delaware Valley Soils and Environmental for providing these services were included in the cost already approved by the Board.” Yates, 10-035 Page 6 b. Expenses provided by Reinhart to the Board for the Bedminster sand mound included the following: Testing & Design Preliminary Soils Evaluation $500.00 Health Department Fee to Witness Testing $1,800.00 Detailed Soils Testing $1,600.00 Stakeout & Survey $2,500.00 Percolation Testing $2,200.00 Design of Sand Mound System $7,500.00 Health Department Permitting Fee $4,320.00 Bedminster Twp. Sewage Management Permit Fee $1,200.00 Bedminster Professional Services Escrow $1,000.00 Waiver Request $750.00 DelVal Construction Management $5,500.00 Subtotal $28,870.00 Construction Costs Sand Mound Installation $122,869.23 Electrical Hook-up $1,200.00 E & S Installation $7,500.00 Decommissioning of Old Treatment Facility $9,555.00 Rock Allowance $8,000.00 Miscellaneous $7,500.00 Subtotal $156,624.23 Total $185,494.23 24. Terri Yates was present at and participated in Pennridge School District Board of Directors meetings when DelVal was selected to provide services related to the Bedminster project. 25. Minutes from the Pennridge School District Board of School Directors meetings include discussions and actions taken with respect to the hiring of DelVal Soil & Environment Consultants to design a sand mound septic system at the District’s Bedminster Elementary School, which included Yates’ participation and vote as a School Board Member. 26. The construction portion of the Bedminster Elementary School sand mound project was advertised for public bidding by the District. a. Stephen Yates was responsible for reviewing the bids and serving as project manager. b. Business Manager Reinhart and Facilities Director [Jeff] Loeffler oversaw the project on behalf of the District. 27. Payments made to DelVal Soil & Environmental Consultants for services relating to the Bedminster Elementary School sand mound project were processed in the same manner as other District payments. a. DelVal Soil and Environmental Consultants’ invoices were submitted to the District’s business office for payment. b. These invoices were reviewed by the Business Manager and Director of Operations to ensure the invoiced work was completed. c. A District check was prepared in the amount of the invoice. Yates, 10-035 Page 7 d. The check information was included along with other payments on a monthly bill list. e. The bill lists are provided to the Board Members for review and official action. 28. The Pennridge School Board typically approves the monthly payment of bills as part of the approval of its monthly “consent calendar.” a. Items contained in the monthly “consent calendar” include, but may not be limited to, prior meeting minutes, financial reports, the Superintendent’s Personnel Report, bill lists, self-insurance bill list, capital reserve bill list, athletic bill list and food service bill list. b. Approval of the monthly “consent calendar” is generally given by way of a single motion covering all of the items contained therein. c. Any item contained within the Board’s “consent calendar” can be discussed and voted on individually at the request of any Board Member. 29. Members of the Pennridge Board of School Directors are provided with copies of items appearing in the monthly “consent calendar” as part of their monthly meeting packets. a. Meeting packets are provided to Board Members approximately one week before their regularly scheduled monthly meeting for review. 30. Pennridge School District business records included itemized invoices from DelVal Soil and Environmental Consultants relating to the Bedminster Elementary School project, which were paid by the District. 31. Terri Yates participated in actions of the Board to approve bill lists, which included invoices from DelVal for services related to the Bedminster project. 32. Terri Yates’ participation in the six (6) votes to approve bill lists resulted in payments totaling $12,500.00 being issued to DelVal Soil & Environmental Consultants for services relating to the Bedminster Elementary School project. a. This total does not include payment in the amount of $2,100.00, as Yates was absent from the meeting when this invoice was approved. b. The above total also does not include an $800.00 nor a $4,350.00 invoice payment as Terri Yates abstained from these approvals. c. Lastly, the $12,500.00 does not include any invoices related to the V & M Building project. 33. DelVal Soil & Environmental Consultants received nine (9) payments totaling $19,750.00 relating to the Bedminster Elementary School project as detailed in the previous Fact Findings. a. Of this amount, $2,000.00 was paid to subcontractors for backhoe service ($800.00) and staking out percolation test area ($1,200.00). 34. DelVal operated on an approximate twenty (20) percent profit margin with Stephen Yates receiving approximately fifteen (15) percent of the profit. Yates, 10-035 Page 8 a. DelVal had net income of $17,750.00 on the Bedminster Elementary School project. b. Profit on this project was approximately $3,550.00 (20% of $17,750.00). c. Stephen Yates’ net income/profit from this project was approximately $532.50 (15% of $3,550.00). The following findings relate to services provided by DelVal Soil & Environmental Consultants regarding the Pennridge School District’s acquisition of property located at 1303 North Fifth Street, Perkasie commonly referred to as the V & M Machine Shop Building or V & M Building. 