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HomeMy WebLinkAbout936 NameyIn Re: Lee Namey STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 Before: k File Docket: 93- 070 -C2 Date Decided: 09/12/94 Date Mailed: 09/14/94 James M. Howley, Chair Daneen E. Reese, Vice Chair Dennis C. Harrington Austin M. Lee Allan M. Kluger The Investigative Division of the State Ethics Commission received a complaint regarding a possible violation of the State Ethics Act, Act 9 of 1989, 65 P.S. §401 et sue. Written notice of the specific allegation(s) was served at the commencement of the investigation. A Findings Report was issued and served, upon completion of the investigation, which constituted the Complaint by the Investigation Division. An Answer was filed and a hearing was waived. A consent agreement was submitted by the parties to the Commission for consideration which was subsequently approved. This adjudication of the Commission is hereby issued which sets forth the individual Allegations, Findings of Fact, Discussion, Conclusions of Law and Order. This adjudication is final and will be made available as a public document fifteen days after issuance. However, reconsideration may be requested which will defer public release of this adjudication pending action on the request by the Commission. A request for reconsideration, however, does not affect the finality of this adjudication. A reconsideration request must be received at this Commission within fifteen days of issuance and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). The files in this case will remain confidential in accordance with Act 9 of 1989, 65 P.S. §408(h) during the fifteen day period and no one unless the right to challenge this Order is waived, may violate confidentiality by releasing, discussing or circulating this Order. However, confidentiality does not preclude discussing this case with an attorney at law. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year, 65 P.S. §409(e). Namev, 93- 070 -C2 Page 2 I. ALLEGATION: That Lee Namey, a public official /public employee, in his position as Mayor of the City of Wilkes - Barre, Luzerne County, violated the following provisions of the State Ethics Act (Act 9 of 1989) when he accepted gifts in the form of free cable service from Service Electric Company and then renegotiated the cable contract with Service Electric Company; and when he failed to report the free cable service on Statements of Financial Interests for the 1989, 1990 and 1991 calendar years. Section 3. Restricted Activities (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 P.S. 5403(a). Section 5. Statement of financial interests (b) The statement shall include the following information for the prior calendar year with regard to the person required to file the statement. (6) The name and address of the source and the amount of any gift or gifts valued in the aggregate of $200 or more and the circumstances of each gift. This paragraph shall not apply to a gift or gifts received from a spouse, parent, parent by marriage, sibling, child, grandchild, other family member or friend when the circumstances make it clear that the motivation for the action was a personal or family relationship. However, for the purposes of this subsection, the term "friend" shall not include ,a registered lobbyist or an employee of a registered lobbyist. This paragraph shall not be applied retroactively. 65 P.S. §405 (b) (6) . Names, 93- 070 -C2 Page 3 II. FINDINGS: 1. Lee A. Namey has served as Mayor of Wilkes - Barre, Luzerne County, from January of 1988 to the present. 2. Namey served as a Wilkes -Barre City Councilman from January, 1976 to December, 1987. 3. In September, 1971, the City of Wilkes -Barre granted an exclusive franchise to Service Electric Cable Company to operate and maintain a community television and pay television system in the City. a. The agreement was enacted by Ordinance No. 17 of 1971 on September 7, 1971 passed by unanimous vote of council. b. Lee Namey was not a member of council when this action occurred. 4. Ordinance No. 17 of 1971 provided as follows: a. Section X of the ordinance called for Service Electric to pay the City of Wilkes -Barre a sum of $12,500 annually for the life of the agreement for the privilege of operating the system. b. Section X of the ordinance also provided that should the government of the United States, or one of its agencies, change the policies from what existed on September 1, 1970 to permit the City of Wilkes -Barre to impose a fee then the amount of money paid the City may be renegotiated or at the end of each eight year period the parties may renegotiate the amount paid to the City. c. Section XII of the Ordinance provided that terms of the contract shall be for thirty years from the date of enactment. 5. On July 14, 1988, Namey notified Service Electric Company by letter that the City was exercising its option to renegotiate the cable contract, specifically the franchise fee. a. Namey's letter specifically referenced the franchise fee pursuant to Section X of Ordinance No. 17. (Refer to Finding 4b). b. The eight -year period to renegotiate provided for in Section X of the Ordinance had expired on September 18, 1987 prior to Namey taking office. 