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HomeMy WebLinkAbout871 PickIn re: Kenneth Pick STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 File Docket: 88 -117 -C : Date Decided: December 10, 1992 Date Mailed: December 15, 1992 Before: James M. Howley, Chair Daneen E. Reese, Vice Chair Roy W. Wilt Austin M. Lee Allan M. Kluger The State Ethics Commission received a complaint regarding a possible violation of the State Ethics Act, No. 170 of 1978, P.L. 883. 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 Order 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 §2.38. The files in this case will remain confidential in accordance with Section 8(a) of Act 170 of 1978 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). Pick, 88 -117 -C Page 2 I. ALLEGATION: That you, Executive Director of the Sunbury Redevelopment Authority (SRA) and Coordinator for the Community Development Program (CDP), violated the following provisions of the State Ethics Act (Act 170 of 1978), when you used your position to participate and award engineering contracts to John Bakowicz with whom you have a private business relationship, and you used confidential information from your position to assist Bakowicz in the purchase of SRA owned property without an open and public process in return for the award of a private :contract from Bakowicz: Section 3. Restricted Activities. (a) No public official or public employee shall use his public office or any confidential information received through his holding public office to obtain financial gain other than compensation provided by law for himself, a member of his immediate family, or a business with which he is associated. 65 P.S. §403(a). Section 3(b) of the Ethics Act provides: (b) No person shall offer or give to a public official or public employee or candidate for public office or a member of his immediate family or a business with which he is associated, and no public official or public employee or candidate for public office shall solicit or accept, anything of value, including a gift, loan, political contribution, reward, or promise of future employment based on any understanding that the vote, official action, or judgment of the public official or public employee or candidate for public office would be influenced thereby. 65 P.S. §403(b). II. FINDINGS: 1. Mr. Kenneth Pick has served as Executive Director of the Redevelopment Authority and as Coordinator of the Community Development Program in the City of Sunbury, Pennsylvania from March 1982 to February, 1990. Pick, 88 -117 -c Page 3 2. A position description of Mr. Pick's duties and responsibilities with the Redevelopment Authority reflects that he performs as follows: a. Chief Administrative Officer of the Authority directly responsible for the proper execution of board policy as it relates to renewal activities in the city. b. Coordinates all activities of the Federal, State and Local agencies as they relate to renewal activities generally and as required specifically. Responsible for delineation of appropriate information to these bodies. c. Provides technical assistance and directs the department staff. Organizes the training of the staff; attends all board meetings; reviews and comments upon all third party contracts and, together with the chairman, signs these when authorized by resolution of the board; recommends personnel adjustments, changes, etc.; provides guidance, direction and interpretation where required of the personnel and administrative policies of the authority. d. Signs letters and performs similar tasks for the authority within the limitations established by the board of resolution and by standard practice; aids in planning of urban renewal projects and the elements thereof. 3. In addition to serving with the Sunbury Redevelopment Authority and the City of Sunbury, Kenneth Pick also provided consulting services to private clients. a. Such services generally related to the field of Community and Economic Development and included the preparation of income surveys, applications for state and federal funding. b. One of the clients to whom Mr. Pick provided such service was John Bakowicz. 4. John Bakowicz served as City Engineer for Sunbury, Northumberland County, Pennsylvania from 1976 until August 14, 1989. a. He provided engineering services to the Sunbury Redevelopment Authority from 1979 to 1989. b. He provided engineering services to the Sunbury Community Development Program from 1979 to 1989. This status was formalized by individual contracts in the early 1980s when the Pennsylvania Department of Community Affairs assumed control of all block grant funding. Pick, 88 -117 -C Page 4 5. John Bakowicz is a licensed professional engineer. a. He operates a private engineering firm under his name. b. In addition to the City of Sunbury and the Sunbury Redevelopment Authority, John Bakowicz also has other municipal clients. c. During the course of his private engineering practice, Mr. Bakowicz employed the services of Kenneth Pick as a consultant (See Finding Nos. 53 -59). 6. The Sunbury Office "of Community Development (DCD) was created by the city as a division of the municipal government charged with the procurement and administration of community development block grant funds (CDBG) and other federal and state grants intended for the enrichment of community life through the enhancement commerce, preservation of historic structures; and revitalization of the public infrastructure. a. A director and secretary comprise the DCD staff. b. There is no direct DCD accountability to or oversight by a designated city council person. c. Other administrative departments are directly responsible to individual members of council. 7. The Redevelopment Authority of the City of Sunbury is an autonomous public entity which operates under the aegis of the Pennsylvania Urban Redevelopment Act and a board of residents appointed by the City Council. a. The Authority serves as a conduit for federal and state funds designated for urban renewal and related functions. b. The Authority's programs are closely attuned with those of the DCD. c. The DCD Director also serves as executive director of the Redevelopment Authority. 8. During late 1986, the City of Sunbury initiated the construction of the Woodlawn Parking Lot at the Arch Street redevelopment project site. The lot's boundaries were Arch and Third Streets and Woodlawn Avenue. a. The Sunbury Redevelopment Authority sold land for this parking lot to the City. b. John Bakowicz served as engineer for the parking lot project. Pick, 88 -117 -C Page 5 c. The parking lot was to be funded with Community Block Grant Program Funds after the Pennsylvania Department of Community Affairs determined that the project was eligible for funding. 9. Sunbury City mayor Charles Moll initially proposed construction of this parking lot in May 1986. 