HomeMy WebLinkAbout95-558 WeitzelJacqueline L. Weitzel
Legal Assistant
Chartiers Valley Industrial &
Commercial Development Authority
1 Glass Street
Carnegie, PA 15106
Dear Ms. Weitzel:
STATE ETHICS COMMISSION
309 FINANCE BUILDING
P.O. BOX 11470
HARRISBURG, PA 1 71 08 -1 470
TELEPHONE (717) 783 -1610
ADVICE OF COUNSEL
May 2, 1995
95 -558
Re: Industrial and Commercial Development Authority; Public
Official; FIS
This responds to your letter of April 4, 1995, in which you
requested advice from the State Ethics Commission.
Issue: Whether members of the Authority are considered "public
officials" as that term is defined in the Public Official and
Employee Ethics Law, and therefore, whether they are required to
file Statements of Financial Interests.
Facts: You question whether the activities and functions of the
Authority members fall within the purview of the definition of
"public official" as that phrase is defined in the State Ethics Law
and the regulations of this Commission. The Authority was
established under the Industrial and Commercial Development
Authority Law, Aug. 23, 1967, P.L. 251, S1 amended Dec. 29, 1971
P.L. 647, No. 171 S1 (codified at 73 P.S. 55371 -386), hereinafter
the "Act," for the purposes as set forth in the findings and
declaration of policy of the Act. Pursuant to the Act, you state
authorities may borrow money but may not pledge the credit or
taxing power of the Commonwealth or any political subdivision. You
further state that board members are appointed by the governmental
body of the municipality that established the authority and board
members receive no compensation for their services. Projects must
be approved by the Authority as well as the Pennsylvania Department
of Commerce through its Revenue Bond and Mortgage Program, which
has strict eligibility guidelines. Upon such approval, the
Authority borrows money from the financing source obtained by the
applicant and, through a financing agreement, makes the money
available to the applicant. A typical project is owned by the
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 2
Authority and leased to the applicant at a rate equivalent to the
debt service on the loan. The Authority collects a nominal
administrative fee from the applicant annually until the loan is
paid. The fee is designed to defer the Authority's administrative
expenses and operating costs and is based on the loan amount. You
believe Authority board members are not required to file Statements
of Financial Interest because they are not elected officials or
public employees; do not receive compensation; are primarily an
advisory board, and are appointed by Carnegie Borough Council. You
request advice from the Commission under the Ethics Law concerning
whether the members of industrial development authorities
established under the Act are required to file Statements of
Financial Interests.
Discussion: The Ethics law provides that -a "public employee or
public official shall file a Statement of Financial Interests with
the governing authority of the political subdivision by which he is
employed or within which he is appointed or elected." 65 P.S.
5404(a). Since you challenge whether members of the Authority are
public officials required to file Statements of Financial Interests
under the Ethics Law, it is necessary to analyze the duties,
functions, and responsibilities of Authority members in order to
determine whether they are covered under the definition of public
official and the Regulations of the Commission. Phillips v. State
Ethics Commission, 79 Pa. Commw. 491, 470 A. 2d 659 (1984).
The powers or duties of industrial development authorities are
set forth in the Industrial and Commercial Development Authority
Law. Section 376 of the Act provides:
(a) Every industrial and commercial development
authority incorporated under this act shall be a public
instrumentality of the Commonwealth and a public body
corporate and politic, and shall be for the purpose of
acquiring, holding, constructing, improving, maintaining,
owning, financing and leasing, either in the capacity of
lessor or lessee, projects. . . .
(b) Every authority is hereby granted, and shall have
and may exercise all powers necessary or convenient for
the carrying out of the aforesaid purposes, including but
without limiting the generality of the foregoing, the
following rights and powers:
(4) To acquire, purchase, own, hold, lease as lessee
and use any franchise, property, real, personal or mixed,
tangible or intangible, or any interest therein necessary
or convenient for carrying out the purposes of the
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 3
authority, and to sell, option, lease as lessor, transfer
and dispose of any property of interest therein at any
time acquired by it.
(5) To acquire by gift, purchase, lease or otherwise,
and to construct, improve, maintain and repair projects.
(7) To appoint officers, agents and employes, to
prescribe their duties and to fix their compensation.
(8) To enter into agreements providing for (i) the
acquisition of projects by either the authority, the
project applicant or the project user; (ii) the financing
of projects where acquisition is by a project applicant
or project user; (iii) the financing of improvements to
existing projects; and (iv) the leasing or sale of
projects to or the loan financing of projects for the
project users or project applicants as provided in this
act.
(9) To enter into agreements of lease, sale or loan
financing with project users or project applicants . . .
(10) To borrow money, make and issue bonds of the
authority, . . .
(11) To make contracts of every name and nature and to
execute all instruments necessary or convenient for the
carrying on of its business.
(12) Without limitation of the foregoing, to borrow
money and accept grants and other funds from and to enter
into contracts, leases or other transaction with any
Federal agency, the Commonwealth of Pennsylvania or its
agencies or instrumentalities, or with any municipality,
school district, bank or other financial institution,
corporation or other authority.
(13) To pledge, mortgage, hypothecate or otherwise
encumber all or any part of the property, real or
personal, including but not limited to the revenues or
receipts of the authority as security for all or any of
the obligations of the authority.
