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HomeMy WebLinkAbout17-004 ManolisSTATE ETHICS COMMISSION 309 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before: Nicholas A. Colafella, Chair Mark R. Corrigan, Vice Chair Roger Nick Maria Feel eyy Melanie ❑ePalma DATE DECIDED: 3129117 DATE MAILED: 4110117 17 -004 To the Requester: James W. Manolis, Esquire Verterano & Manolis Dear Mr. Manolis: This Opinion is issued in response to your letters dated March 24, 2016, September 15, 2016, and January 16, 2017, by which you requested an advisory opinion from the Pennsylvania State Ethics Commission ( "Commission "). I. ISSUE: Whether a Board Member, Member, employee, and/or legal Counsel of the Lawrence County Economic Development Corporation ( "LCEDC ") would be subject to the requirements for filing Statements of Financial Interests pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seg. II. FACTUAL BASIS FOR DETERMINATION: As Counsel for LCEDC, you have been authorized to request an advisory from this Commission on behalf of: (1) the Board of Directors of LCEDC (also referred to herein as the "LCEDC Board "); (2) Sam B. Biasucci ( "Mr. Biasucci "), who is a Member of LCEDC; and (3) Linda D. Nitch ( "Ms. Nitch"), who is employed with LCEDC. You seek a determination as to whether: (1) Members of the LCEDC Board; (2) Mr. Biasucci, in his capacity as a Member of LCEDC; (3) Ms. Nitch, in her capacity as an employee of LCEDC; and /or (4) you, as legal Counsel to the LCEDC, would be required to file Statements of Financial Interests ppursuant to the Ethics Act. You have submitted facts that may be fairly summarized as follows. You state that LCEDC is a private, non- profit 501(c)(3) entity. LCEDC was incorporated by private individuals on January 31, 1955. You state that no political subdivision or governmental entity was involved in the creation of LCEDC, which was originally named the "Greater New Castle Development Corporation." LCEDC is dedicated to enhancing the economy and the quality of life in Lawrence County ( "County "), Pennsylvania, through the delivery of public /private P.O. BOX 11470, HARRISBURG, PA 17108 -1470 • 717- 783 -1610 • 1- 800 - 932 -0936 • www.ethics.state.pa.us Manolis, 17 -004 April 15, 2017 Page 2 resources for the development of the community and the development, expansion, and retention of employment opportunities. You state that LCEDC operates autonomously, separate and apart from any political subdivision, governmental unit, or public body. You state that LCEDC occasionally administers funds from federal and/or state grant programs, and that otherwise, it operates on funds generated from other sources, membership dues and donations. LCEDC has received discretionary annual contributions from the County. Such contributions are made part of LCEDC's general fund and are used for marketing activities such as website development, photography, videography, and site tours. The County contributions are not used for business loans or grants. LCEDC is a Pennsylvania Certified Economic Development Organization and an eligible grantee or subgrantee for Redevelopment Assistance Capital Program funds. LCEDC performs various functions with regard to the administration of funds under particular grant and loan programs, including but not limited to: (1) submitting financing applications for loans to the Pennsylvania Industrial Development Authority on behalf of a business entity or developer; (2) processing or reviewing and approving grant or loan applications; (3) disbursing grant funds; and (4) awarding loans from revolving loan funds that are funded from private, state, or federal sources. Depending upon the particular grant or loan program, LCEDC may have no discretion or complete discretion with regard to the refection, further submission, or approval of applications for funds or the use of funds. At the time you initially submitted your advisory request, the version of the LCEDC bylaws that was in effect had most recently been revised January 9, 2013. This Opinion shall refer to that version of the bylaws as "the 2013 Bylaws." Effective January 1, 2017, the bylaws of LCEDC changed. This Opinion shall refer to the newest version of the bylaws as "the 2017 Bylaws." Pursuant to both the 2013 Bylaws and the 2017 Bylaws, Members of LCEDC and Members of the LCEDC Board were /are not appointed b any political subdivision, governmental unit, or public body. Under the 2013 Bylaws, irappears that the Members of the LCEDC Board of Directors generally were selected by vote of the LCEDC Members at their annual meeting, but vacancies occurring between meetings may have been filled by the Board of Directors itself. 2013 Bylaws, Sections 6.05 -6.06, 7.06 -7.07, at 13 -14, 16. The 2013 Bylaws provided for "regular (voting) and "advisory" (nonvoting) directors on the LCEDC Board of Directors, with the County Commissioners and the County Administrator included as regular directors on the LCEDC Board. Regarding the composition of the Board of Directors, the 2013 Bylaws provided, in pertinent part, as follows: Section 3.02 Structure of Board of Directors (a) Regular Directors The Board of Directors of this Corporation shall consist of not less than eleven (11), and not more than nineteen (19) members, with the exact number to be determined, from time to time, by the Directors. The number may be changed by the vote or written assent, of a majority of the Directors then in office. The Board shall be composed of a reasonable balance of representatives from the following employment sectors and geographic regions of the County: Manolis, 17 -004 prA it 1�, 2017 Page 3 (1) Manufacturing (2) Service (3) Health care /Non- profit (4) Real Estate /Construction /Development (5) Professional (6) At -Large In addition to the above - identified representatives, the Board shall also include, as regular members: M The current Board of Commissioners (only one (1) vote, cast by any Commissioner) (2) The County Administrator Section 6.05 Nominatinq Committee The Nominating Committee shall be appointed to solicit/recommend nominees for open seats on the Board of Directors from the general membership.... 