10. In relation to the parking lot design, by way of letter dated August 7, 1986 to Mr. Bakowicz from Kenneth Pick in his capacity as the Community Development Coordinator for the city, Mr. Bakowicz is advised that the city is interested in acquiring property for a parking lot. a. Mr. Bakowicz is requested to provide legal descriptions and a survey for the Woodlawn /Arch Street site. 11. Mr. Bakowicz was appointed by the -city to act as engineer on the parking lot project several days later on August 11, 1986 (See Finding No. 22(a)). a. The contract for this appointment was dated August 11, 1986. b. In this capacity, Mr. Bakowicz was responsible for performing design surveying as required, design and preparation of plans and specifications for bidding. 12. The Sunbury Redevelopment Authority also sold land to John Bakowicz, acting in his private capacity, for a projected office building which was to be constructed adjacent to the parking lot. a. This land was adjacent to the proposed parking lot being constructed by the city. b. The proposed office building was for John Bakowicz's private engineering firm and was to also contain rental space. 13. As Community Coordinator, Kenneth Pick, reported directly to City Council on matters pertaining to the construction of the parking lot and sale of the land to the city and Mr. Bakowicz. a. Mr. Pick was also involved in the redevelopment authority's issuance of a loan to Mr. Bakowicz to construct the proposed office facility on the land. 14. City Councilman Charles Schlegel was the Department Head who was responsible for this project. He had oversight Pick, 88 -117 -C Page 6 responsibility for the activities of the streets department and public improvement projects. 15. The Sunbury Redevelopment Authority had attempted to foster the development of the Arch Street property since 1980. a. Advertisements regarding the availability of this property were published in 1981. b. Realtors were contacted in an effort to market the property. 16. Several potential buyers expressed an interest in the properties. a. In 1983, Turkey Hill Mini Markets requested to know of any available redevelopment property for the construction of a convenient store. b. In a letter dated November 16, 1983, Mr. Pick describes a 24,000 sq. ft. property and also advises that another mini market is 1/2 block away. c. Others also expressed an interest in this property. 17. At the time that Sunbury was attempting to sell the property on Arch Street, a parking facility was under consideration. a. A parking facility was considered in 1971. 18. A parking analysis, dated April 20, 1985, conducted at the request of Kenneth Pick, determined that there was no need for additional parking facilities in the City of Sunbury at that time. 19. At a June 1986 meeting with the city council members, Kenneth Pick discussed the site for the lot on Woodlawn Avenue and the need to condemn private property. 20. Mr. Pick addressed this meeting and discussed the need to change. the 1986 Community Development Block Grant program to allow for construction of the Woodlawn Parking Lot. 21. The amendment to the program was passed by city council on July 14, 1986. 22. Minutes of the City Council meetings reflect actions taken with regard to the development and implementation of the City's Community Development Program and the sale of land to John Bakowicz. Pick, 88 -117 -C Page 7 a. August 11, 1986: By resolution, Council unanimously selected John Bakowicz as Engineer for its FFY1986 CDBG Program for the Woodlawn Avenue Parking Lot project at a fee not to exceed $5,000. Council also unanimously adopted a resolution selecting Eugene Brosius as Solicitor for the FFY 1986 CDBG Program for the Woodlawn Avenue Parking Lot at a fee not to exceed $6,000. Ms. Schlegel requested council's permission to advertise for bids for the Woodlawn` Avenue Parking Lot project. Mr. Schlegel moved, seconded by Mr. Packer, to authorize Mr. Pick to advertise for bids for the Woodlawn Avenue Parking Lot project. Vote was called for and motion passed unanimously. b. October 13, 1986: Mr. Pick stated that the committee has met concerning the Woodlawn Avenue Parking project bids, and it is the committee's recommendation that Council accept the bids. Low bidders were Faylor - Middlecreek for the general construction work, and K &N Electric for the electrical work. Mr. Heintzelman moved, seconded by Mr. Packer, to accept and award the bids for Contract 8 -86A (General) and Contract 8 -86B (Electrical). Vote was called, and motion passed unanimously. Minutes do not reflect a motion being made to adopt the following resolution: R E S O L U T I O N WHEREAS, the Redevelopment Authority of the City of Sunbury completed an urban renewal project entitled the Arch Street Urban Renewal Project; and WHEREAS, said project contains certain parcels of land which the Authority is desirous of selling in accordance with the Redevelopment Proposal prepared for the area; and WHEREAS, the City of Sunbury has undertaken a project funded by the FFY1986 Community Development Program to construct a municipal parking lot and desires to purchase from the Authority certain parcels of land of the Arch Street Urban Renewal Area. NOW, THEREFORE, be it resolved and it is hereby Pick, 88 -117 -C Page 8 resolved by the Council of the City of Sunbury that: 1. The parcels of land shown as Parcels 8 & 9 on drawing #09- 02 -86 -D -00 by John R. Bakowicz, P.E., and recorded in the Recorder's Office of Northumberland County in Plan Book 8, Page 87 be purchased from the Redevelopment Authority of the City of Sunbury for $1.16 per square foot. 2. The Mayor, on behalf of Council, is authorized and directed to execute all documents necessary to consummate said sale. Mr. Brosius, City Solicitor, presented Bill No. 6, Sessions of 1986, an ordinance amending Ordinance No. 1076, an ordinance establishing and maintaining a lot for the parking of motor vehicles in the area between Third and Fourth Streets and North of Woodlawn Avenue in the City of Sunbury. Mr. Filer moved, seconded by Mr. Schlegel, that Bill No. 6, Sessions of 1986, be passed at first reading in its entirety. Vote was called, and motion passed unanimously. Mr. Heintzelman moved, seconded by Mr. Packer, to authorize Mr. Brosius, City Solicitor, to proceed to file a Declaration of Taking in the event that an amiable purchase price cannot be arrived at by the time it is necessary to proceed with the project. Vote was called for and motion passed unanimously. 