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HomeMy WebLinkAbout91-592 OHaraDear Ms. O'Hara: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL October 15, 1991 Ms. Kathy O'Hara 91 -592 Rehabilitation Specialist City of Farrell 500 Roemer Blvd Farrell, PA 16121 Re: Conflict, Grant /Loan Program, Participation by Public Official /Employee, Earned Income Tax Collector, Assistant City Clerk, Housing Rehabilitation Loan. This responds to your letter of August 23, 1991, as well as the letters of Ms. Margaret DeMasy dated August 14, 1991, and September 16, 1991, through which you requested advice from the State Ethics Commission on behalf of Ms. DeMasy. Issue: Whether an Earned Income Tax Collector and Assistant City Clerk for the City of Farrell under the Public Official and Employee Ethics Law may participate in a housing rehabilitation loan program administered by the City of Farrell. Facts: As a Rehabilitation Specialist for the City of Farrell, Pennsylvania, you seek the advice of the State Ethics Commission on behalf of Ms. Margaret DeMasy who is an Earned Income Tax Collector and Assistant City Clerk for the City of Farrell. There is an extensive history set forth not only in your letters of inquiry but in related documents which have been submitted to this Commission by you and by Ms. DeMasy. Your inquiry focuses upon a parcel of real estate located at 739 Wallis Avenue, Farrell, PA which property is on the waiting list for housing rehabilitation from the City of Farrell. There was a U.S. Department of Housing and Urban Development ("HUD") Section 312 rehabilitation loan made for renovations on this property in 1979. At that time, the property was owned by Lucia DeMasy, who is the daughter of Margaret DeMasy. The property was transferred in 1983 to David DeMasy, et ux (Lucia DeMasy's father David DeMasy, Sr., and her mother, Margaret DeMasy) at which time the mortgage lien was assumed. The property was again transferred in 1988 to David DeMasy, the son of Margaret and Ms. Kathy O'Hara October 15, 1991 Page 2 David DeMasy, Sr. and apparently the brother of Lucia DeMasy, and the mortgage was assumed. In searching the title, your office found that the property was transferred without approval from HUD or the National Loan Service Center ( "NLS "). In a letter dated April 8, 1991 to Ms. Anita Grays of NLS, you sought an opinion from NLS. By letter dated April 19, 1991, Ms. Grays responded on behalf of NLS, indicating that the property should be deeded back to the original owner (Lucia DeMasy) to avoid acceleration of the loan. You have submitted copies of both of the above letters to this Commission, which documents are incorporated herein by reference. The above incorporated documents set forth various issues which are worthy of note. One issue, noted above, is whether the real estate could legally be transferred by Lucia DeMasy without the permission of NLS. Another issue pertains to how often an owner may receive a housing rehabilitation loan. Ms. Margaret DeMasy has requested that NLS allow her to assume the title to the property jointly with her son and to assume the mortgage payments. She will then request a rental loan from the City of Farrell in order to have repairs done to the property. Her son will be joint owner and tenant. Ms. DeMasy is concerned that her request to assume ownership and the 312 loan on the property will be denied by the City. At the present time, her son, David DeMasy, as the current owner of the property will not qualify to obtain a loan to rehabilitate the property since he is not employed. You note that NLS will not permit him to assume the 312 loan. Further circumstances are that Lucia DeMasy, now Mrs. August Wittway, purchased a home at 1311 Union Street and applied for housing rehabilitation. At the time of processing, the Wittways were denied rehabilitation work under the ruling that they had not owned the property six months prior to application which you parenthetically note involves a city guideline. There was a hearing and correspondence with DCA on this matter. You have also submitted what appears to be minutes of the City of Farrell "Rehab" Review Committee meeting on June 28, 1989, which four - page document is incorporated herein by reference. With respect to Ms. Margaret DeMasy, Mr. Gordon Smith of the Erie office of DCA suggested that Ms. DeMasy request an opinion from this Commission regarding this case. You note that Ms. Margaret DeMasy is an employee of the City of Farrell. Her husband, Mr. DeMasy, Sr. is presently a City Councilman. Neither Ms. Margaret DeMasy nor Mr. David DeMasy, Sr. is involved in the Ms. Kathy O'Hara October 15, 1991 Page 3 rehabilitation program. The correspondence from Ms. Margaret DeMasy indicates that she is seeking an opinion as to the feasibility of her requesting an assumption of a 312 loan on the property. She notes that this property was "rehabed" under the 312 program twelve years ago. A loan was given and the payments are up to date, with taxes paid currently, according to Ms. DeMasy. Ms. DeMasy notes that her son David now lives in the house and that he applied for "rehab" and met all guidelines except that he does not hold full -time employment because of his health. Ms. DeMasy states that originally the home was left to her husband from his mother and it has been occupied only by family members. Ms. DeMasy states that she is trying to provide a home for her son, and that after he was refused "rehab" because of his employment situation, she asked if the home were to be turned over to her whether she would qualify for "rehab" under the rental section. This is the reason indicated by Ms. DeMasy for contacting this Commission as to the feasibility of her request. She states that her only intention is to provide a home for her son. It is noted that Assistant Counsel for this Commission spoke with you by telephone on October 9, 1991, requesting clarification as to Ms. DeMasy's position with the City of Farrell and various other facts pertaining to this matter. In that conversation, you indicated that although there is state funding for the Housing Rehabilitation Loan Program, it is administered by the City of Farrell. You additionally stated that to the best of your knowledge, David DeMasy, Sr. has no involvement with the real estate at this time. You confirmed that neither Ms. DeMasy nor David DeMasy, Sr. have any involvement whatsoever with the rehabilitation program in their respective capacities as a City employee and a City Councilman. Following the above telephone conversation, you and Ms. DeMasy provided information in a faxed transmission on October 10, 1991, regarding her positions with the City of Farrell as Assistant City Clerk since January, 1966 and as Earned Income Tax Collector since 1988, which information is incorporated herein by reference. Based upon all of the above, an advisory opinion from the State Ethics Commission has been requested. Discussion: As Earned Income Tax Collector for the City of Farrell, Margaret DeMasy is a "public official" as that term is defined in the Ethics Law and hence she is subject to the provisions of that Law. 65 P.S. S402; 51 Pa. Code S1.1. Ms. Kathy O'Hara October 15, 1991 Page 4 Sections 3(a) and 3(f) of the Ethics Law provide: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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. 