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HomeMy WebLinkAbout99-606 DeetzRichard E. Deetz Attorney -At -Law 1222 North Fifth Street Stroudsburg, PA 18360 STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL September 22, 1999 FAX: (717) 787 -0806 • Web Site: www.ethics.state.pa.us • e -mail: ethics @state.pa.us 99 -606 Re: Conflict; Public Official /Employee; Member; Monroe County Housing Authority. Dear Mr. Deetz: This responds to your letter of August 18, 1999 by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 g g., presents any prohibition or restrictions upon a member of a housing authority as to entering into a contract with the authority for the sale of real estate owned by that member and his immediate family. Facts: As solicitor to the members of the Housing Authority of Monroe County ( "Authority "), a public authority formed under the Housing Authorities Law, 35 P.S. §1541 el sea., you request an advisory on behalf of William A. Rake, Jr. ( "Rake "), the Vice Chairman of the Authority. The Authority consists of five members, each of whom are appointed to five year terms on a staggered basis by the Monroe County Commissioners. The Authority is in the process of searching for and acquiring a parcel of land on which to construct a low- income family housing project containing approximately forty dwelling units. The search for a suitable site has been on -going for over three years and the Authority has reviewed more than ten sites. To date, the Authority has been unsuccessful in acquiring any land for its purposes. Rake has proposed to offer certain property to the Authority consisting of approximately ten acres of land located adjacent to Route 209 in Middle Smithfield Township, Monroe County, Pennsylvania, for $300,000. The real estate is owned by Rake and his spouse, Sonya Rake, and is subject to a partnership agreement among members of the Rake family. The Agreement provides that Rake and his spouse each own a one -third partnership share and their sons own the remaining one -third share. While no agreement of any kind has been reached to date, you and the other Authority members are concerned that there is a conflict of interest in the purchase of land by the Authority from a member. The Authority members desire to further investigate the suitability of acquiring the Rake lands. The members are considering isolating Rake from any deliberations and actions of the Authority Board with respect Deetz, 99 -606 September 22, 1999 Page 2 to the acquisition of the Rake lands, or having Rake resign from the Board to allow it to deal with him as a third party. You request an opinion with regard to the suitability of either of the above courses of action. Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§1107(10), (11), advisories are issued to the requestor based upon the facts which the requestor has submitted. In issuing the advisory based upon the facts which the requestor has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts which have not been submitted. It is the burden of the requestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. §§1107(10), (11). An advisory affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As a member of the Monroe County Housing Authority, Rake is a public official as that term is defined in the Ethics Act, and hence Rake is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: Section 1103. Restricted activities. (a) Conflict of interest - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §1103(a). The following terms are defined in the Ethics Act as follows: Section 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. Deetz, 99 -606 September 22, 1999 Page 3 "Immediate family." A parent, spouse, child, brother or sister. "Business." Any 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. "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. 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. In addition, Sections 1103(b) and 1103(c) of the Ethics Act 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 anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 1103(f) of the Ethics Act provides as follows: Section 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 Deetz, 99 -606 September 22, 1999 Page 4 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). Section 1 103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public off icial /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 public process" be observed as to the contract with the governmental body. Pursuant to Section 1 103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 1103(j) of the Ethics Act provides as follows: Section 1103. Restricted activities. (j) 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 Deetz, 99 -606 September 22, 1999 Page 5 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. 65 Pa.C.S. §1103(j). In each instance of a conflict, Section 1103(j) requires the public official /employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, 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. Based on the facts which you have submitted, Rake's spouse and children are members of his "immediate family" as that term is defined in the Ethics Act. As owners of the land in question, Rake, his spouse and children would receive a financial benefit through the sale of their land to the Authority. Thus, Rake as an Authority Member would have a conflict of interest in that matter and would have to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. The requirements of Section 1103(f) of the Ethics Act noted above must be satisfied. As to your question as to the propriety of Rake resigning from the Authority Board to allow the Authority to deal with him as a third party, be advised that it is not the function of the Ethics Commission to recommend or direct such a course of action. Should Rake resign, he would become a "former public official" subject to Section 1103(g) of the Ethics Act. Section 1 103(g) restricts a former public official /public employee with regard to "representing" a "person" before "the governmental body with which he has been associated ": Section 1103. Restricted activities. (g) Former official or employee. - -No former public official or public employee shall represent a person, with promised or actual compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 Pa.C.S. §1103(g) (Emphasis added). Deetg, 99 -606 September 22, 1999 Page 6 The terms "represent," "person," and "governmental body with which a public official or public employee is or has been associated" are specifically defined in the Ethics Act as follows: Section 1102. Definitions. "Represent." To act on behalf of any other person in any activity which includes, but is not limited to, the following: personal appearances, negotiations, lobbying and submitting bid or contract proposals which are signed by or contain the name of a former public official or public employee. "Person." A business, governmental body., individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "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. 