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HomeMy WebLinkAbout88-636 BlazosekJoseph M. Blazosek, Esquire 341 Wyoming Avenue West Pittston, PA 18643 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PA 17120 TELEPHONE: (717) 783 -1610 ADVICE OF COUNSEL October 3, 1988 88 -636 Re: Conflict of Interest, Redevelopment Authority Board Member, Contracting with Redevelopment Authority Dear Mr. Blazosek: This responds to your letter of August 29, 1988, in which you requested advice from the State Ethics Commission. Issue: Whether the State Ethics Act presents any prohibition or restrictions upon a redevelopment authority's contracting with one of the members. Facts: You state that you are the solicitor for the Redevelopment Authority of Luzerne County and have telephonically advised that you are seeking advice on behalf of a Mr. Frank Ciavarella who is a member of the Board of said Redevelopment Authority, hereinafter Authority. You advise that the Authority receives federal and state funds to implement urban renewal projects and that the Board of Directors of the Authority are appointed by the Luzerne County Board of Commissioners and received no compensation for their services. You then note that the Authority has a staff of twelve people in leased offices. You state that the Authority is currently evaluating as to whether to renew the current lease or seek other quarters for both space and economic reasons. You then advise that Mr. Ciavarella has stated that he has available office space which he believes would suit the needs of the Authority and which he could offer at a considerably less monthly rental than the Authority is currently paying. After noting that the Authority currently pays rent of $1800 a month, you state that Mr. Ciavarella wouldlease his space at a cost of $600 per month but with the cost of the utilities to be paid by the Authority. After advising that the utilities - cost would still result in a lower monthly rental than the existing lease, you request advice under the State Ethics Act as to the propriety of such a lease arrangement. You also cite and include a photocopy of a section of the Urban Redevelopment Joseph M. Blazosek, Esquire October 3, 1988 Page 2 Law, 35 P.S. 1708, which contains a general prohibition as to Authority members' having a direct or indirect interest in a contract for materials or services for the Authority. You then note that there is a limitation on the restriction in the law as to a particular redevelopment project and assert that the particular lease would not be relative to any specific redevelopment project. You conclude by requesting an opinion not only with respect to the provisions of the Ethics Act but also as to any other state law or enactment which might impact upon the Authority and Mr. Ciavarella. Discussion: Initially, it should be noted that a member of a Redevelopment Authority is a "public official" as that term is defined in the State Ethics Act. 65 P.S. §402. As such, his conduct must conform to the requirements of that law. Generally, the State Ethics Act places no per se absolute prohibition upon a public official's - employment in a business that contracts witti his governmental body. The Act does, however, provide 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). The Act further defines business with which he is associated: 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. Under Section 3(a) quoted above, the State Ethics Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain a financial gain which is Joseph M. Blazosek, Esquire October 3, 1988 Page 3 not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon, Orders No. 128, 129, affirmed McCutcheon v. State Ethics Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283 (1983); Yacobet, Order No. 0.2 -R, affirmed Yacobet v. State Ethics Commission, Pa. Commw. Ct. , 531 A.2d 536 (1987). Similarly, Section 3(a) of the Ethics Act would prohibit a public official /employee from using public office to advance his own interests; Koslow, Order 458 -R, affirmed Koslow v. State Ethics Commission, Pa. Commw. Ct. , 540 A.2d 1374 (1988). Likewise, a public official /employee may not use the status or position of public office for his own personal advantage; Huff, Opinion 84 -015. Of course, under this provision a public official may not use public office to secure any financial gain for himself other than compensation provided for by law. Domalakes, Opinion 85 -010. The Commission has determined if a particular statutory enactment prohibits an official's receipt of a particular benefit, then that,official's receipt of such a prohibited benefit, in and through his public office, would also be a use of his office in violation of the Act. The Commission has been called upon, on various occasions, to determine whether a specific benefit or financial gain is prohibited by law. See, Allen, Advice 86 -518. In order to determine whether a particular benefit or gain is strictly prohibited by law, the provisions of the enabling legislation of the governmental body in question must be reviewed. In the instant situation, the Urban Development Law of 1945, P.L. 991, Section 8, as amended, provides as follows: S1708. Interest of members or employes No member or employe of an Authority shall acquire any interest, direct or indirect, in any redevelopment project or in any property included or planned to be included in any redevelopment area, or in any area which he may have reason to believe may be certified to be a redevelopment area, nor shall he have anv interest, direct or indirect, in anv contract or proposed contract for materials or services to be furnished or used by an Authority, or in any contract with a redeveloper or prospective redeveloper relating, directly or indirectly, to any redevelopment project. The acquisition of any such interest in a redevelopment