HomeMy WebLinkAbout780 MooreIn re: Reizdan B. Moore
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STATE ETHICS COMMISSION
308 FINANCE BUILDING
HARRISBURG, PENNSYLVANIA 17120
: File Docket: 85 -164 -C
: Date Decided: February 14, 1991
: Date Mailed: February 28, 1991
Before: Robert W. Brown, Vice Chair
G. Sieber Pancoast
Dennis C. Harrington
Daneen E. Reese
Roy W. Wilt
The State Ethics Commission received a complaint regarding a
possible violation of the State Ethics Act, No. 170 of 1978, 65 P.S.
401 et. seq. 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 not filed and a hearing was waived. The record is complete.
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 52.38.
The files in this case will remain confidential in accordance
with Section 8(a) of the Ethics Act, 65 P.S. 408(a) 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).
ADJUDICATION
I. Allegation: That you, a Councilman of the City of Harrisburg,
violated Section 3(a) of the Ethics Act, which prohibits a public
employee's or public official's use of office or confidential
information gained through that office to obtain financial gain, and
Section 3(b), which prohibits a public employee, or public official or
candidate from offering, soliciting or accepting anything of value
based on an understanding that the vote, official action or judgment
of the public official, public employee or candidate will be
influenced, by accepting campaign contributions from firms associated
with the underwriting of multi - million dollar bond issues in return
for your vote and support of said projects.
II. Findings:
1. Reizdan Moore served as Councilman for the City of
Harrisburg, Dauphin County, Pennsylvania from January 1982
until December 1989.
a. He also served as President of City Council from
January 1985 to December 1989.
2. October 1985, the City of Harrisburg determined to
undertake the Dock Street Dam Project which consists of the
following:
a. The planning, design, and construction of a new movable
crest dam and 34.4 MW hydroelectric generating
transforming and transmission facility.
b. Capital improvements including the City Island
Infrastructure; the lower river front steps; storm
sewer improvements; preservation of the river front
development of a lake and recreational facilities;
development of a secondary water source; and creation
of soil erosion controls on both sides of the
Susquehanna River.
c. The funding of a debt service reserve fund; a
reasonable working capital fund; and a reserve and
replacement fund.
d. The funding of interest during construction and for six
months thereafter.
e. The payment of the costs of issuance of the bonds and
certain expenses incurred by the City with respect to
the Project.
f. Revenue bonds were initially issued in the amount of
$215 million aggregate to support the Project.
Mr. Reizdan B. Moore
Page 2
Subsequently, two re- issuances of these bonds were
approved by City Council.
g. The bonds were to be used to finance the design,
engineering and construction of a movable crest dam and
hydroelectric generating and conveyance facility and
related infrastructure improvement to the waterfront
and to pay the costs of the issuance of the bonds and
other project expenses.
3. Bill No. 59 of 1985 (Ordinance No. 32 of 1985) was passed by
Harrisburg City Council on October 29, 1985. The ordinance
authorized the issuance of $215 million revenue bonds to
finance the design, engineering and construction of a
movable crest dam and hydroelectric generating and
conveyance facility and related infrastructure improvement
to the riverfront; to pay costs of the issuance of the bonds
and certain expenses incurred by the city related to the
project.
a. The Ordinance was passed by a 5 to 2 vote. Voting to
pass the ordinance were Council Members Braxton,
DeGarcia, Gilchrist, Hodgkiss and Moore; opposing were
Council Members Gohl and Robinson.
b. The bill was signed by Mayor Stephen Reed on October
31, 1985.
c. Section No. 6 of the ordinance appointed the
investment banking firms of Russell, Rea & Zappala;
Arthurs, LeStrange & Short; Goldman, Sachs & Co.; and
Prescott, Ball & Turben as the initial remarketing
agent.
1) The section also authorized the city to appoint
additional or substitute remarketing agents.
4. A Remarketing Agreement dated October 29, 1985 was entered
into by the City of Harrisburg, and the investment banking
firms of Russell, Rea & Zappala; Arthurs, LeStrange & Short;
Goldman, Sachs & Co.; and Prescott, Ball & Turben.
a. Section 5 of the agreement outlines the fees to be
paid to the investment banking firm.
1) A fee of 1.8% of the bonds outstanding on
November 15, 1988.
2) An annual fee of 1/8 of 1% of the principal
amount of the bonds, including bonds purchased by
Mr. Reizdan B. Moore
Page 3
the trustee, outstanding on November 15 of each
year during the term of the remarketing
agreement.
5. Bill No. 28 of 1986 (Ordinance No. 15 of 1986) was passed by
Harrisburg City Council on July 10, 1986. The bill
authorized the retiring of the $215 million dollar bond
issue approved by Ordinance.
a. This bill was approved unanimously upon motion by
Gilchrist, and seconded by Mitchell. Moore was
present and participated in the vote.
b. The bill was signed by Mayor Stephen Reed on July 11,
1986.
6. Bill No. 29 of 1986 (Ordinance No. 16 of 1986) was passed by
Harrisburg City Council on July 10, 1986. The bill
authorized the issuance of revenue bonds in the amount of
$394,295,000.
a. The bill was passed by unanimous vote upon motion by
Reizdan Moore, and seconded by 0. Frank DeGarcia.
b. The bill was signed by Mayor Stephen Reed on July 11,
1986.
c. The purpose of the bond issue was to provide funds to:
1) Finance revenue producing projects for the City,
including the design, engineering and
construction of a hydroelectric generating
facility.