65 Pa.C.S. §1102. The term "Person" is very broadly defined. It includes, inter alia, corporations and other businesses. It also includes the former public employee himself, Confidential Opinion 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007. The term "representation" is also broadly defined to prohibit acting on behalf of any person in any activity. Examples of prohibited representation include: (1) personal appearances before the former governmental body or bodies; (2) attempts to influence; (3) submission of bid or contract proposals which are signed by or contain the name of the former public official /employee; (4) participating in any matters before the former governmental body as to acting on behalf of a person; and (5) lobbying. Popovich, Opinion 89 -005. Listing one's name as the person who will provide technical assistance on a proposal, document, or bid, if submitted to or reviewed by the former governmental body, constitutes an attempt to influence the former governmental body. Section 1103(g) also generally prohibits the inclusion of the name of a former public official /public employee on invoices submitted by his new employer to the former governmental body, even though the invoices pertain to a contract that existed prior to termination of public service, Shay, Opinion 91 -012. However, if such a pre- existing contract does not involve the unit where the former public employee worked, the name of the former public employee may appear on routine invoices if required by the regulations of the agency to which the billing is being submitted. Abrams/Webster, Opinion 95 -01 1. A former public official /public employee may assist in the preparation of any documents presented to his former governmental body. However, the public official /public employee may not be identified on documents submitted to the former governmental body. The public official /public employee may also counsel any person Deetz, 99 -606 September 22, 1999 Page 7 regarding that person's appearance before his former governmental body. Once again, however, the activity in this respect should not be revealed to the former governmental body. The Ethics Act would not prohibit or preclude making general informational inquiries to the former governmental body to secure information which is available to the general public, but this must not be done in an effort to indirectly influence the former governmental body or to otherwise make known to that body the representation of, or work for the new employer. Section 1103(g) only restricts the former public official /public employee with regard to representation before his former governmental body. The former public official /public employee is not restricted as to representation before other agencies or entities. However, the "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See, Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R. The governmental body with which Rake would be associated upon termination of public service is the Monroe County Housing Authority in its entirety. Therefore, for the first year after termination of Rake's service with the Monroe County Housing Authority, Section 1103(g) of the Ethics Act would apply and restrict "representation" of "persons" before that body. This prohibition would include Rake representing himself and his immediate family before the Authority as to the sale or offer to sell the above ten acres of land. Finally, as for Section 1103(f), the requirements imposed by that Section as to contract(s) /subcontract(s) involving the Authority and Rake and his immediate family must be observed. Those requirements as to an open and public process and Rake's inability to have any supervisory or overall responsibility for the implementation or administration of such contract(s) are set forth above. 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 the applicability of The Housing Authority Law and Section 1548 of same which involves, inter alia, interested members or employes of an Authority owning or controlling a direct or indirect interest in any property included or planned to be included in any housing project of the Authority. Conclusion: As a member of Monroe County Housing Authority, Rake is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 gt fig. Under Section 1 103(a) of the Ethics Act, Rake would have a conflict and could not participate in matters before the Authority concerning the sale of land owned by him and his immediate family to the Authority. The requirements of 1 103(f) and (j) must be satisfied. Should Rake resign from the Authority, he would become a "former pubic official" subject to Section 1103(g) of the Ethics Act. The former governmental body would be the Monroe County Housing Authority in its entirety. The restrictions as to representation outlined above must be followed. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), 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 requestor has disclosed Deetz, 99 -606 September 22, 1999 Page 8 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 writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code §13.2(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 file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Vincent J. Dopko Chief Counsel