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Home My WebLink About81-534 MonacoElidio Monaco Box 314 Cecil, PA 15321 Facts: You informed us that: STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 March 31, 1981 ADVICE OF COUNSEL RE: Municipal Authority; Conflict of Interest Dear Mr. Monaco: 81 -534 This responds to your letter of February 18, 1981, in which you, Secretary of Cecil Township Board of Auditors, requested an opinion from the State Ethics Commission. Issue: In your letter you request advice as to whether there is a violation of the Ethics Act when: (1) A member of a Municipal Authority owns a private sewage treatment plant that will eventally be purchased by the Township; and (2) The Chairman of the Municipal Authority is an engineer whose firm works for the Township and who has an interest in a building company that has applied to install a treatment plant in the Township. (1) A Municipal Authority member is also a home builder. This individual owns a private sewage treatment plant that the Township will purchase at some indefinate time in the future. • (2) The Chairman of the Municipal Authority is the president of an engineering company. This company "represents" the Township (assuming this to mean as official Township Engineer), the C_airman has an interest in a building company that has applied to construct a treatment plant in the Township. Discussion: In Forney v. State Ethics Commission, Pa. Cmwlth. Ct. , A.2d (1003 C.D. 1980 tiled February 10, 1931) the Commonwealth Court held that municipal authorities are generally subject to the Ethics Act, 65 P.S. Elidio Monaco March 31, 1981 Page 2 §401 et seq. Thus, both members of the Municipal Authority must observe the strictures the statute places upon their conduct as public officials. The member of the Authority owning a sewage treatment plant may not use his public office or confidential information received through holding public office to obtain financial gain for himself, his immediate family, or a business with which he is associated. 65 P.S. §402(a). The member may not use his position on the Authority to obtain financial fain in any way, including the sale of his sewage treatment facility. The member may not use confidential information received through the Municipal Authority to sell the sewage plant. Further, the member may not acccept anything of value based on any understanding that the vote, official action, or judgement of the public official would be influenced thereby. 65 P.S. §403(b). This Section of the Act is meant to preclude personal interest conflicting with the public welfare. The member must not allow the possible sale of his plant to inter- fere in any way with his judgment as a public official. The Act also provides that no public official, member of his immediate family or any business in which the person or a member of his immediate family is an officer, director or owner of greater than 5% of the equity at fair market value may contract with a governmental body unless the contract valued at more than $500 has been awarded through an open and public process. 65 P.S. §403(c); Howard, 79 -044. Previous Opinions of the Commission have held owever, that the term "govern- mental body" in Section 3(c) Th refers to the governmental body with which that public official was "associated." Bryan, 80 -014; Lench, 79 -047. Therefore the "open and public process" limitation of Section 3(c) applies only if the member sells his plant to the governmental body with which he is associated. The governmental body with which the Member is associated is the Municipal Authority. Accordingly, the Member may sell his sewage treatment plant to the Township without complying with the "open and public process" provisions of Section 3(c), 65 P.S. §403(c). Similarly the Chairman of the Authority must not use his public office or confidential information received through holding public office to obtain financial gain for himself, his immediate family, or a business with which he is associated. 65 P.S. §403(a). The Chairman may not use his position or confidential information received through his public office to obtain financial gain for his engineering firm. The Chairman may not accept anything of value based on any understanding that the vote, official action, or judgment of the public official would be influenced thereby. 65 P.S. §403(b). The promise of future employment is a thing of value. Sowers, 80 -050. Accordingly, the Chairman must not allow his Elidio Monaco March 31, 1981 Page 3 official actions or judgment to be influenced by the prospect of receiving a contract to build a sewage treatment plant. The Chairman and his engineering firm may, however, apply to build a sewage treatment plant for the Township. There is no absolute prohibition in the Ethics Act on a public official contracting even with the governmental body with which he is associated, provided that any contract valued in excess of $500 is awarded in an open and public process. If, as you state the Chairman's firm represents the Township as Township Engineer, and the Chairman is "associated with" the Township and the Authority any contract between the Chairman's business (Engineering Firm) and the Township as well as the Authority must be awarded by an open and public process. In its opinion in Howard, 79 -044 the Commission stated that an open and public process meets the following criteria: (1) Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. A reasonableness test is employed to determine whether these standards have been met. 'Essentially, there should be time for a reasonable and prudent competitor of the public official... to be able to prepare and submit a proposal." Howard, 79 -044. If these standards are complied with, the Chairman's business may contract with the Township and the Municipal Authority, the govermental bodies with which he is associated. Conclusion: Members of a Municipal Authority must avoid conflicts and the appearance of such conflicts of interest by conforming to the following requirements: (1) A member of a municipal authority may not use his public office or confidential information received through holding public office to obtain financial gain for himself, his immediate family or a business with which he is associated. The member may not use confidential information received as a member of the Authority to sell his sewage treatment plant to the Township. The member may not accept anything of value, including the sale of his sewage treatment plant, with any understanding that his official acts or judgment will be influenced thereby. Because the governmental body with which a member of a Muhicipal Authority is associated with is the Municipal Authority, the member may sell his treatment plant to the Township without reference to the open and public process requirements of Section 3(c), 65 P.S. §403. Elidio Monaco March 31, 1981 Page 4 (2) A Chairman of a Municipal Authority may not use his public office or confidential information received through holding public office to obtain financial gain tor himself, his immediate family or a business with which he is associated. The Chairman may not accept anything of value, including the promise of future employment, based on any understanding that his official action or judgment would be influenced thereby. The Chairman is associated with the governmental bodies of the Municipal Authority and the Township because the Chairman is President of the Township's Engineering Firm. The Chairman or the business with which he is associated (his Engineering firm) may contract with either the Municipal Authority or tae Township if the contract (valued at greater than $500) is awarded through an open and public process. An open and public process provides for: (1) Prior public notice; and (2) public disclosure of all proposals considered; and (3) public disclosure of the award of the contract. A competitor of the public official should be able to prepare and submit a proposal. 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 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. SW /rdp Sincerely, -'Sa dra S. Christianson Generalunsel