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HomeMy WebLinkAbout84-565 EdwardsTrevor Edwards, Esquire P.O. Box 5063 Camp Curtin Station Harrisburg, PA 17110 Dear Mr. Edwards: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 May 11, 1984 ADVICE OF COUNSEL 84 -565 RE: Montgomery, Department of Commerce, Industrial Development Authority This responds to your letter of May 10, 1984, in which you, on behalf of Mr. Russell Montgomery, hereinafter Montgomery, requested advise from the State Ethics Commission. Issue: You ask whether an individual serving within the Department of Commerce, hereinafter the Department, may enter into a partnership and pursue a development where the partnership seeks loan funds which must be submitted to and approved by the Secretary of the Department. Facts: You indicate that Montgomery is currently serving as program coordinator in the Bureau of Minority Business Development, hereinafter the Bureau, within the Department. You have provided us with his job description which is incorporated herein by reference. In addition to his present employment with the Bureau and the Department, Mr. Montgomery is a general partner in EdMont Associates, hereinafter EdMont, a general partnership. EdMont is in the process of developing a mini plaza at the corner of Sixth and Maclay Streets in the City of Harrisburg. In order to construct this plaza, EdMont has secured financing from the Dauphin County Industrial Development Authority, hereinafter, the Authority. The Authority obtains loan funds from issuing tax exempt bonds. However, because of the nature of the Authority's funding mechanism, the Authority is required by law to submit all of its approved loan projects to the Secretary of the Department for approval or rejection. The Secretary of the Department must approve the loan applicant's project before the Authority can schedule a settlement date on any project. Trever Edwards, Esquire May 11, 1984 Page 2 Mr. Montgomery has been advised by Mr. Matthew M. Douglas, Jr., Secretary for the Authority, that the Authority has submitted EdMont's project to the Secretary of the Department for approval or rejection. However, you have been advised that the Secretary of Commerce will neither approve nor reject EdMont's project until the Ethics Commission has rendered an opinion on the possibility of or an appearance of a conflict with EdMont's submission because of Mr. Montgomery's position with the Department. You indicate, and this has been confirmed through the Office of Counsel to the Department, that neither Mr. Montgomery nor his Bureau has any connection with the process of or decisions relating to approval or rejection of any authority's projects submitted to the Department for review. Further, we will assume for purposes of this Advise, that neither Mr. Montgomery nor his Bureau have had any connection with the establishment of the criteria by which the Department would review the submission of any authority. Finally, you indicate that the approval or disapproval by the Secretary of the Department of this project in a timely fashion is imperative. Specifically, EdMont is operating under a tight time restraint insofar as settlement on this project is scheduled for May 16. If this settlement date is not met, the project itself is in jeapordy. Mr. Douglas, Secretary for the Authority has advised Mr. Montgomery that if the Secretary of the Department has not taken action on this project by May 14 the settlement scheduled for May 16 will not take place and the project will, in all likelihood, be in serious jeapordy if not defeated. You note that the settlement date is critical to the project because that date determines when construction can start, when the contractor can complete the project and when the leases to be established following construction can begin. Also, the contractor's prices were based upon an ability to start the work on the project by May 18 and, if approval of the project by the Secretary or the settlement with the Authority and the banks is postponed, the contract price may increase and the increased price may make the project economically infeasible. The services to be provided by this project include within the mini mall a grocery store, a meat market, a laundry, and a bakery and is designed to provide 30 jobs within a previously blighted area of Harrisburg. If the project is undertaken and completed, in addition to bringing jobs and services back to this area of Harrisburg, you indicate that the parcel will be re- entered onto the tax rolls after having been dormant for tax purposes for over ten years. Discussion: Under the Ethics Act, we should note originally that our jurisdiction is limited to rulings under the Ethics Act. Thus, we cannot and do not in this ruling address the propriety of or the answer to your question in light of any code, statute (federal or state), etc., other than the Ethics Trever Edwards, Esquire May 11, 1984 Page 3 Act. However, with respect to the Ethics Act, it is clear that as the program coordinator within the Bureau of the Department, as set forth above, Mr. Montgomery is a "public employee" as that term is defined in the Ethics Act, and, as such his conduct must conform to the requirements of the Ethics Act. At the outset there are two specific provisions to be reviewed under the Ethics Act, these are Section 3(a) and Section 3(b) of the Ethics Act 65 P.S. 403(a) and (b). Before reviewing these two Sections however, we indicate that Section 3(c) is not reviewed in this context because Section 3(c) of the_ Ethics Act specifically directs attention to and restricts the activity of a public employee or official who seeks to contract with the governmental body with which he is associated. In this case, on the facts as outlined above, there is indication that there will be any "contract" between Mr. Montgomery or his partnership and the "governmental body" (the Bureau) with which he is associated. Accordingly, Section 3(c) of the Ethics Act is inapplicable to this situation and will not be reviewed further in this advise. However, with respect to Section 3(a) of the Ethics Act, we will undertake further review. Section 3(a) of the Ethics Act provides as follows: (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Likewise, we will undertake review of this question in light of Section 3(b) of the Ethics Act which provides as follows: (b) No person shall offer or give to a public official or public employee or candidate for public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public official or public employee or candidate for public office would be influenced thereby. 