6. The City's negotiations with Service Electric took place ■ Hamm, 93- 070 -C2 Page 4 during the period from July, 7 . The City's negotiating team Finnegan, City Administrator Administrator for Operations Assistant City Administrator 1988 to March, 1989. consisted of Solicitor William Richard Muessig, Assistant City and Personnel Linda Casey, and Marion Freeman. a. This group's duties consisted of reviewing all of the City's contracts to determine which could be renegotiated to the City's benefit to increase benefits. b. The negotiating team was appointed by Mayor Namey. c. The team reported to Namey on the progress of the negotiations. d. Upon the recommendation of the negotiating team, Namey sent the proposed contract to Council for its review and approval. (1) Any changes required Council's approval. 8. Service Electric's negotiating team included the Wilkes -Barre General Manager Edward Ganc and the firm's attorney Martin Cohn. 9 . By memo dated March 13, 1989, Solicitor Finnegan notified Mayor Namey of the terms of the renegotiated contract and informed him that he must submit an ordinance , with the terms of the contract, to City Council for their approval. a. Finnegan explained the new contract called for Service Electric to pay the City 3% of its gross revenues for the next 21 years with an estimated payment totalling $65,000 in 1989. b. This old contract provided for a flat fee of $12,500 per year for the TV franchise. c. This increased the terms of the contract by nine years. d. As cable costs increase, th'e City's revenue would also increase. 10. On March 21, 1989, the issue was discussed by the Wilkes -Barre City Council. a. Council voted to adopt the new ordinance on a first reading after changing the expiration date to read December 31, 2001, from the expiration date of December 31, 2010, which was agreed to during negotiations. Namev, 93- 070 -C2 Page 5 11. During March and April of 1989, members of City Council met with representatives of Service Electric Company to discuss the contract and attempted to renegotiate to reduce the term of the contract by ten years. a. Service Electric refused to negotiate that point. 12. On April 13, 1989, the Ordinance came before City Council for a second reading. a. Council voted to adopt the Ordinance on the second reading after changing the expiration date back to December 31, 2010. b. The motion was approved unanimously. 13. Ordinance No. 12 of 1989 provides in part: a. An ordinance requiring that the providing of cable television service be authorized by franchise; granting a franchise to Service Electric Cable T.V., Inc., a Pennsylvania Corporation, its successors and assigns, to install, operate and maintain a cable television system; prescribing terms and conditions; providing regulations for use of the system; and other legal requirements. b. Section 5 provides that the terms of the contract shall be for a period beginning on its enactment and ending on December 31, 2010. c. Section 13 provides that Service Electric shall pay annually to the City a fee equal to 3% of the gross revenues collected by the company from charges for basic cable television service and optional cable television service. 14. At the time of the enactment of the new Ordinance, the following compensation was paid to various municipalities by cable television companies: Municipality Wilkes -Barre York Scranton Allentown Lancaster Hanover Twp.* Kingston 1986 Estimated Population 48,000 44,430 82,260 104,360 57,200 12,300 15,110 Amount or Percentage of Gross Sales $12,500 (3% upon enactment of the new ordinance) $85,000 (method unknown) $87,000 (method unknown) 3% 3% 3% 3% Namey, 93- 070 -C2 Page 6 Plains 11,210 3% Plymouth 6,950 3% Nanticoke 12,190 5% Pittston 9,240 3% * Area also covered by Service Electric Cable Company 15. During the time of the negotiations with Service Electric Company to renegotiate a cable lease, Mayor Namey was receiving basic cable service at no charge to him or his family. a. No members of Council were receiving this service. 16. Namey started to receive cable television service at his home from Service Electric Company in 1973 or 1974. a. Namey received the basic cable television package with no premium channels. b. The payments for the service were to be handled by Namey's wife, Juanita, who paid the household bills. 17. Sometime subsequent to first receiving the cable coverage, Service Electric Company stopped billing Namey for the service. a. Namey has no independent recollection of when Service Electric stopped billing him for service. 18. It was Service Electric Company's policy to provide free cable service to public officials and certain other customers in order to promote good will and as a means of advertisement. 19. Juanita Namey attempted to ascertain why Service Electric Company discontinued billing her and her husband for the cable service. a. When Juanita Namey was unable to obtain an explanation she stopped trying and accepted the lack of billing. 20. Namey was aware that Service Electric Company-did not bill his residence for the service back when it occurred. a. Namey did not focus on the cable bill as it was practice for his wife to pay all household bills. 21. In 1991 the matter of free cable television coverage being provided to public officials became an issue in the May primary political campaign in the Borough of Ashley. Mangy, 93- 070 -C2 Page 7 a. Ashley is located near Wilkes- Barre. 