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HomeMy WebLinkAbout87-513 ReedDonald G. Reed 36 W. Fourth Street Emporium, PA 15834 Dear Mr. Reed: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 February 11, 1987 ADVICE OF COUNSEL 87-513 Re: Conflict of Interest, Director, Economic Development Office, Governmental Business Complex, Interest in Corporation Seeking to Rent Space in Complex This refers to your letter of December 30, 1986, wherein you requested the advice of the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibitions upon the director of a county economic development office becoming involved in a business entity seeking to rent space in a complex regarding which the director has performed certain official duties. Facts: On November 10, 1986, Advice of Counsel No. 86 -623 was issued to Edwin W. Tompkins, II, Esquire, Solicitor for the Mid - Cameron Municipal Authority in Cameron County. Mr. Tompkins had posed the same question for which you now seek an opinion. Mr. Tompkins, as a representative of the authority and the county, had requested advice on your behalf and on behalf of the county in relation to this issue. As part of the request, Mr. Tompkins provided relevant information concerning the matter at hand. Mr. Tompkins had advised that you would be the manager of a business complex owned by the Mid - Cameron Municipal Authority. As a result of the information supplied, the State Ethics Commission issued an advice determining that while the State Ethics Act presented no per se prohibition upon a public employee being involved in a private business enterprise, the Act would prohibit the individual from participating in matters in which they have a direct interest. As a result of the information supplied, the advice did rule that based upon all of the facts presented, it would appear as though an inherent conflict of interest would develop if the individual, who is the subject of Mr. Tompkins request, were to be involved in the particular business corporation that sought to rent space from the authority. The advice was primarily based upon the individual's position as manager of the business complex. Donald G. Reed February 11, 1987 Page 2 You have now contacted the State Ethics Commission in order to provide additional information. You are the individual who was the subject of Mr. Tompkins request. You have indicated in your most recent letter that you have included additional information to more clearly define this situation and you further indicate that various circumstances have changed. As such, we will reiterate the facts that you have provided in your most recent letter of request. The Cameron County Economic Development Office of which you are the director, is an entity of the county established to improve the social and economic climate of the county. You report directly to the County Board of Commissioners. As administrator of the Economic Development Office, hereinafter the Office, you assisted Emporium Borough with an application for community development block grant funds. These funds were received from the Pennsylvania Department of Community Affairs. The object of this application was to obtain funds to acquire the Phillips Facility and convert it into an industrial /multi- tenant complex known as the Emporium Trade Center (ETC). This application was submitted on February 15, 1985. You advised that an industrial incubator area, which is part of the ETC, is used to assist new small start up companies requiring small amounts of space on a short term basis. The multi- tenant area is for new existing businesses which are looking for larger more permanent structures. Pennsylvania Door and Mill Work Limited is a new start up company_ owned by your two brothers. You advise that you contemplate acquiring stock in this entity and at some future point in time, you may become an employee thereof. This entity was established on August 11, 1986, and is interested in purchasing space at the ETC. You further indicate that this company would be seeking to obtain space as a multi- tenant occupant, in buildings 14, 15 and 16 rather than as an industrial incubator tenant. In relation to the acquisition of ETC, you advise that Emporium Borough received $213,282.00 for the purchase of the complex. Originally the County Economic Development Office was identified as the administrator of this grant, however, Emporium Borough has since elected to administer its own grant and your office will not administer the project nor will it receive any funds from it. After the award of the grant, Emporium Borough Council provided $180,000.00 from that grant to the Mid - Cameron Authority, which thereafter acquired the complex and holds title thereto. The authority maintains this property on a day -to -day basis and is reponsible for the operation of the complex. For a short period of time from August, 1986 until October, 1986, the Economic Development Office did manage the ETC. While your office was to administer the 1984 DCA grant and was also to manage the day -to -day activites of ETC, in reality, your office does not perform these functions at the current time. The authority has obtained its own general manager to manage Donald G. Reed February 11, 1987 Page 3 the ETC. Your office was not empowered to negotiate leases, collect lease payment or pay invoices or perform any other functions, although your office did, for a short period of time, as noted above, perform certain marketing and public relation functions in relation to ETC. The County Economic Development Office is located in Building 6 of the ETC. Your office is now responsible for the Ben Franklin Partnership Program. This program has been set up to provide business development services to incubator tenants. You advise that PA Door and Mill Work Limited, has not received any such services from the Ben Franklin Program Incubator Funds. You also advise that the Municipal Authority provided funds to your office to continue operations between funding cycles. These funds were specifically received only in relation to the industrial incubator area, Buildings Nos. 6 and 7, of which PA Door and Mill Work Limited was not a part. You further advise that the Office of Economic Development is not responsible for negotiating leases in either of the ETC areas. Finally, you have advised that the county has applied for DCA funding to assist with renovations to ETC. Your office will not be the administrator of this grant. Additionally, $5,000.00 of the funds that will be obtained in the 1986 grant are to be used to renovate the common electrical areas of Building 14, 15 and 