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HomeMy WebLinkAbout90-513 DerrMr. Dale A. Derr 90 -513 Law Offices of Derr, Pursel, Luschas & Norton 238 Market Street P.O. Box 539 Bloomsburg, PA 17815 Re: Conflict, County Commissioner, Immediate Family, Vote, Purchase of Real Estate by County, Prior Sales by Commissioner to Seller /Company. Dear Mr. Derr: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1810 ADVICE OF COUNSEL February 22, 1990 This responds to your letter of January 5, 1990, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a county commissioner from voting on a county purchase of premises from a company to which the county commissioner and his wife have on prior occasions sold reality and for which members of his immediate family were employed or have a lease arrangement. Facts: As the attorney for Columbia County Commissioner George H. Gensemer, hereinafter Gensemer, you request advice regarding his voting on a county purchase of premises of office and commercial real estate from Delmar R. and Marjorie A. Zeisloft, partners trading as Zeisloft Construction Company, hereinafter company. Columbia County, hereinafter county, has been negotiating for the purchase of premises of office and commercial real estate which will be used for county offices, agencies and other divisional uses from the company. The company owns, operates or develops extensive commercial, rental or residential real estate in the county. Between 1973 and 1984, Gensemer and his wife have sold five family owned properties to the company outright without retaining any continuing financial interest therein. Two of Gensemer's adult married sons had employment and one has a lease arrangement with the company. In seeking an advisory as to whether Gensemer may vote on the agreement to purchase the real estate from the company, you submit a Mr. Dale A. Derr Page 2 memorandum which details the transactions and relationships between the company and Gensemer and his wife. Gensemer has served as a county commissioner since January of 1976; his current term will expire on December of 1991. The Gensemer family is engaged in the meat slaughtering and the wholesale and retail sales of meat. Several properties were received by Gensemer from his mother which would include the former slaughter house and meat facility in Bloomsburg as well as a farm in Scott Township. The company is a partnership comprised of Delmar R. Zeisloft, his brother James D. and his wife Marjorie A. Gensemer and the company have no other on -going business relationships aside from the real estate transactions listed below. The Columbia County Commissioners on December 22, 1988 negotiated a lease agreement with the company for offices and divisional operations of county offices and agencies. The agreement provided for an annual rental of $35,692.08 for seven years. An option to purchase for $400,000 was provided in the agreement which could be exercised at any time in the seven year period. Gensemer and the two other commissioners participated in the negotiation and discussion regarding the lease agreement which was approved by a unanimous decision. Thereafter the county commissioners considered purchasing the premises and obtained three appraisals which reflected the following values: $374,600, $350,000 and $402,000. Thereafter the company offered to sell the premises to the county for $338,000; no vote has been taken as of this time as to whether to accept the offer. The following reflects the various purchases and sales between Gensemer and his wife with Delmar E. Zeisloft and the company. On August 8, 1973 Gensemer and his wife sold four parcels of land in Bloomsburg to the company for $15,000, being part of the property owned and operated by the Gensemer family as the slaughter house and meat sale and distribution business. That land was subsequently developed by the company into an apartment building for housing Bloomsburg University students. A second transaction involved the sale for $36,500 by Gensemer and his wife on November 2, 1978 to the company of two tracts of land in Bloomsburg whereon a residential dwelling was erected. The company gave a purchase money mortgage to the Gensemers in the amount of $26,000 which was satisfied of record on September 23, 1982. A third real estate transaction occurred on August 1, 1979 between Gensemer and the company for a consideration of $36,500 for premises consisting of a two story apartment building in Mr. Dale A. Derr Page 3 Bloomsburg. As to that property, payment was made at settlement without any financing. On April 30, 1981 a forth transaction occurred wherein Gensemer and his wife sold premises to the company for $36,000 consisting of a lot improved by a dwelling in the township of Bloomsburg wherein a purchase money mortgage by the company was given for $29,000 which was satisfied of record on April 6, 1989. A fifth transaction occurred between Gensemer and his wife with the company on January 18, 1984 involving the sale for a consideration of $369,498 of the Gensemer family -farm which consisted of 97.005 acres. The farm was subsequently subdivided by the company into a housing development known as KirkWood Subdivision with the remaining premises used by the company for an office building. In addition, an existing building on the premises was converted into a sales office by the company for the operation of a business of selling mobile homes, health foods, and office facilities. Part of the sales agreement of this property reflected the assumption by the company of a two hundred forty thousand dollar mortgage of Gensemer and his wife to Bloomsburg Bank /Columbia Trust Company dated January 17, 1984. For federal tax considerations regarding realization of capital gains income, the sale was structured subject to the existing Gensemer mortgage with a remaining balance due of $94,498 payable by the company to Gensemer over a ten year period. Payments have been made by the company and are current as of December 1989. As the company subdivided and sold parcels from the