HomeMy WebLinkAbout00-614 PoolHenry S. Pool, Esquire
General Counsel, Corporate Banking
PNC Bank, N.A.
Fifth Avenue and Wood Street
Pittsburgh, PA 15265
Dear Mr. Pool:
ADVICE OF COUNSEL
October 16, 2000
00 -614
Re: Public Official; Member, County Property Assessment Oversight Board; Advisory
Board Exception; Conflict; Senior Vice President; PNC Bank; Contract.
This responds to your letter dated September 13, 2000 by which you requested
advice from the State Ethics Commission.
Issue: Whether a member of a county property assessment oversight board is a
"public official" subject to the provisions of the Public Official and Employee Ethics Act,
65 Pa.C.S. §1101 et seq., and if so, whether said member, who is also a senior vice
president of a bank, would have a conflict as to engaging in business activities with the
county on behalf of that bank.
Facts: As General Counsel, Corporate Banking, for PNC Bank, National
Association ("PNC "), you seek an advisory on behalf of George Whitmer ( "Whitmer "), a
Senior Vice President of PNC.
The Allegheny County Chief Executive, James Roddey, has asked Whitmer to
serve as his designee on the three member Allegheny County Property Assessment
Oversight Board "Oversight Board "). Whitmer would serve on the Oversight Board
without compensation.
Whitmer is the highest ranking municipal finance lending officer within PNC.
Additionally, the PNC Financial Services Group, Inc., PNC's parent, is, through various
subsidiaries and affiliates, the owner of real estate in Allegheny County, including major
office towers and a newly constructed operations building.
You state that Whitmer feels that serving on the Oversight Board is his civic duty,
and PNC encourages him to take the position. However, neither Whitmer nor PNC
would want Whitmer to take a seat on the Oversight Board if taking that position would:
(1) disqualify Whitmer from representing PNC as a municipal finance officer in PNC's
dealings with Allegheny County; (2) impair in any way the ability of PNC or its affiliates
Pool, 00 -614
October 16, 2000
Page 2
to provide banking, investment banking, or other financial or financial advisory or
insurance services to Allegheny County; or (3) impair in any manner the ability of The
PNC Financial Services Group, Inc., or its affiliates, to contest any of the new
assessments on its properties.
You have submitted a copy of Chapters 205, 207 and 209 of the Allegheny
County Administrative Code ( "Code ").
The Oversight Board was created as an agency of the County with the stated
purpose of ensuring professional assessment processes. It is parenthetically noted that
pursuant to Section 205.03 of the Code, all members of the Oversight Board are
required to abide by the "Accountability, Conduct and Ethics Code" of Allegheny
County, which has not been submitted.
Section 205.06 of the Code delineates the Oversight Board's powers and duties
as follows:
Section 205.06 Powers and Duties of Board
The Board shall have the power and its duty shall be to:
A. Recommend to the County Council, within six (6)
months of its formation, in accordance with Chapter
209 of this Administrative Code and consistent with all
applicable laws, an Assessment Standards and
Practices Ordinance based on a nationally recognized
assessment policy;
B. Confirm or reject the appointment of the Chief
Assessment Officer by the County Manager;
C. Certify, in a timely fashion, that assessments
determined by the Office of Property Assessment
have been made according to the Assessment
Standards and Practices Ordinance. If the Board is
unable to certify the assessments, the last certified
assessments and assessments on new and altered
property shall remain in effect. The Board shall not
have the power to modify individual assessments; and
D. Perform and exercise such other powers and duties
as may be conferred or imposed upon it by applicable
Law and the provisions of this Administrative Code.
E. Provide semi - annual reports to County Council
regarding the activities of the Board.
Allegheny County Administrative Code, Section 205.06 (Emphasis added). Apparently
as part of its powers and duties under paragraph C above, the Oversight Board
performs an annual audit of the assessment practices of the Office of Property
Assessments. Allegheny County Administrative Code, Section 209.08C.
You state that the Oversight Board's overriding purpose is to ensure the
existence of professional assessment processes, not to be actively involved in the
actual assessment process (which is the function of the Office of Property Assessment)
or in property assessment appeals and review (which is the function of the Board of
Property Assessment Appeals and Review).
Pool, 00 -614
October 16, 2000
Page 3
You state that Whitmer is to be appointed to the Oversight Board pursuant to
Section 205.02 of the Code. You also state that the Oversight Board has the right to
designate one or more solicitors pursuant to Section 205.04 of the Code. You state that
the Board's ability to: (1) recommend an Assessment Standards and Practices
Ordinance; (2) confirm or reject the appointment of the Chief Assessment Officer; and
(3) certify that assessments determined by the Office of Property Assessment have
been made in accordance with the Assessment Standards and Practices Ordinance,
implies that the Oversight Board has the ability to retain professional consultants.