2) Fund a Debt Service Reserve Fund, Working Capital
Reserve Fund and Capitalize Interest Fund.
3) Pay the costs of the issuance of the bonds and
certain expenses incurred by the City related to
the project.
d. The proposals of Commonwealth Securities &
Investments, Inc.; Russell, Rea & Zappala; Arthurs,
LeStrange & Co.; Goldman, Sachs & Co.; and Pryor,
Govan, Counts & Co. were accepted by the City Council
to market the bonds at a private, negotiated sale.
e. The Ordinance authorized the mayor, controller,
treasurer, clerk or other proper officials of the City
of Harrisburg to pay or cause to be paid from the
Mr. Reizdan B. Moore
Page 4
proceeds of the bonds or otherwise, all costs and
expenses incurred by the City in connection with the
issuance of the bonds.
7. Bill No. 29 of 1988 (Ordinance No. 17 of 1988) was passed on
September 28, 1988 by Harrisburg City Council. The bill
amended Ordinance 16 -1986, Section 5.09 to extend the date
by which conditions set forth in Section 9.09B must be
satisfied.
a. The bill was approved by a 5 to 1 vote upon motion by
Moore, seconded by Gilchrist.
b. Section 9.09B of Ordinance 16 -1986 requires that one of
the conditions to be satisfied before disbursement of
the monies from Restricted Escrow Accounts is that all
necessary federal, state and local environmental
approvals for the dam project be obtained.
c. Section 5.09 of Ordinance 16 -1983 requires the City to
present a resolution, and the Mayor to present a
certificate of approval to the trustee that conditions
in 9.09B have been met. This section also requires a
mandatory purchase of the bonds on November 15, 1988.
d. The Ordinance required that this be accomplished by
October 5, 1988.
The City could not meet this deadline, because
Pennsylvania Department of Environmental Resources
denied the City's requests for certification under
Section 401 of the Federal Water Pollution Control
Act.
e .
8. Harrisburg City Council discussed the Dock Street Dam
Project at various council meetings. Reizdan Moore, as a
member of Council and President of Council, participated in
those discussions and decisions:
a. OCTOBER 8, 1985
The first reading of BILL NO. 59 -1985 was moved by 0.
Frank DeGarcia and seconded by Reizdan B. Moore. BILL
NO. 59 -1985 entitled:
Authorizing and directing the issuance of $215 million
aggregate principal amount of revenue bonds, to be
known as Electric Revenue Bonds (City of Harrisburg
Hydroelectric Project); series of 1985, to finance the
design, engineering and construction of a movable crest
Mr. Reizdan B. Moore
Page 5
dam and hydroelectric generating and conveyance
facility and related infrastructure improvements to the
river front; to pay the costs of the issuance of the
bonds and certain expenses incurred by the City related
to the Project.
The consensus of Council was that this matter be
carefully reviewed and be subject to public hearings
for community input.
b. OCTOBER 29, 1985
Mr. Moore reported on the Administration Committee
meeting of October 28, 1985:
- Dock Street Dam Hydroelectric Project (Bill
No. 59 -1985)
- State Pension Recovery Program (Resolution
No. 242 -1985)
At this meeting, Mr. Moore acknowledged receipt of
correspondence from the Mayor indicating his intended
use of the bond proceeds from the Dock Street Dam
Project.
BILL NO. 59 -1985 (as amended) was moved by 0.
Frank DeGarcia and Reizdan B. Moore and seconded
by Dolores Hodgkiss, Mrs. Braxton and Mr.
Gilchrist for final passage. The bill
established:
An ordinance authorizing and directing the
issuance of $215 million aggregate principal
amount of revenue bonds, to be know as
Electric Revenue Bonds (City of Harrisburg
Hydroelectric Project), Series of 1985, to
finance the design, engineering and
construction of a movable crest dam and
hydroelectric generating and conveyance
facility and related infrastructure
improvement to the river front; to pay the
costs of the issuance of the bonds and
certain expenses incurred by the city related
to the project.
A motion to amend BILL NO. 59 -1985 (as amended)
was moved by Earl F. Gohl, Jr. and seconded by
Dolores M. Hodgkiss and Reizdan B. Moore to:
Mr. Reizdan B. Moore
Page 6
- include a provision for an Electric Revenue
Bond Committee to review the monthly progress
reports of the Independent Consultant. The
committee will be comprised of three members
appointed by the Mayor, three members
appointed by City Council who will serve
with the Business Administrator of the City.
This would provide for public comment and
input during the pre - construction and
construction period.
Motion carried by unanimous vote.
The Council received a presentation from the
financial team and underwriters on the market for
this bond, and the terms and conditions of the
bond.
Mr. Moore recognized Mrs. Hodgkiss for a motion to
waive the Rules to introduce Resolution No. 244-
1985, seconded by Mr. DeGarcia. The motion
carried by a 6 to 1 vote with Councilman Robinson
voting no.
Motion by Moore, seconded by Hodgkiss, to pass
RESOLUTION NO. 244 -1985:
Directing the issuance of $215 million
aggregate principal amount of revenue bonds,
to be known as Electric Revenue Bonds (City
of Harrisburg Hydroelectric Project) series
of 1985, to finance the design, engineering
and construction of a movable crest dam and
hydroelectric generating and conveyance
facility and related infrastructure
improvement to the river front; to pay the
costs of the issuance of the bonds and
certain expenses incurred by the City related
to the Project.
