HomeMy WebLinkAbout18-522 BrungoPHONE: 717 -783 -1610
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ADVICE OF COUNSEL
April 17, 2018
To the Requester:
Mr. Michael L. Brungo, Esquire
Maiello Brungo & Maiello, LLP
Dear Mr. Brungo:
FACSIMILE: 717- 787 -0806
WESSITE: www.ethics.paxiov
18 -522
This responds to your letter dated February 5, 2018, received February 12, 2018,
by which you requested an advisory from the Pennsylvania State Ethics Commission
( "Commission ").
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
7-a -G-.S. § 1101 et seq., would impose prohibitions, restrictions, or requirements upon an
individual serving as a school director, who owns a commercial property, with regard to
enteringg into an agreement with the school district whereby: (1) the school district would
lease tie commercial property for a nine -year period in order to use the commercial
property to house the school district's custodial /maintenance staff and maintenance
equipment and supplies; and (2) the school district would have the option to purchase
the commercial property in fee simple at the conclusion of the lease period.
Facts: As Solicitor for the Uniontown Area School District ( "School District"), you
aive been authorized by Thomas W. Gerke ( "Mr. Gerke "), who is a School Director for
the School District, to request an advisory from the Commission on his behalf. You
have submitted facts that may be fairly summarized as follows.
Mr. Gerke is the owner of a commercial property the "Property") that is located
across the street from the building which houses the Uniontown Area High School and
Administrative Office. The School District School Board, with the recommendation of
the School District administration, wishes to lease and ultimately purchase the Property
from Mr. Gerke in order to use the Property to house the School District's
custodial /maintenance staff and equipment and supplies for maintaining School District
facilities, buildings, and property.
The general terms of the Property lease /purchase agreement (the "Property
Lease /Purchase Agreement ") being considered by the parties Include a lease for a
period of nine years at the monthly rental fee of $3,500.00. During the lease period, the
School District would have the benefit of utilizing the Property to the same extent as any
Brunco, 18 -522
p Aril 17, 2018
Page 2
other leased facility. At the conclusion of the lease period, the School District could
exercise its option to purchase the Property in fee simple for $1.00.
You state that at a publicly advertised meeting of the School District School
Board, the details of the Property Lease/Purchase Agreement would be disclosed to the
public, including the results of an appraisal of the Property and whether other similarly
situated properties, if any, were considered. If approved, the Property Lease/Purchase
Agreement would be executed by the parties and would become a public record subject
to the Right -to -Know Law, 65 P.S. §§ 67.101- 67.3104.
Based upon the above submitted facts, you seek guidance as to whether the
Ethics Act would impose prohibitions, restrictions, or requirements upon Mr. Gerke with
regard to entering into the Property Lease/Purchase Agreement with the School District.
In particular, ou seek guidance as to what actions would satisfy the requirement of
Section 1103 (ff) of the Ethics Act for an "open and public process" as to the Property
Lease/Purchase Agreement.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
fhe Et ifi c� -Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester
based upon the facts that the requester has submitted. In issuing the advisory based
upon the facts that the requester has submitted, the Commission does not en age in an
independent investigation of the facts, nor does it speculate as to facts thaf have not
been submitted. It is the burden of the requester to truthfully disclose all of the material
facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a
defense to the extent the requester has truthfully disclosed all of the material facts.
As a School Director for the School District, Mr. Gerke is a public official subject
to the provisions of the Ethics Act.
Sections 1103(a) and 11030) of the Ethics Act provide:
§ 1103. Restricted activities
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict
of interest.
0) Voting conflict. - -Where voting conflicts are not
otherwise addressed by the Constitution of Pennsylvania or
by any law, rule, regulation, order or ordinance, the following
procedure shall be employed. Any public official or public
employee who in the discharge of his official duties would be
required to vote on a matter that would result in a conflict of
interest shall abstain from voting and, prior to the vote being
taken, publicly announce and disclose the nature of his
interest as a public record in a written memorandum filed
with the person responsible for recording the minutes of the
meeting at which the vote is taken, provided that whenever a
governing body would be unable to take any action on a
matter before it because the number of members of the body
required to abstain from voting under the provisions of this
section makes the majority or other legally required vote of
approval unattainable, then such members shall be
permitted to vote if disclosures are made as otherwise
pprovided herein. In the case of a three - member governing
body of a political subdivision, where one member has
abstained from voting as a result of a conflict of interest and
Brun o, 18 -522
pA rTgT7, 2018
Page 3
the remaining two members of the governing body have cast
opposing votes, the member who has abstained shall be
permitted to vote to break the tie vote if disclosure is made
as otherwise provided herein.
