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HomeMy WebLinkAbout81-518 EvansEdgar C. Evans Box 343 Alum Bank, PA 15521 RE: Authorities, Contracts Dear Mr. Evans: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 February 27, 1980 ADVICE OF COUNSEL 81 -518 This responds to your communication of December 17, 1980. Issue: In that communication and the article you provided you request, we assume, an opinion as to whether a conflict of interest exists for you as a member of the West Saint Clair - Pleasantville Water Authority ( hereinafter, the Authority) which might sell or lease land to businesses with which you are associated -- Arlandria Inc. and Grain Fuels. Facts: You serve as a member of the Authority. The Authority created the Chestnut Ridge Economic Development Association (CREDA) and you serve as a member of CREDA. CREDA operates as a part of the Authority according to your letter. CREDA was formed to encourage economic development and CREDA operates an Industrial Park. As of 1978 you were the sole owner of a business known as Arlandria Inc. (hereinafter Arlandria) and we assume that you are President of and a partner in Arlandria at the present time. You are on the Board of Directors of Grain Fuels Inc., a company established approximately nineteen (19) months ago to operate a synthetic fuels plant. You were also awarded "founders shares" in Grain Fuels which appear to amount to 5% or more of the equity of Grain Fuels. In 1978, according to the article you provided which we assume for purposes of this advice to be factually correct, Arlandria leased or purchased 3.2 acres of land in the Industrial Park owned by the Authority. Arlandria utilized this land to build thirty -two (32) units of low- income housing. CREDA executed an Article of Agreement relating to a building, to which it holds title to one Edward Zablotney to operate a pharmacy. This agreement was a fifteen (15) year Edgar C. Evans February 27, 1981 Page 2 rent - purchase agreement beginning in 1974 and terminating in 1989. Grain Fuels leases a portion of this building from Mr. Zablotney. Discussion: The Ethics Act may be applied at this time to municipal authorities. Forney, et al. v. State Ethics Commission, Pa. Cmwlth. A.2d. (No. 1003 C.D. 1980, opinion filed February 10, 1981). For purposes of this discussion, the Commission precedent set forth in Nanovic, 80 -041, is also applicable. There the Commission interpreted the standards and provisions of Section 3(h)(i) of the Ethics Act which apply to appointed officials, such as yourself as a member of the Authority as paralleling those to be applied under Section 3(c) of the Ethics Act. Section 3(c) of the Ethics Act provides that: "No public official or employee or a member of his immediate family or business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract." 65 P.S. 403(c) • Further, the Commission has concluded that the restric- tions of Section 3(c) should be applied to the "governmental body" with which you are associated. Williams, 79 -012; Womer, 79 -026, and Howard, 79 -044. In your case you must be deemed to be "associated with" the Authority and CREDA, the entity organized by the Authority. See 51 Pa. Code 1.1, definition of "political subdivision." You are an owner of Arlandria and a director in Grain Fuels. Thus, any contract of the Authority and /or CREDA with Arlandria and /or Grain Fuels in excess of $500 should comport with the open and public requirements of Section 3(c). In relation to Edgar C. Evans February 27, 1981 Page 3 such contracts, in general, the State Ethics Commission has ruled in analogous cases that you should abstain from voting on contracts of this nature. Kilmer, 79 -037. In addition, if for example, the lease between CREDA and Mr. Zablotney was executed with the concurrent agreement or understanding that you would sub -lease a portion of the building owned by CREDA from Mr. Zablotney, you should have recused yourself from voting on or participating in the execution of the CREDA - Zablotney lease. See Sowers, 80 -050. In any event, you may not use confidential information gained as a member of the Authority or CREDA to the benefit of yourself, your immediate family or a business with which you are associated -- Arlandria and /or Grain Fuels. This is prohibited under Section 3(a) of the Ethics Act, 65 P.S. 403(a). Finally, we must observe that the arrangements and facts presented here do not indicate the degree of your participation in the sales, leases, etc., between the Authority - CREDA - Arlandria and CREDA - Zablotney - Grain Fuels. Consequently, at most, at this time we conclude that you may not vote and /or participate in such arrangements, sales, leases in the furture under the Ethics Act. The facts as presented, however, raise serious questions which we would like to have you address, if you wish us to provide a more complete response to your inquiry. Specifically: (1) Was there any understanding and /or agreement on your part or otherwise at the time of the CREDA - Zablotney lease that Grain Fuels was to sub -lease from Zablotney? (2) Were all leases /sales between the Authority and /or CREDA and Arlandria and /or Grain Fuels conducted so as to not result in extraordinary gain for you or any other official? (3) Were any or all leases, sub - leases and sales between the Authority and /or CREDA and Arlandria and /or Grain Fuels conducted in an open and public manner (assuming their value to be $500 or more)? Answers to these questions will assist the State Ethics Commission in answering your questions and in reviewing this matter as a possible violation of the Ethics Act. However, until such time as these are provided and /or obtained, your conduct should conform to the standards discussed above and listed below. Conclusion: You may not use confidential information obtained in public office as a member of the Authority or CREDA to secure gain for yourself, a member of your immediate family or a business with which you are associated. This includes Arlandria Inc. and Grain Fuels Inc. Edgar C. Evans February 27, 1981 Page 4 You should abstain from voting on or participating in matters relating to contracts the Authority and /or CREDA may make with Arlandria and /or Grain Fuels. If either Arlandria or Grain Fuels can reasonably expect to have or has a sub - contract or sub -lease or the contemporaneous arrangement or understanding with the prime contractor or lessee of the Authority and /or CREDA to sub - contract or sub -lease you should refrain from participating, including voting, on the execution or award of the prime contract and /or lease. The circumstances you outline give no indication of the facts surrounding the actual sales and /or leases in question here. Please respond to this further inquiry as soon as possible so that a more thorough review of the specific sales /leases may be conducted. Your answers will be reviewed as possible violations of the Ethics Act. Until that time, your future conduct should conform to these conclusions. Please provide the further data requested within the next thirty (30) days. Pursuant to Section 7(9)(ii), this Advice is a complete defense in any enforcement proceeding initiated by the Commis- sion, 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 may be scheduled and a formal Opinion from the Commission will be issued. You should make such a request or indicate your disapproval of this Advice within the next 30 days. SSC /rdp Si cerely, dra S. risstianson General Counsel