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HomeMy WebLinkAbout82-580 LeFeverDonald E. LeFever, Esquire Barley, Snyder, Cooper & Barber 115 E. King Street Lancaster, PA 17602 Dear Mr. LeFever: Mailing Address. STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 October 26, 1982 ADVICE OF COUNSEL 82 -580 RE: Solicitor, City of Lancaster, Authority, Purchase of Property This responds to your letter of October 11, 1982, in which you requested advice from the State Ethics Commission. Issue: You question whether or not you have "interest" in a new partnership that would cause you, as City Solicitor to the City of Lancaster, to be in violation of Section 3(h)(1) of the Ethics Act or whether that provision would be adequately observed if notice and public disclosure of any "interest" you might have in proposed real estate transaction would be made? Facts: You serve as the part -time solicitor for the City of Lancaster. You also are a partner in the law firm of Barley, Snyder, Cooper and Barber, here- inafter Barley- Snyder. Your law firm shares office space with an insurance agency known as Engle - Hambright and Davis, Incorporated, hereinafter Engle. The building which you share is owned by a corporation, the partners of which are the partners in the law firm of Barley- Snyder and the shareholders and affiliates of Engle. Because of the growth of both firms, additional office space is required. A property being used by the Lancaster Parking Authority, hereinafter the Authority, and currently operated as a parking lot is being reviewed as a desirable site for possible expansion. If such expansion were to be finalized the partners of Barley- Snyder and Engle would form a new part- nership, would acquire the authority's option to purchase the property currently being used as a parking lot, and would build an office building to be occupied initially by Engle. The Authority is a Municipal Authority and the City of Lancaster is its incorporating or organizing municipality. Under the terms of the trust inden- tures entered into by the Authority in connection with various bond issues, the City has an interest in all parking facilities of the Authority including the property in question. Specifically, in connection with these bond issues, the City of Lancaster has gauranteed payment of the Authority's bond inden- tures in the event parking revenues of the Authority are insufficient to pay State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania Donald E. LeFever, Esquire October 26, 1982 Page 2 its debt service. The Authority is required as a condition precedent to disposition of any real estate, including the property in question, to obtain a certificate of its independent consulting engineer certifying that the value of property and the revenues of the property to be sold are not required to pay the Authority's debt service and to obtain the approval of the City of Lancaster as to the terms of disposition of the real estate. Sometime in October a partner from Barley- Snyder and the President of Engle will present a proposed agreement to the Authority for the acquisition of the Authority's option to purchase the property and its lease -hold interest in the property as set forth above. If the proposal is of interest to the Authority the Authority will, in accordance with its trust indentures, direct its engineers to determine the value of the parcel and whether or not the revenues from the parcel are necessary in order for the Authority to meet its debt obligations. Assuming that the Authority receives a favorable determination from its engineer, the proposed sale would be submitted to the City for its review and approval. It is anticipated that prior to the City Council meeting at which the Council would take action on reviewing the proposed sale of the parcel, an advertisement would be made concerning the sale of the property. Then, at a regularly scheduled public meeting of City Council, the proposed sale would be considered. You propose to make a full disclosure of your possible interest in the sale of the property either before or at that public meeting. Incidentally, you indicate that the Authority would be represented in all aspects of the proposed transaction by its independent solicitor who is a partner in a law firm unrelated to Barley- Snyder. The City of Lancaster will be represented on all aspects of the proposed transaction by its assistant solicitor who is a partner in a law firm unrelated to Barley- Snyder. If the agreement to acquire the property is approved by the Authority and by the City and assuming that all other events necessary for development of the Office building would occur, after an assignment of rights acquired, the principles and affiliates of Barley- Snyder and Engle would each own an aggre- gate 50% interest in the profits and capital of the new partnership. You indicate that you will not in any event or under any circumstances, possess any direct or indirect interest in more than 5% of the profits or losses of the new partnership nor would you acquire any interest in more than 5% of the profits or capital of the partnership at any time during which you serve as solicitor for the City. In addition, there would be no arrangement or agreement, formal or informal, to increase your interest above the 5% of Donald E. LeFever, Esquire October 26, 1982 Page 3 the profits or capital at any time following the termination of your appointment as City solicitor. Finally, in the event that it might be determined, the Ethics Act prohibits your participation in this partnership, you would be willing to agree to acquire no interest in the partnership which might own or develop this real estate during your tenure as appointed City solicitor for the City of Lancaster. Discussion: It has generally been held that part -time solicitors serving in municipalities such as the City of Lancaster are not to be considered "public employees " -or "public officials" pursuant to the definition of those terms contained in the Ethics Act. See Ballou v. State Ethics Commission, Pa. , 436 A.2d 186 (1981). Under the facts as set forth above, therefore, it is apparent that you need not be considered a "public employee" or a "public official" as those terms are defined in the Ethics Act. Therefore, the sub- stantive portions of the Ethics Act which contain regulations as to these classes of persons need not be deemed applicable to you. However, we should review Section 3(h)(1) of the Ethics Act, 65 P.S. 403(h)(1) which provision of the Act appears to address a broader category of persons and describes conduct required of those persons as follows: Any individual who holds an appointive office in any political subdivision shall not have an interest in any contract or construction in which that political subdivision shall enter or have an interest. Assuming, without deciding that a solicitor such as yourself does hold an "appointive office" within the City or is otherwise within the purview