Your inquiry is twofold. First, you inquire as to whether membership on the
Oversight Board would bring Whitmer within the Ethics Act's definition of "public official,"
such that Whitmer would be subject to the requirements of the Ethics Act. You state
your opinion that the Oversight Board is an advisory board, and that Whitmer as a
Member would therefore not be a "public official" subject to the Ethics Act. You seek an
advisory from the State Ethics Commission to that effect.
In the event that it is determined that the Oversight Board is not merely an
advisory board, you further ask the State Ethics Commission for an advisory stating
that:
1. The Oversight Board is the only public body with which Whitmer or any
other PNC employee or any of its affiliates may not contract;
2. Whitmer or any other PNC employee or affiliate may enter into business
arrangements with Allegheny County, any of the County's departments or related
authorities or any of the elected Allegheny County row offices — excluding the Oversight
Board — without such business arrangements constituting an improper conflict of interest
or otherwise being prohibited by Section 1103 of the Ethics Act; and
3. PNC or any of its affiliates may contest any assessment on any of their
respective properties in Allegheny County despite Whitmer's position on the Oversight
Board.
As to the latter, you state that the enabling ordinance which created the
Oversight Board did not contemplate individual assessments being reviewed by the
Oversight Board. You also state that in the highly unlikely event that a review by the
Oversight Board of an assessment of property owned by PNC or any of its affiliates
would occur, Whitmer would act in accordance with Section 1103(j) of the Ethics Act.
Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11)
of the Ethics Act, 65 Pa.C.S. § §1107(10), (11), advisories are issued to the requestor
based upon the facts which the requestor has submitted. In issuing the advisory based
upon the facts which the requestor has submitted, the Commission does not engage in
an independent investigation of the facts, nor does it speculate as to facts which have
not been submitted. It is the burden of the requestor to truthfully disclose all of the
material facts relevant to the inquiry. 65 Pa.C.S. § §1107(10), (11). An advisory only
affords a defense to the extent the requestor has truthfully disclosed all of the material
facts.
In the instant matter, the threshold issue is whether Whitmer, as a member of the
Allegheny County Property Assessment Oversight Board ( "Oversight Board "), would be
a "public official" and therefore subject to the Ethics Act.
The Ethics Act defines the term "public official" as follows:
§ 1102. Definitions
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October 16, 2000
Page 4
"Public official." Any person elected by the public or
elected or appointed by a governmental body or an
appointed official in the executive, legislative or judicial
branch of this Commonwealth or any political subdivision
thereof, provided that it shall not include members of
advisory boards that have no authority to expend public
funds other than reimbursement for personal expense or to
otherwise exercise the power of the State or any political
subdivision thereof.
65 Pa.C.S. §1102 (Emphasis added).
The regulations of the State Ethics Commission similarly define the term "public
official" and set forth the following additional criteria that are used to determine whether
the advisory board exception applies:
(i) The following criteria will be used to determine
if the exception in this paragraph is applicable:
(A) The body will be deemed to have the power to
expend public funds if the body may commit funds or may
otherwise make payment of monies, enter into contracts,
invest funds held in reserves, make loans or grants, borrow
money, issue bonds, employ staff, purchase, lease, acquire
or sell real or personal property without the consent or
approval of the governing body and the effect of the power to
expend public funds has a greater than de minimis economic
impact on the interest of a person.
(B) The body will be deemed to have the authority
to otherwise exercise the power of the Commonwealth or a
political subdivision if one of the following exists:
(1) The body makes binding decisions or orders
adjudicating substantive issues which are appealable to a
body or person other than the governing authority.
(11) The body exercises a basic power of
government and performs essential governmental functions.
(111) The governing authority is bound by statute or
ordinance to accept and enforce the rulings of the body.
(IV) The body may compel the governing authority
to act in accordance with the body's decisions or restrain the
governing authority from acting contrary to the body's
decisions.
(V) The body makes independent decisions which
are effective without approval of the governing authority.
(VI) The body may adopt, amend and repeal
resolutions, rules, regulations or ordinances.
(VII) The body has the power of eminent domain or
condemnation.
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October 16, 2000
Page 5
(VIII) The enabling legislation of the body indicates
that the body is established for exercising public powers of
the Commonwealth or a political subdivision.
(ii) The term does not include judges and
inspectors of elections, notary publics and political party
officers.
(iii) The term generally includes persons in the
following offices:
(A) Incumbents of offices filled by nomination of
the Governor and confirmation of the Senate.
