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HomeMy WebLinkAbout83-005 CoploffMr. Larry E. Coploff Williamson, Coploff & Hanna 334 E. Water Street Lock Haven, PA 17745 STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 May 23, 1983 OPINION OF THE COMMISSION RE: Use of Federal Funds; Private Corporation; City Council. Dear Mr. Coploff: I. Issue: 83 -005 You ask whether Mr. Hendricks' running for the position of City Councilman would result in a conflict of interest which would either interfere with his ability to hold office in a corporation interested in a housing revitalization program or in that corporation's ability to participate in the revitalization program. II. Factual Basis for Determination: You represent Georg A. Hendricks, a local businessman, who has filed nominating petitions for the position of City Councilman in the City of Lock Haven, Pennsylvania. Mr. Hendricks is currently a stockholder and officer in a corporation which has previously discussed with the current City Council the possibility of a housing revitalization grant or loan. The City has made an application to the U.S. Department of Housing and Urban Development (HUD) for a grant. If the application is approved, the City will administer the federal . funds being used by the corporation in which Mr. Hendricks is involved. III. Applicable Law: The law to be applied to this question is as follows: Section 1. Purpose. The Legislature hereby declares that public office is a public trust and that any effort to realize personal financial gain through public office other than compensation provided by law is a violation of that trust. In order to strengthen the faith and confidence of the people of the State in their government, the Legislature further declares that the people have a right to be Mr. Larry E. Coploff May 23, 1983 Page 2 assured that the financial interests of holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. Because public confidence in government can best be sustained by assuring the people of the impartiality and honesty of public officials, this act shall be liberally construed to promote complete eisclosure. 65 P.S. 401. Section 3. Restricted Activities. (a) No public official or public employe 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) (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). (c) No public official or public employee or a member of his immediate family or any business in which the person or a member of the person's immediate family is a director, officer, owner or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into any contract valued at $500 or more with a governmental body unless the contract has been awarded through an open and public process, including prior public notice and subset,uen4 public disclosure of all proposals considered and contracts awarded. Any contract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of making of the contract. 65 P.S. 403(c). Mr. Larry E. Coploff May 23, 1983 Page 3 IV. Discussion: The Ethics Act, 65 P.S. 401 et•seq., states that its purpose is to strengthen the faith and confidence of the people of the state in their government by assuring that the financial interests of holders of or candidates for public office present neither a conflict nor the appearance of a conflict with the public trust. There is no dispute that as a candidate for and /or an elected City Councilman, Mr. Hendricks would be a "public official" as that term is defined in the Ethics Act, and as such his conduct would have to conform to the requirements the Act. At the outset, two of the pertinent provisions to be reviewed include Sections 3(a) and 3(b) of the Act. See 65 P.S. 403(a) and (b). These Sections provide that no public official may use his public office or confidential information received through public office to obtain financial gain other than compensation provided by law for himself, his family, or a business with which he is associated. A "business with which he is associated" is defined by Section 2 of the Ethics Act as follows: "Business with which he is associated." Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or holder of stock. 65 P.S. 402. In addition, these Sections prohibit a public official or candidate for public office from receiving any thing of value, including the promise of future employment, or the understanding that his official conduct would be influenced thereby. Section 3(c) of the Act is also pertinent and provides, in part, that no public official or any business in which the official is an officer or holder of stock exceeding 5% of the equity at fair market value of the business shall enter into a contract valued at $500 or more with a governmental body with which he is associated unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and contracts awarded. 