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HomeMy WebLinkAbout1149 BarrettIn Re: Christopher Barrett STATE ETHICS COMMISSION 308 FINANCE BUILDING HARRISBURG, PENNSYLVANIA 17120 File Docket: X -ref: Date Decided: Date Mailed: Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Julius Uehlein John J. Bolger Frank M. Brown Susan Mosites Bicket 98- 069 -C2 Order No. 1 149 2/24/2000 2/29/2000 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation as to the above -named Respondent regarding a possible violation of the Public Official and Employee Ethics Law, Act 9 of 1989, P.L. 26, 65 P.S. §401 et seq., as codified by the Public Official and Employee Ethics Act ( "Ethics Act "), Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101 et sea., which inter alia provides for the completion of pending matters under that Act. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was not filed and a hearing was deemed waived. The record is complete. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code §21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with the Ethics Act. 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. Confidentiality does not preclude discussing this case with an attorney at law. Barrett, 98- 069 -C2 Page 2 I. ALLEGATION: That Christopher Barrett, a public official in his capacity as a Member of the Derry Township School District Board of Directors, Dauphin County, violated Section 3(a) of the State Ethics Act (Act 9 of 1989) when he used the authority of his office for the private pecuniary benefit of himself and /or a business with which he is associated by participating in discussions and actions of the school board to approve a long term agreement with his employer, Hershey Entertainment & Resorts Company, regarding the amount of amusement taxes paid by that company. II. FINDINGS: 1 The Investigative Division of the State Ethics Commission received a signed, sworn complaint alleging that Christopher Barrett violated provisions of the State Ethics Act (Act 9 of 1989). 2. Upon review of the complaint the Investigative Division initiated a preliminary inquiry on November 24, 1998. 3. The preliminary inquiry was completed within sixty days. 4. On January 20, 1999, a letter was forwarded to Christopher Barrett, by the Executive Director of the State Ethics Commission informing him that a complaint against him was received by the Investigative Division and that a full investigation was being commenced. Said letter was forwarded by certified mail, no. Z 015 323 507. a. b. The domestic return receipt bore the signature of Jane Kay Barrett, with a delivery date of January 26, 1999. 5. On May 18, 1999, the Executive Director of the State Ethics Commission filed an application for a ninety day extension of time to complete the Investigation. 6. The Commission issued an order on June 1, 1999, granting the ninety day extension. 7 On an application 9 for aEnine Executive d y Director xension of State t me Ethics toc Commission complete the Investigation. 8. The Commission issued an order on August 30, 1999, granting the ninety day extension. 9. Periodic notice letters were forwarded to Christopher Barrett in accordance with the provisions of the Ethics Law advising him of the general status of the investigation. 10. The Investigative Complaint was mailed to the Respondent on January 10, 2000. 11. Christopher Barrett served as a member of the Derry Township School Board of Directors since December 8, 1997. 12. Professionally, Barrett has been employed by the Hershey Entertainment and Resorts Corporation (NERCO) since approximately December 23, 1986. Barrett, 98- 069 -C2 Page 3 a. Barrett has held the position of Director of Marketing and Sales for Hersheypark since March 30, 1998. b. Barrett previously held the position of Director of Sales for Hersheypark. 13. Hersheypark is one of approximately ten (10) business entities under the NERCO corporate umbrella. a. Other NERCO interests include Hersheypark Stadium, Hershey Bears Hockey, Hershey Wildcats soccer, Hershey Lodge, Hotel Hershey, Hershey Nursery, Hershey Laundry, Hershey Highmeadows Campground and the Chocolatetown Cafe located within Chocolate World. 1. Chocolate World itself is owned by Hershey Foods. 14. NERCO is a separate operating entity from the Hershey Foods Corporation. a. Both are district [sic] entities of the Milton Hershey Trust. 15. HERCO interests identified in Finding No. 13 are located within the geographical boundaries of the Derry Township School District. 16. NERCO is the largest taxpayer to both Derry Township and the Derry Township School District. 17. HERCO pays the Derry Township School District and Derry Township an amusement tax based on the lesser of ten percent (10 %) or seventy -five cents ($ .75) per paid admission for the first $7.50 in paid admissions to NERCO attractions. a. This amusement tax revenue is split equally between Derry Township and the Derry Township School District. b. The township and school district each receive substantial tax revenues from amusement taxes paid by HERCO. 