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HomeMy WebLinkAbout85-570A&B MackoMichael J. Macko, Esquire Memorial Boulevard & 8th Avenue Connellsville, PA 15425 Mailing Address State Ethics Commission 308 Finance Building P. 0. Box 11 470 Harrisburg, Pa. 17108 -1470 August 8, 1985 ADVICE OF COUNSEL Re: Grant Program Participation; Relatives of Borough Officials Dear Mr. Macko: 85 - 570 - A This advice responds in part, to your letter of July 19, 1985, wherein you requested the advice of the State Ethics Commission. I note that the question presented was in reference to eighteen different individuals. In order to expedite your request, two separate advices will be issued. The first advice will concern potential participants who are not public employees or borough officials. Issue: Whether relatives of borough officials may participate in a Rehabilitation Grant Program. Facts: As solicitor for the Borough of Vanderbilt, Fayette County, Pennsylvania, you have asked whether certain individuals may participate in a Grant Rehabilitation Program. The program involved in this matter is a $750,000 Small Communities Program Grant which the borough received through the Department of Community Affairs. Gaydos Chambers Associates, a development consultant firm, was employed by the borough to administer this program. The procedures for the implementation of this program are as follows: Program Activity Preparation of grant pre - application and final application procure SCP funds. Preparation of Program Guidelines Approval of Program Guidelines Responsible Entity Gaydos Chambers Associates Gaydos Chambers Associates Vanderbilt Borough Council State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Michael J. Macko, Esq. August 8, 1985 Page 2 Preparation of Program Forms Acceptance of Applicant Intake forms and Verification of Income Eligibility Establishment of Income Figures for Program Participation Prioritization of Applicants for Assistance through the program Implementation of inspection bidding and contracting procedures for the homeowners participating in the program NAME John Addi s Dale Addis Beverly Stevenson Lance Winterhalter Ronald Addis Ellen Addis Ronald Addis, Jr. Gaydos Chambers Associates Gaydos Chambers Associates Department of Housing and Urban Development (section 8 Program) Gaydos Chambers Associates Gaydos Chambers Associates In addition to the above, Gaydos Chambers Associates prepares and forwards cost of payment forms to DCA in order to obtain the allocated funds. The funds are then forwarded to the borough for distribution. The funds are distributed by the borough treasurer and this distribution requires the signature of one of the borough councilmen. The borough treasurer is paid a fee by Gaydos Chambers Associates for the distribution of these funds. Information has also been received that the income guidelines are set by HUD under Section 8 program and any person providing documentation that their income meets these income guidelines is considered eligible for aid. The income verification and intake process is conducted by Gaydos Chambers Associates. Gaydos Chambers has indicated that there is enough money in the program budget to do every income eligible person in Vanderbilt so that the inclusion of the mayor, council, appointed persons, and their respective relatives will not preclude other residents from receiving SCP aid. A rating system developed by Gaydos Chambers Associates is in use to prioritize the persons assisted by the program. You asked whether the following individuals may participate in the program: RELATIONSHIP TO BOROUGH OFFICIAL Son of Mayor Son of Mayor Daughter of Councilman Isaac Lockette Elected School Board Member representing the Connellsville Area School District and brother -in -law of Councilman Jack Washabaugh Brother of Mayor Mother of Mayor Nephew of Mayor Michael J. Macko, Esq. August 8, 1985 Page 3 Pat Orlando Arthur Cumberland Mossie Evans Earl Dowden Dale Arison Uncle of the President of Borough Council Brother -in -law of the Appointed Borough Treasurer Sister of Councilman's wife's grandfather Grandfather of husband of appointed Borough Secretary Cousin of Councilman's wife You have expressed your concern that the borough wishes to avoid even the appearance of a conflict of interest in this matter. Discussion: Initially, we should note that under the Ethics Act our jurisdiction is limited to rulings under the Ethics Act. Thus, we cannot and do not, in this Advice, address the propriety of or answer any questions related to the propriety of your conduct in light of any other code, statute (federal or state), or regulation. Generally, the Ethics Commission in the past, has issued a number of opinions and advices regarding a public official's participation in grant programs. See, Toohey, 83 -003; Balaban, 85 -004; Coploff, 83 -005. These opinions set forth the guidelines applicable in such a situation. With regard to this matter, we note that none of the individuals specified in this advice are borough officials. Therefore, the opinions cited above would not be applicable to these individuals. Additionally, as these individuals are not public officials or public employees they are not generally within the jurisdiction of the Ethics Commission and the Commission may not prohibit them from participating in the program. The Commission, however, does have jurisdiction over the public officials of the borough who are related to these individuals. As such, these officials should be aware of portions of the Ethics Act that are applicable to them. The Ethics Act provices that: Section 3. Restricted activities. (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). Michael J. Macko, Esq. August 8, 1985 Page 4 Additionally, the Act defines member of ones immediate family as follows: Section 2. Definitions. "Immediate family." A spouse residing in the person's household and minor dependent children. 