35. Between approximately 2000 and 2010, a property located at 1303 North Fifth Street, Perkasie, PA had been listed for sale on the local real estate market. a. This property is located diagonally across the street from the District’s administrative office and high school complex. b. The property formerly housed a tool and die machine shop business. c. The property included undeveloped land, a garage, an office and parking facilities. 36. The Pennridge School District was interested in purchasing the property for use by the District’s maintenance department. a. The District was renting space to house its maintenance operations at the time. b. The District was interested in the property because of its proximity to [the District’s] main complex. c. The District did not acquire the property previous times it was for sale because of the cost. 37. In or around the summer of 2009, Business Manager Reinhart became aware that the property was being marketed for sale. a. Reinhart initiated talks with the property owner, attempting to get a lower price for the property than it previously was advertised for. b. Reinhart reported back to the Board on these negotiations during executive sessions so as not to alert any other parties interested in the property of the District’s intent to purchase the property. 38. Of concern to the District with the property was the possibility of environmental contamination as a result of its use as a machine shop. a. A Phase I environmental study was completed when the property was previously on the market by the property’s owner. b. At that time, there were some contamination concerns. c. Reinhart wanted an updated environmental study completed before the District would consider buying the property. Yates, 10-035 Page 9 39. DelVal submitted proposals to the Pennridge School District to conduct environmental studies at the 1303 North Fifth Street, Perkasie property. 40. Pennridge School District business records include two (2) quotes/proposals for Phase I and Phase II environmental studies for 1303 North Fifth Street, Perkasie, dated April 22, 2009, and August 4, 2009. a. Stephen Yates is identified as being copied on both of these proposals. 41. The Pennridge School District Board voted to purchase the property at 1303 North Fifth Street, Perkasie on April 26, 2010. a. Minutes from the Board’s April 26, 2010, meeting include Board action [and confirm that] Terri Yates made the motion and voted in favor of acquiring Bucks County tax parcel #12-14-23-2. 42. Stephen Yates appeared before the Facilities Committee on August 18, 2010, on behalf of DelVal to explain preliminary environmental findings related to the 1303 North Fifth Street, Perkasie property. 43. Minutes from the Pennridge School District Facilities Committee meeting held on August 18, 2010, include discussions on the environmental issues present at the V & M Building site. 44. Questions were raised during the Facilities Committee’s October 14, 2010, meeting regarding costs associated with clean-up and repairs to the V & M Building. a. Under public comment, Terri Yates’ response to citizens’ questions was as follows: “Mr. Rambo had a number of questions regarding the funding for modifications to the V & M Building: if the board was aware of any future modifications including roof replacement, boiler replacement and asbestos abatement. Mrs. Yates explained that any funds to improve the building would come from the Capital Projects Fund and that they were aware that some modifications would be necessary in the future and that was taken into consideration when the offer to purchase the building was made. The asbestos identified in the Phase II report is being handled in house until such time when the boiler is replaced, which will require an abatement plan.” 45. Correspondence of October 22, 2010, from Mark Fortna, Sr., Environmental Scientist/Project Manager, DelVal Soil & Environmental Consultants, to Jeff Loeffler, Pennridge School District, detailed a proposal/work plan and cost estimate to collect confirmatory post removal soil samples from the area where you [sic] had removed blast waste associated with the former V & M Machine Shop. a. This proposal includes costs associated with disposal of contaminated soil removed from the site. b. Stephen Yates is identified as being copied on this proposal. The copy provided does not include any signatures. 46. Fortna’s quote of October 22, 2010, was reviewed and approved by the Facilities Committee on November 8, 2010. a. Terri Yates was not present at this meeting. Yates, 10-035 Page 10 47. During the Facilities Committee’s February 8, 2011, meeting, Jeff Loeffler provided the Committee with a status report on the clean-up at the V & M Building site. a. Terri Yates was present for this meeting. b. Loeffler reported as follows: DelVal report. “Mr. Loeffler reviewed the DelVal report regarding the copper blast waste at the maintenance building on Fifth Street. He reported the total cost was $1,532 and that the drum containing the contaminated soil has been removed.” c. No action was taken by the Committee. 48. Terri Yates began abstaining from all Board actions relating to DelVal in September 2010 after learning of potential conflict of interest issues from District administrators. a. Minutes from the Pennridge School Board meeting held on September 20, 2010, reflect Terri Yates abstained from the vote taken to approve a payment to DelVal. 