of the Ethics Act, we must review the question of whether Section 3(h)(1) impacts upon your proposed participation in the new corporation. In Section 3(h)(1) the definition of the term "interest" clearly indicates that this term does not include the "ownership of shares of stock in any corporation in an amount of 5% or less of the total issue of said corporation." Since the new partner- ship will not issue stock, it is important to discern whether your partici- pation would fall within the definition of "interest" in any other respect. This is particularly pertinent in that you have already indicated that you would not acquire more than 5% of the partnership's profits or capital. We have held that the definition of "interest' in Section 3(h)(1) provides a descriptive but, non - exclusive test to be applied in this kind of circumstance. Thus, we must determine whether your less than 5% interest would pose any problems under this Section of the Ethics Act. See Morris, 82 -561. Donald E. LeFever, Esquire October 26, 1982 Page 4 Thus, even assuming that the "interest" which you would acquire in the new partnership would be within the purview of the definition of that term as contained in Section 3(h)(1), there is no indication that you would have an "interest" in a contract with "that political subdivision" you serve, i.e. the City, if contract were between the Authority and your new partnership. Any contract in this instance would appear to be consummated between the Authority and the new partnership. The requirements of the Ethics Act would be applicable, strictly speaking, only to a contract between the City -- the governmental body or political subdivision with which you serve -- and your new partnership. However, given the fact that you have indicated that an advertisement would be placed and other purchasers alerted to the potential sale of this option on this property and that the sale would be consummated between the Authority and your new partnership in the context of an open meeting, we believe that these procedures would suffice to meet the requirements of Section 3(h)(1) and Section 3(c) of the Ethics Act, if that Section were, in fact, applicable to this contract. See Nanovic, 80 -041. One final note is necessary. This relates to the potential that you, as City Solicitor, might play some role in the City's decision to sell or approve the sale of the option on the land in question. You have indicated quite clearly that the City's assistant solicitor who is in no way associated with either your law firm or the new partnership, would be representing the City in relation to all aspects of the proposed transaction. This arrangement is acceptable and required by the Ethics Act so that even any appearance of any conflict with your financial interests and the public trust would be avoided. Specifically, you should not participate in or give any advice relating to the City's review and decision in relation to the approval of the proposed sale of this option on this land. Conclusion: The activities of a part -time municipal solicitor, such as your- self, may not be regulated by the Ethics Act, where the Ethics Act seeks to address the conduct of "public employees" and /or "public officials." Insofar as your conduct might be regulated by the Ethics Act as an "appointive" officer, the Ethics Act would not prohibit or preclude your "interest" in the proposed sale as outlined above. In the event that the provisions of Section 3(c) of the Ethics Act would be applicable to any contract between your new partnership and the City or in relation to the City's approval of the Authority's sale of the option on this parcel of land, the procedures you propose would suffice to meet the "open and public" process required by Section 3(c) of the Ethics Act. However, you should refrain from rendering legal advice or in any way participating in the City's process of review and decision as to the sale of the option on this property. Donald E. LeFever, Esquire October 26, 1982 Page 5 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 /rdp Sincerely, Sandra S. C General Cou stianson sel Donald E. LeFever Barley, Snyder, Cooper & Barber 115 E. King Street Lancaster, Pennsylvania 17602 RE: Advice No. 82 -580 Dear Mr. LeFever: Mailing Address: STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 December 21, 1982 This responds to your letter of December 3, 1982, in which you requested further advice from the State Ethics Commission. This response will be considered an addendum to and will be attached to and made a part of the Advice referred to above originally issued to you on October 26, 1982. In your letter of December 3, 1982 you indicate that one factual basis for our original Advice may have changed and you request to have this factual difference be taken into consideration. Specifically, the partnership which will be formed to acquire the property from the Lancaster Parking Authority had originally been proposed to be composed of shareholders of Engle - Hambright and Davies, Incorporated and the partners of Barley, Snyder, Cooper and Barber. Now you indicate that the shareholders of Engle - Hambright and Davies will not participate in the new partnership. Rather, the partnership which will acquire the property will be composed solely of the partners in the law firm of Barley, Snyder, Cooper and Barber. The interest that you would hold in your new partnership, however, will remain limited to 5% or less as initially stated in your original request. The fact that the partnership will be comprised of partners within the firm of Barley, Snyder, Cooper and Barber as opposed to a combination of those partners and the shareholders of Engle-Hambright and Davies, does not alter the original conclusion reached in the Advice referred to above. Thus, even in this factual context the Ethics Act would not prohibit or preclude your holding an "interest" in the partnership or prohibit the proposed sale of the property in question. The other restrictions referred to in our previous Advice remain applicable. State Ethics Commission $ 3014 Finance Building a Harrisburg, Pennsylvania Donald E. LeFever December 21, 1982 Page 2 Should you have any further questions relating to this matter, please feel free to contact us again. I note that, as previously stated, this additional factual situation and this addendum to the Advice originally issued, will be subject to the provisions and protections of Section 7(9)(ii) of the Ethics Act and that this letter, as an addendum to the original Advice will be a public record and will be made available as such. Likewise, if you disagree with this addendum to the Advice originally issued or if you have any reason to challenge same, you may request that the full Commission review this addendum to that 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 addendum to the original Advice pursuant to 51 Pa. Code 2.12. SSC /rdp Attachments Sincerely, tti.# Sandra S. Ch stianson General Counsel