(B) Heads of executive, legislative and
independent agencies, boards and commissions.
(C) Members of agencies, boards and
commissions appointed by the General Assembly or its
officers.
(D) Persons appointed to positions designated as
officers by the Commonwealth or its political subdivisions.
(E) Members of municipal, industrial development,
housing, parking and similar authorities.
(F) Members of zoning hearing boards and similar
quasi - judicial bodies.
(G) Members of the public bodies meeting the
criteria in paragraph (i)(A).
51 Pa. Code §11.1.
In applying the Ethics Act and the Regulations to the facts which you have
submitted as to the Oversight Board, the necessary conclusion is that the Oversight
Board is not an advisory body as contemplated by the Ethics Act's definition of "public
official." Pursuant to Section 205.06(C) of the Code, the Oversight Board has the
authority to ensure that assessments have been made according to uniform
assessment standards and practices. Unless the Oversight Board certifies the
assessments as having been made according to the Assessment Standards and
Practices Ordinance, the assessments cannot be changed. As such, the Oversight
Board exercises a basic power of government and performs essential governmental
functions. Further, the Oversight Board makes independent decisions that are effective
without the approval of the governing authority. See, 51 Pa. Code §11.1(i)(B)(II), (V).
Because the Oversight Board does not fall within the advisory board exception,
Whitmer, as a member of the Oversight Board, would be a "public official" as defined in
the Ethics Act. Accordingly, Whitmer would be subject to the Ethics Act and the
Regulations of the State Ethics Commission. The remainder of your inquiry as to the
applicable restrictions of the Ethics Act shall now be addressed.
Section 1103(a) of the Ethics Act provides as follows:
§ 1103. Restricted activities
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October 16, 2000
Page 6
(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 following terms pertaining to Section 1103(a) are defined in the Ethics Act as
follows:
§ 1102. Definitions
"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.
"Authority of office or employment." The actual
power provided by law, the exercise of which is necessary to
the performance of duties and responsibilities unique to a
particular public office or position of public employment.
"Business." Any corporation, partnership, sole
proprietorship, firm, enterprise, franchise, association,
organization, self - employed individual, holding company,
joint stock company, receivership, trust or any legal entity
organized for profit.
"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
has a financial interest.
"Financial interest." Any financial interest in a
legal entity engaged in business for profit which comprises
more than 5% of the equity of the business or more than 5%
of the assets of the economic interest in indebtedness.
65 Pa.C.S. §1102.
In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no
person shall offer to a public official /employee anything of monetary value and no public
official /employee shall solicit or accept anything of monetary value based upon the
understanding that the vote, official action, or judgment of the public official /employee
would be influenced thereby. Reference is made to these provisions of the law not to
imply that there has been or will be any transgression thereof but merely to provide a
complete response to the question presented.
Section 1103(f) of the Ethics Act provides as follows:
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October 16, 2000
Page 7
§ 1103. Restricted activities
(f) Contract. - -No public official or public employee or
his spouse or child or any business in which the person or
his spouse or child is associated shall enter into any contract
valued at $500 or more with the governmental body with
which the public official or public employee is associated or
any subcontract valued at $500 or more with any person
who has been awarded a contract with the governmental
body with which the public official or public employee 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. In such a case, the public official or
public employee shall not have any supervisory or overall
responsibility for the implementation or administration of the
contract. Any contract or subcontract made in violation of
this subsection shall be voidable by a court of competent
jurisdiction if the suit is commenced within 90 days of the
making of the contract or subcontract.
65 Pa. C. S. §1103(f).
The following terms pertaining to Section 1103(f) are defined in the Ethics
Act as follows:
§ 1102. Definitions
"Contract." An agreement or arrangement for the
acquisition, use or disposal by the Commonwealth or a
political subdivision of consulting or other services or of
supplies, materials, equipment, land or other personal or real
property. The term shall not mean an agreement or
arrangement between the State or political subdivision as
one party and a public official or public employee as the
other party, concerning his expense, reimbursement, salary,
wage, retirement or other benefit, tenure or other matters in
consideration of his current public employment with the
Commonwealth or a political subdivision.
"Governmental body." Any department, authority,
commission, committee, council, board, bureau, division,
service, office, officer, administration, legislative body or
other establishment in the executive, legislative or judicial
branch of a state, a nation or a political subdivision thereof or
any agency performing a governmental function.
"Governmental body with which a public official
or public employee is or has been associated." The
governmental body within State government or a political
subdivision by which the public official or employee is or has
been employed or to which the public official or employee is
or has been appointed or elected and subdivisions and
offices within that governmental body.