22. Namey was running for re- election as Mayor of Wilkes -Barre in 1991 and decided to pay for all back cable service he received at no charge from Service Electric. a. Namey had wanted to avoid making this a campaign issue. b. Namey decided that he did not want to get free cable given his position as Mayor of Wilkes - Barre. 23. Juanita Namey contacted Service Electric and requested the total amount of the bills that were not paid. 24. Service Electric's Wilkes -Barre General Manager Edward Ganc informed Juanita Namey that $1284.48 was the amount owed. 25. On May 14, 1991, Namey wrote a personal check to Service Electric Company in the amount of $1284.48 as compensation for past cable television service. 26. Service Electric Company's Work Order #78537 dated June 14, 1991 and June 17, 1991 shows that one line of basic cable television coverage was reconnected at Namey's residence, 45 Plymouth Avenue, Wilkes- Barre, Pennsylvania, under customer number 102- 058629 -7. 27. The following is a list of the monthly and annual cost of Service Electric Company's basic coverage for the years 1976 to 1991: Year Monthly Cost Annual Cost 1976 $ 6.15 $ 73.80 1977 $ 6.15 $ 73.80 1978 $ 6.15 $ 73.80 1979 $ 6.15 $ 73.80 1980 $ 7.15 $ 85.80 1981 $ 7.15 $ 85.80 1982 $ 7.15 $ 85.80 1983 $ 8.00 $ 96.00 1984 $ 8.00 $ 96.00 1985 $ 8.65 $ 103.80 1986 $ 9.05 $ 108.60 1987 $10.25 $ 123.00 1988 $11.50 $ 138.00 1989 $12.95 $ 155.40 1990 $14.99 $ 179.88 1991 $16.50 $ 82.50 (Jan. to May) TOTAL $1635.38 Names, 93- 070 -C2 Page 8 28. 30. Namey received free cable coverage from approximately 1976 to May, 1991. 29 . The $1284.48 paid by Namey Company for monthly payments including September, 1980. a. Namey paid the amount stated to be Service Electric. compensated Service Electric from May, 1991 back to and due and owing by Namey paid Service Electric Company an additional $350.90 for cable service on July 21, 1994. a. This was done to be certain that all cable charges were paid. 31. Statements of Financial Interests filed by Lee A. Namey for the years 1988, 1989, 1990 and 1991 do not reflect any gifts being received. a. The Statements of Financial Interests do not disclose the free cable service received from Service Electric Company. b. The value of the service was less than $200.00 per year. III. DISCDrSSION: As Mayor of the City of Wilkes- Barre, Luzerne County, Pennsylvania, Lee Namey, hereinafter Namey, is a public official as that term is defined under Act 9 of 1989. 65 P.S. §402. As such, his conduct is subject to the provisions of the Ethics Law and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of 1989 provides, in part, as follows: This amendatory act shall not apply to violations committed prior to the effective date of this act, and causes of action initiated for such violations shall be governed by the prior law, which is continued in effect for that purpose as if this act were not in force. For the purposes of this section, a violation was committed prior to the effective date of this act if any elements of the violation occurred prior thereto. Since the occurrences in this case transpired after effective date of Act 9 (June 26, 1989), we must apply provisions of Act 9 to determine whether the Ethics Act June 26, • the the was Name , 93- 070 -C2 Page 9 violated. Under Section 3(a) of Act 9 of 1989 quoted above, a public official /employee shall not engage in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined under Act 9 of 1989 as follows: 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 or his immediate family or a business with which he or a member of his immediate family is associated. 65 P.S. §402. Section 5(b)(6) of Act 9 of 1989 quoted in the allegation requires that every public official /employee and candidate list the name and address of the source and amount of any gift valued in the aggregate of $200 or more and the circumstances of each gift. The question before us is whether Namey as Mayor of the City of Wilkes - Barre, Luzerne County, Pennsylvania violated Section 3(a) and Section 5(b) (6) of Act 9 of 1989 when he accepted gifts of free cable service from Service Electric Company and then renegotiated the cable contract with Service Electric Company, and when he did not report the free cable service on Statements of Financial Interests for the 1989, 1990 and 1991 calendar years. Factually, Namey has served as Mayor of the City of Wilkes - Barre from January of 1988 to the present time. Prior to serving as Mayor, Namey served as a Wilkes -Barre City Councilman from January, 1976 to December, 1987. Service Electric Cable Company ( "Service Electric ") was granted an exclusive franchise by the City of Wilkes -Barre in September, 1971 -- before Namey served as Councilman or Mayor. Names, 93- 070 -C2 Page 10 Pursuant to the cable contract, Service Electric paid an annual franchise fee to the City of Wilkes -Barre in the amount of $12,500.00. The term of the contract was thirty years, but the contract provided the opportunity for renegotiation of the franchise fee every eight years and under certain other specified circumstances. On July 14, 1988, during his first year of service as Mayor, Namey notified Service Electric that the City was exercising its option to renegotiate the cable contract and specifically the franchise fee. From July, 1988 to March, 1989, the City negotiated with Service Electric. The negotiating team for the City was appointed by Namey and reported to Namey. Upon the recommendation of the negotiating team, Namey sent a proposed contract to City Council for its review