18. The township and school district each received the following annual amusement tax revenues from HERCO since 1993. Year Amount 1993 $ 714,295.74 1994 $ 894,792.11 1995 $ 830,618.24 1996 $ 962,1 12.88 1997 $ 956,535.58 1998 $1,067,774.79 1999 $ 953,476.67 - Year to date as of 10/31/99 19. Amusement tax revenues account for approximately five percent (5 %) of the school districts annual operating budget. a. Amusement tax revenues account for approximately twelve percent (12 %) of the township's annual operating budget. Barrett, 98- 069 -C2 Page 4 20. During the fall of 1997, the Pennsylvania State House of Representatives was considering legislation aimed at freezing and ultimately eliminating the amusement tax. 21. State representative Frank Tulli, 106 Legislative District, contacted Derry Township and school district representatives during the latter part of 1997 informing them of the pending changes to the amusement tax law. a. The 106th Legislative District includes Derry Township. 22. Representative Tulli offered to mediate negotiations between the township, school district and NERCO to create some type of agreement to ensure continued revenue for the township and school district should changes be made to the amusement tax legislation. 23. Tulli requested negotiate agreeme t township, school district and NERCO meet with him to an a. August Memmi represented the Derry Township Board of Supervisors. b. Stanley Tarka represented the Derry Township School Board. c. Scott Newkam represented NERCO. 24. Tulli hosted several negotiating meetings with Memmi, Tarka and Newkam between November 1997 and March 1998 at his legislative district office in Hershey, PA. a. Memmi, Tarka and Newkam would each report back to their respective entities after these negotiating sessions. 25. Christopher Barrett was not included in the negotiating committee of the school district or NERCO. 26. The Derry Township School Board discussed terms of the proposed agreement during board executive sessions. a. The board holds an executive session prior to each public meeting. b. The board holds two (2) public meetings per month. c. The 9 7oa and March 1998 of six when potent executive sessions to msof the ag agreement were 1 e 9 discussed. 27. Christopher Barrett did not participate in these executive session discussions at the direction of Board President Stanley Tarka due to a potential conflict of interest for Barrett. a. Barrett was aware of the amusement tax issue from local news reports. b. Barrett tho exec i utive r sess sessions. was being discussed by the school board during these 28. The Derry Township Board of Supervisors discussed terms of the agreement during at least one (1) executive session. Barrett, 98- 069 -C2 Page 5 29. Barrett did not appear before the township board of supervisors regarding any aspect of the proposed agreement. a. Barrett did not contact any Derry Township representatives regarding the proposed agreement in any fashion. 30. Barrett did not assist Scott Newkam or any other HERCO representatives with any aspect of the proposed agreement on behalf of NERCO. a. Barrett is not involved in corporate level decisions at NERCO. 31. Representative Tulli created the framework to be used for an agreement among the school district, township and HERCO. a. The proposed agreement was based on the amusement tax as it was being paid during 1997. b. Barrett did not participate or assist in this process. 32. Prior to the school board's January 19, 1998, meeting Representative Tulli and Timothy Allwein of the PA School Board association spoke about the amusement tax regarding the "district's interests and concerns." a. Minutes reflect Barrett was present at this meeting. 33. By the middle of March 1998 a tentative amusement tax agreement was approved by the negotiating committee. a. Barrett was not involved with the negotiating committee. 34. The tentative agreement was disclosed during the school board's March 16, 1998, meeting. Minutes from that meeting include the following announcement relating to the agreement: a. "Dr. Tarka announced that the Derry Township School District, along with the Derry Township Board of Supervisors, and Hershey Entertainment and Resorts Company have reached a tentative agreement relative to the Resolution of the Amusement Tax issue. The School Board believes that the agreement is very positive, and is optimistic it will result in a Tong -term solution to the potential dilemma that the District is facing. Representative Frank Tulli will be holding an information meeting on Sunday, March 22, 1998, at 2:00 p.m. in the Hershey High School Auditorium. He will review the current status of legislative activity relative to the Amusement Tax and any recent developments. Representative Tulli will also discuss the details and terms of the agreement. The school board will vote on the Amusement Tax Agreement at the March 23, 1998, meeting. Dr. Tarka expressed the School Board's appreciation to parties involved in the process including Hershey Entertainment and Resorts Company, who has displayed outstanding citizenship." b. Barrett was present at this meeting. Barrett, 98- 069 -C2 Page 6 35. Barrett attended the amusement tax information meeting hosted by Representative Tulli at the Hershey High School on March 22, 1998. a. Approximately 300 people attended this meeting. b. Barrett was not required to attend in his public position and had no input during the meeting. c. Barrett sensed public support for the agreement at the meeting. 