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HomeMy WebLinkAbout84-637 WaiteCyl de W. Waite, Esquire Stief, Waite, Gross, Sagoskin & Kellis Law Offices 410 Mill Street Bristol, PA 19007 December 26, 1984 ADVICE OF COUNSEL 84 -637 Re: Bucks County Industrial Development Authority, Board Members Dear Attorney Waite: This responds to your letter of November 1, 1984 in which you, as Solicitor requested Advice from the State Ethics Commission. Issue: You ask whether, as a matter of general policy for future guidance members of the Bucks County Industrial Development Authority, hereinafter the Authority, would be prevented from sponsoring any project which would be financed through the Authority. Facts: You indicate that you are Solicitor for the Authority and in that capacity you have been requested by the Board of Directors hereinafter the Board, of the Authority to contact the Ethics Commission to obtain our Advice on a matter of policy for future guidance. Initially you indicate that Section 12 of the Industrial and Commercial Authority Law specifies that members of the Board of the Authority, employees and others associated with the Authority may not enter into contracts with the Authority or in any other way be beneficially interested in such contracts. However, you indicate that it is unclear whether the Board members would be prevented, under this provision, from participating or sponsoring any project which would be financed through the Authority. You indicate that, commonly, an industrial development authority has as its mission the promotion of industrial and commercial development within the County. Clyde W. Waite, Esq. December 21, 1984 Page 2 It attempts to attract members to the Board persons who have significant business enterprise, background, or involvement. If those persons who were to serve on the Board were unable to sponsor projects that were financed through the Authority a significant amount of expertise, which is invaluable to the operation to the Authority itself, would be lost. The basic manner in which the Authority finances a project would be to operate as a "conduit" for financing. The applicant under such a project sponsored by or financed through the Authority would normally obtain his individual financing through a private lender with the Authority holding record ownership but no beneficial interest. We note that as part of the factual context of this request it is unclear whether these individual members of the Board of this Authority are paid or unpaid or receive reimbursement only for actual expenses. This point will be discussed further below. 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 conduct of any member of the Board in light of any code, statute (federal or state), or regulations, etc., other than the Ethics Act. Initially, in order to respond to your question we must determine whether the members of the Board are even "public officials" as that term is defined in the Ethics Act. See 65 P.S. 402. If these individuals are not "public officials" subject to the Ethics Act, there would be no jurisdiction over them under the Ethics Act, and therefore, no restrictions on their conduct by virtue of the Ethics Act. The definition of "public official" is as follows: Section 2. Definitions. "Public official." Any elected or appointed official in the Executive, Legislative or Judicial Branch of the State 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 otherwise exercise the power of the State or any political subdivision thereof. "Public official" shall not include any appointed official who receives no compensation other than reimbursement for actual expenses. 65 P.S. 402. Clyde W. Waite, Esq. December 21, 1984 Page 3 If these individuals who serve as members of the Board are appointed but receive no compensation other than reimbursement for actual expenses, they may not be considered "public officials" and therefore, their conduct would not be subject to any restrictions under the Ethics Act. We would, under these circumstances find them to be excluded from the definition of public official. We recognize that the Supreme Court's ruling in Snider v. State Ethics Commission, 436 A. 2d 593 (1981) cast some doubt as to the extent of this exclusion in the definition "public official." However, the State Ethics Commission has not as yet, applied the Snyder ruling to any appointed, uncompensated group of persons other than to the school board directors at issue in Snider. Accordingly, there is no precedent or regulation which would draw such other uncompensated appointed persons, if the members of the Board of this Authority are in such status, into the purview of the definition of "public official." If such a ruling or regulation would be promulgated you would be advised, in advance, of its effectiveness by way of notice of publication in the Pennsylvania Bulletin or otherwise. Thus, if, in fact, the members of the Board of this Authority are not compensated, except for reimbursement for actual expenses, there would need be no further review of this question, because the Ethics Act would impose no restrictions upon their conduct in that they would not be considered "public officials" subject to the Ethics Act. However, we will assume as well that for your guidance, you would also ask us to address the question on the assumption that these individuals would be considered "public officials" subject to the Ethics Act. Under the Ethics Act, we must observe the stated purpose of that Act which is to strengthen the faith and confidence of people and their government by assuring the public that the financial interests of the holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. See Section 1 of the Ethics Act, 65 P.S. 401. There are specific provisions of the Ethics Act which must be reviewed in this situation. Those provisions will be discussed more fully below. The Sections of the Ethics Act which will be discussed are Sections 3(a), (b) and (c) of the Ethics Act, 65 P.S. 403 (a), (b) and (c), respectively. We will address the provisions in Section 3(c) of the Ethics Act first. From the facts outlined above, it is not clear whether there will be any "contract" between the Board members as public officials and the Authority. However, if this were to occur, the provisions of Section 3(c) of the Ethics Act would apply and require that any contract in excess of $500 between a public employee or official and a governmental body must