and approval. It is noted that any changes required Council's approval. The new contract called for Service Electric to pay the City an annual franchise fee calculated at three per cent of its gross revenues. For 1989, the estimated franchise fee was $65,000.00 in contrast to the former $12,500.00 flat franchise fee. This new franchise fee arrangement was comparable to those in various other municipalities. During the negotiations with Service Electric to renegotiate the franchise fee, Namey was receiving basic cable service free of charge. Namey first received cable television service from Service Electric in 1973 or 1974. Namey received the basic cable television package with no premium channels. Namey's wife, Juanita, paid the household bills and initially paid for the basic cable television package. At some point in approximately 1976, Service Electric stopped billing Namey for the service. Service Electric had a policy of providing free cable service to public officials and certain other customers in order to promote goodwill and as a means of advertisement. Juanita Namey attempted but was unable to obtain an explanation of why Service Electric had stopped billing the Namey household. Juanita Namey accepted the lack of billing, and Namey did not focus on the situation because it was the practice for his wife to pay all household bills. In 1991, the matter of free cable television coverage to public bfficials became an issue in the May primary political campaign of a neighboring borough. Namey was running for re- election as Mayor and decided to pay for all back cable service. The free cable coverage had been received by Namey from approximately 1976 to May 1991. The Statements of Financial Interest filed by Namey for the years 1988, 1989, 1990 and 1991 did not reflect any gifts being received, but the value of the free cable service was less than Namey, 93- 070 -C2 Page 11 $200.00 per year. In applying the Ethics Law to the above facts, we note that a violation of Section 3(a) of Act 9 of 1989 requires evidence of the use of authority of public office /public employment or confidential information received by being in such a position for the private pecuniary benefit of the public official /public employee himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated. In this case, there is insufficient evidence to establish a violation of Section 3(a) of the Ethics Law. Namey was receiving free cable service from Service Electric since approximately 1976 when he sat as a City Councilman. This was approximately twelve years before he became Mayor and it was approximately five years after the initial ordinance was passed by the City of Wilkes -Barre granting the exclusive cable franchise to Service Electric. When Namey became Mayor in 1988, Namey notified Service Electric that the City would be exercising its option to renegotiate the franchise fee. The franchise fee was renegotiated to a significantly higher figure, and one which was comparable to franchise fees in various other municipalities. Obviously, this higher franchise fee was to the advantage of the City of Wilkes -Barre and to the disadvantage of Service Electric -- the source of Namey's free cable service. Based upon all of the above, we find that Namey did not violate Section 3(a) of the Ethics Law based upon an insufficiency of evidence to establish a use of authority of office for a private pecuniary benefit. With regard to the Statements of Financial Interests for calendar years 1989, 1990, and 1991, the cable service received by Namey was valued at less than $200.00 per year. It was therefore below the threshold for the required disclosure of gifts set forth in Section 5(b) (6) of the Ethics Law, 65 P.S. §405 (b) (6) . Accordingly, we find that there was no violation of Section 5(b) (6) of Act 9 of 1989 in this case. V. CONCLUSIONS OF LAW: 1. Lee Namey as Mayor of the City of Wilkes -Barre in Luzerne County, Pennsylvania is a public official subject to the provisions of Act 9 of 1989. 2. Namey did not violate Section 3(a) of Act 9 of 1989 regarding the receipt of free cable television service from Service Electric Cable Company based upon an insufficiency of evidence. 3. Namey did not violate Section 5(b)(6) of Act 9 of 1989 regarding non - disclosure of the free cable television service valued at less than $200.00 per year from Service Electric Cable Company on Statements of Financial Interests for Namev, 93- 070 -C2 Page 12 calendar years 1989, 1990 and 1991 in that the value of the free cable service was below the threshold for required reporting of gifts. In Re: Lee Namey File Docket: 93- 070 -C2 Date Decided: 09/12/94 Date Mailed: 09/14/94 ORDER NO. 936 1. Lee Namey as Mayor of the City of Wilkes -Barre in Luzerne County, Pennsylvania did not violate Section 3(a) of Act 9 of 1989 regarding the receipt of free cable television service from Service Electric Cable Company based upon an insufficiency of evidence. 2. Namey did not violate Section 5(b)(6) of Act 9 of 1989 regarding non - disclosure of the free cable television service valued at less than $200.00 per year from Service Electric Cable Company on Statements of Financial Interests for calendar years 1989, 1990 and 1991 in that the value of the free cable service was below the threshold for required reporting of gifts. BY THE COMMISSION, JAMES M. HOWL=IR Allan M. Eluger abstained as to the decision in this matter.