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HomeMy WebLinkAbout17-574 Rudyr STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 -932 -0936 ADVICE OF COUNSEL November 15, 2017 To the Requester: Mr. Paul L. Rudy, Jr. Dear Mr. Rudy: 17574 This responds to your letter dated September 21, 2017, by which you requested an advisory from the Pennsylvania State Ethics Commission ("Commission "). Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act") ' 65 Pa. YS. � 1101 et se q., would impose prohibitions or restrictions upon a Member and Vice -Chair of the three - Member Board of Commissioners of Perry County ( "County "), Pennsylvania, who is a Member of the Board of Directors of the Perry County Economic Development Corporation ( "PCEDC ") and the President of PCEDC, with regard to: (1) making or seconding a motion to discuss the issue of whether the County should forgive a debt owed to it by PCEDC pursuant to a County -held lien on real property and record satisfaction of the County -held lien, or (2) voting on a motion to forgive the aforesaid. debt and record satisfaction of the aforesaid lien, where the other two County Commissioners would cast opposing votes. Facts: You request an advisory from the Commission based upon submitted athe material portion of which may be fairly summarized as follows. You are a County Commissioner. The County Board of Commissioners ( "Board of Commissioners ") consists of three Members. You currently serve as Vice -Chair of the Board of Commissioners. PCEDC is a nonprofit corporation that was formed in 1998. You have submitted a copy of the PCEDC bylaws, which document is incorporated herein by reference. The PCEDC Vlaws, provide that PCEDC shall be a membership organization whose Members shaat all times consist exclusively of persons whose duties, business, professions, or interests are to promote the economic and industrial development of the County. The PCEDC Board of Directors (the "PCEDC Board ") is composed of nine Members, two of whom are appointed by the County Commissioners and seven of whom are elected by the Members of PCEDC. The officers of PCEDC are elected by the PCEDC Board. Since the inception of PCEDC, a County Commissioner has served as a Member of the PCEDC Board. You currently serve as a Member of the PCEDC Board and as the President of PCEDC. FAX: (717) 787 -0806 0 Web Site: www.ethics.state. a.us 0 e -mail: ethics@state.pa.us Rud��yY, 17 -574 �vember 15, 2017 Page 2 PCEDC was established to develop a business park known as Business Campus One, which is located in the County. Only three lots at Business Campus One have been sold since it was formed, and only two of those lots have been developed. At some point in time, the County guaranteed two bank loans (the "Loans ") that were made to PCEDC. In 2008, the Board of Commissioners voted to have the County pay off the Loans on behalf of PCEDC. As a result of paying off the Loans, the County holds a lien (the "County Lien ") in the amount of $350,000.00 against the property at Business Campus One. The debt that PCEDC owes to the County pursuant to the County Lien, hereinafter referred to as the "PCEDC Debt," is believed to currently amount to $380,900.00. PCEDC is on the verge of filing for bankruptcy. You state that the PCEDC Board has been presented with a potential opportunity that could result in preserving Business Campus One for development and allowing PCEDC to avoid filing for bankruptcy. You further state that in order to reach the aforesaid results, the County Lien would need to be recorded as satisfied. You and at least one of the other two County Commissioners believe that PCEDC will never be able to pay off the PCEDC Debt. Based upon the above submitted facts, you pose the following questions: (1) Whether the Ethics Act would permit you to make or second a motion to discuss the issue of whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien; and (2) Whether the Ethics Act would permit you to vote on a motion to forgive the PCEDC Debt and record satisfaction of the County Lien, where the other two County Commissioners would cast opposing votes. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of tie t i�E T ics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all of the material facts. As a Member and Vice -Chair of the Board of Commissioners, you are a public official subject to the provisions of the Ethics Act. Sections 1103(a) and 11030) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 0) Voting conflict.