65 P.S. 402. The Ethics Commission, is also empowered to address other areas of possible conflict pursuant to Section 3(d). 65 P.S. §403(d). Fritzinger, 80 -008; Yaw, 85 -011. The parameters of the type of activity encompassed by this provision are generally reviewed in light of the preamble to the Ethics Act which enunciates the legislative intent of the Act. A public official or employee, pursuant to this provision, is to ensure that their personal financial interests present neither a conflict nor the appearance of a conflict with the public trust. 65 P.S. §401. Such a conflict may exist where an individual represents one or more adverse interests, Alfano, 80 -007. Nelson, 85 -009, or where such an official or employee accepts compensation to which he is not entitled. Domalakes, 85 -010. In situations such as the one presented herein, the Commission has determined that the definitional limitations applicable to Section 3(a) of the Act are not relevant to questions addressed under the above provision. Leete, 82 -005. As such, the Commission has placed restrictions upon various actions of public officials and employees when acting upon matters that involve relatives outside of the previously cited definition. O'Reilly, 83 -012; Lewis, 85 -558. Thus, while the individuals identified herein may participate in the program, the borough officials should not participate to any extent in the application process, or granting of funds to their respective relatives. Additionally, all of the records and information pertaining to this process should be open for public inspection. We note that with repsect to three of the previously specified individuals, we do not believe that any of the above restrictions apply. Specifically, the relationships between the borough officials and Mossie Evans, Earl Dowden and Dale Arison are so remote so as not to warrant these restrictions. Also, we note that Arthur Cumberland is the brother -in -law of David Brady the borough treasurer. As noted previously, the treasurer receives a fee for his role in the administering of the program. We believe that an appearance of a conflict exists if the treasurer were to receive a fee in relation to processing Mr. Cumberland's funds. Thus, unless the treasurer foregoes this fee and otherwise abstains from participating in this particular application a _ violation of the Ethics Act may occur. Michael J. Macko, Esq. August 8, 1985 Page 5 Additionally, it is noted that under certain circumstances where a relative of a public official or employee participates in a grant program for which the officer has official responsibilities, the Commission has ruled that the official may have to abstain from decisions regarding others who were also applying for the same funds. Generally, this determination was made where there were limited funds available for distribution and where only a few of the many applicants would be securing approval. The Commissions ruling was grounded upon the concept that an official under such circumstances could effectively deny all applications, other than the one in which he is interested, thereby insuring the availability of funds for the project in which he was interested. Coploff, 83 -005. We reference to this situation not to imply any improper motivation but merely to supply a complete response to your question. We will assume that this particular situation does not exist in relation to your request. Conclusion: There is no prohibition under the Ethics Act, upon the individuals specified herein participating in the Grant Rehabilitation Program. The borough officials must conform to the requirements of the Ethics Act as set forth. 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. 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 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. JJC /sfb John J. Gener Counsel Michael J. Macko, Esquire Memorial Boulevard & 8th Avenue Connellsville, PA 15425 Dear Mr. Macko: Madhng Address State Ethics Commission 308 Finance Building P. O. Box 1 1470 Harrisburg, Pa. 17108 -1470 August 22, 1985 ADVICE OF COUNSEL 85 -570 -B Re: Grant Program Participation, Borough Officials and Employees This completes our response to your letter of July 19, 1985, wherein you requested the advice of the State Ethics Commission. As you are aware, Advice No. 85 -570 -A was issued on August 8, 1985, in partial response to your question. Issue: Whether certain borough officials may participate in a Rehabilitation Grant Program. Facts: Although we have previously outlined the facts of this matter in our prior advice, we will once again set forth the relevant considerations involved herein. As solicitor for the Borough of Vanderbilt, Fayette County, Pennsylvania, you have asked whether certain individuals may participate in a Grant Rehabilitation Program. The program involved in this matter is a $750,000 Small Communities Program Grant which the borough received through the Department of Community Affairs. Gaydos Chambers Associates, a development consultant firm, was employed by the borough to administer this program. The procedures for the implementation of this program are as follows: Program Activity Preparation of grant pre - application and final application procure SCP funds. Responsible Entity Gaydos Chambers Associates State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Michael J. Macko, Esq. August 22, 1985 Page 2 Preparation of Program Guidelines Approval of Program Guidelines Preparation of Program Forms Acceptance of Applicant Intake forms and Verification of Income Eligibility Establishment of Income Figures for Program Participation Prioritization of Applicants for Assistance through the program Implementation of inspection bidding and contracting procedures for the homeowners participating in the program Gaydos Chambers Associates Vanderbilt Borough Council Gaydos Chambers Associates Gaydos Chambers Associates Department of Housing and Urban Development (section 8 