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HomeMy WebLinkAbout00-551 HeeterTerry R. Heeter, Esquire The Kooman Law Firm Marianne Professional Center P.O. Box 700 Clarion, PA 16214 Re: STATE ETHICS COMMISSION 309 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 (717) 783 -1610 1- 800 - 932 -0936 ADVICE OF COUNSEL March 24, 2000 00-551 Conflict; Public Official /Employee; Member; School Board; Intermediate Unit; Immediate Family Member; Wife; Children; Business With Which Associated. Dear Mr. Heeter: This responds to your letter of February 21, 2000 by which you requested advice from the State Ethics Commission. IS ue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. §1101 et seq., presents any prohibition or restrictions upon a school board member as to participating in the development, sale or lease of property owned by his wife where: (1) the wife will sell or lease the property to the intermediate unit which includes the school board member's school district; or (2) the wife will transfer the property to a partnership held by their children who will then sell or lease the property to said intermediate unit. Fact: You are counsel for a local school board member ( "School Board 1 e ") who derives a portion of his livelihood from being a real estate developer. The School Board Member was a real estate developer long before he was elected to the School Board. The School Board Member's wife presently owns a parcel of land in an area that is under development. The local Intermediate Unit ( "IU ") is currently seeking to develop property to house IU employees in the future. The School Board Member is also on the Board of Directors in a School District that is part of the IU. The IU has been in contact with the School Board Member concerning development of his wife's property. The School Board Member's wife is considering transferring her property to a partnership owned by her and her husband's children ( Partnership"). The Partnership has a management agreement ("Management Agreement ") with the School Board Board Member is responsible pursuant to which hich the School onsible for developing, P aefee and services arendered Partnership's the Partnership e un y der the School gement Agreemen paid Before the School Board Member enters into any negotiations with the IU for the development of his wife's property, you request an advisory as to each of the following questions. interest if his Whether the retain the property, develop itaand of FAX: (717) 787 -0806 • Web Site: www.ethics.state.pa.us • e- mail: ethics @state.pa.us Heeter, 00 -551 March 24, 2000 Page 2 lease or sell it to the-IU, and the School Board Member would be involved in the property development and in the negotiations for the sale or lease of the property to the IU; 2. If the situation described in question #1 would create a conflict for the School Board Member, whether he would be required to take any action to resolve the conflict such as resigning or disclosing the nature of his conflict to the School Board and abstaining from voting on the matter; 3. If the situation described in question #1 would create a conflict for the School Board Member, whether he must resign before the negotiations begin or before any contract with the IU is executed. You state that there is no guarantee that the IU will execute a contract for the wife's property. You opine that it would be unfortunate if the School Board Member he negotiations for the wife's property commences and the R.1 determines that the property is not feasible; 4. Whether the School Board Member would have a conflict of interest if his wife would transfer the property to the Partnership, develop it and subsequently lease or sell it to the IU, and the School Board Member would be involved in the property development and in the negotiations for the sale or lease of the property to the IU; 5. If the situation described in question #4 would create a conflict for the School Board Member, whether he would be required to take any action to resolve the conflict such as resigning or disclosing the nature of his conflict to the School Board and abstaining from voting on the matter; and 6. If the situation described in question #4 would create a conflict for the School Board Member, whether he must resign before the negotiations begin or before any contract with the IU is executed. You state that there is no guarantee that the IU will execute a contract for the wife's property. p ig ion• It is initially noted that pursuant to Sections 1107(10) and 110 (1 1) 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 only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. As i School c and hence Member, s your to the public that that term is defined in the Ethics 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. Heeter, 00 -551 March 24, 2000 Page 3 "Conflict" or "conflict of interest." Use by a jaublic 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 a office o pos and of public employ to employment. "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 th e assets of the interest in indebtedness. more 5% of "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 Comm consideration or his political subdivl.yment with the subdivision. 