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HomeMy WebLinkAbout89-015 MeyerMr. Evan Meyer Assistant City Solicitor City of Philadelphia Law Department, 15th Floor Municipal Services Building Philadelphia, PA 19102 -1692 I. Issue: *ATE ETHICS COMMISSION 348 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 OPINION OF THE COMMISSION Before; Helena G. Hughes, Chair Robert W. Brown, Vice Chair W. Thomas Andrews G. Sieber Pancoast James M. Howley Michael J. Washo DATE DECIDED: September 27, 1989 DATE MAILED: October 10, 1989 II. Factual Basis For Determination: 9 - 015 Re: Former Public Employee; Section 3(e); Commerce Director; City of Philadelphia; Philadelphia Industrial Development Corporation; Appeal of Advice of Counsel Dear Mr. Meyer: This Opinion is issued pursuant to your appeal of the Advice of Counsel No. 89 -549 issued on June 6, 1989. Whether the Ethics Act presents any prohibition or restrictions upon the employment of a former city commerce director with the industrial development corporation in the city for a period of one year after termination of his service. The issue which you presented was originally processed as a request for an advice of counsel and as a result, on June 6, 1989 Advice of Counsel No. 89 -549 was issued. That advice concluded that Mr. William P. Hankowsky as (former) Commerce Director of the City of Philadelphia was considered a public employee and would become a former public employee upon termination of service with the Philadelphia Department of Commerce subject to the restrictions imposed by Section 3(e) of the Ethics Act. On June 20, 1989, this Mr. Evan Meyer Page 2 Commission received your two letters wherein you appealed the above advice. By letter of June 27, 1989, you were notified that your appeal would go before the full Commission and that you would be notified of the date, time and location of that meeting by separate letter which was sent to you on July 10, 1989. In your appeal of advice you express your disagreement with the conclusion of the Advice of Counsel. In particular, you argue that the Advice was in error in concluding that Section 3(e) of the Ethics Act applied to Mr. Hankowsky's situation. In the alternative, you argue that if Section 3(e) does apply to Mr. Hankowsky, his activities on behalf of the Philadelphia Industrial Development Corporation (PIDC) as well as with the Philadelphia Authority for Industrial Development (PAID) should be permitted under 3(e) of the Ethics Act under the rubric of "administering an existing contract ". Initially, a review of the facts is in order. William P. Hankowsky has served as Commerce Director for the City of Philadelphia until April 1, 1989, when he terminated service to take the position of President of PIDC. By ordinance, PIDC was established to "promot(e) the industrial and economic development of the City of Philadelphia...." Thus, PIDC is the official industrial development agency for the City of Philadelphia to carry out the functions and purposes of this type of agency as provided for in the Industrial Development Assistance Law, the Act of May 31, 1956, P.L. 1911, 73 P.S. 351 -358. The Industrial Development Assistance Law makes provision for assisting counties on a matching grant basis as to the planning and promotion of programs designed to stimulate new or existing (through enlargement) industrial, commercial or manufacturing enterprises. The City of Philadelphia (City) accomplishes the foregoing through a cooperative program among the City, PIDC and PAID. PAID is an authority organized under the Industrial Development Authority Act, the Redevelopment Area Economic Cooperation and Implementation Act, and the Industrial and Commercial Development Authority Law. The contractual dealings which PIDC has with the City may classified into three categories: 1. Contracts with the City to pass on Federal, State and City monies as loans to companies to create jobs; 2. Contracts with the City to manage projects for the City; and 3. Nominations for purchasers of property in the City to be disposed of by PAID. In addition, PIDC entered into a contract with the City to provide certain services including the staffing of the Developers Services Committee in which PIDC assists developers in preparing the agenda of issues to be reviewed by the Committee and also in preparing the minutes of committee meetings. You express your view Mr. Evan Meyer Page 3 that PIDC is in the nature of a quasi - public /non - profit corporation which basically acts as agent for the City Commerce Department. You then argue that Mr. Hankowsky's new position with PIDC falls within the ambit of an exception wherein this Commission has not applied the provisions of Section 3(e) of the Ethics Act to situations where a public official /employee leaves governmental service and obtains employment with another governmental body which he represents before his former governmental body. You argue that you fit within the above exception because the PIDC is a quasi - governmental body. In reviewing and making a determination in this matter, we will be guided by an application of the State Ethics Act and Regulations of the Commission. III. Discussion: Since your primary challenge relates to the legal status of Mr. Hankowsky's new employer, PIDC, we must focus our review on the nature of this body so as to determine whether PIDC would come within the ambit of our exception which allows, in certain instances, former public officials /employees to represent a new governmental employer before their former governmental body. You do not question and you have so noted that industrial development corporations are prescribed for under the Industrial Development Assistance Law, supra. Section 3 of that law defines the term "industrial development agency" to be: . . any non - profit corporation, organization, association or agency which shall be designated by proper resolution of the governing body of any county . . ." 73 P.S. 353. You do not argue that the PIDC is "wholly a 'public body'", but assert that it is ". . . at least a quasi - governmental body such as distinguishes it from clearly private enterprises . . You compare the PIDC to the Harristown Development Corporation (HDC), the status of which was considered by Commonwealth Court in the case of Appeal of German, 27 Pa. Commw. Ct. 108, 366 A.2d 311 (1976). Since you note that Commonwealth Court found that HDC was "not a private enterprise" and since you assert that HDC is quite similar to PIDC, you believe that Mr. Hankowsky's situation falls within our exception as to the applicability of Section 3(e) of the Ethics Act because Mr. Hankowsky's, in your view, has not entered the private sector. In that regard, you emphasize the tri- partite participation between the City, PIDC and PAID of promoting the industrial and economic development of the City. In particular, you note the above provision of the industrial development statutes and the City ordinances which form the basis for PAID and PIDC to have a continuing contract since January of 1969 with PIDC designated as management agent and administrator of PAID as part of the process wherein PIDC transfers property to PAID which in turn transfers the property to developers Mr. Evan Meyer Page 4 for development as industrial parks. Finally, you note the purpose of industrial development authorities such as PAID is set forth in the Industrial and Commercial Development Authority Law: "to promote the health, safety, morals, employment, business opportunities and general welfare of the people [of the Commonwealth] . . . for the public purpose of alleviating unemployment, maintaining employment at a high level, eliminating and preventing blight and eliminating or reducing air and water pollution, and creating and developing business opportunities by the construction, improvement, rehabilitation, revitalization and financing of industrial, commercial, manufacturing and research and development enterprises." We must now determine whether Section 3(e) of the Ethics Act would restrict Mr. Hankowsky in his new position as President of the PIDC from representing either PIDC or PAID before his former governmental body, the City Commerce Department. Initially we must note that because you terminated your position of employment with The City of Philadelphia in April 1989, the questions addressed herein will be reviewed under the provisions of the Ethics Act of 1978 as the most recent law was not enacted until after (June 1989) your resignation. Section 3(e) of the Ethics Act provides: Section 3. Restricted activities. (e) No former official or public employee shall represent a person, with or without compensation, on any matter before the governmental body with which he has been associated for one year after he leaves that body. 65 P.S. §403. The term "representation" as used in Section 3(e) of the Ethics Act is defined in our Regulations as follows: Section 1.1 Definitions. Representation - -- Any act on behalf of any person including but not limited to the following activities: personal appearances, negotiating contracts, lobbying, and submitting bid or contract proposals which are signed by or contain the name of the former public official or public employee. 51 Pa. Code S1.1. Mr. Evan Meyer Page 5 This Commission has interpreted Section 3 of the Ethics Act to prohibit personal appearances before one's former governmental body, participating in any matters over which the individual had supervision, direct involvement or responsibility while employed by that governmental body or lobbying as to that governmental body. Russell, Opinion 80 -048; Seltzer, Opinion 80 -044. We have determined that Section 3(e), however, would not preclude a former public employee from administering an existing contract as opposed to negotiating or renegotiating a contract. Dalton, Opinion 80 -056. This Commission has also determined that the employment by a government agency by the former public employee would not preclude that individual from appearing before his governmental body. Thus, in Hagan, Opinion 84 -019 and Pinto, Opinion 84 -021, we noted that the legislative intent behind Section 3(e) of the Ethics Act was to prohibit representation of persons in circumstances that might give rise to a conflict, the typical case being where public officials /employees would leave public service and enter into the private sector. However, in the two cited Opinions, we found that Section 