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HomeMy WebLinkAbout86-624 SchagerJudd A. Schager, County Commissioner Cameron County, Pennsylvania County Commissioners Emporium, PA 15834 Dear Mrs Scht:ger: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 Novemher 1R, 1986 ADVICE OF COUNSEL 86 -624 Re: County Commissioner, Participation in Matter Regarding Municipal Authority, Employment by Authority This responds to your letter of Octoher 1, 1986, wherein you requested the advice of the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibitions upon your activities as a county commissioner in relation to matters regarding a municipal authority when the municipal authority employs your private accounting firm to perform work for that authority. Facts: Ry way of letter dated October 1 1986, you have set forth a detailed statement of facts regarding your current position in Cameron County, Pennsylvania. You currently serve as a member of the county hoard of commissioners. You have so served since January 8, 1984. You are also privately employed as a Certified Puhlic Accountant. In this capacity, you are associated in a business with Mr. John E. (lasl. The Puhlic Accounting Firm, with which you are associated, consists of Mr. Clasl, yourself, and one secretary. Pursuant to your letter of request, you have also outlined a series of complicated factual situations regarding Cameron County's involvement in the receipt and expenditure of grant participation funds regarding economic development projects. In this respect, Cameron County has been associated with the Mid- Cameron Municipal Authority in relation to certain projects. While we do not believe that it is important, at this point, to recite all of the specifics regarding the funding of the specific economic development projects which are outlined in your letter, it is important to note that certain relationships exist between the municipal authority and Cameron County, Cpecifically, you have indicated that the Mid- Cameron Municipal Authority has heen involved in a numher of projects Judd A. Schager, County Commissioner November 18, 1986 Page 2 regarding economic development in Emporium Borough. One of the projects, in which this authority has been involved, was the purchase and development of an industrial complex which wi l 1 serve i n the future as an incubator /multi - tenant business faci 1 i ty. Cameron County currently maintains a county economi c development office. This office, which is run by Mr. Donald Reed, has been utilized by local municipalities for the purposes of securing and administering grant funds. The office of encomic development has had a close working relationship with the municipalities that have been involved in the various economic development projects. The Mid - Cameron Municipal Authority, for example, has requested the county commissioners approval in respect to allowing the office of economic development to administer the community block development grant funds that have been received in relation to the above mentioned industrial complex. In this respect, the county will have to enter into an agreement in which they will be closely related to the municipal authority. It is assumed that, pursuant to this agreement, the county will be participating in certain matters, at least through its office of economic development, in supplying manpower and oversight direction for the expenditure of funds and the future operations of the building complex. Additionally, the county office of economic development will play a front line role in administering the grant funds allocated to the authority. You have also advised that you have recently become aware of the fact that the Mid - Cameron Municipal Authority is not a newly created authority. The Mid - Cameron Authority is the Borough of Emporium's former municipal authority, which has recently changed its name. You advise that you had no knowledge of this particular situation until recently. Your concern, in this respect, develops from the fact that your private business firm has been engaged for the past several years in auditing the municipal authority's records. You indicate that you have not personally been engaged in these audits but that such have been performed by your business partner, Mr. Glasl. You advise that the authority, under its new name, has also requested Mr. Glasl to prepare an accounting system for the authority. As a result of this relationship, you have asked a series of questions in relation to this matter. Discussion: As a County Commissioner, it is clear that you are a public official as that term is defined in the State Ethics Act. 65 P.S. §402. As such, you must conform your conduct to the requirements cf that law. Steinman, M-006. Initially, it should be noted that it does not appear that this Commission has the jurisdiction to answer several of the questions that you have raised. Specifically, this Commission cannot determine whether the county commissioners can name the Mid- Cameron Authority to administer the 1984 Commnity Development Block Grant Funds or the 1.986 Community Development Block Grant Funds. Similarly, this Commission cannot determine, under the Ethics Act, whether the commissioners may provide funding to that authority. This Commission, however, may address questions regarding your conduct as a public official in relation to the authority insofar as you have a private business interest with that governmental body. Judd A. Schager, County Commissioner November 18, 1986 Page 3 Generally, the Ethics Act provides as follows: Section 3. Restricted activities. (a) No public official or public employee shall use his public office or any confidential information received through his holdi ng public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. 