49. Minutes from the Pennridge School Board meeting held on December 6, 2010, reflect Terri Yates abstained from the vote taken approving a payment of $1,532.00 to DelVal for the disposal and testing of soil contaminated with copper at 1303 Fifth Street, Perkasie. 50. Pennridge School District business records include invoices submitted by DelVal for payment relating to the V & M Building project. 51. Payments made by the Pennridge School District to DelVal Soil & Environmental Consultants associated with work done at the V & M Building site were made consistent with District policy and in the same manner as those for the Bedminster Elementary School sand mound project. a. Terri Yates participated in Board actions on two occasions to approve bill lists, which included payments to DelVal for services related to the V & M Building site. 52. Terri Yates, in her official capacity as a Member of the Pennridge School Board, participated in three (3) votes approving bill lists containing payments totaling $7,639.00 to DelVal Soil & Environmental Consultants relating to the V & M Building project/1303 North Fifth Street. 53. DelVal Soil & Environmental Consultants received payments totaling $24,339.00 for services related to the V & M Building project. a. The $24,339.00 total is the result of subtracting invoice numbers 2807 ($800.00) and 3033 ($4,350.00), which were for the Bedminster Elementary School project and combined by the District for payment with invoices relating to the V & M Building project. 54. The majority of the payments made by the District to DelVal on the V & M Building project were used to pay subcontractors used by DelVal on the project. a. DelVal received payments totaling $7,567.00 for services it provided directly on the project. Yates, 10-035 Page 11 55. Based on a 20% profit margin, DelVal Soil & Environmental Consultants realized a profit of approximately $1,513.40 on this project. a. Stephen Yates realized a partner’s share of approximately $227.01 as a result of his 15% ownership interest. 56. Terri Yates, in her official capacity as a Member of the Pennridge School District Board of School Directors, voted nine (9) times to approve payments totaling approximately $20,139.00 made by the District to DelVal Soil & Environmental Consultants as detailed in [the above Fact Findings]. a. Bedminster project, six (6) votes totaling $12,500.00. b. V & M Building project, three (3) votes totaling $7,639.00. 57. DelVal Soil & Environmental Consultants received net payments totaling $25,317.00 after all subcontractors on the Bedminster and V & M Building projects were paid. a. $17,750.00 from the Bedminster project. b. $7,567.00 from the V & M Building project. 58. Stephen Yates’ 15% shareholder share of the 20% profit margin on this work was approximately $759.51. a. Bedminster, 20% of $17,750.00 = $3,550.00; x 15% profit = $532.50. b. V & M Building, 20% of $7,567.00 = $1,513.40; x 15% profit = $227.01. c. In addition to the invoiced services Stephen Yates provided to the District, Stephen Yates also performed pro bono and/or non-invoiced services on behalf of the District. 1. Stephen Yates’ approximate hourly rate was $75.00. 2. The exact number of hours Stephen Yates did not bill or otherwise submit invoices for was unascertainable, but exceeded several hours. 59. Terri Yates, in her official capacity as a Member of the Pennridge School Board, participated in discussions and actions of the Facilities Committee and the Board, which ultimately financially benefited DelVal Soil & Environmental Consultants, a business in which her husband, Stephen Yates, has a fifteen (15) percent ownership interest. 60. Once made aware that an inquiry by the State Ethics Commission was underway, Yates and Stephen Yates offered their full cooperation with any ongoing investigation. III.DISCUSSION: As a Member of the Pennridge School District (“School District”) Board of Directors (“Board”) from May 17, 1999, through 2005, and from March 30, 2006, to the present, Respondent Terri Yates, hereinafter also referred to as “Respondent,” “Respondent Yates, 10-035 Page 12 Yates,” and “Yates,” has been 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 allegations are that Yates violated Sections 1103(a) and 1103(f) of the Ethics Act when she participated in discussions and actions of the Board resulting in contracts being entered into with DelVal Soil & Environmental Consultants (“DelVal”), a business with which a member of her immediate family is associated, when the contracts valued at in excess of $500.00 were awarded without an open and public process, and when she participated in Board actions to approve payments to DelVal. Per the Consent Agreement, the Investigative Division has exercised its prosecutorial discretion to nol pros the alleged violation of Section 1103(f) of the Ethics Act. Based upon the nol pros, we need not address the Section 1103(f) allegation, which is no longer before us. Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is prohibited from engaging in conduct that constitutes a conflict of interest: § 1103. Restricted activities (a)Conflict of interest.— No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The term "conflict of interest" is 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. 