65 Pa.C.S. §1102. In addition, Sections 1 103(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, o r is judg t the of the p ublic official /employee would be influenced thereby. prsions merely law t provide a complete response been the quest on presented ression thereof but Section 1103(f) of the Ethics Act provides as follows: Heeter, 00 -551 March 24, 2000 Page 4 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 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 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official/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 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient preps a for nd present a an application prudent proposal; to be salQ (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1 103(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 1 103(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 Hee er, 00 -551 March 24, 2000 Page 5 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 break member the V tie o vote of disclosure is 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 1 103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public bllic off i fe/ the lo per or den i l informa received by holding such a public position a nessl'wi official/public or a of hisam family immediate aed ily' or family, Since the term "immediate family" is defined to include a parent, spouse, child, brother or sister, the School Board Member's wife and children are members of his immediate family. Furthermore, the Partnership which is owned by the School Board Member's children is a business with which the children are associated. Therefore, Section 1103(a) of the Ethics Act would prohibit the School Board Member from participating in actions of the School Board that would result in a financial benefit to himself, his wife, his children or the Partnership. To the extent the School Board Member would, in his public capacity, participate in such School Board actions, he would disclosure requiirements of Section and would the Ethics to Ac s abstain set forth above. the Having established the above principles, your inquiries shall now be addressed. As for your first question the School Board Member generally would not have a conflict as to participating in the negotiations for the sale or lease of the property to the IU since the IU is a separate governmental body. However, there could be certain situations wherein a conflict of interest would arise. For example, if a matter would e come before the School Board involving an appropriation School th e IU Memo r ice t property owned by the School Board Member's wife, the have a conflict and would be required to abstain and observe the disclosure requirements of Section 1103(j). In addition, a conflict could arise in a situation if the School Board Member would have the power to exercise authority over the ID employees involved in the negotiation process, as for example, with regard to their employment, and the IU employees in turn, would have the power to exercise authority over the negotiation process. In such a scenario, the School Board Member would have a conflict in matters before the School Board that could financially affect the IU employees, such as matters involving funding for raises, decreasing. funding which would result in furloughs, etc. This conclusion is consistent with prior Commission decisions. See, Bassi, Opinion 86 -007 -R and Woodrinq, Opinion 90 -001. In such instance ova Heeter, 00 -551 March 24, 2000 Page 6 conflict, the School disclosure requirements of Secti 1 required 3(j) abstain Ethics participation and Your second question has been addressed above. However, since you make inquiry about the possibility of resignation, be advised that the Ethics Act has no provision requiring resignation under the factual circumstances presented. As for your third question, as noted above, the School Board Member would not have to resign before negotiations would begin or before any contract with the IU would be executed. However, as stated above, in any instance of a conflict, the School Board Member would have to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. As for questions four through six, you are advised that the conclusions reached in questions one throu ,9h three would remain the same regardless of the fact that the School Board Member s wife would transfer the property to her children's Partnership. 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 respective municipal code. Conclusion: As a School Board Member, your client is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act ") 65 Pa.C.S. §1101 t seq. The School Board Member's wife and children are members of his immediate family. Furthermore, the Partnership which is owned by the School Board Member's children is a business with which the children are associated. Section 1 103(a) of the Ethics Act would prohibit the School Board Member from participating in actions of the School Board that would result in a financial benefit to himself, his wife, his children or the Partnership. To the extent the School Board Member would, in his public capacity, participate in such School Board actions, he would have a conflict of interest, and would be required to abstain and to satisfy the disclosure requirements of Section 1 103(j) of the Ethics Act set forth above. The School Board Member generally would not have a conflict as to participating in the negotiations for the sale or lease of the property to the IU since the IU is a separate overnmental body. However, there could be certain situations wherein a conflict of interest would arise. For example, if a matter would come before the School Board involving an appropriation to the IU to acquire the property owned by the School Board Member's wife, the School Board Member would have a conflict and would be required to abstain and observe the disclosure requirements of Section 1103(j). The Ethics Act has no provision requiring resignation under the factual circumstances presented. The above conclusions would remain the same regardless of the fact that the School Board Member's spouse would transfer the property to her children's Partnership. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(1 1), 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 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. Heeter, 00 -551 March 24, 2000 Page 7 Any such appeal must be in writing and must be actually received y g as of the date of this Advice pursuant to 51 Pa. Code §13.2(h). at the Commission within thirty (3 T days a ea/ may be received at the , United States appeal delivery service, or by Commission by hand delivery, 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. cerely, Vincent J''Dopko Chief Counsel