HomeMy WebLinkAbout16-543 Shapiro
ADVICE OF COUNSEL
July 21, 2016
Seth Shapiro
Chief Operating Officer
The Goldenberg Group
630 Sentry Parkway, Suite 300
Blue Bell, PA 19422
16-543
Dear Mr. Shapiro:
This responds to your letter dated May 13, 2016, by which you requested an
advisory from the Pennsylvania State Ethics Commission (“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 Chairman of the Board of Directors (“Board”) of the
Philadelphia Facilities Management Corporation (“the PFMC”) with regard to
participating in discussions, votes, or other actions of the PFMC Board pertaining to the
facility relocation plans/analysis of the Philadelphia Gas Works (“Gas Works”), where:
(1) the PFMC manages and operates the Gas Works; (2) the Gas Works is considering
a relocation and/or consolidation of some of its facilities; (3) a property commonly
referred to as “the Logan Triangle” has been identified as a potential location for certain
Gas Works functions; (4) the Philadelphia Redevelopment Authority owns the Logan
Triangle; (5) the Philadelphia Redevelopment Authority has identified a particular real
estate development company as the redeveloper of the Logan Triangle; and (6) in a
private capacity, the individual is employed as the chief operating officer of the aforesaid
real estate development company.
Facts:
You request an advisory from the Commission based upon submitted
facts that may be fairly summarized as follows.
In February 2016, you were appointed as a Member of the PFMC Board by the
Honorable James Kenney, Mayor of the City of Philadelphia (“City”). You are currently
Chairman of the PFMC Board.
It is administratively noted that the City incorporated the PFMC pursuant to the
Pennsylvania Nonprofit Corporation Law of 1972 (now codified at 15 Pa.C.S. § 5101 et
seq.) for the purpose of managing and operating the City-owned Gas Works on a non-
profit basis on behalf of the City and for the exclusive benefit of its citizens. See,
Sphere Drake Insurance Company v. Philadelphia Gas Works, 566 Pa. 541, 782 A.2d
510 (2001). The PFMC’s authority is limited to that specifically granted by the City. Id.
The City Mayor appoints the Members of the PFMC Board. Id.
Shapiro, 16-543
July 21, 2016
Page 2
The Gas Works has for some time been considering a relocation and/or
consolidation of some of its facilities. You state that during a recent meeting with Mayor
Kenney, a property commonly referred to as “the Logan Triangle” was mentioned as a
potential location for certain Gas Works functions. The Logan Triangle is owned by the
Philadelphia Redevelopment Authority. You state that no substantive conversations
have taken place with regard to the Logan Triangle as a potential location for Gas
Works functions and that you do not know if the Logan Triangle is even a viable
location.
In a private capacity, you are employed as the Chief Operating Officer of a real
estate development company named “The Goldenberg Group” (the “Company”). The
Philadelphia Redevelopment Authority has identified the Company as the redeveloper
of the Logan Triangle.
Based upon the above submitted facts, the question that is presented is whether
you would have a conflict of interest under the Ethics Act with regard to participating in
discussions, votes or other actions of the PFMC Board pertaining to the Gas Works
facility relocation plans and analysis.
You express your view that you have a potential conflict of interest arising from
your employment with the Company and your role with the PFMC. You state that you
intend to recuse yourself from any conversations or actions at the PFMC Board or at
staff level at the Gas Works pertaining to the Gas Works facility relocation plans and
analysis.
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 Chairman of the PFMC Board, 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
Shapiro, 16-543
July 21, 2016
Page 3
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:
§ 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.
Subject to the statutory exclusions to the Ethics Act’s definition of the term
“conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, 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.
Shapiro, 16-543
July 21, 2016
Page 4
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.
Per the Pennsylvania Supreme Court’s decision in Kistler v. State Ethics
Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the
Ethics Act, a public official/public employee:
… must act in such a way as to put his \[office/public position\]
to the purpose of obtaining for himself a private pecuniary
benefit. Such directed action implies awareness on the part
of the \[public official/public employee\] of the potential
pecuniary benefit as well as the motivation to obtain that
benefit for himself.
Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics
Act, a public official/public employee “must be consciously aware of a private pecuniary
benefit for himself, his family, or his business, and then must take action in the form of
one or more specific steps to attain that benefit.” Id., 610 Pa. at 528, 22 A.3d at 231.
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
Shapiro, 16-543
July 21, 2016
Page 5
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.
In applying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The Company is a business with which you are associated in your capacity as an
employee. You would have a conflict of interest as to discussion(s), vote(s), and/or
other action(s) of the PFMC Board pertaining to the facility relocation plans/analysis of
the Gas Works if: (1) you would be consciously aware of a private pecuniary benefit for
you or the Company; (2) your action(s) would constitute one or more specific steps to
attain that benefit; and (3) neither 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. Cf. Kistler, supra.
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 restrictions and requirements of Section 1103(f) of the Ethics Act would have
to be observed whenever applicable.
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:
Based upon the submitted and administratively noted facts that: (1)
in February 2016, you were appointed as a Member of the Board of Directors (“Board”)
of the Philadelphia Facilities Management Corporation (“the PFMC”) by the Honorable
James Kenney, Mayor of the City of Philadelphia (“City”); (2) you are currently
Chairman of the PFMC Board; (3) the City incorporated the PFMC pursuant to the
Pennsylvania Nonprofit Corporation Law of 1972 (now codified at 15 Pa.C.S. § 5101 et
seq.) for the purpose of managing and operating the City-owned Philadelphia Gas
Works (“Gas Works”) on a non-profit basis on behalf of the City and for the exclusive
benefit of its citizens; (4) the PFMC’s authority is limited to that specifically granted by
the City; (5) the City Mayor appoints the Members of the PFMC Board; (6) the Gas
Works has for some time been considering a relocation and/or consolidation of some of
its facilities; (7) during a recent meeting with Mayor Kenney, a property commonly
Shapiro, 16-543
July 21, 2016
Page 6
referred to as “the Logan Triangle” was mentioned as a potential location for certain
Gas Works functions; (8) the Logan Triangle is owned by the Philadelphia
Redevelopment Authority; (9) no substantive conversations have taken place with
regard to the Logan Triangle as a potential location for Gas Works functions, and you
do not know if the Logan Triangle is even a viable location; (10) in a private capacity,
you are employed as the Chief Operating Officer of a real estate development company
named “The Goldenberg Group” (the “Company”); and (11) the Philadelphia
Redevelopment Authority has identified the Company as the redeveloper of the Logan
Triangle, you are advised as follows.
As a Member and Chairman of the PFMC Board, 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 Company is a business with which you are associated in
your capacity as an employee. You would have a conflict of interest as to discussion(s),
vote(s), and/or other action(s) of the PFMC Board pertaining to the facility relocation
plans/analysis of the Gas Works if: (1) you would be consciously aware of a private
pecuniary benefit for you or the Company; (2) your action(s) would constitute one or
more specific steps to attain that benefit; and (3) neither 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. 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 restrictions and requirements of
Section 1103(f) of the Ethics Act would have to be observed whenever applicable.
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