23. Minutes of the Redevelopment Authority meetings reflect the following information pertaining to the Arch Street Project which includes the Woodlawn Parking Lot: a. August 7, 1986: Mr. Pick gave the following reports: The City allocated funds from the 1986 Community Development for a parking lot to be developed on a portion of the Arch Street parcel and extending to Woodlawn Avenue 230 feet. The lot will be 70 feet fronting on Arch Street and would require the transfer of a 70 x 120 foot parcel from the Authority to the city. An option to purchase a 65 foot frontage on Arch Street and approximately 120 feet in depth was received from Mr. . John R. Bakowicz , P . E . This would leave a 12 foot right- Pick, 88 -117 -C Page 9 of -way to get to the Third Street parcel. A long discussion followed. Mr. Walter made motion, seconded by Mr. Askew, to accept the option from Mr. Bakowicz upon the condition that Mr. Bakowicz place his driveway on the west side, and the driveway would be subject to ingress and egress to the remaining property of the Authority, its successors or assigns; or that Mr. Bakowicz relinquish 5 feet, reducing the width to a 60 foot frontage on Arch Street. Vote was called for and motion passed with Mr. Albright, Mr. Walter, Mr. Askew voting aye. Mr. Deitrich did not vote. b. September 4, 1986: Mr. Pick reported that Mr. John Bakowicz, P.E. is requesting a revision in the direction and location of the parcel he is interested in acquiring from the Arch Street parcel where he plans to build an office building. The parcel would essentially be the same size - 120' fronting on Arch Street x 53' deep and would be located next to the Metropolitan Insurance Building. His original option was for 60' fronting on Arch Street and 120' deep and would sit closer to the Aldine Hotel. Mr. Deitrich commented that the Redevelopment Authority lot has been vacant for a number of years and now the City desires to make it into a parking lot. He was hoping the City would . just use a small portion of Parcel No. 5 (adjacent to privately owned land) for an exit and use the Redevelopment Authority owned parcel for the parking. A lengthy discussion followed. Mr. Woodring made motion, seconded by Mr. Walter, to modify the option received from Mr. Bakowicz as requested. Vote was called for and voting was as follows: Aye - Mr. Woodring, Mr. Walter and Mr. Albright. Mr. Deitrich abstained. Mr. Pick and Mr. Brosius explained the proposed sub- division of the Arch Street lot containing parcels 1, 8, 9 and 10 and requested permission to pass the proposed subdivision. Question was raised if the City would be inclined to purchase parcel No. 8 as well as No. 9 and combine the two into one parcel. Discussion followed. Mr. Woodring made motion, seconded by Mr. Walter, to approve the subdivision plan as presented. Vote was called for and voting was as follows: Aye - Mr. Woodring, Mr. Walter and Mr. Albright. Mr. Deitrich abstained. Pick, 88 -117 -C Page 10 c. October 2, 1986: Mrs. Forbes reported that a resolution will be presented under new business for the sale of parcels No. 8 and No. 9 of the Arch Street parcel to the City. Mr. Albright noted that with this last bond program proposal, the total our Authority used to date will be $730,000. Mr. Jim Jaegers stated that, according to their deed, the survey of the Arch Street parcel was off by 2° feet, and he questioned what happened to-this amount of land? Mr. Brosius, Solicitor, . explained that he has to assume the surveyor is correct. If he is wrong, he has to answer to that. Mr. Brosius will check with Mr. Bakowicz and then get back to Mr. Jaegers. Mr. Walter made motion, seconded by Mr. Askew, that Parcels No. 8 and 9 be sold to the City with the assumption all parties are satisfied, that Parcel No. 9 be checked for accuracy. Vote . was . called for and was as follows: Aye - Mr. Albright, Mr. Walter and Mr. Askew. No - Mr. Deitrich. The following resolution was approved: R E S O L U T I O N WHEREAS, the Redevelopment Authority of the City of Sunbury completed an urban renewal project entitled the Arch Street Urban Renewal Project; and WHEREAS, said project contains certain parcels of land which the Authority is desirous of selling in accordance with the Redevelopment Proposal prepared for the area; and WHEREAS, the City of Sunbury has undertaken a project funded by the FFY1986 Community Development Program to construct a municipal parking lot and desires to purchase from the Authority certain parcels of land of the Arch Street Urban Renewal Area. Now, therefore, be it resolved, and it is hereby resolved by the governing body of the Redevelopment Authority of the City of Sunbury that: 1. The parcels of land shown as Parcels 8 & 9 on drawing No. 09 -02 -86 D -001 by John R. Bakowicz, P.E. and recorded in the Recorder's Office of Northumberland County in Plan Book 8, page 87 be Pick, 88 -117 -C Page 11 sold to the City of Sunbury for $1.16 per square foot. 2. The Chairman and Secretary are authorized and directed to execute all documents necessary to consummate said sale. d. October 22, 1986: Mr. Walter made motion, seconded by Mr. Askew, that Parcel No. 1 of the Arch Street lot be sold to John R. & Mary Lou A. Bakowicz for construction of a two -unit office facility. :Vote was called for and motion passed unanimously. The resolution is as follows: R E S O L U T I O N NOW, THEREFORE, be it resolved, and it is hereby resolved by the governing body of the Redevelopment Authority of the City of Sunbury that: 1. The parcel of land shown as Parcel No. 1 on drawing No. 09- 02 -86 -D -001 by John R. Bakowicz, P.E. and recorded in the Recorder's Office of Northumberland County in Deed Plan Book 8, Page 87, be sold to John R. and Mary Lou Bakowicz for the sum of $7,350. 2. The chairman and secretary are authorized and directed to execute all documents necessary to consummate said sale. e. December 4, 1986: Mr. Pick presented a drawing of the plans and specifications of the proposed building to be constructed by Mr. & Mrs. John Bakowicz. Building will consist of 2,650 square feet for two offices; one for Mr. Bakowicz and one for a prospective tenant Plans include four parking spaces plus the public parking lot is available for further required parking. Mr. Walter made motion, seconded by Mr. Woodring, that we accept the plan as submitted by Mr. & Mrs. John R. Bakowicz. Vote was called for, and motion passed unanimously. f. January 8, 1987: Mr. Pick reported that settlement with Mr. & Mrs. Bakowicz for the Arch Street parcel has been completed. Pick, 88 -117 -C Page 12 From the proceeds of these two parcels, 50% will be returned to the State. This completes the Arch Street Program. 24. Mr. Bakowicz was aware that the city had selected a site for a parking lot, and he considered building a new office facility at the same location. a. Mr. Pick suggested that Backowicz may want to consider purchasing a parcel of remaining Authority land to build a building. b. Kenneth Pick was aware of the'fact that Mr. Bakowicz was seeking an office facility. 25. In relation to the sale of land to John Bakowicz, by way of letter dated August 6, 1986 from John Bakowicz to the Redevelopment Authority, Mr. Bakowicz requests an option to purchase the property on Street for the purpose of constructing an office facility thereon. a. The configuration of the parcel sought consisted of a 65 foot frontage on Arch Street. and 120 feet deep, b. This configuration was consistent with the parking lot design - Option A (See Finding No. 27(a)). c. On August 6, 1986, the three options had . not yet been prepared. d. This letter was dated one day prior to Mr. Pick's letter to Mr. Bakowicz requesting legal description and surveys (See Finding No. 10). 26. Three design options were prepared in relation to the physical layout of the city parking lot project. a. Options A, B, and C were prepared by Muller and Lonegran Associates, Inc. 1) The original concept known as Option A was prepared by Pick based upon council's discussion of the parking lot during a meeting held on June 9, 1986. b. Muller and Lonegran, Inc. served as a contract consultant for the City of Sunbury in relation to the development of a community development program. 27. The three options entailed the configuration of the parking lot, the number of spaces, the site of the office facility, and the location of vacant parcels. ick, 88 -117 -C Page 13 a. Option A involved a parking lot running parallel with Fourth Street between Arch and Woodlawn. The lot would be a straight run of 42 spaces. The office facility would be on Arch Street with the lot to one side and a vacant parcel to the other . b. Option B placed the lot in the shape of a reverse Letter L running parallel with Fourth (from Woodlawn) and then up from Fourth to Third Street. The office would face Arch and be bordered by the lot which contained 64 spaces. c. Option C placed the office on Arch Street with the entrance to the lot adjacent thereto. The lot would run in the shape of a reverse Letter Z from Woodlawn parallel with Fourth up toward Third and across to Arch. The lot consisted of 42 spaces. 28. Option C was preferred by John Bakowicz for his private office complex, because his building would be situated closer to the Metropolitan Building and further from the Aldine Hotel. 29. Parking lot design, Option A, presented certain egress problems for Mr. Bakowicz. a. A potential problem also would occur in securing parking and turning around in the building site. 30. Option C did not present these problems and worked to the benefit of Mr. Bakowicz. - 31. 'In mid- August 1986, Mr. Bakowicz met with James Walton of Mullen & Lonegran Associates, Inc. to discuss preliminary design of a plan consistent with Option C. a. This was prior to councilman Schlegel's agreement to recommend that option (See Finding No. 32(c)). b. The only option for which preliminary design work was prepared prior to September 4, 1986 was C. 1.) This was prepared by Mr. Bakowicz. c. Neither Option A nor B was prepared with specificity as of September 4, 1986. 1.) A drawing was prepared with a configuration similar to Option A. 32. On September 4, 1986, a breakfast meeting was held with Kenneth Pick, City. Councilman Schlegel and John Bakowicz for Pick, 88 -117 -C Page 14 the purpose of discussing design options A, B and C. a. Mr. Bakowicz sought to determine which option city council would accept. b. Mr. Bakowicz had reviewed the three options prior to that time. c. Mr. Schlegel decided on Option C subject to council's approval. 1.) Schlegel approved of Option C over the two remaining options. d. Mr. Schlegel believed that only Option C entailed both a parking lot and an office facility. 33. Mr. Bakowicz, as a potential buyer, would have wanted to see all three design options so as to determine if the option selected by city council would suit his needs. 34. Mr. Bakowicz, during a sworn deposition, testified that he did not know in what capacity he had been: given the three design options; that is either as a potential buyer or as an engineer for the parking project. 35. By way of letter of September 4, 1986 from John Bakowicz to the Sunbury Redevelopment Authority, Mr. Bakowicz requests to amend his letter of August 6, 1986 whereby he proposed to purchase the Arch Street property (See Finding No. 25). a. The amendment relates to the configuration of the size of the lot and requested a 120 foot frontage on Arch Street and a depth of 52.78 feet. b. This configuration was consistent with the parking lot design C (See Finding No. 27(c)). c. The letter contained a legal description of the property (revised) consisting of an exact metes and bounds identification. 36. On September 4, 1986, the Redevelopment Authority Mr. Bakowicz's request (See Finding No. 23(b)). a. The approved subdivision was consistent with the design - Option C. b. This decision occurred the evening of Mr. Bakowicz's meeting with Councilman Schlegel (See Finding No. 32). Pick,, 88 -117 -C Page 15 37. Mr. Bakowicz had privately hired a draftsman sometime in August 1986 to prepare a design for the construction of his facility. a. Mr. Bakowicz paid the draftsman on September 12, 1986, and the plans were filed in the county courthouse on that date. b. The plans were consistent with Design Option C. 38. During a sworn deposition, Mr. Pick testified inter alia that the reason that the configuration of the parking lot design was altered was because of the desire of Mr. Bakowicz to change the positioning of his building. 39. In order to sell the land to Mr. Bakowicz, the land was required to be subdivided . a. This was accomplished on September 8, 1991 by the city. 40. In an effort to finance the construction of a private office facility, John Bakowicz sought funds through the Sunbury Redevelopment Authority. a. The financing involved the issuance of authority bonds to be secured by the lending institution. 41. On September 11, 1986, a public meeting was held by the Sunbury Redevelopment Authority for the purpose of considering the projects and solicit public comment therein. a. One project was the Bakowicz office facility. b. The meeting was called to order by the authority chairman also thereafter turned the floor over to Mr. Kenneth Pick who proceeded to describe the projects. 42. The financing issued as part of a program called the Commercial Rehabilitation Program of the Redevelopment Authority. a. Interest rates were low with this program. 43. The loan program was going to expire in December 1986 and, as such, Mr. Bakowicz had to complete his efforts to secure financing prior thereto. 44. On October 22, 1986, the chairman of the Sunbury Redevelopment Authority executed a resolution approving the issuance of tax - free bonds. Pick, 88 -117 -C Page 16 a. The resolution provides that the Authority is authorized to barrow funds through the issuance of tax free bonds to area lenders who have agreed to participate in the program for the acquisition, construction, reconstruction or improvement of industrial and commercial property b. The authority makes these funds available to qualified property owners. c. The resolution authorizes the issuance of bonds totaling in part $127,200. 45. On October 22, 1986, the chairman of the Sunbury redevelopment Authority executed a resolution approving the issue of funds for the sale of the tax free bonds. a. The funds were released in part to John R. and Mary Lou Bakowicz in the amount of $95,000.00. 46. By way of memo dated November 18, 1986 to Eugene Brosius, Esq., solicitor for the Sunbury Redevelopment Authority, from Kenneth Pick, a bond tax opinion is requested in relation to the Bakowicz loan. a. The lender required an opinion regarding the tax free eligibility of the bond. 47. Settlement whereby the Sunbury Redevelopment Authority transferred the Arch Street property to John R. and Mary Lou Bakowicz took place on December 11, 1986. a. The consideration noted in the deed was $7,350.00. 48. On December 12, 1986, Kenneth Pick forwarded an Industrial Development Bond final allocation request to the Pennsylvania Department of Commerce regarding the Bakowicz loan. a. Mr. Pick also filed IRS Form 8038, information for private activity bond issues on December 12, 1986. 49. Kenneth Pick advised the voting members of the Redevelopment Authority on the loan-approval to Mr. Bakowicz. 50. The members of the Redevelopment Authority were not advised by Mr. Pick of his private business relationship with Mr. Bakowicz at the time of the loan approval. 51. By letter of March 1, 1989, the PA Department of Community Affairs forwarded to Mayor Moll a Performance Review Report of the City's Community Development Block Grant program. Pertinent portions of pages three through five, relative to Pick, 88 -117 -C Page 17 the Woodlawn Avenue projects, confirmed the following: a. Eligibility Based on the review of documentation contained within the City's files; and on -site inspections of each activity; all activities are eligible, with the exception of the Woodlawn Avenue Parking Lot. b. Woodlawn Avenue Parking: 1) An amendment was submitted in July 1986 and approved by DCA to include in the 1986 program, the acquisition and construction of the Woodlawn Avenue Parking Lot. This lot was to benefit the Center City Neighborhood and City overall both of which exceed 51% low and moderate income persons. The City justified this activity based on slum and blight removal. DCA qualified the activity based on the low and moderate income benefit since it apparently met both objectives. 2) DCA's research on -site indicates that this parking lot is primarily utilized by government employees and /or employees of other agencies or businesses within the downtown. 3) Conflict of Interest Determination: Federal Regulation 24 CFR Part 570.611(b) (regarding conflicts of interest) provides: "...no person [who is an employee, agent, consultant, officer, or elected official or appointed official of the recipient] who exercise or have exercised any functions or responsibilities with respect to CDBG assisted activity or have an interest in any contract, subcontract or agreement with respect thereto, or the proceeds thereunder, either for themselves or those with whom they have family or business ties, during their tenure or for one year - thereafter. 4) Based on our monitoring of the City of Sunbury CDBG program, we strongly believe that at least one City official has violated the above provision and thus obtained prohibited interest in the Woodlawn Avenue Parking Lot project, a CDBG assisted project within the City. 5) Our monitoring of the city program reveals the following: Pick, 88 -117 -C Page 18 In June 1986, City Council adopted a plan for the construction of a rectangular parking lot in the downtown area between 3rd and 4th streets. The lot, as originally proposed, constituted 16,100 square feet and was to accommodate 42 parking spaces. As finally constructed, the lot measured 18,260 square feet and accommodated 41 parking spaces. The square footage and space loss, based upon our review of this project, was the result of acquisition by the City Engineer, John Bakowicz, of a purchase option to adjacent property; redesign of the proposed lot by Mr. Bakowicz as well as modification of parking lot during its construction phase. August 6, 1986 - Mr. Bakowicz requested a purchase option for land adjacent to the proposed Woodlawn Avenue Parking Lot from the Sunbury Redevelopment Authority. August 11, 1986 - The City awarded Mr. Bakowicz a contract to survey the proposed Woodlawn Avenue Parking Lot area. The survey as performed included the land described in Mr. Bakowicz's purchase option from the Redevelopment Authority. During the design of the lot, the original rectangular configuration was replaced with an L- shaped lot comprised of 18,260 square feet. The new L- shaped configuration provided Mr. Bakowicz, as holder of a purchase option on the adjacent property, with the following advantages: Mr. Bakowicz's frontage on Arch Street was increased from 60 to 120 feet. The redesign enabled Mr. Bakowicz to move this "planned office building" farther away from the Aldine Hotel, a deteriorated structure, and closer to the Metropolitan Life Building, a modern office building in good repair. September 4, 1986 - The Redevelopment Authority approved a revised purchase option for Mr. Bakowicz, consistent with the revision of the parking lot. September 8, 1986 The City approved Mr. Pick, 88 -117 -C Page 19 During the construction, spaces 35 and 36 were eliminated, and the curbing separating the parking lot from Mr. Bakowicz option area was altered; drop curbing was installed giving Mr. Bakowicz's option area direct access to the city's parking lot. December 8, 1986 — City approved right -of -way to Mr. Bakowicz's option area at Mr. Bakowicz's request. December 9, 1986 - Mr. Bakowicz exercised his option and purchased lot adjacent to Woodlawn Avenue Parking Lot. 6) Our investigation of this matter shows that the Community Development Director, Kenneth Pick, advised Mr. Bakowicz concerning the acquisition of the purchase option; beneficial revisions; and probability of success in his endeavors. 7) Mr. Pick failed to advise City Council of Mr. Bakowicz's interest in the Woodlawn Avenue site and the redesigning of the parking lot to accommodate Mr. Bakowicz's interests. 9 Bakowicz's subdivision plan for land adjacent to the proposed Woodlawn Avenue Parking Lot. October 22, 1986 - The Redevelopment Authority adopted a resolution for the sale of its land adjacent to the Woodlawn Avenue Parking Lot to Mr. Bakowicz. November 5, 1986 - The City purchased the Woodlawn Avenue site from the Redevelopment Authority. November 7, 1986 - The City awarded a contract for construction of the Woodlawn Avenue Parking Lot. Mr. Bakowicz, as City Engineer, supervised the construction. It does not appear that Mr. Pick has received any financial benefit for providing assistance to Mr. Bakowicz in this project. No contract, subcontract or agreement is evident. A Finding of Noncompliance has been made as per Section - 105(a) of the Housing and Community Development Act of 1974, as amended 24CFR Part 570.201, and Federal OMB Circular A -102, Attachment 0. This activity is not eligible due to the Pick, 88 -117 -C Page 20 apparent conflict of interest underlying its execution, and because the parking lot is not a public facility. Corrective Action: The City is prohibited from using CDBG funds for this activity. Any CDBG funds drawn down from DCA for this activity must be returned to DCA, to then be made available for some other eligible and fundable activity. 