65 P.S. 403(c). Mr. Hendricks, it is presumed here, will be a "public official" for the purposes of the Ethics Act and so because of his simultaneous position as stockholder and officer of the corporation in question, that corporation can contract with the City of Lock Haven only if the contract is awarded after the requisite open and public process. You have not indicated whether there will be a contract between the City and Mr. Hendricks' corporation, but if there is, the open and public process must be followed if contracts between them exceed $500. This process, as delineated by the Commission in Howard, 79 -044, must meet the following criteria: Mr. Larry E. Coploff May 23, 1983 Page 4 Prior public notice; and Public disclosure of all proposals considered; and Public disclosure of the award of the contract. If these standards are met and competitors of the corporation in question have reasonable time within which submit t'Heir proposals, such standards will insure that Mr. Hendricks and /or the City of Lock. Haven are not influenced in this award of such contracts or the administration of any funds to be used for the revitalization program. If the corporation with which Mr. Hendricks is associated obtains the contract with or funding from the City before Mr. Hendricks takes office, there should be nothing to render that contract void so long as Mr. Hendricks meets the provisions of 65 P.S. 403(b) during his candidacy for public office. In any event, whether the contract is awarded before or after Mr. - Hendricks takes office, Mr. Hendricks -must, in order to avoid any appearance of conflict with the public trust abstain from all participation, including discussions and votes, in the administration or awarding of grants, contracts, etc. to the corporation with which he is associated. Essentially, as we held in Toohey, i3= -003, a public official is not automatically disqualified from participating in programs which would otherwise be available to him. Although Toohey dealt with a HUD grant to an individual, we see no reason to preclude The corporation with which Mr. Hendrick is associated from participating in this revitalization program. We do, however, re -state as we said in Toohey, that "... if and when a public official is in a position to tailor the benefit program to specially benefit himself or to influence the award of a grant to himself, a business with which he is associated, or a member of his immediate family, he should in all cases abstain from participating in the decision - making process related to such." Toohey, p. 3. Likewise, even as to a business with which potential councilman Hendricks would be associated, that business could participate in the revitalization program if he played no role in deciding who would get the funds, establishing the criteria by which the program itself was to be operated and /or criteria by which applications would be reviewed or actually granted, and used no confidential information acquired during his holding of public office to apply for or obtain such funds. Mr. Larry E. Coploff May 23, 1983 Page 5 Further, similar to our ruling in Toohey, Mr. Hendricks as a councilman would have to remove himself from making any decisions regarding the distribution of limited revitalization funds if the corporation with which he is associated is applying for such t'unds. This is because, if a councilman can effectively deny all applications other than that of his corporation, he . can effectively insure the availability of funds for his corporation's project or application. See Toohey, supra and Reisinger, 82- 146 -C. Finally, should Mr. Hendricks win election and his corporation apply to participate in the revitalization program, he should insure the widest possible dissemination of the fact that said corporation is applying for such funds, that the public should be allowed to comment on this process, that the abstentions set forth above are observed and the reasons therefore are made part of the public record. V. Conclusion: As a public official and /or candidate for public office, Mr. Hendricks' conduct with relation to the corporation in which he is both an officer and stockholder, should be governed by the guidelines developed in the above discussion. Specifically, he must observe and insure the entire Council is aware of and observes the requirements of an open and public process of Section 3(c) if a contract of $500 or more between the City and Councilman Hendricks' corporation is undertaken. The direction as to abstention from participating in the City's decisions on establishing the criteria for the program so as to "mold" the program or to actually produce benefits for oneself or the business with which the Councilman, if elected, is associated and as to awarding grants /funds must be met to insure compliance with Section 3(a) of the Ethics Act. A Councilman- applicant should disclose and disseminate information as to the application of the business with which he is associated and abstain as discussed above for the entire fiscal year(s) associated with this corporation's application. Pursuant to Section 7(9)(i), this opinion is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any civil or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance of the advice given. This letter is a public record and will be made available as such. Mr. Larry E. Coploff May 23 1983 Page 6 Finally, any person may request within 15 days of service of the opinion that the Commission reconsider its opinion. The person requesting reconside- ration should present a detailed explanation setting forth the reasons why the opinion requires reconsideration. • CW /rdp cr"ic!L , A By the Commission, AUL J. Chairma ITH