be made only after an "open and public process." The State Ethics Commission has interpreted this Clyde W. Waite, Esq. December 21, 1984 Page 4 provision to apply and to require an "open and public process" when the particular public employee or official seeks to contract with the "governmental body" with which he is "associated." See Bryan, 80 -014 and Lynch, 79 -047. The governmental body with which the Board members are associated" is the Authority. Thus, assuming, for purposes of this advice, that a contract would be made between the Authority and the Board members Section 3(c) of the Ethics Act would be applicable. If Section 3(c) of the Ethics Act is applicable, it would require the following to be undertaken if a contract in excess of $500 were to be made between the Board members and the governmental body with which they are associated (the Authority) there must be: 1. prior public notice of the contract possibility; 2. public disclosure of applications and contracts considered; and 3. public disclosure of the award of the contracts. Assuming that all of the guidelines as to an open and public process mentioned above, if applicable have been or will be met, we must next consider the other aspects of the propriety of the proposed conduct of the Board members under other provisions of the Ethics Act. In this review, we note that we appreciate and recognize the concern that arises where a public program which may be administered through a public agency, political subdivision, or governmental body is also available to public officials and /or employees of that agency or governmental body. We recogize the public concern and criticism that may arise if a public official or public employee who serves a governmental body receives some benefit from such a program of this nature. Thus, we must review this conduct in light of Section 3(a) of the Ethics Act and Section 3(b) of the Ethics Act. Section 3(a) of the Ethics Act provides as follows: 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). Clyde W. Waite, Esq. December 21, 1984 Page 5 Likewise, we will undertake review of this question in light of Section 3(b) of the Ethics Act which provides as follows: Section 3. Restricted activities. (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). Under these Sections of the Ethics Act and the Opinions of the Ethics Commission, it is clear that the Ethics Act was primarily designed to restrict the activity of a public employee or official where a conflict of interests exists and to address situations where the appearance of a conflict with the public trust may arise. However, the Opinions of the Ethics Commission indicate that the Ethics Act was not designed nor should it be interpreted to preclude public officials or public employees from participating in programs or ventures 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,for example, 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. Clyde W. Waite, Esq. December 21, 1984 Page 6 In the present situation there is no indication that, under the opinions of the Commission or the Ethics Act, this conclusion would be different with respect to a member of the Board of the Authority seeking to participate in a project or to sponsor any project which would be funded through the Authority. Specifically, so long as the above criteria met a member of the Board of the Authoirty should be able to, as could any other citizen, sponsor any project which would be financed through the Authority. Further discussion on abstentions, however, follows. Specifically, 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 or to participate in projects, 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 or projects. 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 or projects would be in a position to insure the grant funds or the program benefits would be available to be applied for or applied to for his own benefit. Thus, a public official or public employee in such a situation should refrain from participating in making decisions or recommendations about the program or project and regarding distribution of the limited funds which might be available as a result of such a project or programs. The reason for such abstentions must be placed on the public record. Based upon the facts as outlined above and as we understand them, we must now apply these principles to this case and particular circumstances. Essentially, we conclude that a Board member may participate in or sponsor projects, as outlined above, without resigning from his position or relinquishing his role as a public official. As long as his conduct meets the criteria listed above at Numbers 1 -4. Under such circumstances, and so long as the required abstentions discussed above are observed a Board member may apply for and participate in sponsoring projects of the Authority. Finally, we must make reference to Section 3(b) of the Ethics Act in order to provide a complete response to your inquiry. Under Section 3(b) of the Ethics Act cited above, which Board members must observe, they must neither offer nor accept anything of value on the understanding or with the Clyde W. Waite, Esq. December 21, 1984 Page 7 intention that their official judgment would be influenced thereby. We assume such a situation does not exist here. We add reference to this Section not to indicate that any such activity has been or will be undertaken but in a effort to provide a complete response to your inquiry. Conclusion: The members of the Board of this Authority may or may not be public officials as outlined above. If they are not public officials, that is, they do not receive compensation other than reimbursement for actual expenses, they would not be subject to any restrictions under the Ethics Act and their ability to sponsor and participate in projects which would be financed through the Authority would not be affected by any provisions of the Ethics Act. If these individuals are to be considered "public officials" subject to the Ethics Act the above standards and guidelines must be observed. If these guidelines are met the members of the Board of the Authority should encounter neither a conflict nor appearance of a conflict with the public trust under the Ethics Act should they choose to participate in or sponsor any project which would be financed through the Authority. 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. SSC /sfd Sincerely, Sandra S. Chri: ianson General Counsel