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 or 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. The following terms are defined in the Ethics Law: Section 2. Definitions. "Conflict or conflict of interest." Use Ms. Kathy O'Hara October 15, 1991 Page 5 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. "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. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. "Immediate family." A parent, spouse, child, brother or sister. 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 City of Farrell is the government body with which Margaret DeMasy is associated, Ms. Kathy O'Hara October 15, 1991 Page 6 Section 3(f) would apply in this case. Assuming that a contract or sub - contract would be made between Margaret DeMasy or her spouse or child, or any business with which she or her spouse or child is associated, and the City of Farrell or any person who has been awarded a contract with the City of Farrell 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. We will now address the propriety of the proposed conduct under Section 3(a) of the Ethics Law. In this review, we note and recognize the concern that arises where a public program, funded with public monies and administered through a public agency, political subdivision, or governmental body is also available to public officials or employees of that agency or governmental body. We recognize the public concern and criticism that may arise if a public official or public employee who serves a governmental body receives benefits under a program of this nature. It is clear that the Ethics Law, and in particular Section 3(a), was primarily designed to restrict the activity of a public official or employee from using the authority of office for private pecuniary benefit. However, we believe that as a general rule the Ethics Law was not enacted nor should it be interpreted to preclude public officials or employees from participating in programs which might otherwise be available to them as citizens. Wolff, Opinion 89 -030; Woodrina, Opinion 90 -001. In order to insure that a public official or employee is not in a conflict when he seeks to participate in a rehabilitation or grant program, he must observe the following: 1. play no role in establishing the criteria under which the program is to operate, particularly with reference to the structure or administration of the program; Ms. Kathy O'Hara October 15, 1991 Page 7 2. play no role in establishing or implementing the criteria by which selections for program participation are to be made; 3. play no role in the process of selecting and reviewing applicants or in awarding grants or funds; 4. use no confidential information acquired during the holding of public office or public employment to apply for or to obtain such funds, grants, etc., and 5. abstain, publicly disclose and file a memorandum with the person responsible for recording the minutes under Section 3(j) of the Ethics Law in cases where the public official/ employee is associated with administering the grant or rehabilitation program not only as to his own application but as to similarly situated individuals with whom the public official /employee might be competing for available funds. In cases where Section 3(f) is applicable, the public official /employee would be prohibited from any supervisory or overall responsibility as to the contract or program. Through application of the above criteria, we seek to eliminate the possibility that a public official /employee who is seeking such funds or seeking to participate in these programs would be in a position to insure that the grant /loan funds or the program benefits would be available for his own benefit. Thus, a public official or public employee in such a situation should refrain from participating in making decisions or recommendations about the program and regarding distribution of the limited funds which might be available as a result of such a program. Expressly conditioned upon the assumption that the conduct of Margaret DeMasy is in conformance with the above criteria, she may apply for and participate in the benefits associated with the Program within the parameters of the Ethics Law. However, 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 Code of Federal Regulations or the respective municipal code. Similarly, questions raised as to the propriety and /or viability of Margaret DeMasy's requesting a housing rehabilitation loan under the terms and conditions which apply to such loans have not been addressed herein. This Commission does not have the statutory authority to offer advisory opinions on such matters which are Ms. Kathy O'Hara October 15, 1991 Page 8 beyond the scope of the Ethics Law. Conclusion: As an Earned Income Tax Collector for the City of Farrell, Pennsylvania, Margaret DeMasy is a public official subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would not preclude Margaret DeMasy from applying for a HUD Section 312 housing rehabilitation loan provided she played no role in establishing the criteria under which the program would operate, played no role in implementing the criteria for selecting applicants, played no role in selecting or reviewing applicants, used no confidential information and finally had no involvement with the administration of the program. The requirements of Section 3(f) of the Ethics Law noted above, to the extent applicable, must be complied with. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Questions raised as to the propriety and /or viability of Margaret DeMasy's requesting a housing rehabilitation loan under the terms and conditions which apply to such loans have not been addressed herein. 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. such. This letter is a public record and will be made available as 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. incerely, Vincent . Dopko Chief Counsel