Motion carried by a 6 to 1 vote. Voting
affirmatively were Mrs. Braxton, Mr. DeGarcia, Mr.
Gilchrist, Mr. Gohl, Ms. Hodgkiss and Mr. Moore.
Voting no was Councilman Robinson.
Prior to the vote, Mr. Moore explained that the
Resolution accepts the proposal of Russell, Rea
and Zappala for the investment of proceeds from
the electric revenue bond issue. It is a
component of the Dock Street Hydroelectric Dam
Mr. Reizdan B. Moore
Page 7
Project as adopted this evening by the Council
(BILL NO. 59 -1985, as amended).
c. JULY 1, 1986
BILL NO. 28 -1986 was moved by Calvin E. Gilchrist for
passage and seconded by Stanley H. Mitchell. The bill
authorized:
Amending the terms of Ordinance No. 32 -1985 and
providing that the amendment of such prior
ordinance shall be for the purpose of retiring all
of the issued and outstanding $215,000,000.00 bond
floated 6 months earlier in order to refinance the
bond issue.
Chairman DeGarcia recognized a motion to suspend
the rules in order to receive a presentation from
the bond counsel and bankers proposing the bond
issue.
Thomas R. Balaban, Bond Counsel for the City,
stated that the $25,000,000.00 bond issue was
ready to be floated. He went on to say that the
City must decide about the bond issue by November
15, 1988. At that time, the Project financing
would be in place and the advance capital would be
put toward immediate expenses. If the decision by
all parties involved was not to go ahead with the
Project, the bonds would be recalled. Mr. Balaban
stated that on November 1, 1988, Main Hurdman,
Auditing Firm, would certify that the money to
fund the Hydroelectric plant was available. He
further related that this BILL NO. 28 -1986 was
identical to the earlier Bill which established
the $215,000,000.00 bond issue, and that all
affirmative action clauses are in the measure.
BILL NO. 29 -1986 was moved by Calvin Gilchrist for
passage and seconded by Stanley Mitchell. The
bill further directed:
Authorize and direct the issuance of
$329,840,000 aggregate principal amount of
revenue bonds, to be known as electric
revenue bonds (City of Harrisburg
Hydroelectric project), fixed /adjustable rate
series of 1986; determining that such bonds
shall be issued for the purpose of providing
funds to finance various revenue producing
Mr. Reizdan B. Moore
Page 8
projects for the City, including, the
design, engineering and construction of a
movable crest dam and hydroelectric
generating and conveyance facility and
related infrastructure improvements to the
river front; and authorizing and directing
officers of the City to do, to take and to
perform necessary acts to effect the issuance
of the bonds.
Councilman Gilchrist commented that this was a
good bill because it replaces the debt of BILL NO.
28 -1986. Chairman DeGarcia recognized a motion to
suspend to receive a presentation by Thomas
Balaban by Mr. Mitchell and seconded by Mr.
Gilchrist. All members signified their approval
by voice vote.
Dan Lispi Hydroelectric Project Director for the
City of Harrisburg listed the reasons for the
additional cost for the Project:
1) Because the final location for the dam
was relocated due to a conflict with
the Paxton Creek.
2) Also because Rite Aid Corporation was
building in an industrial park near the
original location.
3) And finally, the dam would be located
3,000 feet from the original site, and
3,200 across instead of 3,000 feet, with
a second powerhouse and additional
caulker dams for more power generation.
Mr. Thomas Balaban, one of the bond underwriters,
responded that because tax reforms are on the way,
the bonds must be floated immediately to protect
the City's investment. Acres International had
been hired to provide up to the minute information
about the bond market. He remarked that the
Federal Government had given cities until 9/1/86
to save bond deals. Any local deal must be passed
by August 15, 1986. The City, he said, must
decide on a project or no project. Mr. Balaban
also remarked that at stake was 98 million
dollars if the City did not move expeditiously.
Mr. Reizdan B. Moore
Page 9
Ms. Smith asked the Law Bureau what action could
bond counsel take against the City in 1988, if
Council voided the agreement.
Mr. Balaban responded that Bond Counsel would be
unable to sell the bonds.
The Chair called for questions from the public:
Dick Simpson, member of the Hydroelectric
review board, questioned why new engineers
were needed and why did they change their
professional judgment in one night.
The Chairman instructed bond counsel to have all
team members including the engineers at the
Monday, July 7, 1986 presentation.
d. JULY 8, 1986
The second reading of BILL NO. 28 -1986 was moved by
Calvin Gilchrist and seconded by Stanley H. Mitchell.
Mr. Gilchrist stated that this bill would retire
the City's current $215,000,000 bond issue on the
Hydroelectric Dam Project.
The reading of BILL NO. 29 -1986 was moved by
Calvin Gilchrist and seconded by Stanley Mitchell.
Mr. Gilchrist related that this bill would
establish a new bond issue for $395,000,000.00.
He stated that one more discussion session would
be held on Wednesday, July 10, 1986 to inform the
public about the process.
e. JULY 10, 1986
BILL NO. 28 -1986 (as amended) was moved by Calvin
Gilchrist for approval and seconded by Stanley
Mitchell.
The Chair recognized a motion to suspend the rules
in order to receive a report from the finance
team, moved by Gilchrist and seconded by DeGarcia.
On voice vote, all members indicated that they
were in favor.