2013 Bylaws, at 4, 13. The County Commissioners' terms on the LCEDC Board of Directors were concurrent with their terms as Commissioners. 2013 Bylaws, at 6. The 2017 Bylaws no longer designate County officials as LCEDC Directors. Regarding the composition of the LCEDC Board of Directors, the 2017 Bylaws provide, in pertinent part, as follows: Structure and Membership of Board 3.02. The Board of Directors of this Corporation shall consist of four classes of directors established solely for the purpose of distinguishing the manner in which directors of the corporation shall be elected, appointed, designated or otherwise selected, and removed. Class One: Eight directors who shall be the Qualified Directors of the Lawrence County Regional Chamber Foundation. Class Two: Three directors who shall be the Directors at Large of the Lawrence County Regional Chamber Foundation, who shall have the right to attend and participate in the meetings of the Board of Directors of the Corporation, but shall have no voting rights. Manolis, 17 -004 April 10, 2017 Page 4 Class Three: Five directors who shall be elected, appointed, designated and otherwise selected, and removed by the Lawrence County Regional Chamber Foundation, none of whom shall be a director of the Greater New Castle Chamber of Commerce tldfbla Lawrence County Chamber of Commerce. Class Four: Four directors who shall be elected, appointed, designated and otherwise selected, and removed by the Members of the Corporation. 3.05. Any vacancy occurring on the Board of Directors, due to the expiration of a term, resignation, or otherwise, shall be filled in the manner provided for by the organic laws and rules of the appointing entity... 2017 B laws, at 5 -6. With respect to the Class Four Directors, who are chosen by the Members ot LCEDC, the 2017 Bylaws provide for the Nominating Committee to solicit and recommend nominees from the general membership for open seats on the LCEDC Board. 2017 Bylaws, at 14. Regarding membership in LCEDC, the 2013 Bylaws provided, in pertinent part, as follows: Section 7.01 Definition Membership in the Corporation shall be limited to those persons, natural or corporate, who shall be residents of, or have interests in, Lawrence County, and who shall express an interest in the advancement and enhancement of economic development within Lawrence County and a willingness to cooperate in the furtherance of those purposes. Section 7.02 Application and Qualification of Members The application for general membership must be approved by the Board of Directors of the LCEDC. The qualifications of the Members are as follows: (a) Members must be persons, natural or corporate who shall reside in or have an economic interest in Lawrence County. (b) Members must express an interest in the advancement of economic development with Lawrence County. (c) Members must express a willingness to cooperate in the furtherance of the corporate purposes. Manolis 17 -004 April 10, 2017 Page 5 (d) Members must comply with the requirements for Membership established herein. Section 7.03 Member's Dues The annual dues payable to the Corporation b Members shall be in such amount as may be established from time to time by Resolution of the Board of the Directors.... 2013 B laws, at 15. Membership in LCEDC could terminate through the resignation, death, or dissolution of a Member or through the expulsion of the Member by the LCEDC Board of Directors. 2013 Bylaws, at 16. Regarding membership in LCEDC, the 2017 Bylaws provide, in pertinent part, as follows: 7.01. Membership in the Corporation shall be limited to those persons, natural or corporate, who shall be residents of Lawrence County, or express an interest in the advancement and enhancement of economic development within Lawrence County and a willingness to cooperate in the furtherance of those purposes. Application and Qualification of Members 7.02. The application for general membership must be approved by the Board of Directors of the Corporation. The qualifications of the Members are as follows: A. Members must be persons, natural or corporate who shall reside in Lawrence County or express an interest in the advancement of economic development with Lawrence County. B. Members must express a willingness to cooperate in the furtherance of the purposes of the Corporation. C. Members must comply with the requirements for Membership established herein. Member's Dues 7.03 The annual dues payable to the Corporation by members shall be in such amount as may be established from time to time by Resolution of the Board of the Directors.... 2017 B laws, at 1314. Membership in LCEDC may terminate through the resignation, death, or dissolution of a Member, through the expulsion of the Member by the LCEDC Board of Directors, or as a result of nonpayment of dues. 2017 Bylaws, at 15. Based upon the submitted facts, you request an advisory opinion as to whether the LCEDC Board Members, Mr. Biasucci, who is a Member of LCEDC, Ms. Nitch, who Manolis, 17 -004 Apr�iT10, 2017 Page 6 is employed with LCEDC, andlor you as legal Counsel of LCEDC would be subject to the requirements for filing Statements of Financial Interests pursuant to the Ethics Act. By letter dated March 1, 2017, you were notified of the date, time and location of the public meeting at which your request would be considered. Ill. 