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HomeMy WebLinkAbout91-553 MartinMr. Aaron J. Martin 102 Redwood Lane Kennett Square, PA 19348 Dear Mr. Martin: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL July 1, 1991 91 -553 Re: Conflict, Public Official /Employee, Chairman, Joint Municipal Authority, Bidding on Property to be Sold by Authority, Financing Purchase of Property to be Sold by Authority. This responds to your letter of May 9, 1991, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon a Chairman of a joint municipal authority with regard to purchasing or financing the purchase of tracts of land to be sold by the Authority. Facts: As Chairman of the Board of the Kennett Area Park Authority, a joint municipal authority formed by the Borough of Kennett Square and the Township of Kennett, in Chester County, Pennsylvania, you seek the advice of the State Ethics Commission. You have provided a map, history, and description of the future Anson B. Nixon Park, which documents are incorporated herein. Said documents describe the mission of the Authority to create a public park by selling for development purposes certain tracts of land adjacent to the planned park, and using the proceeds for creation and endowment of the park. The Authority is currently trying to sell three parcels designated as "Future Development Areas B, C, and D" on the incorporated map. You have submitted a copy of a letter dated April 15, 1991, addressed to B &B Company from the Authority's Bid Coordinator, which you state shows the Authority's effort to find buyers for the tracts. The said letter is incorporated herein by reference. This letter and enclosures went out to twenty local developers and so far the Authority has received very little response to this effort. Page 2 Aaron J. Martin You state your belief that these tracts of land have good development potential when the park is built. You have done considerable investing in land and question whether it would be permissible under the Ethics Law for you to tender an offer to buy the tracts, either personally or by a corporation in which you are a principal shareholder. You acknowledge that you would have to absent yourself from any discussion about the sale and abstain from voting on it, and you would not expect your bid to receive any special consideration. Additionally, an independent developer with whom you have had significant personal dealings in the past has indicated some interest in owning tracts C and D. However this particular developer is having difficulty obtaining the additional financing to buy the tracts outright and he has asked you whether you could loan him the necessary funds under normal terms to buy the tracts. Because you are so anxious to have the tracts sold so that the Authority may proceed with the park development, you are willing to lend the funds or to co -sign at a lending institution. You further state your belief that this developer would do a fine job of developing the tracts in a manner complimentary to the park. You inquire as to whether such a transaction would be permissible under the Ethics Law as long as it is divulged to the Board and you would take no part in the discussion or vote. Discussion: As Chairman of the Board of the Kennett Area Park Authority, you are a public official as that term is defined under the Ethics Law, and hence you are subject to the provisions of that law. Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms are defined in the Ethics Law as follows: Section 2. 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 Page 3 Aaron J. Martin 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. "Conflict" or "conflict of interest" 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 or 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 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. "Financial interest." Any financial interest in a legal entity engaged in business for profit which comprises more than 5% of the equity of the business or more than 5% of the assets of the economic interest in indebtedness. "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. "Contract" 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 Page 4 Aaron J. Martin other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. In addition, Sections 3(b) and 3(c) of the Ethics Law provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept any thing of monetary value based upon the understanding that the vote, official action, or judgement of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has or will be any transgression thereof but merely to provide a complete response to the question presented. Section 3(f) of the Ethics Law provides: Section 3. Restricted activities. (f) 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. Parenthetically, where contracting is otherwise allowed or where there appears to be no expressed prohibitions to such Page 5 Aaron J. Martin contracting, the above particular provision of law would require that an open and public process must be used in all situations . where a public official /employee is otherwise appropriately contracting with his own governmental body in an amount of $500.00 or more. This open and public process would require: prior public notice of the employment or contracting possibility; sufficient time for a reasonable competitor /applicant to be able to present an application or proposal; (3) (4) public disclosure of the contract offered and accepted. public disclosure of all applications considered and; and prudent prepare and or. proposals awarded and Section 3(f) of the Ethics Law also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract. Section 3(j) of the Ethics Law provides as follows: Section 3. Restricted activities. (j) 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 Page 6 Aaron J. Martin 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 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. If a conflict exists, Section 3(j) requires the public official /employee to abstain as well as file a written memorandum to that effect with the person recording the minutes or supervisor. Under the Ethics Law, we must observe the stated purpose of that Act which is to strengthen the faith and confidence of people in their government by assuring the public that the financial interests of the holders of or candidates for public office do not present a conflict with the public trust. In applying the above quoted provisions of the Ethics Law to the instant matter, we will first consider the provisions of Section 3(f) of the Ethics Law. Since the Kennett Area Park Authority is the government body with which you are associated, Section 3(f) would apply in this case. Assuming that a contract or sub - contract would be made between you and the Board of the Kennett Area Park Authority pursuant to the provisions of this Program, Section 3(f) of the Ethics Law would impose the following requirements if the contract or sub - contract is $500.00 or more: 1. prior public notice of the contract possibility; 2. public disclosure of applications and contracts considered; 3. public disclosure of the award of the contracts; and 4. no supervisory or overall responsibility for the implementation or administration of the contract or sub- contract by the public official /employee. In passing, a concern is noted as to whether the Authority's efforts thus far to find buyers for the tracts would comport with the requirements of Section 3(f), if only selected individuals Page 7 Aaron J. Martin rather than the general public have been targeted to receive notice, and if a fee is required to obtain the necessary information to submit a bid. We will now address the propriety of the proposed conduct under Section 3(a) of the Ethics Law. The Ethics Law would not prohibit the submission of a bid by you or by the corporation for which you are a principal shareholder, nor would it prohibit your financing or co- signing a loan for the independent developer who seeks to purchase the tracts, subject to the express condition that you comply with the restrictions set forth herein. It is clear that in each such instance you would have a conflict of interest. You would therefore be required to abstain from any participation whatsoever in the Authority's consideration of the submitted bids, including your own bid, a bid by the corporation for which you are a principal shareholder, a bid by the developer for whom you would be providing financing or co- signing a loan, and also all competing bids. Your abstention would encompass any participation of any nature on this matter, including but not limited to discussions and voting. Furthermore, the disclosure requirements of the Ethics Law would apply in each such instance, such that you would be required to both publicly.. announce and disclose the nature of your interests in a written memorandum filed with the secretary recording the minutes. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed herein is the applicability of the. Municipality Authorities Act. Conclusion: As Chairman of the Board of the Kennett Area Park Authority, you are a public official subject to the provisions of the Ethics Law. Subject to the restrictions herein, the Ethics Law would not prohibit you from submitting a bid to the Authority either personally or by a corporation in which you are a principal shareholder, for purchasing tracts of land from the Authority which are adjacent to the proposed Anson B. Nixon Park. Subject to the restrictions herein, the Ethics Law would not prohibit you from providing financing or co- signing a loan for an independent developer who seeks to submit a bid to purchase some of the said tracts. The requirements of . Section 3(f) of the Ethics Law, noted above, must be observed. You must also comply with the disclosure requirements of Section 3(j) of the Ethics Law, both publicly announcing and disclosing the nature of your interests in a written memorandum filed with the secretary responsible for recording the minutes. Lastly, the propriety of Page 8 Aaron J. Martin the proposed conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), 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. 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 in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code 52.12. Sincerely, Vincent Dopko, Chief Counsel