65 Pa.C.S. § 1102. Section 1103(a) of the Ethics Act prohibits a public official/public employee 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. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are set forth above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Yates, 10-035 Page 13 Respondent Yates has served as a Member of the Board from March 30, 2006, to the present. Yates previously served as a Member of the Board from May 17, 1999, through 2005. Members of the Board have the opportunity to serve on various committees, including the School District Facilities Committee (“Facilities Committee”). The Facilities Committee is responsible for overseeing the School District’s twelve buildings, administrative office, support center, and Capital Projects, and it makes non-binding recommendations to the Board. Yates has served on the Facilities Committee throughout her tenure on the Board, and she has served as Chair of the Facilities Committee since 2010. Respondent Yates is married to Stephen Yates (“Mr. Yates”). Mr. Yates is a professional engineer by trade, and he is a 15% shareholder and employee of a business named “DelVal Soil & Environmental Consultants” (“DelVal”). DelVal provides laboratory testing and environmental and business consulting services. DelVal first performed services for the School District around 1996, which services involved the design of an elevated sand mound septic system at the School District’s Grasse Elementary School (“Grasse Elementary”). Mr. Yates was the DelVal employee who designed the aforesaid septic system. This initial work predated Respondent Yates’ tenure on the Board by approximately three years. DelVal subsequently provided services to the School District in 2009 and 2010. The Bedminster Elementary School Project By 2008, the onsite septic system (“Septic System”) at the School District’s Bedminster Elementary School (“Bedminster Elementary”) was failing to meet environmental standards. The Septic System required daily maintenance checks to ensure that it remained operational, and the School District was faced with the decision of whether to repair the Septic System to bring it into compliance with environmental standards or replace it with a new system. Addressing issues such as failing septic systems was the responsibility of the Facilities Committee. During 2008, the Facilities Committee consisted of Yates and two other Members of the Board. The Facilities Committee, along with the School District Business Manager and the School District Maintenance Director, participated in discussions in an effort to come to a consensus on the best way to resolve the issue with the Septic System. Respondent Yates had private discussions with Mr. Yates about the Septic System issues prior to discussing any possible solutions with other Board Members or School District administrators. Mr. Yates informed Respondent Yates that an elevated sand mound septic system like the one previously built at Grasse Elementary could be a possible solution to the problem at Bedminster Elementary. In or about October or November 2008, Respondent Yates informed School District Business Manager Robert Reinhart (“Reinhart”) that she felt a sand mound style septic system could be installed at Bedminster Elementary. Yates advised Reinhart that her husband had previously designed a sand mound system for Grasse Elementary which was still functioning properly. Respondent Yates based her recommendation to Reinhart upon information that she received from Mr. Yates. Mr. Yates/DelVal did not charge the School District a fee for this initial assessment. Based on information received from Respondent Yates, around October or November 2008, Reinhart initiated conversations with Mr. Yates and Doug Taylor, who was an employee of the School District’s consulting engineer, about the possible Yates, 10-035 Page 14 installation of a sand mound septic system at Bedminster Elementary. Respondent Yates participated in Facilities Committee meetings when the septic issue, including the utilization of her husband’s company for services, was discussed. Members of the Board and School District administrators were aware of the marital relationship between Respondent and Mr. Yates from at least November 2008, when project discussions began. The entire Board was made aware of the Yates’ marital relationship by Reinhart by way of correspondence dated November 21, 2008, regarding the “Bedminster Elementary School Sand Mound Proposal.” Reinhart was provided with information regarding the proposed sand mound septic system for Bedminster Elementary, including DelVal’s proposal and cost estimates for services to be provided in connection with such project, by correspondence from DelVal employees dated December 19, 2008, and January 8, 2009. By correspondence dated September 16, 2009, Reinhart provided the Board with expenses recommended by the Facilities Committee for the Bedminster Elementary sand mound. Respondent Yates participated in Board meetings and voted when DelVal was selected to provide services related to the Bedminster Elementary sand mound septic system project. Yates additionally voted to approve six monthly bill lists which included payments totaling $12,500.00 to DelVal for services related to the Bedminster Elementary project. DelVal received nine payments totaling $19,750.00 related to the Bedminster Elementary