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, this 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. The response to your inquiry regarding the LCEDC Board Members, Member, and employee on whose behalf you have inquired hinges upon whether they would be considered °public employees or public officials" as the Ethics Act defines those terms. Persons falling within either of those definitions are required to file Statements of Financial Interests pursuant to Section 1104 of the Ethics Act, 65 Pa.C.S. § 1104. The Ethics Act defines the terms "public employee" and "public official` as follows: § 1102. Definitions "Public employee." Any individual employed by the Commonwealth or a political subdivision who is responsible for taking or recommending official action of a nonmmisterial nature with regard to: (1) contracting or procurement; (2) administering or monitoring grants or subsidies; (3) planning or zoning; (4) inspecting, licensing, regulating or auditing any person; or '(5) any,other activity where the official action has an economic impact of greater than a de minimis nature on the interests of any person. The term shall not include individuals who are employed by this Commonwealth or any political subdivision thereof in teaching as distinguished from administrative duties. "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to Manolis, 17-004 prAii10 2017 Page 7 otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. § 1102. See also, 51 Pa. Code § 11.1. In applying the above definitions, it is significant whether the body /entity in question_ -in this case, the LCEDC - -is a "political subdivision" or "governmental body' as the Ethics Act defines those terms: § 1102. Definitions "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational schooI, county institution district, and any authority, entity or body organized by the aforementioned. "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body or other establishment in the executive, legislative or judicial branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. 65 Pa.C.S. § 1102. Under the submitted facts, LCEDC is a privately created non - profit 501(c)(3) entity. No political subdivision or governmental entity as involved in the creation of LCEDC, and there is no indication in the submitted facts that any political subdivision has had any involvement in "organizing" LCEDC. (See, Eiben, Opinion 04 -002 regarding the meaning of the term `organize "). Therefore, ase upon the submitted facts, the necessary conclusion is that LCEDC is not a political subdivision. However, LCEDC appears to perform some governmental functions regarding government grants and loans, and so the question arises as to whether LCEDC may be considered a "governmental body" as the Ethics Act defines that term, specifically as an "agency performing a governmental function." 65 Pa.C.S. § 1102. We addressed questions similar to those presented by your inquiry in our Opinions referred to as Area Loan Organizations Under Capital Loan Fund Act, Opinions 95 -006 and 95- 006 -R. In those Opinions, we considered whether members /employees of various non - profit corporations serving as "area loan organizations' under the Capital Loan Fund Act were public officialslpublic employees required to file Statements of Financial Interests pursuant to the Ethics Act. While we noted that the power of such area loan organizations to eliminate applicants from certain governmental programs was the exercise of a governmental function and beyond a purely advisory function, we stated: "However, it is not only the function performed by these entities which is significant - -we must also review their organizational nature to determine whether they fall within the pertinent definitions of the [Ethics Act] which delineate our jurisdiction." Area Loan Om anizations Under Capital an Fund Act, Opinion 95 -006, at 12. a determine t at those area loan or that were incorporated by private individuals and were not organized by political subdivisions were not themselves political subdivisions, such that their employees were not "public employees" as the Ethics Act defines that term. We further determined that where members of the area loan organizations applied for membership, much like joining a club, as opposed to being appointed, such members were not public officials subject to the Ethics Act because the Ethics Act's definition of the term "public official" only includes persons who are elected or appointed. Id., at 13. Manolis, 17 -004 April T0, 2017 Page 8 In the instant matter, we determine that: (1) Members of the LCEDC Board; (2) Mr. Biasucci, in his capacity as a Member of LCEDC; and (3) Ms. Nitch, in her capacity as an employee of LCEDC, are not to be considered "public employees" subject to the Ethics Act. To he a "public employee" subject to the Ethics Act, an individual must stand in an employer - employee relationship with the Commonwealth or a political subdivision of the Commonwealth. Eiben, sup ra; Ver Ellen, Opinion 03 -005. Factually, neither a Member of the LCEDC Board nor Mr. iasucci, in his capacity as a Member of LCEDC, is an employee of LCEDC. Although Ms. Nitch is an employee of LCEDC, LCEDC is not a part of the Commonwealth, and as we have already determined, LCEDC also is not a political subdivision as the Ethics Act defines that term. Cf., Area Loan Or. anizations Under Capital Loan Fund Act, supra. Therefore, you are