52. On June 12, 1989, in a letter to the Pennsylvania Department of Community Affairs authored by Mayor Charles Moll, the City of Sunbury concurred with the PA Department of Community Affairs determination that Mr. Bakowicz benefited financially when he purchased a lot next to the Woodlawn Parking Lot. That letter noted as follows: a. D.C.A. determined that John Backowicz obtained a personal financial benefit from this C.D.B.G. assisted project. At the time this benefit was received by John Backowicz, he was the City Engineer. The City agrees with the determination by D.C.A. that John Backowicz was a City Official at the time he obtained this prohibited interest. b. The City is concerned about loss of C . D . B . G .funds for the Woodlawn Avenue Parking lot as a result of the prohibited activities by Mr. Backowicz. Accordingly, we request a meeting with D.C.A. for two purposes. First, the City would like to discuss actual loss as a result of the prohibited activities. Second, the City would like to discuss assistance from D.C.A., as well as other state agencies, to assist the City in the recovery of the funds. 53. In relation to the private consulting services provided by Kenneth Pick to John Bakowicz (See Finding Nos. 3(b) and 5(c)), Mr. Pick and Mr. Bakowicz first discussed such services in 1985. 54. Mr. Pick did not perform any services until' 1986. 55. Mr. Pick assisted Mr. Bakowicz in -the filing of letters of intent for several municipal clients by which Mr. Bakowicz was employed including Lewis Township and Zerbe Township. a. In this capacity, Mr. Pick was assisting in applying for grant funds for other municipalities. Pick,, 88 -117 -C Page 21 56. Mr. Pick considered Mr. Bakowicz an important client for his private consulting business because of Mr. Bakowicz's extensive contacts and representation with municipalities. 57. Mr. Pick felt that it was important to maintain a good rapport with Mr. Bakowicz because he was an important client. 58. The compensation paid to Mr. Pick by Mr. Bakowicz was contingent upon the successful receipt of funding by the municipality. 59. Mr. Pick received payments for performing private consulting services for Mr. Bakowicz as follows: a. Check #4863, dated February 24, 1987, in the amount of $1,000. b. Check #1094, dated May 18, 1987, in the amount of $2,300. c. Check #1077, dated May 2, 1987, in the amount of $500. d. Payments outlined above were in relation to the approved grant for Lewis Township. Total $3,800.00 III. DISCUSSION: As the Executive Director of the Sunbury Redevelopment Authority and Coordinator for the Community Development Program, Kenneth Pick, hereinafter Pick, was a public employee as that term is defined in the Ethics Act, 65 P.S. §402; 51 Pa. Code §1.1. As such, his conduct is subject to the provisions of the Ethics Act :and the restrictions therein are applicable to him. Initially, it is noted that Section 9 of Act 9 of June 26, 1989, P.L. 26, 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 prior to the effective date of Act 9 (June 26, 1989), we must apply the Pick, 88 -117 -C Page 22 provisions of Act 170 of 1978, P.L. 883, to determine whether the Ethics Act was violated. Under Section 3(a), quoted above, this Commission has determined that use of office by a public official to obtain a financial gain for himself or a member of his immediate family or a business with which he is associated which is not provided for in law transgresses the above provision of law. Thus, use of office by a public official to obtain a financial gain which is not authorized as part of his compensation is prohibited by Section 3(a): Hoak /McCutcheon v. State Ethics ,Commission, 77 Pa. Commw. Ct. 529, 466 A.2d 283 (1983); Yacobet v. State Ethics Commission, 109 Pa. Commw. Ct. 432 531 A.2d 536 (1987). Similarly, Section 3(a) of the Ethics Act would prohibit a public official /employee from using public office to advance his own financial interests; Koslow v. State Ethics Commission, 116 Pa. Commw. Ct. 19, 540 A.2d 1374 (1988). Section 3(b) provides in part that no person shall solicit or accept anything of value based on the understanding that the vote, official action or the judgment of the public official or employee would be influenced thereby. The issue before us is whether Pick violated either Section 3(a) or 3(b) of Act 170 of 1978 regarding the allegation that he used his position to participate and award engineering contracts to John Bakowicz with whom he had a private business relationship and whether he used confidential information to assist Bakowicz in the purchase of Sunbury Redevelopment Authority (SRA) property in return for the award of a private contract from Bakowicz. Factually, Pick served as the Executive Director of the SRA and Coordinator of the Community Development Program (CDP) for the City of Sunbury from March, 1982 until February, 1990. As to the SRA, Pick was the chief administrative officer who coordinated all activities with federal, state and local agencies as they related to renewal activities. In a private capacity, Pick provided private consulting services to clients, one of whom was John Bakowicz, the Sunbury City Engineer from 1976 until August, 1989. In addition, Bakowicz also provided engineering services to the SRA between 1979 and 1989. Bakowicz is a licensed professional engineer who operated a private engineering firm with private and municipal clientele including Sunbury, the SRA and other municipal clients. As to his private engineering practice, Bakowicz did employ the services of Pick as a consultant. In 1986, Sunbury initiated the construction of the Woodlawn Parking Lot project. The SRA sold the land to the City for the construction of a parking lot which was to be funded with Community Block Grant Program funds from the Pennsylvania Department of Community Affairs (DCA). The project was originally proposed by Pick, 88 -117 -C Page 23 Sunbury Mayor Charles Moll. By letter dated August 7, 1986, to Bakowicz from Pick, as Community Development Coordinator for Sunbury, Bakowicz was requested to provide legal descriptions and a survey for the parking lot site. Four days later on August 11, 1986, Bakowicz was appointed by Sunbury to act as engineer for the parking lot project. Bakowicz was responsible for performing design surveying, design and preparation of plans, and specifications for bidding. Separate