project. The parties have stipulated that DelVal’s profit on the Bedminster Elementary project was approximately $3,550.00 and that Mr. Yates’ net income/profit from such project was approximately $532.50. The V & M Machine Shop Property Project Between approximately 2000 and 2010, a property (“the Property”) located at 1303 North Fifth Street, Perkasie, Pennsylvania, was listed for sale on the local real estate market. The Property, which formerly housed a tool and die machine shop business, included undeveloped land, a garage, an office, and parking facilities. The Property was located diagonally across the street from the School District’s administrative office and high school complex. In or around the summer of 2009, Reinhart became aware that the Property was for sale. The School District, which was renting space to house its maintenance operations, was interested in purchasing the Property for use by the School District’s maintenance department because of the Property’s proximity to the School District’s main complex. The School District had not acquired the Property previous times that it was for sale because of the cost. Reinhart initiated talks with the Property’s owner, attempting to get a lower price for the Property than that at which it had previously been advertised. The School District was concerned about the possibility of environmental contamination of the Property as a result of its use for a machine shop. A Phase I environmental study was completed when the Property was previously on the market, at which time there were some concerns about contamination. Reinhart wanted an updated environmental study completed before the School District would consider buying the Property. DelVal submitted two quotes/proposals to the School District dated April 22, 2009, and August 4, 2009, to conduct Phase I and Phase II environmental studies for the Property. At the Board’s April 26, 2010, meeting, Yates made the motion and participated in the vote to purchase the Property. Yates, 10-035 Page 15 Respondent Yates publicly disclosed that Mr. Yates was her husband at a Facilities Committee meeting held on May 10, 2010, when prompted by a question about their relationship. On August 18, 2010, Mr. Yates appeared before the Facilities Committee on behalf of DelVal to explain preliminary environmental findings related to the Property. Respondent Yates was not present at the Facilities Committee meeting on November 8, 2010, when the Facilities Committee reviewed and approved DelVal’s proposal/work plan and cost estimate for the collection of confirmatory post removal soil samples from the Property and the disposal of contaminated soil removed from the Property. Yates, in her capacity as a Member of the Board, participated in three votes to approve bill lists containing payments totaling $7,639.00 to DelVal for services related to the Property. Yates began abstaining from all Board actions relating to DelVal in September 2010, after learning of potential conflict of interest issues from School District administrators. At Board meetings on September 20, 2010, and December 6, 2010, Yates abstained from votes to approve payments to DelVal. DelVal received payments totaling $7,567.00 for services it provided directly on the Property project. The parties have stipulated that Del Val received a profit of approximately $1,513.40 from the Property project, and that Mr. Yates realized a partner’s share of approximately $227.01 of DelVal’s profit from the Property project as a result of his 15% ownership interest in DelVal. Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations as follows: 3. The Investigative Division will recommend the following in relation to the above allegations: a. That a violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1103(a), occurred in relation to Yates’s participation in discussions and actions as a Member of the School Board of Directors of the Pennridge School District, which resulted in contracts being entered into between Pennridge School District and DelVal Soil & Environmental Consultants, a business with which a member of her immediate family is associated, and when she subsequently voted to approve payments to DelVal Soil & Environmental Consultants; and b. As part of a negotiated settlement agreement, the violation of Section 1103(f) of the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1103(f), is hereby nol prossed. 4. Yates agrees to make payment in the amount of $500.00 in settlement of this matter payable to the Pennridge School District and forwarded to the Pennsylvania State Ethics Yates, 10-035 Page 16 Commission within thirty (30) days of the issuance of the final adjudication in this matter. 5. Yates agrees to not accept any reimbursement, compensation or other payment from the Pennridge School District representing a full or partial reimbursement of the amount paid in settlement of this matter. 