advised that: (1) Members of the LCEDC Board; (2) Mr. Biasucci, in his capacity as a Member of LCEDC; and (3) Ms. Nitch, in her capacity as an employee of LCEDC, are not to be considered "public employees" subject to the Ethics Act. In applying the Ethics Act's definition of the term "public official," the first portion of the definition provides that a public official is a "person (defined to include, inter alia, an individual, business, corporation or firm, 65 Pa.C.S. § 1102) which is: (1) eked by the public; (2) elected or appointed by a governmental body; or (3) an appointed official in the executive, legislative or judicial branch of the Commonwealth of Pennsylvania or a political subdivision of the Commonwealth. Muscalus, Opinion 02 -007. When the first portion of the definition is met, status as a public of'icial subject to the Ethics Act is established, unless the exclusion for members of purely advisory boards is applicable. Eiben, supra. Based upon the submitted facts, Ms. Nitch, in her capacity as an employee of LCEDC, would not fall within any of the three categories above. Accordingly, you are advised that Ms. Nitch, as an employee of LCEDC, would not be considered a "public official" subject to the Ethics Act. Membership in LCEDC is achieved through applying for membership and paying dues, much like joining a club. As noted above, this Commission has determined that this sort of arrangement does not qualify such a Member as a public official. Area Loan Organizations Under Ca ital Loan Fund Act, Opinion 95 -006, at 13. Therefore, you are advised that Mr. Biasucci, in his capacity as a Member of LCEDC, would not be considered a "public official" as the Ethics Act defines that term. A Member of the LCEDC Board clearly does not fall within either the first or third category above. A Member of the LCEDC Board is not elected by the public. Additionally, a Member of the LCEDC Board is not an appointed official in the executive, legislative, or Judicial branch of the Commonwealth or a political subdivision of the Commonwealth. As for the second category, those Members of the LCEDC Board chosen by the Members of LCEDC are not elected or appointed b a "governmental body." Therefore, you are advised that such Members of the LCEDC Board are not to be considered you officials" subject to the Ethics Act. As for other Members of the LCEDC Board — either those who became such under the 2013 Bylaws as a result of status as a County Commissioner or County Administrator, or through the filling of a vacancy, or those who are now elected, appointed, designated or otherwise selected by others —we conclude that such LCEDC Board Members would not be considered public officials in their capacities as Members of the LCEDC Board. We conclude that it would be an absurd or unreasonable Manolis, 17 -004 April - O, 2017 Page 9 interpretation to treat those Board Members differently than the other LCEDC Board Members, and it is a fundamental principle of statutory construction that "[t]he General Assembly does not intend a result that is absurd, impossible of execution or unreasonable." 1 Pa.C.S. § 1922. We are also aware of the legislative debate that immediately preceded the inclusion of the key phraseology!, the definition of the term "governmental body," sug esting that the term "a ency" was not intended to apply to a private corporation re orming a governmental function solely through contractual arrangements(s). e islative Journal of House, 1989 Session, No. 43 at 1037 (Comments of Representatives Blaum and Heckler, moments before the approval of the bill including the language by a vote of 199 -1 in the House). However, we need go no further than we do.above in order to respond to your inquiry. Having determined that (1 ) Members of the LCEDC Board; (2) Mr. Biasucci, in his capacity as a Member of LCEDC; and (3) Ms. Nitch, in her capacity as an employee of LCEDC, are not to be considered "public employees" or "public officials" subject to the Ethics Act, you are further advised that they are not required to file Statements of Financial Interests pursuant to the Ethics Act. Based upon the submitted facts, you are further advised that in your capacity as legal Counsel for LCEDC, you are not required to file Statements of Financial Interests pursuant to the Ethics Act because LCEDC is not a political subdivision and there is no factual basis for concluding that you have been "appointed" to a position. Cf., 65 Pa.C.S. § 1104(a) (requiring full -time or part -time solicitors for political subdivisions to file Statements of Financial Interests pursuant to the Ethics Act). Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. IV. CONCLUSION: Based upon the submitted facts: (1 Members of the Board of Directors of the Lawrence County Economic Development Corporation ( "LCEDC "); (2) Sam B. Biasuccl, in his capacity s a Member of LCEDC; and (3) Linda D. Nitch, in her capacity as an employee of LCEDC, are not to be considered "public employees" or "public officials" subject to the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., and therefore they are not required to file Statements of Financial Interests pursuant to the Ethics Act. Additionally, based upon the submitted facts, you, as legal Counsel for LCEDC, are not required to file Statements of Financial Interests pursuant to the Ethics Act. Act. The propriety of the proposed conduct has only been addressed under the Ethics Pursuant to Section 1107(10), the person who acts in-good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public, record and will be made available as such. By the Commission, Ni h a 4Co I daf ce I I Chair �. / h: