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HomeMy WebLinkAbout83-560 SchimmelMs. Judith Brown Schimmel The City of Harrisburg Law Bureau City Government Center Harrisburg, PA 17101 Dear Ms. Schimmel: Mailing Address STATE ETHICS COMMISSION P.O. BOX 1 179 HARRISBURG, PA 17108 TELEPHONE: (717) 783 -1610 June 16, 1983 ADVICE OF COUNSEL RE: Harrisburg Housing Authority; Section 3(h)(1); Section 3(c) State Ethics Commission • 308 Finance Building • Harrisburg, Pennsylvania 83 -560 This responds to your letter of May 16, 1983, in which you, as Counsel to the City of Harrisburg, request advice from the State Ethics Commission. Issue: You ask whether a possible Harrisburg Housing Authority member would be precluded, under Section 3(h)(1), from serving on the Authority where the possibility exist for future contracting between the Authority and the business with which the proposed member is associated. Facts: Since early 1982, the City of Harrisburg has used one insurance agency almost exclusively as its designated insurance broker. The chief executive officer of the corporation owns more than 5% of the shares of outstanding stock, and the commissions his business receives from the premiums paid by the City exceeds $500 per year. The Mayor would like to appoint this individual as a voting member of the Harrisburg Housing Authority, which is an independent entity. No insurance of the Authority is purchased or its purchase influenced by the City, or visa - versa. Board members receive no compensation for their services. You point out that the definition of "public official" excludes those appointed officials who receive no compensation other than reimbursement for actual expenses. Accordingly, you assume that the prohibitions of Section 3(c) do not apply. However, Subsection 3(h)(1) applies to "individuals ", rather than public officials. In this regard, you are concerned that appointment of such individual to the Harrisburg Housing Authority may constitute an "appointive office in a political subdivision" so as to either preclude his appointment or, in the event that the Authority would contract with his business, make him liable for the penalty provided in Subsection 3(h)(2). Ms. Judith Brown Schimmel June 16, 1983 Page 2 Discussion: There is some question as to whether or not the individual in question could be considered a "public official" within the current definition of that term as contained in the Ethics Act. See 65 P.S. 402. As you point out, the definition currently excludes those persons who are appointed to their positions and are not compensated, other than reimbursement for actual expenses. While the ruling of the Supreme Court in Snider v. State Ethics Commission, 436 A.2d 593 (1981), may have cast some doubt upon this exclusion contained in the definition of "public official ", the State Ethics Commission has not interpreted this ruling, to date, to require non - compensated and appointed persons such as members of the Harrisburg Housing Authority, to be considered "public officials" subject to the provisions of the Ethics Act. However, under the Ethics Act, appointed, as well as elected, officials must observe certain restrictions when contracting with the political subdivision with which they are associated. As an appointed official, the proposed member of the Harrisburg Housing Authority would be precluded from contracting with the Authority unless the Ethics Act is obeyed. Section 3(h)(1) of the Ethics Act provides that: (h)(1) 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. 65 P.S. 403(h)(1). In an earlier Opinion, however, the Ethics Commission stated: the Commission believes that the questions arising under Section 3(h)(1) should be addressed ... in light of the safeguards contained in Section 3(c)." Nanovich, 80 -041: The appointed public official, therefore, even if considered a "public official" or otherwise subject to Section of the Ethics Act, should be treated identically as similarly situated elected public officials. Id. Thus, the member proposed to be appointed to the Harrisburg Housing Authority should be subject to restrictions similar to those embodied in Section 3(c) which allows "public officials" to contract with the governmental body with which they are associated under certain conditions. Specifically, the contract is valued at more than $500, the contract must be awarded in an open and public process. 65 P.S. 403(c). Should the value of the contract between the Harrisburg Housing Authority and the business with which the proposed member is associated exceed $500, it must be granted only after a process including: Ms. Judith Brown Schimmel June 16, 1983 Page 3 1. prior public notice; and, 2. public disclosure of all proposals considered; and, 3. public disclosure of the award of a contract. Howard, 79 -044. Subject to these restrictions the Harrisburg Housing Authority member may contract freely with the Harrisburg Housing Authority. Likewise, so long as the requirements of Section 3(c) are met, this proposed member and the "business with which he is associated" (See Section 2 of the Ethics Act), may contract with and provide brokerage services to the City. In this regard, the penalties provided under Subsection 3(h)(2) would be applicable only where the proposed member did not first through the Section 3(c) open and public requirement process before contracting with the Authority. Conclusion: Because an appointed "public official" is to be treated as a similarly situated elected public official, even assuming this prospective member to be subject to the Ethics Act, the prohibition of Section 3(h)(1) of the Ethics Act is to be interpreted light of the safeguards of Section 3(c) of the Statute. The member proposed to be appointed to the Harrisburg Housing Authority may contract to provide insurance to the Authority or the City. Should the value of such contracts exceed $500, however, they must be awarded in an open and public process allowing for: 1. prior public notice; and, 2. public disclosure of all proposals considered; and, 3. public disclosure of the award of a contract. The penalty provided by Section 3(h)(2) will only become operative if the proposed member of the Authority contracts with the Authority or City in excess of $500 without first entering upon the open and public process of Section 3(c) of the Act. Adherence to the guidelines delineated above, will serve to prevent both a conflict and the appearance of a conflict of interest with the public trust. Ms. Judith Brown Schimmel June 16, 1983 Page 4 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. CW /rdp Sincerely, S.ndra S. General Couns ri ,kd= (,ekbaOYI ianson