403(a). Within this provision of law, you, as a county commissioner, may not use your position in order to obtain any financial gain for yourself or for a business with which you are associated. The Act defines business with which one is associated as follows: Section 2. Definitions. "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. Clearly, you are associated with the accounting business in which Mr. Glasl is involved and, as such, you cannot use your position as a county commissioner in order to obtain any financial gain for that entity. You, similarly, may not use any confidential information obtained as a county commissioner for similar purposes. In the instant situation, it is clear that the board of county commissioners is a separate and distinct governmental body from that of the municipal authority. See, Commonwealth v. Erie Metropolitan Transit Authority, 281 A.2d 882, 444 Pa. 345, (1971). In this respect, the county commissioners cannot direct the activities of the authority and, as such, the county commissioners cannot, in effect, award any authority business to your private firm. In this respect, you would not be able to use your position, as a public official, in order to obtain a financial gain for your business. The Ethics Act, therefore, would not appear to prohibit the authority's use of your private accounting firm for the purposes set forth in your letter. We do note, however, that because of the close relationship between the authority and the county in relation to the grant funds that have been received, you most likely will have access to certain information that will not be generally available to the public. You are cautioned as to the above provision of law and you are further advised that the use of such information to assist your private firm in obtainig business with the authority even though you are not involved in the authority's award of that business to your company, would be contrary to the provisions of the State Ethics Act. Judd A. Schager, County Commissioner November 18, 1986 Page 4 In addition to the above provision of the Act, we must also consider the instant situation in light of Section 403(d) of the State Ethics Act, which allows this Commission to address other areas of possible conflict. Such a conflict would arise in situations where a public official attempts to represent interest that are adverse to the interest represented in his official capacity. See, Allen, 79 -024, Domalakes, 85 -010. Based upon this provision of law, this Commission has specifically ruled, in the past, that while the Ethics Act would not prohibit a public official from engaging in private business ventures, such an official must abstain from participating in a matter that involves an entity by which he is employed. In Knox, 81 -009, this Commission determined that township commissioners, who are employed by a company that is party to a dispute before the township, must abstain from voting on a settlement agreement between his employer and the township. Similarly, the Commission has determined that a township commissioner, who also served as a school district business administrator, could not participate in the decision by the township to purchase property from the school district. See, Hahalis, 83 -009; McCullough, 82 -589. More recently, this Commission determined, in Welz, 86 -001, that a township supervisor could not participate in non - routine matters presented by the county board of commissioners to the township, when that supervisor has an on -going contractual relationship with the county board of commissioners. That situation is substantially similar to the issue presented herein. The Commission determined in that situation, that there could be no doubt that if the county commissioner, who had awarded a business contract to the township supervisors private entity, now presented a proposal to this particular township that required action by the township board of township supervisors, the supervisor in question, would be required to vote upon a proposal that has basically been presented to him by the same individuals who had employed his business entity. That supervisor, of course, is a public official and is obliged to serve the interest of the public. However, in that situation, he was also called upon to review the proposals that were being submitted by the county commissioners, i.e. the governmental body that had also employed him in a private capacity. The Commission determined that there could be no doubt that in that situation the interest involved could be adverse. On the one hand, the supervisor must decide whether the proposals, set forth by the county, are in the best interest of the citizens of the township who elected him. On the other hand, there will always be in his mind, the fact that the particular group of individuals whose proposal he must review, has awarded him a financial benefit. As such, the Commission determined that a conflict of interest, the type prohibited by Section 403(d) above, was present. In the instant situation, you, as a county commissioner, are being called upon to negotiate agreements and cast your official vote in relation to matters regarding the municipal authority that has employed and seeks to employ your private business entity. In this respect, your position is substantially similar to that of the township supervisor noted above. As such, it appears that there is no distinction between you and that particular individual. The situation, in the instant case, raises even more potenti al conflict questions in that th business in which you are engaged is that of Judd A. Schager, County Commissioner November 18, 1986 Page 5 accountant. In this respect, your firm will be called upon, no doubt, to set up accounting procedures and to do financial audits regardi ng the municipal authority's receipt of various funds. These funds, in part, will probably include those received through the Community Development Block Grant Program. As a county commissioner, you will have negotiated and passed upon agreements regarding the administration of those funds from the county level and by the county's office of economic development, while at the same time, you will be setting up accounting procedures for the authority in relation to the handling of all authority funds. There is no doubt, that serving in both situations, would create a substantial conflict of interest. As such, while there is no prohibition upon your private firm being employed by the authority, you- as a county commissioner, must abstain from participating in matters relating to the authority. As such, in relation to your question, it appears that you may not participate in negotiating agreements with the authority in , °elatiin to this particular situation. Similarly, you must abstain, as a count commissioner, in matters relating to the funding that will be provided to the authority and in relation to the county economic development offices dealing with that authority. Your abstention in these matters should be publicly noted and appropriately recorded. Conclusion: While the State Ethics Act presents no per se prohU toy s.! ; ;on your private business activities in this situation, as a county off ci61 , you are subject to the provisions of the State Ethics Act as noted above and should act in accordance therewith. In this respect, you may not participate in any matter regarding the Mid- Cameron Municipal Authority as county Commissioner. Your abstention, in these matters, should be appropriately noted and recorded. Pursuant to Section 7(9)(ii), this Advice is a complete de :',ease in any enforcement proceeding initiated by the Commission, and eviden,,:e 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. Si nce ehn J�onti Genet Counsel