65 P.S. 403(b). Trever Edwards, Esquire May 11, 1984 Page 4 We recognize the concern that is expressed with regard to an application by a public employee to obtain funds from an Authority especially where approval of such funding is contingent upon a review by the Department in which that individual serves as a program coordinator within a Bureau of the Department. We recognize the public concern and critizism that may arise if a public official or public employee of the Department recieves benefits that appear to be within the control of the Department where he is employed or serves. However, in the context in which you have presented this issue, we are also cognizant of the fact that the funds in question are not being channeled or provided by or even through the Department itself. The funds in this instance are basically provided by or through the banks in question. The approval or disapproval of the Department, however, is determinative as to the nature of the loan application from the aspect of issuing tax exempt bonds or otherwise. In this case, however, we must refer back to the Opinions of the Ethics Commission. These Opinions indicate that while the Ethics Act was designed to restrict activity where a conflict of interest exists and to address situations where the appearance of a conflict with the public trust may arise, the Ethics Act was not to be designed or interpreted to preclude public officials or public employees from participating in programs which might otherwise be available to them as citizens. See Toohey, 83 -003; Balaban, 83 -004 and Coploff /Hendricks, 83 -005. In these cases the Ethics Commission indicated that a public official or public employee or a business with which he is associated could participate in a rehabilitation program so long as that public official or public employee: 1. Played no role in establishing the criteria under which the program at issue is to operate, particularly with reference to the structure or administration of the program; 2. Played no role in establishing or implementing the criteria by which selections for program participation are made; 3. Played no role in the process of selecting or reviewing applicants or in awarding grants or funds; 4. Used no confidential information acquired during the holding of public office or public employment to apply for or to obtain such funds, grants, etc. Further, the Commission has indicated that if the body with which the public employee or official is associated is in any way involved in adminstering the grant program or selecting who, among the applicants should recieve assistance, the employee within that governmental body who is making an application must abstain from all discussions and votes or recommendations on the application in which he is interested, as well as the application of Trever Edwards, Esquire May 11, 1984 Page 5 other individuals similarly situated and the reasons for such abstention must be placed upon the public record. Essentially, Mr. Montgomery should not be in a position to insure that grant funds would be available to be applied to the benefit of his partnership. However, based upon the facts as you have outlined them above and as we understand them from the Department , the Bureau with which Mr. Montgomery is associated as well as Mr. Montgomery himself, plays no role in the process by which the Department reviews or approves the applications in question for the approval of the projects to obtain tax exempt bond -loan funding. Likewise, we are assuming and you have articulated as a fact that in his role as Bureau program coordinator, Mr. Montgomery has never had any association with or opportunity to play any role in establishing the criteria under which the Department would review the application, accept or reject same, or implement the criteria by which such rejections or approvals are made. Under these circumstances, because Mr. Montgomery is primarily associated with a Bureau within the Department which is separate and functionally distinct from the persons, divisions, or bureaus which establish, implement, and make decisions regarding the approval or disapproval of a project application such as he wishes to present, there is no inherent conflict presented. Likewise, because Mr. Montgomery is not associated and has not been associated with the process of establishing the criteria underwhich the program will operate, and therefore, can be presumed to have no confidential information as a result of his public employment with the Bureau, there is no appearance of a conflict with the public trust under these circumstances. However, we must also review Section 3(b) of the Ethics Act as set forth above. Under Section 3(b) of the Ethics Act it is obvious that Mr. Montgomery must observe the requirements of Section 3(b) and in this regard must neither offer nor accept anything of value on the understanding or with the intention that the official judgment of any public official or public employee would be influenced thereby. We add reference to this Section not to indicate that any such activity has been undertaken but in a sense of providing a complete response to your inquiry. Conclusion: The rulings of the Ethics Commission reveal no reason to preclude Mr. Montgomery under these facts from participating in the application process for the project in question as outlined above even where that application must in some manner be approved by or reviewed by an entity within the Department. So long as his conduct conforms to the guidelines discussed above, as they may be applicable, Mr. Montgomery may participate in the partnership in question, the project in question, and undertake whatever actions are necessary to apply for and secure the approval or rejection of the Department as discussed herein. If these guidelines are met Mr. Montgomery should encounter neither a conflict nor the appearance of a conflict with the public trust under the Ethics Act. Trever Edwards, Esquire May 11, 1984 Page 6 Pursuant to Section 7(9)(ii), this 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, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. SSC /na 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 request that the full Commission review this Advice. A personal appearance before the full Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. cc: James 0. Pickard, Secretary, Commerce Sincerely, ,4 '74t4A7-8-)-) Sandra S. Chri ianson General Couns-1