36. At the Board's March 23, 1998, meeting, further discussion and official action occurred on the amusement tax agreement with HERCO. Under citizens comments Chris Morelli "questioned if there were any other board members in addition to Mr. Barrett who are employed by HERCO and will be participating in the agreement discussion ?" Mr. Morelli's questions were answered. a. Under new business, several pages of minutes were generated as the result of board discussions on the three (3) way agreement_ Solicitor James Clippinger presented the main points of the agreement. Board Member Ellen Wolpert expressed her opposition to it because terms of the agreement could not be revisited for ten (10) years. b. Barrett was present for this public discussion. 37. The agreement negotiated by Representative Tulli was presented to the school board on March 23, 1998, for approval. 38 official action ac on occurr ng on the 1998, � e three (3)wayagreement include w th Derry Township HERCO: "It is recommended that the board approve a negotiated long term agreement with HERCO to insure [sic] continued payments of the amusement tax by HERCO at the current rate regardless of any legislative modification repeal of the legal authority to collect such tax. Moved by Mrs. Koch; seconded by Mr. Clark." Roll CaII Vote: Barrett - Yes Clark - Yes Dorrance - Yes Grab - Yes Koch - Yes Mooney - Yes Moran - Yes Wolpert - No Tarka - Yes negotiating parties did not "Comment: Mr. Barrett stated that the influence his vote on the issue." 39. Minutes from the supervisors' April 27, 1998, meeting include board action to approve the minutes from March 23, 1998, without change. a. Minutes reflect Barrett was present at this meeting. b. This motion passed by a 9 -0 margin with Respondent Barrett's participation. 40. Prior to the vote of March 23, 1998, Barrett was advised by the district's solicitor, James Clippinger, to abstain from the vote. Barrett, 98- 069 -C2 Page 7 a. Clippinger did not provide Barrett with a written opinion. b. No advice is recorded as being provided in the board's meeting minutes. 41. Barrett did not seek any advice from the State Ethics Commission regarding his participation in the agreement process. 42. Barrett participated in board action on the agreement because he felt that it was good for the community. 43. The Derry Township Board of Supervisors took official action on the three (3) way agreement during their March 24, 1998, meeting. 44. Minutes from the Derry Township Board of Supervisors March 24, 1998, meeting include the following recorded official action on the three (3) way agreement. a. "It was moved by Supervisor Payne and seconded by Vice Chairman Clark that an agreement between and among Hershey Entertainment and Resort Company; the Township of Derry and the Derry Township School District is hereby approved. A roll call vote was taken and a motion was unanimously carried." Present: Memmi, Clark, Cunningham, Payne and Manari. b. Meeting minutes also include a list of people present at the meeting. A review of this list reflects that Barrett was not present. 45. On March 25, 1998, a three (3) way agreement was entered into between HERCO, Derry Township and the Derry Township School District for the continued payment of amusement taxes by HERCO regardless of changes to local tax enabling legislation. a. Key provisions of the agreement include: 1. The agreement is for a fifty (50) year period commencing on July 1, 1998. 2. Terms and conditions of the agreement can be renegotiated every ten (10) years with the agreement of all three (3) parties. 3. During the term of the agreement, NERCO shall make the payment of amusement taxes under the terms of currently enacted ordinances for the lesser of ten percent (10 %) or seventy -five cents ($ .75) per paid admission for any amusement operated by HERCO. 4. The agreement does not provide for any cost of living adjustments to the payment amount. 5. In the event there is no repeal or modification to the amusement tax as currently authorized by the enabling legislation or that such modification does not reduce the rates of taxation below that maximum established by the agreement, HERCO would receive no credit for the taxes collected and paid pursuant to the agreement. Barrett, 98- 069 -C2 Page 8 b. The agreement was signed by S.J. Newkam, Executive VP and COO of NERCO; Stanley M. Tarka, Jr., President of Derry Township School Board and August Memmi, Jr., Chairman of the Derry Township Board of Supervisors. 46. By entering into the three (3) way agreement, the Derry Township School District ensured the continued receipt of amusement tax revenues in excess of $900,000 annually. a. The agreement was viewed as a win -win situation by all three (3) parties. b. Derry Township and the Derry Township School District ensured themselves continued amusement tax revenues regardless of pending legislative changes. 