HomeMy WebLinkAbout18-559 TaroliPHONE: 717 - 783 -1610
TOLL FREE: 1- 800- 932 -0936
STATE ETHICS COMMISSION
FINANCE BUILDING
613 NORTH STREET, ROOM 309
HARRISBURG, PA 17120 -0400
ADVICE OF COUNSEL
October 31, 2018
To the Requester:
Mr. Garry S. Taroli, Esquire
Rosenn Jenkins & Greenwald LLP
Dear Mr. Taroli:
FACSIMILE: 717-787-0806
WEBSITE; www.othics.pa.gov
18 -559
This responds to your letter dated August 22, 2018, and your email received
August 24, 2018, b which you requested an advisory from the Pennsylvania State
Ethics Commission {Commission ").
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
7a.77S. 1101 et se-9., would impose prohibitions or restrictions u on a Member and
Chair of to Board of the Luzerne County Redevelopment Authority ( "Authority "), who in
a private capacity is an equitable owner of a company, with re and to an ofFer b the
company to purchase an 80 -acre parcel of property owned by the Authority. y
Facts: As Solicitor for the Authority, you have been authorized by Carol Keup
TWs-.-Keup "), who is a Member and Chair of the Board of the Authority, to request an
advisory from the Commission on her behalf. You have submitted facts, the material
portion of which may be fairly summarized as follows.
The Authority owns an 80 -acre parcel of property known as "Ashley Yards" (the
"Property ") that was formerly a railroad yard and roundhouse. The Proppert y is the
subject of a Pennsylvania Department of Environmental Protection ( "DEP") Consent
Decree with regard to the cleanup of contamination at the Property. You state that
although the Property is serviced by rail lines and is therefore attractive for commercial
uses, the Property has largely sat idle while it has been owned by the Authority. The
Property is currently listed on the "Penn's Northeast" publicly available website where
commercially developable properties are advertised for sale.
In a private capacity, Ms. Keup is an equitable owner of a company named
"Ashley Complex, LLC' (the "Company "). Ms. Keup recently made the Authority Board
aware of the Company's interest in purchasing the Property, and she forwarded a letter
of intent (the "Letter of Intent ") to the Authority with regard to the proposed acquisition of
the Property. Pursuant to the Letter of Intent, the Company offered to purchase the
Property at a certain price and assume, with DEP approval, the obligations pertaining to
the cleanup of the Property. The Authority had previously received an appraisal that,
Taroli, 18 -559
Octo er 31, 2018
Page 2
without considering the costs to clean up the Property, had determined the value of the
Property to be more than twice the purchase price offered by the Company.
Upon receipt of the Letter of Intent, the Board commissioned a second appraisal
to determine the value of the Property where the buyer would be responsible for the
costs to clean up the Property. After the second appraisal valued the Property at
approximately $90,000 more than the purchase price offered byy the Company pursuant
to the Letter of Intent, the Company indicated a willingness to increase its purchase
price to the new appraised value.
You state that Ms. Keup has not participated in any Board discussions or votes
related to the proposed transaction between the Company and the Authority. You
further state that Ms. Keup has not attended executive sessions of the Board while the
Company's proposed purchase of the Property was discussed.
Based upon the above submitted facts, the question that is presented is whether
the Ethics Act would impose prohibitions or restrictions upon Ms. Keup with regard to
the Company's offer to purchase the Property from the Authority.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of
e Ethics Art, 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 engage in an
independent investigation of the facts, nor does it speculate as to facts that 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 Member and Chair of the Authority Board, Ms. Keup 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
provided herein. In the case of a three - member governing
body of a political subdivision, where one member has
Taroli, 18-559
fiber 31, 2018
Page 3
abstained from voting as a result of a conflict of interest and
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), 0).
The following terms related to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"Conflict" or "conflict of interest." Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate
family or a business with which he or a member of his
immediate family is associated. The term does not include
an action having a de minimis economic impact or which
affects to the same degree a class consisting of the general
public or a subclass consisting of an industry, occupation or
other group which includes the public official or public
employee, a member of his immediate family or a business
with which he or a member of his immediate family is
associated.
"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.
"Business." An corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self-employed individual, holding company,
joint stock company, receivership, trust or any legal entity
organized for profit.
"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
has a financial interest.
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.
Taroli, 18 -559
0—c-to-6er 31, 2018
Page 4
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 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.
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
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 ublic 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
Taroli, 18 -559
�6er 31, 2018
Page 5
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
In ap Iying the above provisions of the Ethics Act to the instant matter, you are
advised as follows.
The Company is a business with which Ms. Keup is associated in her capacity as
an owner. An agreement or arrangement whereby the Company would purchase the
Propert y from the Authority would constitute a "contract" as that term is defined in the
Ethics Act.
