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HomeMy WebLinkAbout01-576 KynettKenneth D. Kynett, Esquire Kassab Archbold & O'Brien, LLP 214 North Jackson Street P.O. Box 626 Media, PA 19063 ADVICE OF COUNSEL July 26, 2001 01 -576 Re: Conflict; Public Official /Employee; First Class Township; Commissioner; Authority Board Member; Authority Employee; Independent Contractor; Compensation; Simultaneous Service. Dear Mr. Kynett: This responds to your letter of June 20, 2001, by which you requested 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 a municipal authority as to receiving compensation as an authority employee or an independent contractor for the authority. Facts: Your firm represents the Southwest Delaware County Municipal Authority (Authority "), a body corporate and politic, incorporated by Aston Township, a township of the first class. The Authority was created as per the Municipality Authorities Act of 1945, as amended. You seek an advisory on behalf of Harold W. Jones ("Jones "), Chairman of the Authority and a duly - elected Commissioner of Anston Township. You state that Jones did not participate in the vote of the Anston Township Commissioners appointing him to the Authority Board or in the establishment of his compensation as an Authority member. You further state that Jones receives modest compensation from Anston Township as a Commissioner, and from the Authority as a Board member. As Chairman of the Authority, Jones serves as its Chief Executive Officer. In addition, Jones, at the direction of the Board, provides the Authority with day -to -day supervision and management of its business operations. Other than a contract administrative office manager who provides services under an hourly contract, there are no other business management workers employed by or under contract with the Authority. Kynett /Jones, 01 -576 July 26, 2001 Page 2 You state that Jones currently spends approximately 40 or more hours a week dealing with the business operations of the Authority. You further state that over the past 12 months, Jones has played an integral role in improving the fiscal status of the Authority. The members of the Authority Board have expressed a desire that Jones continue his day -to -day management efforts for the Authority in exchange for regular monetary compensation as an employee or an independent contractor. You state that Jones' continued services to the Authority would permit the Authority to decrease its use of and compensation for the contract office manager. Given the foregoing facts, you ask whether Jones, an Authority Board Member, may receive compensation as an Authority employee or an independent contractor for the Authority. You further ask upon what basis the compensation may be paid. 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 a Township Commissioner for Aston Township and a Member of the Southwest Delaware County Municipal Authority, Jones is a public official as that term is defined in the Ethics Act, and hence Jones 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. "Authority of office or employment." The actual power provided by law, the exercise of which is necessary to Kynett /Jones, 01 -576 July 26, 2001 Page 3 the performance of duties and responsibilities unique to a particular public office or position of public employment. "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. 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: $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). 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: Kynett /Jones, 01 -576 July 26, 2001 Page 4 (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 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. Having established the above, your specific inquiries shall now be addressed. As to whether Jones may receive compensation from the Authority as an Authority employee, the State Ethics Commission in Swick/Aman, Opinion 91 -006, determined that the Municipality Authorities Act (53 P.S. § §3096, C) would not preclude simultaneous Kynett /Jones, 01 -576 July 26, 2001 Page 5 service as a municipal authority board member and employee. However, the Commission's decision that such simultaneous service as an authority board member and employee would be permitted under the Ethics Act was subject to two qualifications. First, the board member could not use the authority of office" by participating in or voting in favor of his own appointment or in matters concerning his employment. Swick/Aman, supra, at 8. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited 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, a member of his immediate family, or a business with which he or a member of his immediate family is associated. Participating in appointing oneself to a compensated position, in the absence of express authority to do so, would constitute a use of authority of office for a private pecuniary benefit in contravention of Section 1103(a) of the Ethics Act. Second, the Commission determined that such employment positions would have to be legitimate, rather than a mere machination to enable the authority board members to set their own compensation for duties performed as board members, rather than as bona fide employees. Id. Thus, although authority board members may fix the number of authority employees and may prescribe the powers /duties and compensation of authority employees (53 P.S. § §306 B(g); 309 C), authority members may not be compensated as authority employees for duties which they would properly perform as board members. Within the parameters of Sections 1103(a) and 1103(j) and subject to the conditions, restrictions, and qualifications set forth above, the Ethics Act would not preclude Jones from receiving compensation as an employee of the Water Authority. In each instance of a conflict of interest, Mr. Weaver would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) as set forth above. As to whether Jones would be permitted to receive compensation from the Authority as an independent contractor, Jones, as an Authority Board Member, would have a conflict under Section 1103(a) of the Ethics Act and could not participate as to matters pertaining to his contract with the Authority. In any instance of a conflict, Jones would be required to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Further, where Section 1103(f) applies, its requirements must be strictly observed. Under the facts that you have submitted, the governmental body with which Jones would be associated would be the Authority. Accordingly, the contract between Jones and the Authority, if over $500, would be subject to the restrictions of Section 1103(f). Parenthetically, although the contracting in question would not be prohibited under the Ethics Act provided the requirements of Sections 1103(a), 1103(f), and 1103(j) are satisfied, a problem may exist as to such contracting under the Municipality Authorities Act of 1949, as amended. In the instant situation, the Municipality Authorities Act of 1945, as amended, provides as follows: §312. Competition in award of contracts D. No member of the Authority or officer or employee thereof shall either directly or indirectly be a party to or be in any manner interested in any contract or agreement with the Authority for any matter, cause or thing whatsoever by reason whereof any liability or indebtedness shall in any way be Kynett /Jones, 01 -576 July 26, 2001 Page 6 created against such Authority. If any contract or agreement shall be made in violation of the provisions of this section the same shall be null and void and no action shall be maintained thereon against such Authority. 53 P.S §312(D). Since such contracting may be prohibited by the above quoted provision of the Municipality Authorities Act of 1945, as amended, and since the State Ethics Commission does not administer or enforce that Act, it is suggested that Jones seek legal advice in that regard. 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 Municipality Authorities Act of 1945, as amended. Conclusion: As a Township Commissioner for Aston Township and a Member of the Southwest Delaware County Municipal al Authority, Jones 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. Within the parameters of Sections 1103(a), 1103(j), and 1103(f) and subject to the conditions, restrictions, and qualifications set forth above, the Ethics Act would not prohibit Jones, an Authority Board Member, from receiving compensation from the Authority as an Authority employee or an independent contractor for the Authority. Since such contracting as an independent contractor may be prohibited by the Municipality Authorities Act of 1945, as amended, it is suggested that Jones seek legal advice in that regard. 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. 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 §13.20. 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