(14) To make loans to project applicants or project
users and to provide or issue alternative types of
financing, including, but not limited to, standby loan
commitments, guarantees, letters of credit and grants.
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 4
73 P.S. §376.
The question to be answered is whether the powers authority
members are encompassed within the term "public official" as
defined in the Ethics Law and Regulations of the Commission.
65 P.S. §402.
Section 2. Definitions
"Public Official." Any person elected by
the public or elected or appointed by a
governmental body, or an appointed official in
the Executive, Legislative or Judicial Branch
of the State or any political subdivision
thereof, provided that it shall not include
members of advisory boards that have no
authority to expend public funds other than
reimbursement for personal expense, or to
otherwise exercise the power of the State or
any political subdivision thereof.
The regulations of the State Ethics Commission similarly
define the term "public official" as above with the additional
following criteria:
(i) The following criteria will be used
to determine if the exception in this
paragraph is applicable:
(A) The body will be deemed to have the
power to expend public funds if the body may
commit funds or may otherwise make payment of
monies, enter into contracts, invest funds
held in reserves, make loans or grants, borrow
money, issue bonds, employ staff, purchase,
lease, acquire or sell real or personal
property without the consent or approval of
the governing body and the effect of the power
to expend public funds has a greater than de
minimis economic impact on the interest of a
person.
(B) The body will be deemed to have the
authority to otherwise exercise the power of
the Commonwealth or a political subdivision if
one of the following exists:
(I) The body makes binding decisions or
orders adjudicating substantive issues which
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 5
are appealable to a body or person other than
the governing authority.
(II) The body exercises a basic power of
government and performs essential governmental
functions.
(III) The governing authority is bound by
statute or ordinance to accept and enforce the
rulings of the body.
(IV) The body may compel the governing
authority to act in accordance with the body's
decisions or restrain the governing authority
from acting contrary to the body's decisions.
(V) The body makes independent decisions
which are effective without approval of the
governing authority.
(VI) The body may adopt, amend and repeal
resolutions, rules, regulations or ordinances.
(VII) The body has the power of eminent
domain or condemnation.
(VIII) The enabling legislation of the
body indicates that the body is established
for exercising public powers of the
Commonwealth or a political subdivision.
(ii) The term does not include judges
and inspectors of elections, notary publics
and political party officers.
(iii) The term generally includes
persons in the following offices:
(A) Incumbents of offices filled by
nomination of the Governor and confirmation of
the Senate.
(B) Heads of executive, legislative and
independent agencies, boards and commissions.
(C) Members of agencies, boards and
commissions appointed by the General Assembly
or its officers.
(D) Persons appointed to positions
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 6
51 Pa. Code §11.1.
designated as officers by the Commonwealth or
its political subdivisions.
(E) Members of municipal, industrial
development, housing, parking and similar
authorities.
(F) Members of zoning hearing boards and
similar quasi- judicial bodies.
(G) Members of the public bodies meeting
the criteria in paragraph (i)(A).
We must review the question you present under these provisions
of the statute and the regulations of the Commission in light of
the Authority's powers as described above. Our inquiry necessarily
focuses on the job itself and not on the individual incumbent in
the position, the variable functions of the position, or the manner
in which a particular individual occupying a position may carry out
those functions. See Phillips v. State Ethics Commission, supra;
Mummau v. Ranck. 531 Fed. Supp. 402 (E.D. Pa. 1982).
Also, in reviewing your question, the Commonwealth Court in
its ruling in Phillips, supra, at page 661, directs us to construe
coverage of the Ethics Act broadly, rather than narrowly, and
conversely, directs that exclusions from the Ethics Act should be
narrowly construed. Based upon this directive and reviewing the
definition of "public official" in the statute and the regulations
and opinions of this Commission, in light of their duties and
responsibilities, we must conclude that members of the Authority
are "public officials" subject to the financial reporting and
disclosure requirements of the State Ethics Act.
In their capacities as members of the Authority, these members
have, among other powers, the power to enter into contracts, employ
staff, and acquire or sell real or personal property without the
consent or approval of the governing body. These activities fall
within the definition of public official as contained in the
regulations of the Commission. 51 Pa. Code 11.1. Further, the
regulations specifically state that "[m]embers of . . . industrial
development . . .authorities" are included in the term "public
official." 51 Pa. Code §11.1(iii)(E). Under these circumstances,
we must conclude that members of the Authority are "public
officials." The fact that the members of the Authority are
appointed rather than elected and they receive no compensation for
their service does not change the analysis. Although you also
state that the Authority is "primarily an advisory board," the
powers of the Authority as defined in the Act when viewed under the
Weitzel, Jacqueline L., 95 -558
May 2, 1995
Page 7
Ethics Law and the regulations of the Commission clearly show that
members of the authority are "public officials."
Conclusion: Members of the Authority are be considered "public
officials." Accordingly, they must file Statements of Financial
Interests for each year in which they hold such positions as
outlined above and for the year following their termination of this
service.
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 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 writing and must be actually
received at the Commission within fifteen (15) days of the date
of this Advice pursuant to 51 Pa. Code 513.2(h). The appeal may
be received at the Commission by hand delivery, United States
mail, delivery service, or by FAS transmission (717- 787 - 0806).
Failure to file such an appeal at the Commission within fifteen
(15) days may result in the dismissal of the appeal.
v'
Vincent ". Dopko
Chief Counsel