Ms. Keup would have a conflict of interest under Section 1103(a) of the Ethics
Act as to discussion(s), vote(s), or other action(s) of the Authority Board pertaining to
the Company's offer to purchase the Property from the Authority. In each instance of a
conflict of interest, Ms. Keup would be required to abstain from participation, which
would include voting unless one of the statutory exceptions of Section 110310) 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, a
contract between the Company and the Authority for the purchase of the Property 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 any contract between the
Company and the Authority for the ppurchase of the Property. (See, Kistler v. State
Ethics Commission, 610 Pa. 516 A.
, 22 3d 223 (2011), regarding the requirements or an
open and public process. ")
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 any potential
applicability of the Urban Redevelopment Law, 35 P.S. § 1701 et seq., which provides
in part:
§ 1708. Interest of members or employes
No member or employe of an Authority shall acquire
any interest, direct or indirect, in any redevelopment protect
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 any interest, direct or indirect, in any
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 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
protect, 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
Taroii, 18 -559
fiber 31, 2018
Page 6
writing upon the minute books of the Authority. Failure to
make such disclosure shall constitute misconduct in office.
35 P.S. § 1708. It is recommended that Ms. Keup obtain legal advice regarding any
potential applicability of the Urban Redevelopment Law with respect to the Company's
proposed purchase of the Property from the Authority.
Conclusion: As a Member and Chair of the Board of the Luzerne County
Redevelopment Authority ("Authority"), Carol Keup ( "Ms. Keup ") is a public official
subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S. § 1101 et sec. Based upon the submitted facts that: (1) the Authority owns an
80 -acre parcel oT-property, known as "Ashley Yards" (the "Property ") that was formerly a
railroad yard and roundhouse; (2) the Property is the subject of a Pennsylvania
Department of Environmental Protection ( "DEP ") Consent Decree with regard to the
cleanup of contamination at the Property; (3) although the Property is serviced by rail
lines and is therefore attractive for commercial uses, the Property has largely sat idle
while it has been owned by the Authority; (4) the Property is currently listed on the
"Penn's Northeast" publicly available website where commercially developable
properties are .advertised for sale; (5) in a private capacity, Ms. Keup is an equitable
owner of a company named "Ashley Complex, LLC" (the "Company "); (6) Ms. Keup
recently made the Authority Board aware of the Company's interest in purchasing the
Property, and she forwarded a letter of intent (the "Letter of Intent ") to the Authority with
regard to the proposed acquisition of the Property; (7) pursuant to the Letter of Intent,
the Company offered to purchase the Property at a certain price and assume, with DEP
approval, the obligations pertaining to the cleanup of the Property; (8) the Authority had
previously received an appraisal that, without considering the costs to clean up the
ropert ,had determined the value of the Property to be more than twice the purchase
price offered by the Company; (9) upon receipt of the Letter of Intent, the Board
commissioned a second appraisal to determine the value of the Property where the
buyer would be responsible for the costs to clean up the Property; (10) after the second
appraisal valued the Property at approximately $90,000 more than the purchase price
offered by the Company pursuant to the Letter of Intent, the Company indicated a
willingness to increase its purchase price to the new appraised value; (11) Ms. Keup
has not participated in any Board discussions or votes related to the proposed
transaction between the Company and the Authority; and (12) Ms. Keup has not
attended executive sessions of the Board while the Company's proposed purchase of
the Property was discussed, you are advised as follows.
The Company is a business with which Ms. Keup is associated in her capacity as
an owner. An agreement or arrangement whereby the Company would purchase the
Propert y from the Authority would constitute a "contract" as that term is defined in the
Ethics Act.
Ms. Keup would have a conflict of interest under Section 1103(a) of the Ethics
Act as to discussion(s), vote(s), or other action(s) of the Authority Board pertaining to
the Company's offer to purchase the Property from the Authority. In each instance of a
conflict of interest, Ms. Keup 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, a
contract between the Company and the Authority for the purchase of the Property 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 any contract between the
Company and the Authority for the purchase of the Property.
Taroii, 18 -559
Uc o6er 31, 2018
Page 7
Lastly, the propriety of the proposed conduct has only been addressed under the
Ethics Act. Specificallyy not addressed herein is any potential applicability of the Urban
Redevelopment Law, 35 P.S. § 1701 et seq. It is recommended that Ms. Keup obtain
legal advice regarding any potential applicability of the Urban Redevelopment Law with
respect to the Company's proposed purchase of the Property from the Authority.
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.
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 before 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
AdO e pursuant to 51 Pa. Code § if3.2(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
Me such an appeal at the Commission within thirty (30) days may
result in the dismissal of the appeal.
Sincerely,
t
Robin M. Hittie
Chief Counsel