- -Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any law, rule, regulation, order or ordinance, the following procedure shall be employed. Any public official or public employee who in the discharge of his official duties would be required to vote on a matter that would result in a conflict of interest shall abstain from voting and, prior to the vote being taken, publicly announce and disclose the nature of his interest as a public record in a written memorandum filed Rudy, 17 -574 November 15, 2017 Page 3 with the person responsible for recording the minutes of the meeting at which the vote is taken, provided that whenever a governing body would be unable to take any action on a matter before it because the number of members of the body required to abstain from voting under the provisions of this section makes the majority or other legally required vote of approval unattainable, then such members shall be permitted to vote if disclosures are made as otherwise pprovided herein. In the case of a three - member governing body of a political subdivision, where one member has abstained from voting as a result of a conflict of interest and the remaining wo members of the governing body have cast opposing votes, the member who has abstained shall be permitted to vote to break the tie vote if disclosure is made as otherwise provided herein. 65 Pa.C.S. §§ 1103(a), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. "Business." Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self - employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. "Business wit h business in which the immediate family is a has a financial interest. 65 Pa.C.S. § 1102. which he is associated." Any person or a member of the person's director, officer, owner, employee or Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or "conflict of interest," 65 Pa.C.S. § 1102, a public official /public employee is Rudy, 17 -574 November 15, 2017 Page 4 prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In each instance of a conflict of interest, the public official/public employee would be required to abstain from participation. The abstention requirement would not be limited merely to voting, but would extend to any use of authority of office including, but not limited to, discussing, conferrin' with others, and lobbying for a particular result. Juliante, Order 809. Subject to certain statutory exceptions, in each instance of a voting coffin Fitt, Section 11030) of the Ethics Act would require the public official/public employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes. In ap I ing the above provisions of the Ethics Act to the instant matter, you are advised as follows. PCEDC is a business with which you are associated in your capacities as a Director and an officer (President). Pursuant to Section 1103(a) of the Ethics Act, in your capacity as a County Commissioner, you generally would have a conflict of interest in matters that would financially impact you or PCEDC. You specifically would have a conflict of interest with regard to discussion(s), vote(s), or other action(s) of the Board of Commissioners pertaining to the issue of whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien. Subject to the voting conflict exceptions of Section 11030) of the Ethics Act, you would be required to abstain fully from participation in each instance of a conflict of interest. The exception for breaking a tie vote despite a conflict is available exclusively to members of three - member governing bodies who first abstain and disclose their conflicts as require by Section 11030) of the Ethics Act. See, etc ., Garner, Opinion 93- 004; Pavlovic, Opinion 02 -005. In Garner, supra, the Commission considered the issue of whether, under Section 1103) of the Ethics Act, a township supervisor serving on a three member board would be permitted to second a motion despite a conflict where the two remaining supervisors would have opposing views or where one of the remaining two members would be absent from the meeting. Citing Juliante, supra, the Commission first noted that seconding a motion is a use of authority f office. e. See, Garner, supra. The Commission then stated: However, the General Assembly in enacting Section [1103(�)] would not have allowed a public official /employee on a twee member board who has a conflict to be able to vote unless a second to the motion could be made so that the matter would be in the posture for a vote. Thus, we believe that since there is a need for a second to a motion in order to make Section [1103 ')] of the Ethics Law operative, the General Assembly inters ed as to three members [sic] boards for the public official with a conflict to be allowed to second so that if the other supervisors became deadlocked, the public official could then vote provided the disclosure requirements are satisfied. Garner, Opinion 93 -004 at 0. The Commission concluded that Section 11030) of the Tics Act would allow a township supervisor serving on a three - member board to second a motion despite having a conflict where the two remaining supervisors would have opposing views or where one of the other two supervisors would be absent. The Rudd 17 -574 November 15, 2017 Page 5 Commission emphasized that its ruling was expressly limited in its application to three member boards and to the question of seconding a motion. In applying Garner to the submitted facts, you are advised as follows. Section 1103(a) of the Ethics Act would prohibit you from making a motion to discuss —or a motion to vote on— whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien. However, because the Board of Commissioners consists of three Members, you would be permitted to second a motion to discuss —or a motion to vote on— whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien, where the other two County Commissioners would have opposing views. Allowing you to second the motion under such circumstances would put the matter in a posture for a vote. As long as you would initially: (1) abstain from the vote; and (2) fully satisfy the disclosure requirements of Section 1'II030), you would then be permitted to vote to break the tie if the other two County Commissioners would cast opposing votes. However, you could not otherwise use the authority of office, such as by advocating your view, in the matter. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the County Code. Conclusion: Based upon the, submitted facts that: 1) you are a County oommis over for Perry County ( "County "), Pennsylvania; (2) the County Board of Commissioners ( "Board of Commissioners ") consists of three Members; (3) you currently serve as Vice -Chair of the Board of Commissioners; (4) the Perry County Economic Development Corporation ( "PCEDC ") is a nonprofit corporation that was formed in 1998; (5) the PCEDC bylaws provide that PCEDC shall be a membership organization whose Members shall at all times consist exclusively of persons whose duties, business, professions, or interests are to promote the economic and industrial development of the County; (6) the PCEDC Board of Directors (the "PCEDC Board ") is composed of nine Members, two of whom are appointed by the County Commissioners and seven of whom are elected by the Members of PCEDC; (7) the officers of PCEDC are elected by the PCEDC Board; (8) since the inception of PCEDC, a County Commissioner has served as a Member of the PCEDC Board; (9) you currently serve as a Member of the PCEDC Board and as the President of PCEDC; (10) PCEDC was established to develop a business park known as Business Campus One, which is located in the County; (11) only three lots at Business Campus One have been sold since it was formed, and only two of those lots have been developed; (12) at some point in time, the County guaranteed two bank loans (the "Loans ") that were made to PCEDC; (13 in 2008, the Board of Commissioners voted to have the County pay off the Loans on tehalf of PCEDC; (14) as a result of paying off the Loans, the County holds a lien the "County Lien ") in the amount of $350,000.00 against the property at Business Campus One; (15) the debt that PCEDC owes to the County pursuant to the County Lien, hereinafter referred to as the "PCEDC Debt," is believed to currently amount to $380,900.00; (16) PCEDC is on the verge of filing for bankruptcy; (17) the PCEDC Board has been presented with a potential opportunity that could result in preserving Business Campus One for development and allowing PCEDC to avoid filing for bankruptcy; (18) in order to reach the aforesaid results, the County Lien would need to be recorded as satisfied; and 19) you and at least one of the other two County Commissioners believe that PGEDC will never be able to pay off the PCEDC Debt, you are advised as follows. As a Member and Vice -Chair of the Board of Commissioners you are a public official subject to the provisions of the Public Official and Emplo ee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et s—q. PCEDC is a business with which you are associated in Rudy, 17 -574 November 15, 2017 Page 6 your capacities as a Director and an officer (President). Pursuant to Section 1103(a) of the Ethics Act, in your capacity as a County Commissioner, you generally would have a conflict of interest in matters that would financially impact you or PCEDC. You specifically would have a conflict of interest with regard to discussion(s), vote(s), or other action(s) of the Board of Commissioners pertaining to the issue OT whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien. Subject to the voting conflict exceptions of Section 11030) of the Ethics Act, you would be required to abstain fully from participation in each instance of a conflict of interest. Section 1103(x) of the Ethics Act would prohibit you from making a motion to discuss —or a motion to vote on whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien. However, because the Board of Commissioners consists of three Members, you would be permitted to second a motion to discuss —or a motion to vote on— whether the County should forgive the PCEDC Debt and record satisfaction of the County Lien, where the other two County Commissioners would have opposing views. Allowing you to second the motion under such circumstances would put the matter in a posture for a vote. As long as you would initially: (1Y030), abstain from the vote, and (2) fully satisfy the disclosure requirements of Section 1 you would then be permitted to vote to break the tie if the other two County Commissioners would cast opposing votes. However, you could not otherwise use the authority of office, such as by advocating your view, in the matter. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11) of the Ethics Act, an 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, provided the requester 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 appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717- 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, %y � Robin M. Hittie Chief Counsel