3(e) of the Ethics Act would not restrict the ability of new government employees from representing their new governmental body or entity before the former governmental body with which they were associated. In these cases, we opined that the post public employment was with another governmental body or entity and hence the concerns the General Assembly sought to address in Section 3(e) of the Ethics Act were allayed because the new governmental body could not be expected to influence the former governmental body. In light of the above, we must specifically decide whether Section 3(e) of the Ethics Act would be applicable to Mr. Hankowsky in his post city employment with the PIDC in terms of representing PIDC or PAID before the City Commerce Department. As a threshold issue we must decide whether PIDC is to be considered a governmental employer so as to exempt Mr. Hankowsky from the restrictions of Section 3(e) of the Ethics Law. Our analysis leads us to the conclusion that the PIDC cannot, for the purposes of this advisory opinion, be considered a governmental body. As to the exception that we have applied in the Hunt and Hagan Opinions supra, we will not engage in semantics as to whether a given body might be considered as "quasi" governmental because it is a non- profit corporation performing a worthwhile function. We are constrained to follow the definition in the Industrial Development Assistance Law which defines such entities to be non - profit corporations; hence, we must conclude that the PIDC, as other industrial corporations, are not considered governmental bodies. Therefore, Mr. Hankowsky is subject to the provisions of Section 3(e) of the Ethics Act for a period of one year after he leaves Mr. Evan Meyer Page 6 governmental service with the City Commerce Department. Turning to your subsidiary questions as to whether Mr. Hankowsky's activities as President of PIDC may be considered as administering an existing contract, we are guided by our prior decision in Dalton, Opinion 80 -056. In the cited opinion, a public employee in the Office of Administration had the responsibility of reviewing bids by contractors who administered state benefit programs. The public employee contemplated termination of service followed by employment by one of those contractors which was a non - profit corporation. We held in that case that the individual could continue to administer an existing contract with the prospective employer even though that individual had responsibility or supervision over that program while in governmental service, subject to the limitation that the individual could not negotiate a new contract or change an existing contract as an employee of the prospective employer. In the instant matter, we find that the PIDC is not a governmental body. As such, Mr. Hankowsky as a former public employe is subject to the provisions of Section 3(e) of the Ethics Act which would restrict his appearances and representation before the Philadelphia Commerce Department for a period of one year after termination of service as to any new contractual matters involving the City since his arrival at PIDC; however, Mr. Hankowsky may administer any ongoing contracts that were in existence with the City prior to his arrival at PIDC. Finally, it is noted that Section 403(b) of the State Ethics Act would prohibit any public employee or public official from accepting a position of employment if said position has been offered based upon the understanding that the official conduct of the employee or official, while working for his former governmental body, was influenced by such offer. See 65 P.S. §403(b). The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. The Advice of Counsel No. 89 -549, with the above clarification, is affirmed. IV. Conclusion: As a former Commerce Director, Mr. Hankowsky was a "public employee" as defined under the Ethics Act. Upon termination of service with the Philadelphia Department of Commerce, Mr. Hankowsky would become a "former public employee" subject to the restrictions imposed by Section 3(e) of the Ethics Act. The Philadelphia Mr. Evan Meyer Page 7 Industrial Development Corporation is not a governmental body and hence Mr. Hankowsky did not transfer from one governmental body to another. Section 3(e) of the Ethics Act restricts appearances and representation by Mr. Hankowsky before the Philadelphia Commerce Department for a period of one year after termination of service as to any new contractual matters involving the City since his arrival at PIDC; however, Mr. Hankowsky may administer any ongoing contracts that were in existence with the City prior to his arrival at PIDC. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. The Advice of Counsel, with clarification, is affirmed. 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 evidence of the advice given. such. This letter is a public record and will be made available as Finally, any person may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within fifteen days of the mailing date of this Opinion. The person requesting reconsideration should present a detailed explanation setting forth the reasons why the Opinion requires reconsideration. By the Commission, elena G. Hughes, Chair