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
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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