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October 16, 2000
Page 8
"Person." A business, governmental body,
individual, corporation, union, association, firm, partnership,
committee, club or other organization or group of persons.
65 Pa.C.S. §1102. The "governmental body with which a public official /public
employee is or has been associated" is not limited to the particular subdivision of the
agency or other governmental body where the public official /employee had influence or
control but extends to the entire body. See, Legislative Journal of House, 1989 Session,
No. 15 at 290, 291; Sirolli, Opinion No. 90 -006; Sharp, Opinion 90- 009 -R.
Section 1103(f) does not operate to make contracting with the governmental
body permissible where it is otherwise prohibited. Rather, where a public official /public
employee, his spouse or child, or a business with which he, his spouse or child is
associated, is otherwise appropriately contracting with the governmental body, or
subcontracting with any person who has been awarded a contract with the
governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an
"open and public process" be observed as to the contract with the governmental body.
Pursuant to Section 1103(f), an "open and public process" includes:
(1) prior public notice of the employment or contracting possibility;
(2) sufficient time for a reasonable and prudent competitor /applicant to be
able to prepare and present an application or proposal;
(3) public disclosure of all applications or proposals considered; and
(4) public disclosure of the contract awarded and offered and accepted.
Section 1103(f) of the Ethics Act also requires that the public official /employee
may not have any supervisory or overall responsibility as to the implementation or
administration of the contract with the governmental body.
Section 1103(j) of the Ethics Act provides as follows:
§ 1103. Restricted activities
(j) Voting conflict. - -Where voting conflicts are not
otherwise addressed by the Constitution of Pennsylvania or
by any law, rule, regulation, order or ordinance, the following
procedure shall be employed. Any public official or public
employee who in the discharge of his official duties would be
required to vote on a matter that would result in a conflict of
interest shall abstain from voting and, prior to the vote being
taken, publicly announce and disclose the nature of his
interest as a public record in a written memorandum filed
with the person responsible for recording the minutes of the
meeting at which the vote is taken, provided that whenever a
governing body would be unable to take any action on a
matter before it because the number of members of the body
required to abstain from voting under the provisions of this
section makes the majority or other legally required vote of
approval unattainable, then such members shall be
permitted to vote if disclosures are made as otherwise
provided herein. In the case of a three - member governing
body of a political subdivision, where one member has
abstained from voting as a result of a conflict of interest, and
the remaining two members of the governing body have cast
opposing votes, the member who has abstained shall be
Pool, 00 -614
October 16, 2000
Page 9
permitted to vote to break the tie vote if disclosure is made
as otherwise provided herein.
65 Pa.C.S. §1103(j).
In each instance of a conflict, Section 1103(j) requires the public
official /employee to abstain and to publicly disclose the abstention and reasons for
same, both orally and by filing a written memorandum to that effect with the person
recording the minutes or supervisor.
In the event that the required abstention results in the inability of the
governmental body to take action because a majority is unattainable due to the
abstention(s) from conflict under the Ethics Act, then voting is permissible provided the
disclosure requirements noted above are followed. See, Mlakar, Advice 91- 523 -S.
The above provisions of the Ethics Act shall now be applied to your inquiry,
beginning with Section 1103(a) of the Ethics Act.
Subject to certain exceptions delineated in the definition of "conflict" or "conflict of
interest" above, it is a conflict of interest under Section 1103(a) of the Ethics Act for a
public official /public employee to use 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.
Whitmer is a Senior Vice President of PNC. Therefore, PNC is a business with
which Whitmer is associated. Pursuant to Section 1103(a), Whitmer would be
prohibited from using the authority of his office as a member of the Oversight Board or
confidential information received by being in that position for the private pecuniary
benefit of PNC. In each instance of a conflict of interest, Whitmer would be required to
abstain fully and to fully satisfy the disclosure requirements of Section 1103(j) as set
forth above.
As for PNC affiliates, the status of being affiliates of PNC would not make them
businesses with which Whitmer is associated, conditioned upon the assumptions that:
(1) they are separate corporations; and (2) Whitmer does not have a "financial interest"
in them and is not a director, officer, or employee of them. See, Confidential Opinion,
92 -003. However, any such affiliate(s) for which Whitmer would have a "financial
interest," or would be a director, officer, or employee, would be business(es) with which
he is associated for purposes of applying Section 1103(a).
Section 1103(a) which pertains to conflicts of interest of public officials and public
employees would not operate to restrict PNC or its affiliates. Thus, under the Ethics
Act, the potential for conflicts of interest for Witmer would not preclude PNC or its
affiliates from contesting any assessment on any of their respective properties in
Allegheny County, or from contracting with Allegheny County, its departments, row
offices, boards, or related authorities.