Bond Counsel indicated that BILL NO. 28 -1986 was
Mr. Reizdan B. Moore
Page 10
contingent upon the new issue of bonds being sold
(BILL NO., 29- 1986).
The motion to approve BILL NO. 28 -1986 (as
amended) was carried by unanimous vote with Mr.
Moore, Mr. DeGarcia, Mrs. Braxton, Mr. Gilchrist,
Mr. Gohl, Mr. Mitchell and Ms. Smith; all voting
affirmatively.
BILL NO. 29 -1986 was moved by Calvin Gilchrist for
approval and seconded by Stanley Mitchell.
A motion to suspend the rules was passed
unanimously in order to receive a presentation by
bond counsel concerning changes in the financial
breakdown of the bill.
Joseph Herenza, representing bond counsel,
reported that the bond figure had been reduced
from $394,295,000.00 to $391,000,000.00. The AAA
rating would be maintained and the city's credit
rating would remain high. He went on to say that
only hydroelectric revenues may be pledged to
secure the bonds and that no city water funds or
incinerator funds could be pledged to secure the
bonds. And finally, an independent revenue
consultant would be appointed to appraise the
value of the escrow account and all revenue
projections must be certified by the independent
consultant.
The motion to pass BILL NO. 29 -1986 was carried by
unanimous vote with Mr. Moore, Mr. DeGarcia, Mrs.
Braxton, Mr. Gilchrist, Mr. Gohl, Mr. Mitchell and
Ms. Smith; all voting.
Mr. Gilchrist thanked all members of the finance
team and all council members for their hard work
and support in considering these bond issues.
Mr. Mitchell asked all members to support this
bill because it would create over 500 jobs for the
citizens of Harrisburg.
Mr. DeGarcia agreed with Mr. Mitchell that the
bill should be passed.
Mr. Gilchrist added that he felt very proud about
the bill for the City of Harrisburg. He also
opined that the vote tonight be unanimous. He
Mr. Reizdan B. Moore
Page 11
also thanked Mr. Balaban, Earl Harris and Trevor
Berbeck as well as the City Clerk.
Ms. Smith said that the presentations by bond
counsel are what changed her vote to a yes.
Mrs. Braxton said that she would support the
measure.
Mr. Gohl said that he would support the measure
but felt that the project itself would not get off
the ground because of the cost of the electricity
and inflation.
Mr. Moore added that hopefully this vote tonight
would be a giant step forward for Harrisburg. To
correct revenue problems while the city risks no
money and loses no money, we should all support
the measure.
f. SEPTEMBER 13, 1988
The first reading of BILL NO. 29 -1988 was moved by 0.,
Frank DeGarcia and seconded by Sherri Levin.
This bill was outlined by Mr. DeGarcia as the
proposal to remarket previously issued bonds
pertaining to Dock Street Dam.
g. SEPTEMBER 27, 1988
Mr. Moore reported on the Administration Committee
meeting of September 26, 1988, noting that the Dock
Street Dam Bond Remarketing Agreement was on the agenda
and that various changes had been recommended by
Council for inclusion in the remarketing agreement.
h. SEPTEMBER 30, 1988
This was the recessed meeting of Tuesday, September 27,
1988 and was reconvened at 12:15 p.m. on Friday,
September 30, 1988.
The second reading of BILL NO. 29 -1988 was moved
by Reizdan B. Moore and seconded by Calvin B.
Gilchrist.
A motion to suspend the rules was passed
unanimously in order to review BILL NO. 29 -1988
with the Bond Counsel.
Mr. Reizdan B. Moore
Page 12
Dauphin Deposit Bank
and Trust Company
Pennsylvania National
Bank & Trust Company
Packard Press
Packard Press
CUSIP Service Bureau
After a brief final review of dates and amounts of
fees related to the remarketing, discussion was
closed on the Motion To Amend BILL NO. 29 -1988.
Mr. Moore outlined revisions and requested the
support of all members present.
It was moved by Reizdan B. Moore and seconded by
Calvin E. Gilchrist to pass BILL NO. 29 -1988 (as
amended), motion carried by a 5 to 1 vote.
9. Mayor Stephen Reed appointed all of the firms associated
with the engineering, financing and consulting associated
with the Dock Street Dam project.
a. Mayor Reed negotiated the fees paid to each of these
firms.
10. The following firms were selected by Mayor Reed as part of
the Financial team for the Dock Street Dam project. Fees
were paid to these firms for the original marketing as well
as the 1986 and 1988 remarketing of the bonds.
ORIGINAL ISSUE:
PAYEE PURPOSE
Fee of Trustee
Paying Agent's Initial
and Authentication
Fees and Expenses
Printing Preliminary
and Final Official
Statement; Blue Sky
and Legal Investment
Surveys
Printing 1985 Fixed/
Adjustable Rate
Series Bonds
CUSIP Numbers
AMOUNT
$50,000.00
15,045.00
To be Paid Post
Closing
96,926.72
To be Paid Post
Closing
To be Paid Post
Closing
Mr. Reizdan B. Moore
Page 13
PAYEE
Standard & Poor's
Corporation
Stevens & Lee, P.C.