and apart from the above, Bakowicz purchased land in a private capacity from the SRA for a office building which was to be constructed adjacent to the parking site. Bakowicz intended to erect an office building which would contain his private engineering firm as well as rental space for tenants. As Community Development Coordinator, Pick reported to Sunbury City Council as to matters pertaining to the parking lot and the sale of the land both to the City and Bakowicz. Pick also had involvement in the SRA's issuance of a loan to Bakowicz to construct his proposed office facility. Parenthetically, in 1971, consideration was made to sell the land in question for a parking facility but a parking analysis done in April of 1985 at the direction of Pick determined that there was no need for additional parking facilities in Sunbury at that time. In a 1986 meeting with City Council Members, Pick discussed the need to change the 1986 Community Development Block Grant Program to allow for the construction of the Woodlawn Parking lot which amendment was passed by City Council on July 14, 1986. The Sunbury City Council meeting minutes reflect the following as to the Community Development Program and sale of land to Bakowicz: On August 11, 1986, by unanimous resolution Bakowicz was selected as engineer for the Woodlawn Avenue Parking lot with his fee not to exceed $5,000 and Pick is directed to advertise for bids for the parking lot project; On October 13, 1986, a resolution was adopted, which was not reflected in the minutes, that the City purchase certain parcels of land from the SRA and that the ordinance be amended so as to establish and maintain the lot for parking vehicles at Woodlawn Avenue; On August 7, 1986, Pick reported that City funds were allocated for the development of the parking lot project and that Bakowicz was seeking an option to purchase frontage on Arch Street which option was accepted with a modification by Council; On September 4, 1986, Pick reported that Bakowicz was Pick, 88 -117 -C Page 24 requesting a further revision whereby his desired parcel would be located next to the Metropolitan Insurance Building rather than closer to the Aldine Hotel which revision was accepted by Council through the passage of a motion; On October 2, 1986, a resolution was passed for the implementation of the purchase by the City of various parcels of land as to the parking lot project; On October 22, 1986, a motion was passed to sell property on Arch Street to John Bakowicz and his spouse for the construction of a two -unit office facility which motion passed unanimously; On December 4, 1986, Pick presented a drawing of plans and specifications for the proposed office building by Bakowicz which included._ four parking spaces plus the space in the new parking lot which was accepted by City Council through the passage of unanimous motion; and On January 8, 1987, Pick reported that settlement occurred as to conveyance of the Arch Street property to Bakowicz with 50% of the proceeds being returned to the state. Bakowicz was aware that the City selected the site for the parking lot and he considered building, a new office facility at that same location. Likewise, since Pick was aware that Bakowicz was seeking an office facility, he suggested to Bakowicz that he might consider purchasing a parcel of remaining SRA land on which to erect his office building. The request by Bakowicz for an option to purchase the property on Arch Street was contained in a letter dated August 6, 1986, which predated by one day Pick's letter.to Bakowicz requesting a legal description and surveys as to the property. Three design options were prepared relative to the physical layout of the parking lot project: Option A would involve a straight run parking lot with 42 spaces with the office facility being on Arch Street with the parking lot . on one side and the vacant lot on the other; Option B would be for an L -shape parking lot with the office facility facing Arch Street and bordering the parking lot with 64 spaces; and Option C would be with the office on Arch Street with the entrance to the lot adjacent to it with the parking lot in the form of a Z with 42 spaces. Pick, 88 -117 -C Page 25 Bakowicz favored Option C for his private office complex because his building would be closer to the Metropolitan Building and farther away from the Aldine Hotel. Option A presented certain egress problems for Bakowicz which did not exist as to Option C which would hence benefit of Bakowicz. In mid - August, 1986 Bakowicz met with Muller and Lonegran Associates, Inc., the contract consultant for Sunbury in relation to the development of a Community Development Program, to discuss the preliminary design of a plan consistent with Option C. This occurred prior to the recommendation of a Council Member to adopt that option. Further, preliminary design work was only done for Option C which was prepared" by Bakowicz; neither Option A or B was prepared with specificity. In a meeting between Pick, City Councilman Schlegel and Bakowicz for the purposing of discussing the three Options, Schlegel decided on Option C subject to Council's approval over the other two options. In this regard, Schlegel was under the impression that only Option C entailed both a parking lot and office facility. Bakowicz admitted that he did not know in what capacity he had been given the three design options, that is, whether as a potential buyer or as engineer for the parking lot project. The September 4, 1986 amendment by Bakowicz as to his August 6, 1986 letter for the proposed purchase is consistent with the configuration as proposed for parking lot design Option C. The September 4, 1986 approval by the SRA of Bakowicz's request was also consistent with design Option C. On August, 1986, when Bakowicz hired a draftsman to prepare a design for the construction of this facility which was filed in the County Courthouse on September, 1986, the plan was consistent with design Option C. Pick admitted that the reason for the change in design of the parking lot configuration was because of the desire of Bakowicz to change the position of his proposed office building. On September 11, 1986, at a public meeting of the SRA, various projects including Bakowicz's were considered following a description of the projects by Pick. In an effort to finance the construction of this private office facility, Bakowicz sought funding through the SRA. Since the funding from a program called the Commercial Rehabilitation Program of the Redevelopment Authority was to expire on December, 1986, Bakowicz had to complete his efforts to secure financing prior to that time. On October 22, 1986, the Chairman of the SRA executed a resolution approving the issuance of tax free bonds in the amount of $127,200 with $95,000 being released to Bakowicz and his spouse. Settlement on the Arch Street property with the SRA occurred