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HomeMy WebLinkAbout81-573 MorrisBurton D. Morris Baskin & Sears 5th Floor Payne- Shoemaker Bldg. Harrisburg, PA 17101 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 June 8, 1981 ADVICE OF COUNSEL 81 -573 Robert H. Long, Jr. Rhoads, Sinon & Hendershot 410 North Third Street Harrisburg, PA 17108 RE: Pennsylvania Housing Finance Agency, Executive -level State Employee Dear Mr. Morris and Mr. Long: This responds to the communication of May 13, 1981 in which Mr. Morris, as Counsel for Carl Payne, requested an opinion from the State Ethics Commission. In addition, this responds to the letter of June 2, 1981 of Mr. Long, as Counsel for the Pennsylvania Housing Finance Agency, relating to the same subject. Issue: You have requested advice as to whether the Pennsyl- vania Housing Finance Agency (PHFA) is a State agency within the contemplation of Section 2 of the Ethics Act and whether or not Mr. Payne is a "State employee" within the contem- plation of Section 2 of the Ethics Act, specifically, the definition of "executive -level State employee." In addition, you question whether the 2 -year prohibition contained in Section 3(g) of the Ethics Act, 65 P.S. 403(g) would apply to Mr. Payne and /or preclude his proposed activities in this matter. Facts: Mr. Payne served as the Executive Director of the Pennsylvania Housing Finance Agency through October 19, 1979, according to Mr. Morris_' letter, when he terminated that employment. We note that the letter of Mr. Long uses the termination date of January 18, 1980. Given our conclusion as to the application of Section 3(g), however, this discrepency is not material. Following his termination of employment with PHFA, Mr. Payne has functioned as a developer of subsidized housing projects and as a consultant to developers for such housing projects. However, during the year immediately following the termination of his employment as Executive Director, Mr. Payne refrained from representing himself or any person before the PHFA. Burton D. Morris Robert H. Long, Jr. June 5, 1981 Page 2 However, within the past sixty (60) days in response to a notification of funding availability issued by the PHFA, Mr. Payne filed one application with the agency in the capacity of a co-developer (a project in western Pennsyl- vania) and is listed on two applications in the capacity of . a consultant to the developers (projects in central and northeastern Pennsylvania). In the coarse of the agency's, review and consideration of these applicat.io.z a question was raised as to whether or not Mr. Payne was subject to the two year prohibition contained in Sectior 3(g) of the Ethics Act. As a result of these questions the Agency determined that further consideration of Mr. Payne's appiicatiu should be held in advance pending resolution of these questryuns. Accordingly, you have requested that we provide advice, hopefully, prior to the Agency's next scheduled meeting of Tune 16, 1981. Discussion: The Housing Finance Agency Law, 65 P.S. 1680.102(7) declares that the Commonwealth of Pennsylvania shall engage in the creation of a body corporate and politic to be known as the Pennsylvania Housing Finance Agency. In addition, this law further provides that this agency shall be a public corporation and a government instrumentality. Case law, in particular, Johnson v. Pennsylvania Housing Finance Agency, 453 Pa. 329, 309 A.,2d 528 (1973) concludes that the Pennsylvania Housing Finance Agency is generally to be considered a "State -wide governmental instrumentality" Mr. Long's letter states that. the Agency, however, has no statutory mandate to directly recruit businesses or corporations to the Commonwealth or to induce such organizations to open new plants or facilities or to expand existing plants or facilities. This data comports with our understanding and the Agency's Law which merely establishes PHFA as a loan agency to which applicants may apply. Under the Ethics Act current litigation has resulted in the determination that, in general, municipal authorities created under the auspices of the Municipalities Authorities Act are to be considered covered by the Ethics Act and the members thereof are to be considered State employees. See Forney v. State Ethics Commission, Pa. Cmwlth. 425 A.2d 66 (1981). Given these precedents, both under the Pennsylvania Housing Finance Agency Law, in particular and the Ethics Act, in general, it would be difficult to conclude that the PHFA is anything other than a "State Burton D. Morris Robert H. Long, Jr. June 5, 1981 Page 3 agency." Accordingly, in general, the PHFA would be considered a "State agency" within the contemplation of the Act. Likewise, it is clear that Mr. Payne was a "public employee" within the meaning of the Act. When Mr. Payne left his employment with the PHFA he became a "former public employee." As indicated, however, Mr. Payne had no contact, per se, with the agency within the year following the termina- tion of his employment. This would be in compliance with Section 3(e) of the Ethics Act which imposes a one year prohibition upon former public employees from appearing or representing any person, with or without compensation, before the govermental body with which he was associated. However, we must review your final question which involves an interpretation of Section 3(g) of the Ethics Act. This Section provides as follows: No former executive -level State employee may for a period of two years from the time that he terminates his State employ- ment be employed by, receive compensation from, assist, or act in a representative capacity for a business or corporation that he actively participates in recrui- ting to the Commonwealth of Pennsylvania or that he actively participated in inducing to open a new plant, facility or branch in the Commonwealth or that he actively participated in inducing to expand an existent plant or facility within the Commonwealth, provided that the above prohibition shall be invoked only when the recruitment or inducement is accomplished by a grant or loan of money from the Commonwealth to the business or corporation recruited or induced to expand. 65 P.S. 403(g). The initial reading of this Section makes it clear that no former executive -level employee may even be employed by a business or corporation that he has actively participated in recruiting to the Commonwealth or for a business or corpora- tion that he actively participated in inducing, through law or grant, to open a new plant, facility or branch in the Burton D. Morris Robert H. Long, Jr. June 8, 1981 Page 4 Commonwealth. In the case of Mr. Payne in relation to the three projects referenced in question, it does not appear that these projects were even contemplated while Mr. Payne was serving as Executive Director of the PHFA. Thus, it cannot on its fact be said that Section 3(g) of the Ethics Act would be applicable. Specifically, even assuming that Mr. Payne is a former executivelevel State employee there is nothing in Section 3(g) which would preclude him from participating in totally new project applications which he had not recruited to the State or "induced" to expand through a loan or grant for a two year period. Essentially, the situation which you present, where the former employee intends to participate in totally new projects that would be presented to his former agency is to be differentiated from one in which the former executive -level State employee would participate in projects or work for corporations which he actively participated in recruiting to Pennsylvania or induced to expand through loans /grants while he was serving as an executive -level State employee. These latter facts do not appear to exist and any prohibitions that would exist in relation to Mr. Payne's conduct would be found under Section 3(e) of the Ethics Act and not Section 3(g) of the Ethics Act. Conclusion: The provisions of Section 3(g) of the Ethics Act do not preclude Mr. Payne from participating in the presentation of applications in the capacity of co- developer or as consultant to developers for notification of funding availability issued by the PHFA. 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 Lcts 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 /rdo Sincerely, andra S. C istianson General Counsel