Baskin and Steingert,
P.C. Malatesta, Hawke,
McKeon & Morris
Trevor Edwards, Esquire
Obermayer, Rebmann,
Maxwell & Hippel
Balaban and Balaban
KMG /Main Hurdman
Generation Development
Corporation
Hough Associates
Wickwire, Gavin & Gibbs
Baskin & Steingut
Obermayer, Rebmanetal
Stevens & Lee
Malatesta, Hawke,
McKeon & Morris
Myers & Associates
PURPOSE
Rating
Fee
Expenses of Co -Bond
Counsel
Fee
Expenses of Co -Bond
Counsel
Fee
Expenses of Co -Bond
Counsel
Fee
Expenses of Under -
Writers Counsel
Fee
Expenses of Under -
Writers Counsel
Verification of Bond
Proceeds
Financial Report
Engineering Report
FERC Counsel
Additional Expenses
Additional Expenses
Additional Expenses
Additional Expenses
Printing
TOTAL
AMOUNT
30,000.00
150,000.00
To be Paid Post
Closing
120,000.00
To be Paid Post
Closing
15,000.00
To be Paid Post
Closing
85,000.00
To be Paid Post
Closing
To be Paid Post
Closing
65,507.53
3,000.00
100,000.00
25,000.00
To be Paid Post
Closing
9,398.58
2,764.93
28,948.44
35,000.00
914.99
$832,506.19
Mr. Reizdan B. Moore
Page 14
1986 REMARKETING
PAYEE
Public Financial Management -
Financial Advisor
Commonwealth Securities - Computer
Services
Standard & Poor's - Credit Rating
Acres International - Profs. Services
Stevens & Lee - Co. - Bond Counsel
Packard Press - Printing Official
Statements
CUSIP Service Bureau - Assignment of
CUSIP Numbers
Group One Research - Revenue Consultant
Obermayer, Rebmann, Maxwell & Hippel
Underwriters Counsel
Delores Wilson - Co -Bond Counsel
Melville G. M. Walwyn - Co. Bond
Counsel
Trevor Edwards - Co- Underwriters
Counsel
Earl L. Harris - Co -Bond Counsel
Packard Press - Printing of Bonds
Eckert, Seamans, Cherin & Mellott
Co -Bond Counsel
Balaban & Balaban - Co- Underwriters
Counsel
Dauphin Deposit Trustee's Initial Fee
PA National - Paying Agent's Fee
MOUNT
$ 201,395.60
75,000.00
25,000.00
150,000.00
214,541.08
30,000.00
63.00
50,233.00
111,900.00
27,000.00
22,400.00
25,000.00
41,600.00
5,000.00
131,142.19
68,977.58
75,000.00
27,046.25
Mr. Reizdan B. Moore
Page 15
PAYEE AMOUNT
Commonwealth Securities - Bond 6,068,250.00
Salomon Brothers - Additional Cost 180.64
in Purchase of U.S. Treas. Strips
Baskin, Flaherty, Elliott & Maninno - 25,000.00
Co -Bond Counsel Fee
KMG Main Hurman (Actual Requisition 15,000.00
Enclosed) Verification of computa-
tions, 1986 issue
Eckert, Seamans, Cherin & Mellott 5,139.02
(Expenses)
TOTAL $7,394,868.36
1988 REMARKETING
PAYEE AMOUNT
Financial Advisor (Includes out -of- pocket $ 155,000
and expenses due) - Public Financial
Management
Remarketing Agents' Counsel ($75,000 to 150,000
Obermayer, Maxwell & Hippel & $75,000 to
Edwards & Harris)
Special Remarketing Agents' Counsel - 75,000
Kutak Rock & Campbell
Restructuring Fee - Commonwealth Securities 250,000
and Investments, Inc.
Special Tax Counsel - Haynes & Miller 280,000
Bond Counsel - Stevens & Lee 475,000
Trustee - Dauphin Deposit Bank & Trust Co. 50,000
Rating Agency - Standard & Poors 22,000
Printing of the Remarketing Memorandum - 35,000
(Packard Press)
Mr. Reizdan B. Moore
Page 16
PAYEE
AMOUNT
Computer Verification - Commonwealth 100,000
Securities and Investments, Inc.
Rate Consultants Fee - Resource Management 175,000
International Inc. (includes travel) Group
One Research, Inc.
Remarketing Fees - Commonwealth Securities 3,890,925
and Investments, Inc.