on December 11, 1986, for a stated consideration of $7,350 paid by Bakowicz. On December 12, 1986, Pick forwarded an industrial development bond final allocation request to DCA regarding the Bakowicz loan. Although Pick advised the SRA members Pick, 88 -117 -C Page 26 of the loan approval by Bakowicz, he did not disclose to the members his private or business relationship with Bakowicz at the time of the loan approval. By letter of March 1, 1989, DCA forwarded to Mayor Moll a performance review report of the City's Community Development Block Grant Program which stated in part that the activities relative to the Woodlawn Avenue Parking lot were not eligible noting the conflict of interest determination under Federal Regulation 24 CFR Part 570.611(b). In particular, it was noted that there was a square footage and space loss in the project due to the acquisition by City Engineer Bakowicz of a purchase option as to adjacent property concomitant with the redesign of the proposed lot by Bakowicz and the modification of the parking lot. The report reflected that their investigation indicated that Pick advised Bakowicz of the acquisition of the purchase option, beneficial revisions and the probability of the success of his endeavors and further that Pick failed to advise City Council of Bakowicz's interest in the Woodlawn Avenue site. The report stated that it did not appear that Pick received any financial benefit for providing assistance to Bakowicz as to the project. The report concluded with a finding of non - compliance as to the Woodlawn project noting ineligibility due to the conflict of interest underlying the execution and due to the fact that the parking lot was not considered a public facility. In a letter of response by Mayor Moll dated June 12, 1989, to DCA, the City concurred that Bakowicz benefitted financially as to the purchase of the lot next to the Woodlawn parking lot in that Bakowicz obtained a personal financial benefit at a time when he was City Engineer and that the City was concerned about the loss of Community Block Grant funds for the Woodlawn Avenue Parking lot. Finally, Mayor Moll requested a meeting with DCA to discuss the actual loss as a result of the prohibited activities and secondly sought assistance from DCA or any other state agency in the recovery of the funds. As to the relationship between Pick and Bakowicz, the idea of Pick providing private consulting services to Bakowicz was first discussed in 1985 but no services were performed by Pick until 1986. Further, Pick assisted Bakowicz in filing letters of intent with several other municipal clients. Pick considered Bakowicz an important client for his private consulting business and sought to maintain a good raport with Bakowicz due to Bakowicz's extensive contacts and representation as to municipalities. Lastly, the compensation paid to Pick from Bakowicz was contingent upon the successful receipt of funding in any given municipality. In applying the provisions of Section 3(a) and 3(b) of Act 170 of 1978 quoted above to the instant matter, we cannot find that a violation of the Ethics Law occurred in the instant matter. As to Pick, 88 -117 -C Page 27 the award of engineering contracts to Bakowicz, Pick was not in a position to award such contracts. Further, to the extent that he participated in the process, we do not find any resultant financial gain to Pick which is required for a Section 3(a) violation. Likewise, we find no violation under Section 3(b) because there is no evidence establishing an understanding which is a requisite element for a violation of that section of the Ethics Law. As to the SRA property, it does appear from a review of the record that Pick used public office on behalf of Bakowicz and derivatively himself regarding the purchase of the SRA property by Bakowicz. In this regard, the record is replete with actions of Pick which were supportive of Bakowicz as to the purchase of the property and as to the modification of the Woodlawn Parking lot plan which would be advantageous to Bakowicz. However, what is absent from the record is the linkage between the use of public office and the financial gain; since such is lacking, we do not find a violation of Section 3(a) in this case. As to Section 3(b), the record does not reflect the requisite understanding between Pick and Bakowicz and on that basis we must also find no violation of Section 3(b) of Act 170 of 1978. Our ruling in this matter should not be construed as countenancing the actions of Pick in this matter. It is patently clearly that Pick did not act so as to insure that there was no conflict between his public and private interests. However, in reaching our decision, we may only find a violation if all of the requisite elements of Section 3(a) of Act 170 of 1978 exist. As noted above, the requisite element of a financial gain to Pick is not present and for that reason we find no violation of Section 3(a). Similarly, since the evidence does not establish the requisite "understanding" needed in order to sustain a Section 3(b) violation, we likewise find no violation of that provision of the Ethics Act. Given the fact that Pick is no longer publicly employed and considering the totality of the facts and circumstances of this case, we will take no further action. IV. CONCLUSIONS OF LAW: 1. Kenneth Pick as Executive Director of the Sunbury Redevelopment Authority and the Coordinator for the Community Development Program of Sunbury was a public employee subject to the provisions of Act 170 of 1978. 2. Pick did not violate Section 3(a) of Act 170 of 1978 regarding using his position to award engineering contracts to Bakowicz or to assist Bakowicz in purchasing SRA owned property in that there is no showing that Pick received a financial gain as to such activity. Pick, 88 -117 -C Page 28 3. Pick did not violate Section 3(b) of Act 170 of 1978 regarding the award of engineering contracts or the assistance as to the purchase of SRA owned property by Bakowicz in that the record does not establish any "understanding" between Pick and Bakowicz. In re: Kenneth Pick File Docket: 88 -171 -C Date Decided: December 10, 1992 : Date Mailed: December 15, 1992 ORDER NO. 871 1. Kenneth Pick as Executive Director of the Sunbury Redevelopment Authority and the Coordinator for the Community Development Program of Sunbury Pick did not violate Section 3(a) of Act 170 of 1978 regarding using his position to award engineering contracts to Bakowicz or to assist Bakowicz in purchasing SRA owned property in that there is no showing that Pick received a financial gain as to such activity. 2. Pick did not violate Section 3(b) of Act 170 of 1978 regarding the award of engineering contracts or the assistance as to the purchase of SRA owned property by Bakowicz in that the record does not establish any "understanding" between Pick and Bakowicz. BY THE COMMISSION, JAMES M. HOWL HAIR