HomeMy WebLinkAbout01-551 ConfidentialADVICE OF COUNSEL
May 11, 2001
01 -551
Re: Conflict; Public Official /Employee; Borough; Council President; E; Non - Profit
Corporation; Lease.
This responds to your letter of April 12, 2001, by which you requested a
confidential advice from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa. .S. §1101 et seq., presents any prohibition or restrictions upon a member of borough
council as to leasing space to a non - profit corporation where: 1) the borough pays an
annual fee to the non - profit corporation to promote business in and revitalize the
borough; 2) three members of borough government, including a borough council
member, are entitled to ex officio membership on the non - profit corporation's board of
directors; and 3) the borough manager hires the executive director of the non - profit
corporation, provides its administrative and clerical staff, and pays said staff and some of
the corporation's bills through the borough's finance office with corporate funds.
Facts: You represent A, B of the C Borough Council in D County, Pennsylvania. A
has authorized you to seek an advisory as to whether he would violate the Ethics Act by
entering into a lease agreement as a landlord with the E for consideration.
E, a non - profit corporation, was incorporated in [date] for the promotion of F. The
corporation was formed after the Commonwealth established the G program. E's goals
are to promote the H and I in the Borough, and organize events that J. Currently,
[number] individuals and businesses in the C area comprise the membership of E.
Membership fees are [dollar amount].
The Borough participates in the activities of E to the extent that it makes an annual
contribution from its general fund to that corporation. The Borough's contribution for the
current year is [dollar amount]. In addition, the Borough presently pays E [dollar amount]
per year to coordinate the Borough's K, which payment is considered a fee for service.
Because the Borough makes contributions to E, the Borough Mayor, Borough
Manager and one Borough Council Member are entitled to serve as ex officio members
on E's Board of Directors. A does not serve as one of the three ex officio members.
The E Board of Directors is elected by its membership. The Board is responsible
for interviewing and recommending an individual to serve as E's Executive Director,
Confidential Advice, 01 -551
May 11, 2001
Page 2
whom the Board oversees and supervises with respect to the implementation of its
business. In order to reduce E's administrative costs, the Borough, through the Borough
Manager and without the involvement of the Borough Council, hires the Executive
Director. In addition, the Borough provides a certain level of administrative and clerical
support to E as a "contribution in kind" to the L and pays its staff and certain bills that
have been approved by E through the Borough's finance office with E funds.
The E is responsible for obtaining office space for its staff. E's current location at
[street address] is no longer of sufficient size. Therefore, E's Board wishes to move its
offices to a vacant storefront located on the same block, which is owned by A.
You state that the parties to a lease agreement to rent the storefront would include
E and A. You further state that the consideration E would pay A would be drawn from an
E account, rather than a Borough account. Given A's position on Borough Council and
the relationship between the Borough and E, you ask whether A would violate the Ethics
Act if he would enter into a lease agreement with E under the above - described
circumstances.
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.
As President of the C Borough Council, A is a public official as that term is defined
in the Ethics Act, and hence A is subject to the provisions of that Act.
Section 1103(a) of the Ethics Act provides:
$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 following terms 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.
Confidential Advice, 01 -551
May 11, 2001
Page 3
"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.
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(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 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.
Confidential Advice, 01 -551
May 11, 2001
Page 4
In applying the above provisions of the Ethics Act, the Commission has held that a
reasonable and legitimate expectation that a business relationship will form may support
a finding of a conflict of interest. Amato, Opinion 89 -002; Garner, Opinion 93 -004.
See, also, Snyder, Order 979 -2, affirmed Snyder v. SEC, 68 A.2d 843 (Pa.
Commw. 1996), alloc. den., No. 0029 M.D. Allocatur Docket 1997 (Pa. December 22,
1997), wherein theCommonwealth Court affirmed the Commission's Order in concluding
that a township supervisor violated Section 3(a) of the Ethics Law when he participated in
board actions concerning two private developments while pursuing and engaging in
business relationships with the developers of those projects.
The Commission has also held that it is a conflict of interest under Section 1103(a)
for a public official /public employee to pursue a private business opportunity in the course
of public action. Metrick, Order 1037.
As to the instant matter, the Ethics Act would not prohibit A from entering into a
lease agreement with E. However, because A clearly has a reasonable and legitimate
expectation that a business relationship will form with E through the lease agreement, he
would have a conflict of interest as to matters before Borough Council involving E,
including, but not limited to, the payment of the Borough's annual contribution to E, the
Borough's payment of a fee to E to coordinate the Borough's K, and the Borough's
provision of administrative and clerical staff to E. In each instance of a conflict of interest,
A would be required to abstain from participation in his public capacity and observe the
disclosure requirements of Section 1103(j) of the Ethics Act. The abstention requirement
would not only be limited to voting, but would extend to discussing, conferring with others,
lobbying for a particular result or engaging in other uses of authority of office. Juliante,
Order 809.
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 Borough Code.
Conclusion: As B of the C Borough Council, A is a public official subject to the
provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101
et seq. The Ethics Act would not prohibit A from entering into a lease agreement with E.
However, because A clearly has a reasonable and legitimate expectation that a business
relationship will form with E through the lease agreement, he would have a conflict of
interest as to matters involving E, including, but not limited to, the payment of the
Borough's annual contribution to E, the Borough's payment of a fee to E to coordinate the
Borough's K, and the Borough's provision of administrative and clerical staff to E. In
each instance of a conflict of interest, A would be required to abstain from participation in
his public capacity and observe the disclosure requirements of Section 1103(j) of the
Ethics Act. 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 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.
Confidential Advice, 01 -551
May 11, 2001
Page 5
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