Transcript Preparation - Peat Marwick 6,000
Bond Counsel (Stevens & Lee) - Expenses 9,400
Haynes & Miller - Expenses 3,000
Obermayer, Rebmann, Maxwell & Hippel 5,500
Kutak Rock & Campbell - Expenses 3,000
Edwards & Harris - Expenses 1,700
TOTAL $5,686,525
SEPARATE ACCOUNT (E &L) 1988 REMARKETING
PAYEE
Packard Press for Print Costs
3rd Printing of Remarketing
Memorandum Inv. - Reg. 92
Paid to Obermayer, Rebman,
Maxwell & Hippel for Professional
Services for Co- Remarketing Agent's
Counsel - Reg. 83
Paid to Edwards and Harris for
Legal Services for Remarketing,
of Electric Revenue Bonds - Reg. 84
Paid to Peat Marwick Mitchell &
Co. CPA's for Professional Services
Associated with Remarketing Electrical
Revenue Bonds - Reg. 86
AMOUNT
$ 14,668.50
25,000.00
160,000.00
4,000.00
Mr. Reizdan B. Moore
Page 17
PAYEE AMOUNT
Paid to Resources Management
International Inc. for Consulting
Services for Remarketing of
Project Fund Bonds - Reg. 88
Paid to Eckert, Seamans, Cherin
& Mellott for out of pocket
expenses during 1986 - 1988
Reg. 93
Paid to Eckert, Seamans, Cherin
& Mellott for Legal Services
Rendered During the Period of
1986 Through 1988 - Reg. 93
12/5/85 to 7/1/86
1986 REMARKET
8/1/86 to 12/9/90
57,565.65
3,080.87
90,533.75
TOTAL $354,848.77
11. Brinjac Kambic and Associates, or Brinjac Chester
Engineering was selected by Mayor Stephen Reed as the
engineer for the project. The firm received payments for
services in relation to the Dock Street Dam project as
listed below. The fees were negotiated by Mayor Reed. The
following fees were paid:
a. BRINJAC KAMBIC & ASSOCIATES (ORIGINAL ISSUE)
Total - $433,001.00
Total - $1,077,478.10
b. SUBACCOUNT FOR BRINJAC KAMBIC ASSOCIATES AND BRINJAC
CHESTER ENGINEERING
Brinlac Kambic Associates
12/11/86 to 7/27/89 Total - $89,289.37
Briniac- Chester Enaineerina
3/9/87 to 8/8/88 Total - $80,721.41
GRAND TOTAL FOR BRINJAC.EAMBIC ASSOCIATES AND BRINJAC
CHESTER ENGINEERING - $1,680,489.80
Mr. Reizdan B. Moore
Page 18
12. David DiCarlo
Zappala.
a.
b.
c .
d.
e .
f.
g.
h.
His firm
issue of
is an Investment Banker with Russell, Rea and
was the "Lead Banker" on the initial bond
the Dock Street Dam Project.
DiCarlo attended several meetings in Harrisburg
pertaining to the Dock Street Dam Project.
He provided expertise on the financing of a bond issue.
It is his opinion that the market place determined the
fees paid to firms involved in a bond issue.
Russell, Rea and Zappala was not the lead banker on at
least one of two re- issuances of the bonds.
He was never pressured by Reed, Moore or Gilchrist for
campaign contributions.
His firm had a political action committee to regulate
its policy on campaign contributions. Good candidates
for public office were sought. Members of his firm
have an expertise in seeking such candidates.
His firm's campaign contribution to Gilchrist was $100,
which he emphasized was a minimal contribution.
13. Charles Gomulka serves as the Chief Operating Officer of
Russell, Rea & Zappala:
a. Members of his firms tend to support candidates who are
in favor of good government.
b. Dave DiCarlo is Russell, Rea & Zappala's contact person
in Harrisburg.
c. Campaign contributions made by his firm to Harrisburg
public officials had nothing to do with the Dock Street
Dam Project.
d. His firm was trying to develop business throughout the
state, not only in Harrisburg. His business is very
competitive and political contributions are a fact of
life.
e. The financing structure Russell, Rea & Zappala did for
Harrisburg was set -up to allow the city to conduct
engineering studies of the impact of the Dock Street
Dam project.
Mr. Reizdan B. Moore
Page 19
14. Employees of the investment banking firms of Russell, Rea
and Zappala, Greenwood Enterprises and Arthurs, LeStrange &
Short contributed to the campaigns of Mayor Stephen Reed and
Councilmen Reizdan Moore and Calvin Gilchrist.
a. All of these employees were physically located in the
Pittsburgh, PA area.
b. Their contributions were made through the individual
company's political action committees.
c. The employees were encouraged to make contributions by
their employers.
15. Robert Weber serves as President of Arthurs, LeStrange &
Short an investment banking firm.
a. His firm has a long standing presence for municipal
projects.
b. His firm has been involved in a number of projects in
the Harrisburg area.
c. the firm was involved in the Dock Street Dam project,
and others with the City of Harrisburg.
d. It was a normal business practice for members of his
firm to make campaign contributions to elected
officials where the firm did business.
e. There had been an on -going satisfactory relationship
with Harrisburg officials that is essentially why the
firm supported the incumbents.
16. Reizdan Moore sought re- election to Harrisburg City Council
in 1985 and 1990.
17. Reizdan Moore filed Campaign Finance Reports at the Dauphin
County Bureau of Elections when he sought election to
Harrisburg City Council.
a. The Political Committee Registration Statement dated
March 10, 1981 identified the committee as Committee to
elect Reizdan Moore.
b. The Political Committee Registration Statement dated
January 27, 1985 identified the committee as committee
to re -elect Reizdan Moore.
Mr. Reizdan B. Moore
Page 20
c. In 1981, campaign expense records do not reflect any
contributions from any of the individuals or firms
associated with the Dock Street Dam Project.
d. In 1985, campaign expense records disclose that Moore
received $20,510.24 in contributions. Of that amount,
$2,350 came from individuals or firms associated with
the Dock Street Project.
e. The largest contributor in 1985 was the bond
underwriter, Russell Rea and Zappala - $1,000.00.
f. In 1988 - 1989 campaign expense records reflect that
Moore received $7,615.00 in contributions of which
$2,150.00 was received from individuals or firms
associated with the Dock Street Dam Project.
The largest contributor in 1988 - 1989 was Malcolm
Pryor, an investment banker from the firm of Pryor,
Govan, Counts & Co. who contributed $800.00.