1. NERCO ensured themselves of no increases to their amusement tax liability rate for at least ten (10) years. c. No cost of living adjustment was included under the premise that as the number of people attending HERCO attractions increase, so would the amount of amusement tax revenues paid. 47. During the period of time that the three way agreement was being negotiated, Barrett was being considered for promotion by NERCO. 48. On March 27, 1998, Kim Schaller, Vice President of Sales & Marketing for HERCO circulated a memo company -wide announcing three (3) promotions within the Hersheypark Sales & Marketing area effective March 30, 1998. a. Barrett was promoted to Managing Director of Hersheypark Sales & Marketing. b. Barrett was given additional job duties and responsibilities as part of the promotion. 49. Barrett received a 2.99 percent pay increase effective March 30, 1998, as a result of his promotion. a. This increased his base salary approximately $2,007.05 annually. 50. Barrett's promotion at HERCO was announced four (4) days after Barrett participated in school board action approving the three (3) way agreement with the township and his employer, HERCO. (See Finding No. 38). 51. Barrett's promotion was being considered for approximately four (4) to six (6) weeks prior to its effective date. 52. As a matter of normal business, NERCO provides annual raises to employees each March. a. Raises associated with a promotion are given on the effective date of the promotion. 53. Barrett has abstained from voting on school board matters when he perceives a potential conflict of interest. Barrett, 98- 069 -C2 Page 9 a. During the board's June 15, 1998, meeting a real estate tax issue related to the Hershey Medical Center went before the board of consideration and Barrett abstained from board action taken on it. b. Barrett's wife is employed by the Medical Center. III. DISCUSSION: At all times relevant to this matter, the Respondent, Christopher Barrett, hereinafter Barrett, has been a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), Act 9 of 1989, as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. §1101, et seq. The issue is whether Barrett as a Derry Township School Board Director violated Section 1 103(a) of the Ethics Act as to the allegation that he participated in actions of the School Board to approve an agreement with his employer, Hershey Entertainment and Resorts Corporation, regarding the amount of amusement taxes it would pay. Section 1103. Restricted activities. (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. §1103(a). The term "conflict of interest" is defined under the Ethics Act as follows: Section 1102. Definitions. 65 Pa.C.S. §1102. "Conflict" or "conflict of interest." Use by a public official or public employee of the authority of his office or employment or any confidential information received through his holding public office or employment for the private pecuniary benefit of himself, a member of his immediate family or a business with which he or a member of his immediate family is associated. The term does not include an action having a de minimis economic impact or which affects to the same degree a class consisting of the general public or a subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. Section 1103(a) of the Ethics Act prohibits a public official /public employee from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official /public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Barrett, 98- 069 -C2 Page 10 Barrett has served as Member of the Derry Township School Board of Directors since December, 1997. In a private capacity, Barrett has been employed by Hershey Entertainment and Resorts Corporation (HERCO) since December, 1986. HERCO, as a taxpayer in both Derry Township (Township) and Derry Township School District (School District), pays an amusement tax per paid admission to NERCO attractions. HERCO is the biggest taxpayer for both the Township and School District which split the amusment tax. In 1997, the Pennsylvania General Assembly was considering legislation aimed at freezing or eliminating the amusement tax. The State Representative from the Legislative District that includes the Township and School District informed those municipal bodies about the pending changes to the amusement tax law. The State Representative offered to mediate negotiations between the Township, School District, and HERCO to create some type of agreement to ensure continued revenue for both the Township and School District in the event that changes would be made as to the amusement tax. A negotiation committee was formed which included one representative from the Township, the School Board, and HERCO. Several negotiating meetings occurred from November, 1997 through March, 1998. Barrett was not included in the negotiating committee for the School District or HERCO. The School District Board held several executive sessions to discuss terms of the proposed agreement. Barrett did not participate in the executive session discussions at the direction of the School Board President due to a potential conflict of interest on Barrett's part. The Township Board of Supervisors had at least one executive