Program) Gaydos Chambers Associates Gaydos Chambers Associates In addition to the above, Gaydos Chambers Associates prepares and forwards cost of payment forms to DCA in order to obtain the allocated funds. The funds are then forwarded to the borough for distribution. The funds are distributed by the borough treasurer and this distribution requires the signature of one of the borough councilmen. The borough treasurer is paid a fee by Gaydos Chambers Associates for the distribution of these funds. Information has also been received that the income guidelines are set by HUD under Section 8 program and any person providing documentation that their income meets these income guidelines is considered eligible for aid. The income verification and intake process is conducted by Gaydos Chambers Associates. Gaydos Chambers has indicated that there is enough money in the program budget to do every income eligible person in Vanderbilt so that the inclusion of the mayor, council members, appointed officers, and their respective relatives will not preclude other residents from receiving SCP aid. A rating system developed by Gaydos Chambers Associates is in use to prioritize the persons assisted by the program. In addition to the foregoing, we have reviewed the guidelines that have been established and approved by the council in relation to this program. We note that these guidelines contain the following items: 1. The borough council is responsible for developing a list of approved contractors to perform the necessary work. 2. The borough council must approve any deviations in the types of materials used. Michael J. Macko, Esq. August 22, 1985 Page 3 3. Specific standards for all materials used will he developed by the borough. 4. The borough is responsible for the ultimate approval of the assistance. You have asked whether the following borough officials and employees may participate in this program. NAME Martin Riggin Jack Washabaugh Ike Lockette David Brady Loretta Winterhalter Ruth Ann Thomas We note that we have also learned that Ms. Thomas is an employee of Gaydos Chambers Associates. Once again, we note your concern that the borough wishes to avoid even the appearance of a conflict of interest. Discussion: Initially, we should note that under the Ethics Act our jurisdiction is limited to rulings under the Ethics Act. Thus, we cannot and do not in this Advice, address the propriety of or answer any questions related to the propriety of the questioned conduct in light of any code, statute (federal or state), regulations, etc. other than the Ethics Act. The individuals involved herein are public officials or public employees as these terms are defined in the State Ethics Act. 65 P.S. §401, et. seq. Their conduct, therefore, must conform to the requirements thereof. Kilmer, 79 -037; Keith, No. 11. The Ethics Act provides that: POSITION Councilman Councilman Councilman Borough Treasurer Borough Tax Collector; Mother -in -law of Councilman Borough Secretary; neice of Councilman Section 3. Restricted activities. (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). Michael J. Macko, Esq. August 22, 1985 Page 4 Within this provision of law the Commission has on a number of occasions reviewed the propriety of a public official participating in grant programs. Toohey, 83 -003; Balaban, 83 -004; Coploff, 83 -005. In these cases the Ethics Commission has indicated that a public official or public employee or a business with which he is associated could participate in rehabilitation or grant programs so long as that public official or public employee: 1. played no role in establishing the criteria under which the program at issue was 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 to be or were made; 3. played no role in the process of selecting and 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. Furthermore, the Commission's opinions indicate that if the body with which the public employee or official is associated is in any way involved in the administering of the grant program or selecting who, among the applicants should receive assistance or funds, the public employee or official within the governmental body who is making an application to participate in such a program or to obtain such funds, must abstain from all discussions, votes or recommendations on the applications or programs in which he or she is interested. Additionally, such a public official or public employee should also abstain from participating in matters before that governmental body which he or she serves as to the applications of other individuals who may be similarly situated and who are applying for funds or seeking to participate in the program. Essentially, the Commission sought to eliminate the possibility that a public official or public employee who was seeking such funds or seeking to participate in these grant programs would be in a position to insure the grant funds or the program benefits would be available for his own benefit. Thus, the Commission determined that a public official or public employee in such a situation should refrain from participating in making decisions or recommendations about the program and regarding distribution of the limited funds which might be available as a result of such a program. The reason for such abstentions must be placed on the public record. Michael J. Macko, Esq. August 22, 1985 Page 5 In addition to the previously cited sections, the Ethics Act further provides that the Commission may address other areas of possible conflict. F ri tzi nge r, 80 -008; Yaw, 85 -011. The parameters of the type of activities encompassed by this provision are generally reviewed in light of the preamble to the Act which enunciates the legislative intent of the Act. A public official or employee, pursuant to this provision, is to ensure that their personal financial interests present neither a conflict nor the appearance of a conflict with the public trust. 