premises, the Bloomsburg Bank /Columbia Trust Company provided releases with respect to the mortgage so that good and marketable title could be conveyed. The portion of the premises which remain exceeds in value the remainder due on the mortgage. The subdivision was accomplished by the company; Gensemer did not participate in that matter or receive any portion of the sale price or benefits from the subdivision. As of December, 1989, the balance of principal due Gensemer on the remaining installments is $44,453.93 with $112,806.31 due Bloomsburg Bank /Columbia Trust Company under the assumed mortgage. Finally on June 6, 1986 Gensemer and his wife conveyed to the company a right -of -way in Scott Township, 301.51 feet in length by 21.31 feet in width which extended to a portion of the Scott Township farm to correct and erroneous exclusion regarding the description in the premises as to the agreement of sale. There have been no subsequent real estate or other dealings between Gensemer and his wife and the company since January 18, 1984. Mr. Dale A. Derr Page 4 Two of Gensemer's adult married sons have certain employment or business relationships with the company. Son David was employed by the company as a laborer for seven years which employment terminated in March, 1989. Son John was employed as a carpenter by the company for three months during 1987. From September 1989 to date, son John has rented a portion of a convenience store premises owned and operated by the company. The operation by son John is an independent self - employed meat retail outlet in which Gensemer has no financial interest. The foregoing constitutes the supplied information on which advice is sought regarding the propriety of Gensemer's voting on the purchase of the property in question from the company. Discussion: As a commissioner for Columbia County, George H. Gensemer is a "public official" as that term is defined under the Ethics Law. 65 P.S. 5402; 51 Pa. Code S1.1. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined under the Ethics Law: " 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. "Conflict" or "conflict of interest" 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 or his immediate family or a business with which he or a member of his immediate family is associated. Mr. Dale A. Derr Page 5 "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 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. Section 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value or no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Preliminarily, it is noted that certain actions have already occurred by Gensemer. Since advisories are limited to prospective conduct, this advice expressly does not address any actions on the part of Gensemer to the extent that such constitute past action. 65 P.S. §407(11). As to matter of whether Gensemer may vote on the county purchase of certain property from the company, it is necessary to apply the submitted facts to the provisions of Section 3 (a) quoted above. His vote would constitute a use of the authority of office. In addition, a private pecuniary benefit would inure to the company which would consist of the consideration that they would be receiving for the sale of their property. The remaining question is whether a private pecuniary benefit would inure to the benefit of a business with which Gensemer or a member of his immediate family is associated as that term is defined under the Ethics Law. Since the proffered facts state that Gensemer has no financial interest in the company, it is assumed that he is neither a director, officer, owner, employee or holder of a financial interests therein. Therefore, based upon the submitted facts, the company would not be a "business with which-- - [Gensemer] is associated." Completed prior real estate Mr. Dale A. Derr Page 6 transactions between Gensemer and his wife and the company do not fall within the statutory definition of "business with which he is associated" and therefore that factual element is not encompassed within the statutory definitions of the terms. Further, the fact that the company assumed the mortgage from Gensemer and his wife to the Bloomsburg Bank /Columbia Trust Company regarding the purchase of the family farm does not in of itself rise the status of making Gensemer associated with the company. The foregoing has equal application to the matter of Gensemer's sons. His son David was an employee of the company but since that employment relationship has been terminated, David would not be associated with the company at this point in time. Similarly, his son John has terminated his employment relationship and the existence of a lease relationship is not included within the statutory definition of "business with which he is associated." Therefore, based upon the submitted facts, neither Gensemer or his wife or two sons would be associated with the company, as the term "business with which he is associated" is defined under the Ethics Law. Accordingly, under the facts and circumstances noted above Gensemer would not be precluded from voting on the matter of the purchase by the county, of property from the company. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law; 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 Law. Specifically not addressed herein is the applicability of the County Code. Conclusion: County Commissioner George Gensemer is a public official subject to the provisions of the Ethics Law. Under the submitted facts, Section 3(a) of the Ethics Law would not prohibit George Gensemer from voting on the purchase by the county of property owned by Zeisloft Construction Company, the latter of which is not a "business with which he is associated" as that term is under the Ethics Law. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. 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. Mr. Dale A. Derr Page 7 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 in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code 52.12. Sincerely, Vincent J. Dopko, Chief Counsel