session regarding the terms of the agreement. Barrett did not appear before the Township Board regarding any aspect of the proposed agreement. Barrett did not assist any one of the HERCO representatives with regard to any aspect of the proposed agreement on behalf of HERCO since he was not involved in corporate level discussions at HERCO. The State Representative created a framework to be used for an agreement among the School District, Township, and NERCO. Barrett did not participate or assist in that process. By mid - March, 1998, a tentative amusement tax agreement was approved by the negotiating committee. Barrett was not involved with the negotiating committee but was aware that there was public support for the agreement. The agreement negotiated by the State Representative was presented to the School Board on March 23, 1998, for its approval. At that time a motion was passed by the Board to approve the agreement which passed by a 8 -1 vote with Barrett voting with the majority. At that time, Barrett commented that the negotiating parties did not influence his vote on the issue. Prior to the March 23, 1998, vote by the School Board, Barrett was advised by the School District Solicitor that he should abstain from the vote. Barrett did not seek any advice from this Commission regarding his participation in the agreement process. After the Derry Township Board of Supervisors took official action to approve the agreement, on March 25, 1998, a three -way agreement was entered into between NERCO, Derry Township, and the School District. During the time the three -way agreement was negotiated, Barrett was being considered for a promotion by HERCO. Barrett received an approximate 3% pay raise Barrett, 98- 069 -C2 Page 11 in March, 1998 as a result of a promotion he received. NERCO provides annual raises to employees each March as a matter of normal business. There is nothing of record to connect the raise with the negotiations as to the amusement tax. Having summarized the above relevant facts, we must now determine whether the actions of Barrett violated Section(s) of the Ethics Act. In applying Section 1 103(a) of the Ethics Act to the above facts, we note that Barrett as a public official used the authority of his office. Specifically, Barrett voted on March 23, 1998, in favor of the motion which approved the agreement between the School Board and NERCO regarding the amusement tax. The action of Barrett in voting on a motion before the School Board was a use of authority of office. See, Juliante, Order 809. That use of authority of office resulted in a pecuniary benefit to NERCO consisting of the negotiated agreement among the School District, Township, and itself regarding the amusement tax. In that Barrett is an employee of HERCO, it is a business with which he is associated as that term is defined under the Ethics Act. Accordingly, we find a technical violation of Section 1 103(a) of the Ethics Act when Barrett as a School Board Director used the authority of office for a private pecuniary benefit for a business with which he is associated when he voted to approve an agreement among the School District, the Township, and his employer HERCO as to an amusement tax. We believe that a technical violation is an appropriate disposition of this case based upon the fact that Barrett did not have any involvement as to the negotiated amusement tax agreement other than casting a non deciding vote along with seven of the eight other School Board Members to approve the agreement. We caution Barrett that as to future matters, he must exercise caution to ensure that he abstains as to matters in which he would have a conflict and, in such instances, observe the disclosure provisions of Section 1103(j) of the Act which require making oral disclosure of a conflict as well as the reasons for the conflict and reducing that in writing for submission to the secretary recording the minutes. Based upon the totality of facts and circumstances, we shall take no further action in this case which is closed. IV. CONCLUSIONS OF LAW: 1. Christopher Barrett, as a School Board Member of the Derry Township School District, is a public official subject to the provisions of Act 9 of 1989, as codified by Act 93 of 1998. 2. Barrett committed a technical violation of Section 1103(a) of the Ethics Act when he as a School Board Member used the authority of office for the private pecuniary benefit of a business with which he is associated when he voted to approve an agreement among the School District, the Township, and his employer, HERCO, as to an amusement tax. In Re: Christopher Barrett ORDER NO. 1149 File Docket: 98- 069 -C2 Date Decided: 2/24/2000 Date Mailed: 2/29/2000 1. Christopher Barrett, as a School Board Member of the Derry Township School District, committed a technical violation of Section 1103(a) of the Ethics Act when he as a School Board Member used the authority of office for the private pecuniary benefit of a business with which he is associated when he voted to approve an agreement among the School District, the Township, and his employer, HERCO, as to an amusement tax. BY THE COMMISSION, 6066 aue_i DANEEN E. REESE, CHAIR