HomeMy WebLinkAbout02-515 KressAaron M. Kress, Esquire
P.O. Box 778
1092 Fifth Avenue
New Kensington, PA 15068 -6291
ADVICE OF COUNSEL
February 13, 2002
02 -515
Re: Conflict; Loan /Grant Program; Public Official /Public Employee; City Redevelopment
Authority; Participation By Board Member in Economic Development Loan Program
Administered by Redevelopment Authority.
Dear Mr. Kress:
This responds to your letter of January 9, 2002, by which you requested advice from the
State Ethics Commission.
Issue: Whether, pursuant to the Public Official and Employee Ethics Act ( "Ethics Act "), 65
Pa.C.S.. 1101 et seq., a redevelopment authority board member may participate in a loan
program administered by the redevelopment authority.
Facts: You are the Solicitor for the Redevelopment Authority of the City of New
Kensington ( "Authority "), an authority organized and existing under what you refer to as the
"Redevelopment Authority Act of the Commonwealth of Pennsylvania." The Authority Board
consists of five members, all of whom are residents of the City of New Kensington. The Board
members are appointed by the Mayor of the City of New Kensington to five -year terms on a
staggered basis. The City of New Kensington ( "City ") is a third -class city.
One of the programs administered by the Authority is a program whereby the Authority
grants Economic Development Loans to small businesses within the City to improve the
business properties or provide additional employment within the City. The funds for the
Economic Development Loan Program come from Community Development Block Grants
( "CDBG ") given to the City by the Commonwealth of Pennsylvania. The Authority administers
the Economic Development Loan Program as well as other programs funded by CDBG money
for the City.
You ask whether a duly appointed Authority Board member ( "Board Member ") who owns
and operates a small business within the City would be permitted to receive an Economic
Development Loan or whether such action would constitute a violation of the Ethics Act by the
Board Member or the Authority. It is your understanding that all board action relative to the
proposed loan would be taken during a regular public monthly meeting and that the Board
Member would refrain from participating in such action.
Discussion: It is initially noted that pursuant to Sections 1107(10) and (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
Kress, 02 -515
February 13, 2002
Page 2
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.
The Board Member of the Redevelopment Authority of the City of New Kensington, is a
"public official" as that term is defined in the Ethics Act and hence the Board Member is subject
to the provisions of that Act. 65 Pa.C.S. §1102; 51 Pa. Code §11.1.
Sections 1103(a) and 1103(j) of the Ethics Act provide as follows:
$1103. Restricted activities.
(a) Conflict of interest. - -No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
(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(a), (j).
The following terms that pertain to conflicts of interest under the Ethics Act are defined 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
Kress, 02 -515
February 13, 2002
Page 3
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 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.
65 Pa.C.S. §1102.
Section 1103(f) of the Ethics Act, which pertains to contracting, 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).
The following terms that pertain to Section 1103(f) are defined in the Ethics Act as
follows:
$1102. Definitions.
"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.
"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.
In applying the above provisions of the Ethics Act to your inquiry, you are advised that to
the extent your inquiry relates to the conduct of the Authority itself, such conduct cannot be
addressed herein in that the Ethics Act applies to public officials /public employees, not political
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February 13, 2002
Page 4
subdivisions. To the extent your inquiry relates to the Board Member as a public official, you are
advised as follows.
The stated purpose of the Ethics Act is to strengthen the faith and confidence of the
people in their government by assuring the public that the financial interests of the holders of or
candidates for public office do not conflict with the public trust. 65 Pa.C.S. §1101. Section
1103(a) of the Ethics Act in particular 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.
The Commission recognizes that public concern and criticism may arise if a public official
or public employee who serves a governmental body receives benefits under the very program
which that governmental body administers. On the other hand, as a general rule, the Ethics Act
was not enacted nor should it be interpreted to preclude public officials or public employees from
participating in programs which might otherwise be available to them as citizens. Wolff, Opinion
89 -030; Woodrinq, Opinion 90 -001.
In order to ensure that a public official or public employee does not have a conflict of
interest when he, as a citizen, seeks to participate in a loan or grant program administered by
the governmental body which he serves, he must:
1. play no role in establishing the criteria under which the program is to operate, particularly
with reference to the structure or administration of the program;
2. play no role in establishing or implementing the criteria by which selections for program
participation are to be made;
3. play no role in the process of selecting and reviewing applicants or in awarding grants or
funds;
4. use no confidential information acquired during the holding of public office or public
employment to apply for or to obtain such funds, grants, etc., and
5. abstain and satisfy the disclosure requirements of Section 1103(j) above in cases where
the public official /public employee is associated with administering the loan or grant
program. The abstention and disclosure would be required not only as to his own
application, but also as to similarly situated individuals with whom the public
official /public employee might be competing for available funds.
As for Section 1103(f), it is noted that this sort of program may require participants to
enter into contracts and /or subcontracts. If the Board Member, as a participant in the Economic
Development Loan Program, would enter into a contract with Redevelopment Authority of the
City of New Kensington, the governmental body with which the Board Member is associated, or
would enter into a subcontract with any "person" (as defined above) who has a contract with the
said governmental body, Section 1103(f) of the Ethics Act would impose the following
requirements if the contract or sub - contract would be valued at $500.00 or more:
1. prior public notice of the contract possibility;
2. public disclosure of applications and contracts considered;
3. public disclosure of the award of the contracts; and
4. no supervisory or overall responsibility for the implementation or administration of
the contract or sub - contract by the public official /employee.
Kress, 02 -515
February 13, 2002
Page 5
As long as the Board Member observes the restrictions of Sections 1103(a) and 1103(f),
the Board Member may apply for and participate in the benefits associated with the Economic
Development Loan Program.
This Advice is limited to addressing the applicability of Sections 1103(a) and 1103(f) of
the Ethics Act. It is expressly assumed that there has been no use of authority of office for a
private pecuniary benefit as prohibited by Section 1103(a) of the Ethics Act. Further, you are
advised that Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall
offer to a public official /employee 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.
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 Code of Federal Regulations or
the Urban Redevelopment Law. It is parenthetically noted that upon review, the
"Redevelopment Authority Act of the Commonwealth of Pennsylvania" does not appear to exist.
Conclusion: The Board Member of the Redevelopment Authority of the City of New
Kensington 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. Section 1103(a) of the Ethics Act would not
preclude the Board Member from applying with the Redevelopment Authority of the City of New
Kensington for a Economic Development Loan provided the Board Member played no role in
establishing the criteria under which the program would operate, played no role in implementing
the criteria for selecting applicants, played no role in selecting or reviewing applicants, used no
confidential information, and finally had no involvement with the administration of the program.
The requirements of Section 1103(f) of the Ethics Act noted above, to the extent applicable,
must be observed. 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 13.2(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,
Kress, 02 -515
February 13, 2002
Page 6
Vincent J. Dopko
Chief Counsel