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