18. Campaign contributions Moore received from individuals or
firms involved in the Dock Street Project were reported on
the Campaign Finance Reports filed with Dauphin County
Bureau of Elections:
g.
a. Balaban & Balaban
6/4/85 - $ 100.00
10/85 - 200.00
2/11/88 - 500.00
2/11/88 - 500.00
TOTAL - $1,300.00
b. Baskin & Steingert
6/4/85 - $100.00
10/85 - 250.00
TOTAL - $350.00
c. Trevor Edwards
2/5/85 - $200.00
4/11/89 & - 500.00
4/25/-89
TOTAL - $700.00
Mr. Reizdan B. Moore
Page 21
d. Arthurs, LeStrange & Short
2/1/85 - $ 250.00
4/6/87 - 500.00
4/6/87 - 500.00
TOTAL - $1,250.00
e. Russell, Rea & Zappala
2/6/85 - $ 500.00
2/6/85 - 250.00
2/11/85 - 250.00
2/13/85 - 250.00
2/13/85 - 250.00
2/13/85 - 500.00
2/13/85 - 500.00
TOTAL - $2,500.00
f. Brin ac & Kambic and Briniac Kambic PAC
2/1/85 - $250.00
10/10/85 - 250.00
TOTAL - $500.00
g. Chester Engineers and Chesters Engineers PAC
10/24/85 - $100.00
11/1/85 - 100.00
TOTAL - $200.00
h. Obermaver, Rebmann, Maxwell & Hippel
10/25/88 - $100.00
SAL - $100.00
i. Eckert, Seamans, Cherin & Mellott
10/27/88 - $300.00
TOTAL - $300.00
Mr. Reizdan B. Moore
Page 22
j
Earl Harris
4/19/89 - $500.00
TOTAL - $500.00
19. Firms involved in the Dock Street Dam project, who made
contributions to Reizdan Moore campaigns, have received
payments from the City of Harrisburg are as follows:
Names Amount
Baskin & Steingert P.C. and
Malatesta, Hawke, McKeon &
Morris.
Trevor Edwards, Esquire
Earl L. Harris, Esquire
Edwards & Harris
Obermayer, Rebmann, Maxwell
& Hippel
$ 155,000.00
40,000.00
41,600.00
75,000.00
280,164.93
Balaban & Balaban 134,485.11
Eckert, Seamans, Chevin & 229,895.83
Mellott
Brinjac - Kambic Associates 89,289.37
Brinjac - Chester Engineering 80,724.41
TOTAL $1,126,159.60
20. Reizdan Moore provided a statement to the State Ethics
Commission:
a. As Council President, Moore never pressured members to
vote on any issue on which they were not prepared to
vote.
b. Any decisions made by Moore with regard to bond issues
or re- issues were made in the best interests of City
residents.
c. Moore never had any direct contact with bond
underwriters or bond counsel with regard to the Dock
Street Dam project.
Mr. Reizdan B. Moore
Page 23
d. Moore was aware that Mayor Reed received campaign
contributions from persons involved in the Project and
that some of these contributions were directed to his
campaign.
21. Members of Harrisburg City Council never met as a
legislative body to select any of the firms involved in the
Dock Street Dam project.
a. City Council was not consulted by Mayor Reed on any of
these selections.
b. City Council members were not made aware what criteria
or guidelines the Mayor used when making selections.
c. There were no advertisements for bids or proposals.:
d. Mayor Stephen Reed had the final say in regards to the
selection of the engineers, bond underwriters, bond
counsel and consultants associated with the dam
project.
22. By memo dated October 31, 1985, Nathan Waters, Acting City
Solicitor, responded to a request from Councilman Robinson
regarding the actions of Council President Moore and
Councilman Gilchrist:
a. Robinson inquired as to whether Moore's and Gilchrist's
failure to disclose that they received campaign
contributions from underwriters and bond counsel
participating in the bond constituted a conflict of
interest within the meaning of Rule 3 of City Council.
b. Waters noted the test applied by the State Ethics
Commission to determine if it was proper to vote on a
matter was whether the personal or private interest of
the council members is more than that of any citizen
affected by the vote.
c. Waters concluded that he was satisfied that Moore and
Gilchrist did not have a personal or private interest
in the Dock Street Dam bill as to require disclosure to
City Council.
23. In a follow -up memo dated November 12, 1985, Waters advised
Robinson as follows:
a. I continue to be satisfied that the giving and
receiving of political contributions by supporters and
Mr. Reizdan B. Moore
Page 24
Council Members respectively is not improper, per -se,
and no impropriety should attach to the aforesaid
transactions. However, if there is reason to believe
that contributions are, in fact, bribes then proof must
follow accusations. In the present case, there are no
allegations that contributions were made to influence
or control voting on any issue, bill or resolution.
This office, therefore, assumes that there was no such
intent.
b. I do not recall legally addressing the question of
political contributions in the past. I do reiterate
that Council Members should avoid the appearance of
impropriety, but I find no actionable impropriety in
the present case.
III. Discussion: As a member and president of Harrisburg City
Council, Reizdan B. Moore, hereinafter Moore, was a public official as
that term is defined under the Ethics Act. 65 P.S. 402; 51 Pa. Code
§L.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
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 provisions
of Act 170 of October 4, 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
Mr. Reizdan B. Moore
Page 25
official /employee from using public office to advance his own
interests; Koslow v. State Ethics Commission 116 Pa. Commw. Ct. 19,
540 A.2d 1374 (1988). Likewise, a public official /employee may not use
the status or position of public office for his own personal advantage;
Huff, Opinion 84 -015.