16. You advise that PA Door and Mill Work Limited plans to pay for its own electrical line into these buildings, therefore no 1986 grant funds will be used to renovate Buildings 14, 15 and 16. Based upon the foregoing, you have asked a series of questions in relation to your future involvement with PA Door and Mill Work Limited and any restrictions that may be imposed under the State Ethics Act. Discussion: As noted in the previously issued Advice of Counsel, Tompkins, 86 -623, you are a public employee as that term is defined in the State Ethics Act. 65 P.S. §402. As such, your conduct must conform to the requirements of that law. Generally, one of the main factors, as set forth in the prior advice of counsel, was the fact that information had been supplied indicating that you generally supervised and managed the day -to -day activities of ETC. Based upon Section 403(d) of the Ethics Act, which allows this Commission to address other areas of possible conflicts, it was determined that an inherent and daily conflict would be occasioned if you were to participate in the general daily supervisory management of ETC. This was especially so in light of the fact that you would be a stockholder of one of the coporations renting space from that complex. In your most recent letter, however, you have indicated that the management services provided by your office to ETC was conducted during the months of August, 1986 through and including October, 1986. You advise that after this period of time, the municipal authority acquired its own general manager to take care of the daily operations of the Donald G. Reed February 11, 1987 Page 4 ETC. As such, one of the main concerns that was raised by the issues appears to be no longer applicable in that you are not performing as indicated in the original letter of request. Your office does not administer the current grant through which ETC was acquired and the funds which your office does administer, the Ben Franklin Partnership Program, do not appear to be utilized for services provided to the businesses in the industrial incubator area. You have further advised that your office would be performing no functions or services, whatsoever, in relation to the tenants who occupy Buildings 14, 15 and 16. In addition, any funds that were to be utilized for those buildings, in relation to the electrical renovation project, would be witheld and the business with which you are associated would be assuming the costs of those renovations. You advise that you do not negotiate or otherwise become involved in the leasing of facilities to tenants. You advise that while your office was originally intended to be both the grant administrator for ETC and the general manager for that complex, this has not occured. Generally, as noted in the original Advice of Counsel, the Ethics Act in addition to providing as set forth above, also 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 holding 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). As we noted in our prior advice, you, as a public employee, could not use your position or any confidential information obtained therein in order to assist the business with which you are assoicated, Pennsylvania Door and Mill Work Limited in obtaining any benefit or advantage in relation to their rental of space. You were advised that you would have to abstain completely from any action conducted in your public position that would relate to this enterprise. That requirement, of course, is still applicable and your abstention would be required. In addition to the foregoing, your relationship to this company and your abstention must be publicly disclosed. Thus, if, as you set forth in your letter of request, you perform no functions in relation to the areas occupied by Pennsylvania Door and Mill Work Limited, and you perform no services as a public employee in relation to this company's utilization of that space, then many of the concerns set forth in our original letter of advice would not arise. Additionally, we assume, as you indicate in your letter of request, that none of the funds which you are responsible for as director of CCEDO would be utilized for purposes related to the business with which you are associated. Based upon these factor, we do not believe that Donald G. Reed February 11, 1987 Page 5 there would be any inherent conflict of interest in the event that Pennsylvania Door and Mill Work Limited were to occupy space in the ETC. Once again, as noted above, you must abstain from participating in any of the county's dealings with this particular business. In relation to your conduct upon your termination of employment with the Office of Economic Development, as noted in the previous advice of counsel, the State Ethics Act provides as follows: Section 3. Restricted activities. (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. 403(e). Once again we will not attempt to, within the parameters of this advice, address the restrictions that are applicable to former public employees under this provision of law. You are, however, advised as to the existence of this particular provision of law and are invited to seek the further advice of this Commission upon your termination of public employment. Conclusion: Under the foregoing circumstances, there would appear to be no prohibition upon your involvement in a business entity that seeks to rent space in a business trade complex with which you have been involved as- a public employee. As noted from the foregoing facts, you will be peforming no tasks in relation to the day -to -day management of this complex and perform no tasks in relation to the leasing of office space in this complex. Additionally, it is noted that your current public employment appears to have no involvement with the specific buildings from which this business will rent space. Based upon the foregoing, there appears to be no inherent conflict of interest in this situation. You, however, advised that in the event that you are called upon as a public employee to perform some functions that could develop a conflict of interests in relation to your private business endeavors and your public position, you must abstain from participating in said matters, your abstention must be publicly recorded along with the reason therefore. You are also invited to seek the further advice of this Commission in the, event that such is necessary. Advice No. 86 -623 is modified in accordance herewith. 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. Donald G. Reed February 11, 1987 Page 6 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 ohn J. Act i ntino General Counsel