65 Pa.C.S. §§ 1103(a), (j).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"Conflict"
official or public
employment or ai
his holding publ
pecuniary benefr
family or a buss
immediate family
an action having
affects to the san
public or a subcl�
other group whi
employee, a mer
with which he c
associated.
or "conflict of interest." Use by a public
employee of the authority of his office or
,y confidential information received through
is office or employment for the private
of himself, a member of his immediate
less with which he or a member of his
is associated. The term does not include
a de minimis economic impact or which
ie degree a class consisting of the general
iss consisting of an industry, occupation or
ch includes the public official or public
fiber of his immediate family or a business
,r a member of his immediate family is
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
65 Pa.C.S. § 1102.
Subject to the statutory exclusions to the Ethics Act's definition of the term
"conflict" or "conflict of interest," 65 Pa.C.S. § 1102, a public official/public employee is
prohibited from using the authority of public office /employment or confidential
information received by holding such a public position for the private pecuniary benefit
of the public official/public employee himself, any member of his immediate family, or a
business with which he or a member of his immediate family is associated.
The use of authority of office is not limited merely to voting, but extends to any
use of authority of office including, but not limited to, discussing, conferring with others,
and lobbying for a particular result. Juliante, Order 809.
In each instance of a conflict of interest, a public official/public employee would
be required to abstain from participation, which would include voting unless one of the
statutory exceptions of Section 1103{1) of the Ethics Act would be applicable.
Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have
to be satisfied in the event of a voting conflict.
Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows:
§ 1103. Restricted activities
(f) Contract. - -No public official or public employee or
his spouse or child or any business in which the person or
Brun o_, 18 -522
April 17, 2018
Page 4
his spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with
which the public official or public employee is associated or
any subcontract valued at $500 or more with any person
who has been awarded a contract with the governmental
body with which the public official or public employee is
associated, 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. In such a case, the public official or
public employee shall not have any supervisory or overall
responsibility for the implementation or administration of the
contract. Any contract or subcontract made in violation of
this subsection shall be voidable by a court of competent
jurisdiction if the suit is commenced within 90 days of the
making of the contract or subcontract.
65 Pa.C.S. § 1103(f).
The term "contract" is defined in the Ethics Act as follows:
§ 1102. Definitions
"Contract." An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as
one party and a public official or public employee as the
other party, concerning his expense, reimbursement, salary,
wage, retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
65 Pa.C.S. § 1102
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official/public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the governmental body, or
subcontracting with any person who has been awarded a contract with the
governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an
open and public process" be observed as to the contract with the governmental body.
Section 1103(f) of the Ethics Act also provides that the public official/public employee
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
In ap I ing the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
Section 1103(a) of the Ethics Act would not prohibit Mr. Gerke, in his private
capacity, from entering into the Property Lease /Purchase Agreement with the School
District. However, in his public capacity as a School Director, Mr. Gerke general)
would have a conflict of interest under Section 1103(a) of the Ethics Act in matters)
pertaining to the Property Lease /Purchase Agreement. Mr. Gerke would specifically
have a conflict of interest with regard to voting to approve the Property Lease Purchase
Brun o, 18522
April 1 7, 2018
Page 5
Agreement. Mr. Gerke would also have a conflict of interest with regard to voting to
eliminate competitor(s) for property agreement(s) or contract(s) with the School District.
Cf., Pepper, Opinion 87 -008.
It is parenthetically noted that if the School District School Board would enter into
the Property Lease/Purchase Agreement without an action, participation, or
involvement by Mr. Gerke as a School Director, then Mr. Gerke would not have a
conflict of interest under Section 1103(a) of the Ethics Act with regard to subsequently
participating in the approval of pre- fixed, routine, uncontested payments by the School
District under the Property Lease/Purchase Agreement. See, Yezzi, Order 825 at 58;
Krushinski, Order 168; Brooks, Opinion 89 -023; Faah Tc _ Opinion 90 -010;
izoon a Rieder, Opinion 09 -UU7—.
In each instance of a conflict of interest, Mr. Gerke would be required to abstain
from participation, which would include voting unless one of the statutory exceptions of
Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure
requirements of Section 11030) of the Ethics Act would have to be satisfied in the event
of a voting conflict.
As for Section 1103(f) of the Ethics Act, based upon the submitted facts, the
Property Lease/Purchase Agreement would be valued in excess of $500.00. Therefore,
the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be
observed as to the Property Lease/Purchase Agreement, including the requirement that
the Property Lease/Purchase Agreement be awarded through an "open and public
process," including "prior public notice and subsequent public disclosure of all proposals
considered and contracts awarded." You are advised that: (1) prior public notice of the
ublic meeting of the School District School Board at which entry into the Property
ease /Purchase Agreement would be considered; (2) public disclosure at the aforesaid
meeting of the details of the Property LeaselPurchase Agreement, including the results
of an appraisal of the Property and whether other similarly situated properties, if any,
were considered; and (3) public disclosure of the School District School Board s
approval of the Property Lease /Purchase Agreement, would be sufficient to satisfy he
requirement of Section 1103(f) for an "open and public process." Cf., Kistler v. State
Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011).
