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HomeMy WebLinkAbout91-604 HotchkissSTATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL December 17, 1991 Mr. David L. Hotchkiss, Esquire Culbertson, Weiss, Schetroma and Schug 91 -604 911 Diamond Park Meadville, PA 16335 -2693 Re: Conflict Purchase Option ion Program, Participation by Public Authority, Board Member, Sales by Members to Authority. Official/Employee, Economic and Industrial Development Dear Attorney Hotchkiss: This responds to your letters of October 8, 1991 and October 22, 1991, in which you requested advice from the State Ethics Commission. Issue: Whether a Member of the Board of the Conneaut Valley Economic and Industrial Development Authority under the Public Official and Employee Ethics Law may participate in a purchase option program administered by the said Authority. Facts: As Solicitor for the Conneaut Valley Economic and Industrial Development Authority ( "Authority"), which was formed under the Industrial and Commercial Development Authority Law, 73 P.S. §371, you seek the advice of the State Ethics Commission on behalf of Mr. Ross Graham, who is a Board Member of the Authority. The Authority intends to acquire purchase options for nominal consideration, as to real estate suitable for industrial or .commercial development. The Authority intends to create a register of such properties and to attempt to promote the sale and development of these properties. You have submitted a copy of the Real Estate Purchase Option Contract, a five -page form contract, which is incorporated herein by reference. The Authority's activities would primarily be in the nature of the general promotion of the Conneaut Valley area, rather than working for the sale of a particular piece of land. If a developer should commit to purchase one of these properties, the Authority will assign the purchase option for nominal consideration to the developer, in consideration for the 1 David L. Hotchkiss December 17, 1991 Page 2 developer's commitment to purchase from the owner at the option price. In all cases, the sale price would exceed $500.00. At this time, the Authority is interested in optioning land owned by Mr. Ross Graham for commercial and /or industrial development. You specifically pose the following question: "Is a member of the Authority Board barred from granting a purchase option to the Authority, pursuant to this program, by reason that this could be a contract having a value in excess of $500.00, as prohibited by 65 P.S. Section 403 ?" Discussion: As a Board Member for the Authority, Mr. Ross Graham is a "public official" as that term is defined in the Ethics Law and hence he is subject to the provisions of that Law. 65 P.S. 5402; 51 Pa. Code §1.1. Sections 3(a), 3(f) and 3(j) 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 David L. Hotchkiss December 17, 1991 Page 3 commenced within 90 days of the making of the contract or subcontract. (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 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. 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. David L. Hotchkiss December 17, 1991 Page 4 The following terms are defined in the Ethics Law: 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 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 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. 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 Authority is the government body with which Mr. Graham is associated, Section 3(f) would apply in this case. However, contrary to the implication of the question which you have posed, Secton 3(f) does not act as an absolute bar to contracting with one's governmental body where the value of the contract exceeds $500.00. David L. Hotchkiss December 17, 1991 Page 5 Rather, assuming that a contract or sub - contract would be made between Mr. Graham and the Authority pursuant to the provisions of this purchase option 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; Woodrinq, 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 program such as the purchase option program under consideration, 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; David L. Hotchkiss December 17, 1991 Page 6 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 real estate purchase option contract(s); 4. use no confidential information acquired during the holding of public office or public employment to apply for or to , obtain such real estate purchase option contract(s), and 5. abstain and publicly disclose the abstention and the reasons for same, both orally and by filing a written memorandum with the person responsible for recording the minutes, pursuant to Section 3(j) of the Ethics Law, with the abstention and disclosure requirements applying not only to the application of the public official /employee himself, but also 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 program 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. It is clear that in order for Mr. Graham to be able to participate in the Authority's purchase option program, he could not have played any role in structuring the program or any request for proposals. It is equally clear that Mr. Graham could in no way use the authority of his office or confidential information received by holding his office to effectuate the exercise of any purchase option related to his real estate. Expressly conditioned upon the assumption that Mr. Graham's conduct would be in conformance with all of the above criteria, Mr. Graham may apply for and participate in the benefits associated with the real estate purchase option program. David L. Hotchkiss December 17, 1991 Page 7 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. However, a serious concern is noted as to whether Mr. Graham's proposed conduct in participating in the Authority's purchase option program would transgress the Municipality Authorities Act, 53 P.S. $301, et sea., and specifically the ,following provision of that Act: S 312. Competition in award of contracts D. No member of the Authority or officer or employe thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the Authority for any matter, cause.or thing whatsoever by reason whereof any lability or indebtedness shall in any way be created against such Authority. If any, contract or agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such Authority. 53 P.S. §312(D). It is recommended that Mr. Graham seek the advice of legal counsel as to his responsibilities in complying with the Municipality Authorities Act. Conclusion: As a Board Member for the Conneaut Valley Economic and Industrial Development Authority ( "Authority "), Mr. Ross Graham is a public official subject to the provisions of the Ethics Law. Section 3(a) of the Ethics Law would not preclude Mr. Graham from granting a real estate purchase option to the Authority pursuant to its purchase option program provided Mr. Graham played no role in establishing the criteria under which the program would operate, played no role in implementing the criteria for selecting applicants, did not in any way structure the program or any request for proposals, played no role in selecting or reviewing applicants, used no confidential information and finally had no involvement with the administration of the program. Mr. Graham would be required to abstain from any matters before the Board pertaining to the program, and the disclosure requirements of Section 3(j) noted above must be observed. Mr. Graham could not use the authority of his office or confidential information received by holding office to effectuate the exercise of any option to purchase his David L. Hotchkiss December 17, 1991 Page 8 real estate. The requirements of Section 3(f) of the Ethics Law noted above, to the extent applicable, must be observed. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. A serious concern has been noted as to whether Mr. Graham's proposed granting of real estate purchase option(s) to the Authority would transgress the Municipality Authorities Act. 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. ncerely, Vincent J. Dopko Chief Counsel