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HomeMy WebLinkAbout14-524 Wolovich ADVICE OF COUNSEL June 17, 2014 Brian Wolovich Council Vice President Borough of Millvale 902 Hansen Street Millvale, PA 15209 14-524 Dear Mr. Wolovich: This responds to your letter dated April 15, 2014, 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 prohibitions or restrictions upon an individual serving as a member and vice president of a borough council with regard to contracting to act as a consultant to a non-profit corporation in his private capacity, where the individual would be providing consulting services on matters pertaining to a grant awarded to the non-profit corporation in relation to a redevelopment project in the borough. Facts: As a Member and Vice President of Council for Millvale Borough (“Borough”), you request an advisory from the Pennsylvania State Ethics Commission based upon submitted facts that may be fairly summarized as follows. Organizational stakeholders, including the Borough, the Millvale Borough Development Corporation (the “Corporation”), and Allegheny River Towns Enterprise Zone, are working to redevelop a cluster of vacant, underutilized, or blighted properties (the “Properties”) in the heart of the main street business districts in order to create the Bennett Station Town Square redevelopment project (the “Project”). You state that private individuals and organizations own all of the Properties and that neither you nor your family owns any of the Properties or any part of the organizations/businesses which own the Properties. The Corporation is an independent 501(c)(3) non-profit organization which is a separate entity from the Borough and has its own Board of Directors. You state that neither you nor anyone in your family is on the Corporation’s Board of Directors. The Corporation has entered into an agreement to purchase the Properties and is raising money to acquire and complete the planning for the Properties in preparation of the construction phase of the Project. The Borough is also applying for grants for the Wolovich, 14-524 June 17, 2014 Page 2 necessary construction work on the Project and was recently awarded a $500,000 Redevelopment Assistance Capital Program Grant from the Commonwealth for the construction phase of the Project. The Corporation has received a $150,000 grant (the “Grant”) from a local private foundation for the planning, design, engineering, and community engagement piece of the Project. The Corporation and you would like to enter into an Independent Contractor Agreement (the “Agreement”) under which you would be paid a total of $18,000 from the Grant for providing professional services as a consultant to the Corporation in matters related to the Grant. You have submitted an unexecuted copy of the Agreement, which is incorporated herein by reference. Based upon the above submitted facts, you ask whether the Ethics Act would permit you to contract to act as a consultant to the Corporation under the Independent Contractor Agreement. 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 Vice President of Borough Council, you are a public official 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 Wolovich, 14-524 June 17, 2014 Page 3 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 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. It is noted that Section 1103(a) of the Ethics Act does not prohibit public officials/public employees from having outside business activities or employment. However, subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, 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 could form the basis for a conflict of interest under Section 1103(a) of the Ethics Act would include the pursuit of a private business opportunity in the course of public action (Metrick, Order 1037) and 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 support a finding of a conflict of interest (Amato, Opinion 89- 002). In each instance of a conflict of interest, the public official/public employee would be required to abstain 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 would require 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. Wolovich, 14-524 June 17, 2014 Page 4 In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. The Ethics Act would not prohibit you, in your private capacity, from contracting to act as a consultant to the Corporation under the Independent Contractor Agreement. However, at such times as you either would have a business relationship with the Corporation or would have a reasonable expectation of developing a business relationship with the Corporation, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters before Borough Council that would financially impact you or the Corporation, unless one of the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would be applicable. As noted above, 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 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 Borough Code. Conclusion: As a Member and Vice President of Council for Millvale Borough (“Borough”), 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. Based upon the submitted facts that: (1) organizational stakeholders, including the Borough, the Millvale Borough Development Corporation (the “Corporation”), and Allegheny River Towns Enterprise Zone, are working to redevelop a cluster of vacant, underutilized, or blighted properties (the “Properties”) in the heart of the main street business districts in order to create the Bennett Station Town Square redevelopment project (the “Project”); (2) private individuals and organizations own all of the Properties, and neither you nor your family owns any of the Properties or any part of the organizations/businesses which own the Properties; (3) the Corporation is an independent 501(c)(3) non-profit organization which is a separate entity from the Borough and has its own Board of Directors; (4) neither you nor anyone in your family is on the Corporation’s Board of Directors; (5) the Corporation has entered into an agreement to purchase the Properties and is raising money to acquire and complete the planning for the Properties in preparation of the construction phase of the Project; (7) the Borough is also applying for grants for the necessary construction work on the Project and was recently awarded a $500,000 Redevelopment Assistance Capital Program Grant from the Commonwealth for the construction phase of the Project; (8) the Corporation has received a $150,000 grant (the “Grant”) from a local private foundation for the planning, design, engineering, and community engagement piece of the Project; (9) the Corporation and you would like to enter into an Independent Contractor Agreement (the “Agreement”) under which you would be paid a total of $18,000 from the Grant for providing professional services as a consultant to the Corporation in matters related to the Grant, you are advised as follows. The Ethics Act would not prohibit you, in your private capacity, from contracting to act as a consultant to the Corporation under the Independent Contractor Agreement. However, at such times as you either would have a business relationship with the Corporation or would have a reasonable expectation of developing a business relationship with the Corporation, you would have a conflict of interest under Section 1103(a) of the Ethics Act in matters before Borough Council that would financially impact you or the Corporation, unless one of the statutory exclusions to the definition of “conflict” or “conflict of interest” as set forth in the Ethics Act, 65 Pa.C.S. § 1102, would Wolovich, 14-524 June 17, 2014 Page 5 be applicable. 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. 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