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
conduct other than the Ethics Act has not been considered in that they do not involve an
interpretation of the Ethics Act. Specifically not addressed herein is the applicability of
the Public School Code, and in particular, Section 3 -324 of the Public School Code, 24
P.S. § 3 -324.
Conclusion: As a School Director for the Uniontown Area School District
c qol trict "), Thomas W. Gerke ( "Mr. Gerke ") is a public official subject to the
provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §
1101 et se q. Based upon the submitted facts that: (1) Mr. Gerke is the owner of a
commercial property (the "Property ") that is located across the street from the building
which houses the Uniontown Area High School and Administrative Office; (2) the School
District School Board, with the recommendation of the School District administration,
wishes to lease and ultimately purchase the Property from Mr. Gerke in order to use the
Property to house the School District's custodial /maintenance staff and equipment and
supplies for maintaining School District facilities, buildin s, a nd property; (3) the general
terms of the Property lease /purchase agreement ithe "Property Lease/Purchase
Agreement) being considered by the parties include a lease for a period of nine years
at the monthly rental fee of $3,500.00; (4) during the lease period, the School District
would have the benefit of utilizing the Property to the same extent as any other leased
facility; (5) at the conclusion of the lease period, the School District could exercise its
Brun _o, 18 -522
April 17, 2018
Page 6
option to purchase the Property in fee simple for $1.00; (6) at a publicly advertised
meeting of the School District School Board, the details of the Property Lease /Purchase
Agreement would be disclosed to the public, including the results of an appraisal of the
Property and whether other similarly situated properties, if any, were considered; and
(7) if approved, the Property Lease/Purchase Agreement would be executed by the
parties and would become a public record subject to the Right -to-Know Law, 65 P.S. §§
67.101- 67.3104, you are advised as follows.
Section 1103(a) of the Ethics Act would not prohibit Mr. Gerke, in his private
capacity, from entering into the Property Lease/Purchase Agreement with the School
District. However, in his public capacity as a School Director, Mr. Gerke general)
would have a conflict of interest under Section 1103(a) of the Ethics Act in matters)
pertaining to the Property Lease /Purchase Agreement. Mr. Gerke would specifically
have a conflict of interest with regard to voting to approve the Property Lease/Purchase
Agreement. Mr. Gerke would also have a conflict of interest with regard to voting to
eliminate competitor(s) for property agreement(s) or contract(s) with the School District.
It is parenthetically noted that if the School District School Board would enter into
the Property Lease/Purchase Agreement without anyy action, participation, or
involvement by Mr. Gerke as a School Director, then Mr. Gerke would not have a
conflict of interest under Section 1103(a) of the Ethics Act with regard to subsequently
participating in the approval of pre - fixed, routine, uncontested payments by the School
District under the Property Lease /Purchase Agreement.
In each instance of a conflict of interest, Mr. Gerke would be required to abstain
from participation, which would include voting unless one of the statutory exceptions of
Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure
requirements of Section 11030) of the Ethics Act would have to be satisfied in the event
of a voting conflict.
As for Section 1103(f) of the Ethics Act, based upon the submitted facts, the
Property Lease/Purchase Agreement would be valued in excess of $500.00. Therefore,
the restrictions and requirements of Section 1103(f) of the Ethics Act would have to be
observed as to the Property Lease/Purchase Agreement, including the requirement that
the Property Lease /Purchase Agreement be awarded through an "open and public
process," including "prior public notice and subsequent public disclosure of all proposals
considered and contracts awarded." You are advised that: (1 prior public notice of the
publipublic meeting of the School District School Board at which entry into the Property
c Agreement would be considered; (2) public disclosure at the aforesaid
meeting of the details of the Property Lease/Purchase Agreement, including the results
of an appraisal of the Property and whether other similarly situated properties, if any,
were considered; and (3) public disclosure of the School District School Board "s
approval of the Property Lease /Purchase Agreement, would be sufficient to satisfy the
requirement of Section 1103(f) for an "open and public process."
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act. Specifically not addressed herein is the applicability of the Public School
Code, and in particular, Section 3 -324 of the Public School Code, 24 P.S. § 3 -324.
Pursuant to Section 1107(11) of the Ethics Act, an 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, provided the requester 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.
Brun a, 18 -522
April 17, 2018
Page 7
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance bet`ore the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writingg and must be actual!
received at the Commission within thirty (30) days of the date o��s
vice pursuant to 51 Pa. Code § 73.2(h). The appeal may be
received at the Commission by hand delivery, United States mail,
delivery service, or by FAX transmission (717 - 787 - 0806). Failure to
file such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
Vv v (• ,
RoUbin M. Hittie
Chief Counsel