65 P.S. §401. Thus, we must now review the instant situation in light of the foregoing principles in order to answer the question presented. The members of the borough council have been, from the beginning of this program, involved in implementing the procedures to be employed. The council hired the Gaydos Chambers firm to administer the program. That firm is ultimately responsible to the council. The guidelines for the program specifically set forth that they "were formultated by the Vanderbilt Borough Council... in an effort to develop an equitable framework for the implementation of the borough's Small Communities Program... ". The Council maintains ultimate approval on applications for assistance and also maintains authority over various aspects of the program. These factors, in light of the previously mentioned standards, lead us to conclude that the members of the borough council may not, within the framework of the Ethics Act, participate in the program. They have played a role in establishing the program guidelines; they hired the administrator of the program, they have played a role in establishing and implementing the criteria by which program selection are made and they will plan a role in the process of reviewing and approving applicants. While we understand that the administrative firm also played a major role in this process, this firm was hired by the borough council and is ultimately responsible to that body. Those members of the council who had reason to believe that they would participate in the program would have had to abide by the aforementioned standards in order to fall within our previous opinions. The members of the council were responsible for and established this program as public officials for the citizens of the borough. For these officials to now participate in a program for which they are ultimately responsible and which they have already established would run against the intent and spirit of the law. We must now turn to the remaining officials involved herein. With relation to the borough tax collector, we see no reason why this official may not participate in the program. This person apparently played no role in the implementation of this program and appears to fall within the established criteria. We do note that this official is also a relative of a member of 7. Michael J. Macko, Esq. August 22, 1985 Page 6 council. That member of council, pursuant to our prior advice, should abstain from all participation in relation to any application presented by this person. A more difficult situation arises in relation to the two remaining individuals. The borough treasurer has not played any role in establishing this program. The only role played by this person is that he disburses the funds after approval. This appears to be a non - discretionary function and under normal circumstances there would he no prohibition on this person participating in the program. The treasurer, however, collects a fee from Gaydos Chambers for this function. While we do not address under what authority this official is receiving this financial gain, we do believe that an appearance of a conflict could arise. The treasurer, an official of the borough, is being paid by a private entity to disburse funds for a public purpose. He has, thus, to some extent became associated with the firm that has helped established and that administers the program. For this person to participate in the program under these circumstances would create the type of appearance that you indicate you wish to avoid. We note that this official is obtaining financial gain other than his compensation provided by law to carry out his official functions. Serious public perceptions may develop from this situation. We do not address the propriety of this receipt of financial gain and note that this advice does not purport to authorize such situation. Under these circumstances, we do not believe that this official may participate in the program as long as this relationship exists. Were this relationship not in existence, then we would not see any prohibition upon this persons participation in the program. We now turn to the final person involved herein. This person is the borough secretary and is also an employee of Gaydos Chambers Associates. This person, as a public employee, has access to information and personnel in the governmental process. In addition, this person is employed by the company that has a contract with the borough. This company and the borough are responsible for administering the program and for evaluating and approving all applicants. As an employee of both the borough and the firm the person naturally has access not only to information regarding her own application but to many others seeking funds. While we are not implying any wrongdoing by this person, once again certain appearances are raised by this situation. Michael J. Macko, Esq. August 22, 1985 Page 7 In order to resolve this difficult situation, we believe that this person, if she abstains from dealing with any Small Communities Program applications in both her public and private positions, may participate in the program. Once again we note that the councilman who is the uncle of this person may not participate in any action relating to an application in which she has an interest. In relation to all of the officials who may participate in the program, we reiterate that all applications, abstentions and records regarding these individuals must meet with the open and public process requirements of our prior advice. Conclusion: The individuals involved herein are public officials and public employees as defined in the State Ethics Act and, as such, they must comply with the requirements of the Act as set forth in this Advice. 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. JJC /sfb 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 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. Si nc rely John J ontino General Counsel GIL