HomeMy WebLinkAbout88-561 McCarthyMr. James J. McCarthy, Jr.
30 E. Market Street, Apt. 1
Bethlehem, PA 18018
Dear Mr. McCarthy:
STATE ETHICS COMMISSION
308 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 17108 -1470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
May 12, 1988
88 - 561
Re: Conflict of Interest, Public Employee, Director of Community
Development; Holding Real Estate Sales License
This responds to your letter of March 14, 1988, in which you
requested advice from the State Ethics Commission.
Issue: You ask whether the State Ethics Act presents any
restrictions or prohibition upon a city Director of Community
Development who holds a real estate sales license from engaging
in the listing or sale of properties either within or outside of
the corporate limits of the city.
Facts: You state for the past ten years that you have served as
the Director of Community Development in the City of Bethlehem
which is a cabinet level position appointed by the mayor. You
advise that your duties and responsibilities consist of
administering the City Department which is involved in the
planning, zoning, development, building and housing inspections,
public and environmental health and emergency medical services
functions, as well as managing most of the City's Federal or
State grant programs with the exception of utilities areas. You
then state that on May 8, 1984, you were issued a Pennsylvania
Real Estate Sales License #RS- 139985 -A through the brokerage of
Valley Real Estate and that since that time you have been engaged
in the part -time real estate sales in Bethlehem and in the
surrounding Lehigh Valley area. After noting that you disclosed
your real estate involvement with the then sitting mayor, you
received an opinion from the city solicitor concerning the
parameters of your real estate activity vis -a -vis your position
as Director of a Community Development. You then advise that
after your re- appointment by the incoming mayor, a suggestion was
made to you that you should either terminate your public position
or alternatively escrow your real estate license during the
tenure of your service. At about that time, you advise that the
Mr. James J. McCarthy, Jr.
May 12,1988
Page 2
new mayor requested the current city solicitor to review the
matter and he then issued an opinion that there was a conflict
in your holding an active real estate license in conjunction with
your service as Community Development Director of the City. You
indicate that you do not agree with the current opinion and state
that you do not intend to use your part -time real estate practice
to obtain improper financial gain through your position with the
City. You state that in conducting your real estate matters over
the past four years you have not engaged in any activity that has
dealt with the City. You further advise that you have not
represented any real estate interest of a party having a
contractual relationship with the City and that you have not
represented any private party before any board, authority or
commission of the City. After advising that you work as an
independent contractor and have no propriety interests in Valley
Real Estate, you state that your sole compensation is generated
as a result of sharing real estate commissions paid on properties
listed, sold or leased through Valley Real Estate. You note that
you have listed this income on your financial disclosure form and
that these activities occur on your personal time and that no
party has ever filed a grievance complaint against you with the
Pennsylvania Real Estate Commission or the Local Board of
Realtors. Because of the diversity of the two opinions issued
by the former and current city solicitor, you request advice
under the Ethics Act as to whether you as a Community Development
Director could engage in the listing and sales of properties
either within or outside of the corporate limits of the City of
Bethlehem.
Discussion: As a Community Development Director for the City of
Bethlehem, you are a public employee within the definition of
that term as set forth in the Ethics Act and the regulations of
this Commission. 65 P.S. 5402; 51 Pa. Code S1.1. As such, you
are subject to the provisions of the Ethics Act.
Section 3(a) of the Ethics Act provides:
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).
Mr. James J. McCarthy, Jr.
May 12, 1988
Page 3
Section 3(a) basically provides that a public official or
employee may not use his public office or confidential
information to obtain a financial gain other than compensation
as provided for by law for himself or a member of his immediate
family or a business with which he is associated. Under this
provision, the Ethics Commission has determined that the use of
office by a public official to obtain a gain or benefit for
himself or a member of his immediate family which is not provided
for in law constitutes a "financial gain other than compensation
provided for by law." These determinations have been appealed to
the Commonwealth Court of Pennsylvania which has affirmed the
Orders of the Commission. See McCutcheon v. State Ethics
Commission, 77 Pa. Commw. 529 (1983). See also Yocabet v. State
Ethics Commission, Pa..Commw. , 531 A.2d 536 (1987).
Thus, under this provision, a public official may not use his
public position to secure benefits for himself or a member of his
immediate family which are not provided for by law. Domalakes,
Opinion 85 -010; likewise, the receipt of private financial gain
or benefit through use of office is not permitted under this
section, Huff, Opinion 84 -015.