However, Section 1103(f) of the Ethics Act would clearly apply to impose
restrictions upon contracting /subcontracting involving business(es) with which Witmer is
associated and his "governmental body."
Based upon the Commission's decision in Hitt, Opinion 90 -005, Witmer's
"governmental body" would include the Oversight Board and the Office of Property
Assessment which the Oversight Board audits.
Pool, 00 -614
October 16, 2000
Page 10
In applying Section 1103(f), for contracts valued at $500 or more between
Witmer's governmental body (whether the Oversight Board, the Office of Property
Assessment, or both) and Whitmer or a business with which Whitmer is associated, or
for subcontracts valued at $500 or more between Whitmer or a business with which
Whitmer is associated and any "person" awarded a contract with Witmer's governmental
body (whether the Oversight Board, the Office of Property Assessment, or both), the
requirements imposed by Section 1103(f) of the Ethics Act would have to be satisfied.
Those requirements as to an open and public process for the contract(s) and Whitmer's
inability to have any supervisory or overall responsibility for the implementation or
administration of such contract(s) are set forth above.
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. Specifically not addressed herein is the applicability of
the "Accountability, Conduct and Ethics Code" of Allegheny County.
Conclusion: Upon becoming a Member of the Allegheny County Property
Assessment Oversight Board ( "Oversight Board "), George Whitmer ( "Whitmer ") would
be a "public official" subject to the Public Official and Employee Ethics Act ( "Ethics Act ")
and the Regulations of the State Ethics Commission.
Given Whitmer's status as a Senior Vice President of PNC Bank, National
Association ( "PNC "), PNC is a business with which Whitmer is associated. PNC
affiliates are not businesses with which Whitmer is associated, conditioned upon the
assumptions that: (1) they are separate corporations, and (2) Whitmer does not have a
"financial interest" in them and is not a director, officer, or employee of them. Any such
affiliate(s) for which Whitmer would have a "financial interest," or would be a director,
officer, or employee, would be business(es) with which he is associated for purposes of
applying Section 1103(a).
Pursuant to Section 1103(a), Whitmer would be prohibited from using the
authority of his office as a member of the Oversight Board or confidential information
received by being in that position for the private pecuniary benefit of PNC or any other
business with which he is associated. In each instance of a conflict of interest, Whitmer
would be required to abstain fully and to fully satisfy the disclosure requirements of
Section 1103(,) as set forth above. Section 1103(a) which pertains to conflicts of
interest of public officials and public employees would not operate to restrict PNC or its
affiliates. Under the Ethics Act, the potential for conflicts of interest for Witmer would
not preclude PNC or its affiliates from contesting any assessment on any of their
respective properties in Allegheny County, or from contracting with Allegheny County,
its departments, row offices, boards, or related authorities.
Witmer's governmental body would include the Oversight Board and the Office of
Property Assessment which the Oversight Board audits. For contracts valued at $500
or more between Witmer's governmental body (whether the Oversight Board, the Office
of Property Assessment, or both) and Whitmer or a business with which Whitmer is
associated, or for subcontracts valued at $500 or more between Whitmer or a business
with which Whitmer is associated and any "person" awarded a contract with Witmer's
governmental body (whether the Oversight Board, the Office of Property Assessment,
or both), the requirements imposed by Section 1103(f) of the Ethics Act would have to
be satisfied. Those requirements as to an open and public process for the contract(s)
and Whitmer's inability to have any supervisory or overall responsibility for the
implementation or administration of such contract(s) are set forth above. Lastly, the
propriety of the proposed conduct has only been addressed under the Ethics Act.
Pursuant to Section 1107(11), an Advice is a complete defense in any
enforcement proceeding initiated by the Commission, and evidence of good faith
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October 16, 2000
Page 11
conduct in any other civil or criminal proceeding, provided the requestor has disclosed
truthfully all the material facts and committed the acts complained of in reliance on the
Advice given.
This letter is a public record and will be made available as such.
Finally, if you disagree with this Advice or if you have any
reason to challenge same, you may appeal the Advice to the full
Commission. A personal appearance before the Commission will be
scheduled and a formal Opinion will be issued by the Commission.
Any such appeal must be in writing and must be actually
received at the Commission within thirty (30) days of the date of this
Advice pursuant to 51 Pa. Code §13.2(h ). The appeal may be received
at the Commission by hand delivery, United States mail, delivery
service, or by FAX transmission (717 -787- 0806). Failure to file such an
appeal at the Commission within thirty (30) days may result in the
dismissal of the appeal.
Sincerely,
Vincent J. Dopko
Chief Counsel