Under Section 3(b) of the Ethics Act quoted above, no person shall
offer or give to a public official and no public official shall
solicit or accept anything of value including a political contribution
based upon the understanding that the vote, official action or judgment
of the public official /employee would be influenced thereby.
In the instant matter, we must determine whether Moore violated
either Section 3(a) or 3(b) of the Ethics Act regarding the receipt of
campaign contributions from firms associated with the underwriting of a
multi - million dollar bond issue relative to a project which Moore
supported.
Moore served on Harrisburg City Council from 1982 through 1989 and
also served as Council President from 1985 through 1989. In October of
1985 the City considered undertaking the Dock Street Dam Project to
construct a hydroelectric plant for the generation of electricity. In
order to implement the project, the City of Harrisburg enacted
Ordinance 32 of 1985 authorizing the issuance of $215 million revenue
bonds to finance the project. The ordinance passed on a five to two
vote with Moore voting with the majority. The ordinance provided for
the appointment of the investment banking firms of Russell Rea &
Zappala; Arthurs, LeStrange & Short; Goldman, Sachs & Co.; and
Prescott, Ball & Turben as remarketing agents. Ordinance 15 of 1986,
which was unanimously enacted with Moore's participation and vote,
authorized the retiring of the original $215 million dollar bond issue;
thereafter, Ordinance 16 of 1986 authorized the issuance of
$394,295,000 in revenue bonds. Ordinance 16 was unanimously enacted
following the passage of a motion made by Moore. The bond issue was
designed to provide funds for the design and construction of the
project as well as to create reserve and interest funds and to pay for
the various costs related to the project. Prior to the passage of the
foregoing ordinances, there were discussions of Council in which Moore
participated. However, it was the function of the Mayor to appoint all
of the firms associated with the engineering, financing and consulting
relative to the project. The names of those parties, the amounts paid
and the services which they performed are outlined in Fact Findings 10
and 11.
A review of the campaign financing reports filed by Moore with the
County Board of Elections as to his 1981 campaign expense records do
not reflect any contributions from any individuals or firms involved
with the project. However, in 1985, Moore received $20,510.24 in
contributions, of which $2,350 of that amount came from individuals or
firms associated with the project; his largest contributor was the firm
Mr. Reizdan B. Moore
Page 26
of Russell, Rea & Zappala which contributed $1,000. Moore's 1988 -89
campaign expense records reflect that he received $7,615.00 in
contributions, of which $2,150.00 was received from individual firms
associated with the project; the largest contributor was Malcolm Pryor
who, as an investment banker in the firm of Pryor, Govan, Counts &
Company, contributed $800. Fact Finding 18 recites the various firms
and individuals involved with the project which contributed monies to
Moore's election campaigns. In addition, Fact Finding 19 sets forth
the fees received by those individuals or firms for the services
performed as to the project. Lastly, it is noted that City Council
members never selected any of the firms involved in the project and
were not consulted by the Mayor when he made his selections.
In applying the provisions of Sections 3(a) and (b) of the Ethics
Act to the above facts, we are constrained to find that no violation
exists as to either Section since there is no evidence that there was a
use of office to obtain a financial gain under Section 3(a) or an
understanding under Section 3(b) between the campaign contributors and
Moore as to his participation and voting. In Bartle, Order 659, we
held that a county commissioner did not violate Sections 3(a) or 3(b)
of•the Ethics Act in participating in a matter involving a firm from
which various individuals contributed to his re- election campaign,
since there was no evidence to establish a connection between the
involvement by the public official and the re- election campaign
contributions by persons in the firm. See also Wolfgang, Opinion 89-
028. Since we find that there was no understanding under Section 3(b)
of the Ethics Act and no linkage between the use of office of Moore in
voting and the financial gain consisting of the campaign
contributions, no violation occurred.
IV. Conclusions of Law:
1. Reizdan B. Moore as Councilmember and President of Harrisburg City
Council was a public official as that term is defined under the
Ethics Law.
2. Moore did not violate Section 3(a) of the Ethics Act regarding
participating or voting as to the Dock Street Dam Project when
firms associated with the underwriting of that project made
contributions to Moore's election campaign because no linkage was
established between the use of office of Moore in voting for the
project and the receipt of election campaign contributions.
3. Moore did not violate Section 3(b) of the Act regarding receiving
election campaign contributions from firms associated with the
underwriting of bond issues as to the Dock Street Dam project since
there is no evidence to establish an understanding between Moore
and the firms as to the receipt of the campaign contributions and
his voting.
in re: Reizdan B. Moore
: File Docket; 85 -164 -C
: Date Decided: February 14, 1991
: Date Mailed: February 28 1991
ORDER No. 780
1. Reizdan B. Moore as a Councilmember and President of
Harrisburg City Council did not violate Section 3(a) of the
Ethics Act regarding participating or voting as to the Dock
Street Dam Project when firms associated with the
underwriting of that project made contributions to Moore's
election campaign because no linkage was established between
the use of office of Moore in voting for the project and the
receipt of election campaign contributions.
2. Moore did not violate Section 3(b) of the Act regarding
receiving election campaign contributions from firms
associated with the underwriting of bond issues as to the
Dock Street Dam project since there is no evidence to
establish an understanding between Moore and the firms as to
the receipt of the campaign contributions and his voting.
BY THE COMMISSION,
ROBERT W. BROWN, VICE CHAIR
Dennis C. Harrington did not participate in this matter.