Section 3(b) of the Ethics Act provides:
(b) No person shall offer or give to a public
official or public employee or candidate for
public office or a member of his immediate
family or a business with which he is
associated, and no public official or public
employee or candidate for public office shall
solicit or accept, anything of value,
including a gift, loan, political
contribution, reward, or promise of future
employment based on any understanding that
the vote, official action, or judgment of the
public employee or candidate for public
office would be influenced thereby. 65 P.S.
403(b).
Under Section 3(b) of the Ethics Act cited above, which a
public official or employee must observe, a public official or
employee must neither offer nor accept anything of value on the
understanding or with the intention that his judgment would be
influenced thereby. It is assumed such a situation does not
exist here. This Section is referenced not to indicate that any
such activity has been or will be undertaken but in an effort to
provide a complete response to your inquiry.
Mr. James J. McCarthy, Jr.
May 12, 1988
Page 4
Section 3. Restricted activities.
(d) Other areas of possible conflict shall be
addressed by the commission pursuant to paragraph (9)
of Section 7. 65 P.S. 403(d).
Under the above provision of law, the Ethics Commission,
however, is also empowered to address other areas of possible
conflict pursuant to Section 3(d). 65 P.S. 5403(d). Fritzinger,
Opinion 80 -008; DeBenedictis, Opinion 86 -002. The parameters of
the type of activity encompassed by this provision are generally
reviewed in light of the preamble to the Ethics Act which
enunciates the legislative intent of the Act. The intent and
purpose of the Act is to strengthen the faith and confidence of
the people in their government by assuring the public that the
financial interests of the holders of public office present
neither a conflict nor the appearance or a conflict with the
public trust. A public official or employee, pursuant to this
provision, is to ensure that their personal financial interests
present neither a conflict nor the appearance of a conflict with
the public trust. 65 P.S. 5401. Such a conflict may exist
where an individual represents one or more adverse interests.
Alfano, Opinion 80 -007; where an individual serves in positions
that are incompatible or conflicting; Nelson, Opinion 85 -009, or
where such an official or employee accepts compensation to which
he is not entitled. Domalakes, Opinion supra.
In the instant situation, your position in part includes the
function of municipal planning and as a consequence you would
have available sensitive and confidential information concerning
real estate development as well as information which would either
positively or negatively impact upon the values of real estate
not only within the City of Bethlehem but in the surrounding
areas. In this regard, such knowledge and information which
would be acquired by you through the position you hold, has the
potential for the utilization of that information to obtain a
financial gain in the real estate market both in terms of knowing
those areas where land may rapidly increase in value or
conversely where land values may decrease because of something
which would negatively impact upon real estate values in a given
area. Not only would your public service as Community
Development Director simultaneous with the holding of a
Pennsylvania Real Estate Sales License create the potential for
a conflict of interest, there would also exists an appearance of
a conflict of interest under Section 3(d) of the Ethics Act for
the same reasons as outlined above. Thus, under Section 3(a) of
the Ethics Act, the holding of your real estate license would
create the potential or actual conflict and would create the
Mr. James J. McCarthy, Jr.
May 12, 1988
Page 5
appearance of a conflict under Section 3(d) of the Ethics Act;
therefore, you should not utilize your real estate license for
the period of your public service. The above is applicable
regardless of whether you would engage in the listing and sales
of property either inside or outside the corporate limits of the
city because the prohibition relates to the position that you
hold which would conflict with your private endeavors of engaging
in real estate sales activities.
Lastly, 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 condu ^t
other than the Ethics Act has not been considered in that they do
not involve an interpretation of the Ethics Act.
Conclusion: As City Director for Community Development for
Bethlehem, you are a public employee subject to the provisions of
the Ethics Act. Under Sections 3(a) and 3(d) of the Ethics Act,
the holding of a real estate sales license while you serve as
Community Development Director would create a conflict and an
appearance of conflict and hence you may not use your real estate
license during your period of public employment as Director of
Community Development. Lastly, the propriety of your proposed
conduct has only been addressed under the Ethics Act.
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 ci
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.
such.
This letter is a public record and will be made available c
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 former Opinion from the
Commission will be issued. Any such appeal must be made, In
writing, to the Commission within 15 days of service of thi.>
Advice pursuant to 51 Pa. Code §2.12.
Sincerely,
to
Vincent . Dopko,
General Counsel