project or in any such property or contract shall constitute misconduct in office. If any member or employe of an Authority shall Joseph M. Blazosek, Esquire October 3, 1988 Page 4 already own or control any interest, direct or indirect, in any property later included or planned to be included in any redevelopment project under the jurisdiction of the Authority, or has any such interest in any contract for material or services to be furnished or used in connection with any redevelopment project, he shall disclose the same in writing to the Authority and to the Department of Community Affairs and the local governing body, and such disclosure shall be entered in writing upon the minute books of the Authority. Failure to make such disclosure shall constitute misconduct in office. (Emphasis supplied) 35 P.S. §1708. The Redevelopment Authority Law does not appear to contain any exception to the restriction that an Authority member may not directly or indirectly be involved in any contract or proposed contract for materials or services. The provision which relates to redevelopment projects appears to only qualify the particular phrase dealing with contracts with redevelopers or prospective redevelopers; it does not modify the restriction dealing with direct or indirect interests as to contracts or proposed contracts for materials or services to be furnished or used by the Authority. Therefore, under Section 1708 of the Urban Redevelopment Law, it appears that no member can have a direct or indirect interest in a contract or proposed contract for services, such as a lease, to be furnished or used by the Authority. Therefore, any gain that Mr. Ciavarella would receive as a result of the lease appears to be prohibited by law; hence, the receipt of the financial gain in and through public position would also appear to be prohibited by Section 3(a) of the State Ethics Act. See Weaver, Opinion 85 -014, wherein the Ethics Commission determined that a school board member who owned and operated a business which would contract with the school district would be prohibited from receiving compensation for providing services or transacting business with the school district in light of the provisions of the Public School Code which prohibited a school board member from having a direct or indirect interest in any contract with the school district. See also Fvda, Order 438 -R. As such, based upon prior rulings of the Ethics Commission, Mr. Ciavarella would be prohibited from receiving funds from the Redevelopment Authority for leasing his building to the Authority. Joseph M. Blazosek, Esquire October 3, 1988 Page 5 In addition to the foregoing, the State Ethics Act provides as follows: Section 3(c) of the Ethics'Act provides: (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). In relation to the above provision of law, the State Ethics Commission has generally determined that this provision is a procedure to be used when a public official or employee contracts with his own governmental body in excess of $500. Bryan, Opinion 80 -014; Lynch, Opinion 79 -047. The Commission, however, has also determined that the above provision of law is not a general authorization for a public official to contract with his own governmental body where such is otherwise prohibited by law. The above provision of law clearly is intended to be a procedure to be utilized where contracting is otherwise allowed by law. For example, if a particular business transaction were prohibited under Section 3(a) of the State Ethics Act, a particular code would prohibit a public official from being interested in a contract, then this provision would not allow that interest. Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such contracting, the above particular provision of law would require that an additional procedure, the open and public process, must be used in all situations where a public official is otherwise appropriately contracting with his own governmental body in excess of_$500. This open and public process would require: (1) prior public notice of the employment or contracting possibility; Joseph M. Blazosek, Esquire October 3, 1988 Page 6 (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered and; (4) public disclosure of the contract awarded and offered and accepted. See, Cantor, 82 -004. Thus, in the event that contracting would be allowed, the above process must be employed. Lastly, it must be noted that the propriety of the proposed course of conduct has only been addressed under the Ethics Act. Conclusion: As a Redevelopment Authority member, Mr. Ciavarella is a public official subject to the provisions of the Ethics Act. Based upon the above facts and circumstances and legal analysis, the Ethics Act would prohibit Mr. Ciavarella from leasing office space to the Authortiy because such would result in a financial gain that is strictly prohibited by law. A member of a Redevelopment Authority, who receives such compensation would be receiving a financial gain that is strictly prohibited by law. Such would, thus, be received in and through public office and would not be in accord with the State Ethics Act. Parenthetically, in the event that there had been no such prohibition upon the receipt of this compensation, then the Ethics Act, generally, would not have been precluded in and of itself this contracting possibility. However, the Redevelopment Authority member could not participate in any actions relating to the Redevelopment Authority's leasing and all contracting must be accomplished through an open and public process as set forth above. Lastly, the propriety of the 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 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. Joseph M. Blazosek, Esquire October 3, 1988 Page 7 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. Sincerely, Vincent J. Dopko, General Counsel