6. The Investigative Division will recommend that the State Ethics Commission take no further action in this matter; and make no specific recommendations to any law enforcement or other authority to take action in this matter. Such, however, does not prohibit the Commission from initiating appropriate enforcement actions in the event of Respondent's failure to comply with this agreement or the Commission’s order or cooperating with any other authority who may so choose to review this matter further. Consent Agreement, at 1-2. In considering the Consent Agreement, we accept the recommendation of the parties for a finding that a violation of Section 1103(a) of the Ethics Act occurred in relation to Yates’ participation in discussions and actions of the Board which resulted in contracts being entered into between the School District and DelVal, and when she subsequently voted to approve payments to DelVal. Yates used the authority of her public office when, based upon information received from her husband, she recommended to the School District Business Manager in or about October or November 2008 that a sand mound style septic system could be installed at Bedminster Elementary. Yates further used the authority of her public office when she participated in Facilities Committee meetings when the septic issue, including the utilization of her husband’s company for services, was discussed, and when she participated in Board meetings and voted when DelVal was selected to provide services related to the Bedminster Elementary sand mound septic system project. As a Board Member, Yates voted nine times to approve payments totaling approximately $20,139.00 to DelVal for services provided in relation to the Bedminster Elementary sand mound septic system project and the Property project. Yates’ aforesaid actions resulted in a private pecuniary gain to DelVal, a business with which her husband, a member of her immediate family, is associated in his capacity as a 15% shareholder and employee. With each element of a violation of Section 1103(a) established, we hold that a violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred in relation to Yates’ participation in discussions and actions of the Board which resulted in contracts being entered into between the School District and DelVal, a business with which a member of her immediate family is associated, and when she subsequently voted to approve payments to DelVal. As part of the Consent Agreement, Yates has agreed to make payment in the amount of $500.00 payable to the Pennridge School District and forwarded to this Commission within thirty (30) days of the issuance of the final adjudication in this matter. Yates has further agreed to not accept any reimbursement, compensation or other payment from the School District representing a full or partial reimbursement of the amount paid in settlement of this matter. Yates, 10-035 Page 17 We determine that the Consent Agreement submitted by the parties sets forth a proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. Accordingly, per the Consent Agreement of the parties, Yates is directed to make payment in the amount of $500.00 payable to the Pennridge School District and forwarded th to this Commission by no later than the thirtieth (30) day after the mailing date of this adjudication and Order. Yates is further directed to not accept any reimbursement, compensation or other payment from the School District representing a full or partial reimbursement of the amount paid in settlement of this matter. Compliance with the foregoing will result in the closing of this case with no further action by this Commission. Noncompliance will result in the institution of an order enforcement action. IV.CONCLUSIONS OF LAW: 1. As a Member of the Pennridge School District (“School District”) Board of Directors (“Board”) from May 17, 1999, through 2005, and from March 30, 2006, to the present, Respondent Terri Yates (“Yates”) has been a public official subject to the provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq. 2. Yates violated Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), when she participated in discussions and actions of the Board which resulted in contracts being entered into between the School District and DelVal Soil & Environmental Consultants, a business with which a member of her immediate family is associated, and when she subsequently voted to approve payments to DelVal Soil & Environmental Consultants. In Re: Terri Yates, : File Docket: 10-035 Respondent : Date Decided: 9/27/11 : Date Mailed: 10/6/11 ORDER NO. 1592 1. As a Member of the Pennridge School District (“School District”) Board of Directors (“Board”), Terri Yates (“Yates”) violated Section 1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103(a), when she participated in discussions and actions of the Board which resulted in contracts being entered into between the School District and DelVal Soil & Environmental Consultants, a business with which a member of her immediate family is associated, and when she subsequently voted to approve payments to DelVal Soil & Environmental Consultants. 2. Per the Consent Agreement of the parties, Yates is directed to make payment in the amount of $500.00 payable to the Pennridge School District and forwarded to the th Pennsylvania State Ethics Commission by no later than the thirtieth (30) day after the mailing date of this Order. 3. Yates is further directed to not accept any reimbursement, compensation or other payment from the School District representing a full or partial reimbursement of the amount paid in settlement of this matter. 4. Compliance with Paragraphs 2 and 3 of this Order will result in the closing of this case with no further action by this Commission. a. Non-compliance will result in the institution of an order enforcement action. BY THE COMMISSION, ___________________________ Louis W. Fryman, Chair