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HomeMy WebLinkAbout02-533 LeightonThomas M. Leighton, Broker State Certified Residential Appraiser C. A. Leighton Company, Inc. 15 Public Square Wilkes- Barre, PA 18701 -1704 Dear Mr. Leighton: ADVICE OF COUNSEL March 13, 2002 02 -533 Re: Conflict; Public Official /Employee; Chairman; City Council; Business With Which Associated; Real Estate Broker; Residential Appraiser; Insurance Broker; Enterprise Zone Loan. This responds to your letter of February 11, 2002, 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 chairman of city council as to performing real estate brokerage services in relation to a private sale of real estate and the assumption of an enterprise zone loan by the purchaser, where neither the chairman in his public capacity nor the city will be involved in the transaction. Facts: You are presently Chairman of the Wilkes -Barre City Council. You have just begun your eleventh year as a Council Member. In a private capacity, you are a licensed Pennsylvania real estate broker and a State certified residential appraiser. It would appear from the letterhead stationery on which you submitted your request that you perform such services in association with C.A Leighton Company, Inc. In addition, you are an insurance broker. You have an active listing agreement with Fred J. and Marilyn Ney (the "Neys "), who own property at 322 -324 North Pennsylvania Avenue, Wilkes -Barre City, Luzerne County, Pennsylvania 18702 (the "Property ") A buyer is currently interested in purchasing the Property and assuming the current outstanding balance on an Enterprise Zone Loan secured by the Property, due to the Loan's low interest rate. Before executing the listing agreement, you asked the City Administrator whether a potential conflict would exist if a buyer would assume the Enterprise Zone Loan. After researching your question, the City Administrator advised you that you would not have a Leighton, 02 -533 March 13, 2002 Page 2 conflict since City Council would not have any involvement in or vote on the loan assumption. You state that you have never been involved in any action taken by the Enterprise Zone Loan Committee, the members of which are appointed by the Mayor without City Council approval. You further state that the City of Wilkes -Barre has no interest in the Property since the Property is privately owned and your actions as the real estate broker have no relationship with the City. You ask whether you would have a conflict if the prospective buyer would proceed with the assumption of the Enterprise Zone Loan. 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 Chairman of Wilkes -Barre City Council, you are a public official as that term is defined in the Ethics Act, and hence you are 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 the performance of duties and responsibilities unique to a particular public office or position of public employment. Leighton, 02 -533 March 13, 2002 Page 3 "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(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). Leighton, 02 -533 March 13, 2002 Page 4 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. In applying the above provisions of the Ethics Act to your inquiry, you are advised that Section 1103(a) of the Ethics Act does not prohibit public officials /public employees from having outside business activities or employment; however, the public official /public employee may not use the authority of his public position or confidential information obtained by being in that position for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89- 011. Examples of conduct that would be prohibited under Section 1103(a) would include: (1) the pursuit of a private business opportunity in the course of public action, Metrick, Order No. 1037; (2) the use of governmental facilities, such as governmental telephones, postage, staff, equipment, research materials, or other property, or the use of governmental personnel, to conduct private business activities, Freind, Order No. 800; Pancoe, supra; and (3) the participation in an official capacity as to matters involving the business with which the public official /public employee is associated in his private capacity, such as the review /selection of its bids or proposals, Gorman, Order No. 1041. If a business with which the public official /public employee is associated or its client(s) would have matter(s) pending before the governmental body, the public official public employee would have a conflict of interest as to such matter(s). Miller, Opinion No. 89 -024; see also, Kannebecker, Opinion 92 -010. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and satisfy the disclosure requirements of Section 1103(j) set forth above. You do not specify whether you are a director, officer, owner, employee or have a financial interest in C.A. Leighton Company, Inc. If such would be the case, C.A. Leighton Company, Inc. would be a business with which you are associated. Pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest as to matters that would come before you in your capacity as a Member of the Wilkes -Barre City Council that would financially impact yourself, C.A. Leighton Company, Inc., or those doing business with C.A. Leighton Company, Inc., such as the Neys. You would also have a conflict as to any matter involving the Property given your potential sales commission as to that Property. See, Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Commw. 1996). In each instance of a conflict, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. As to the question you have posed, you would not have a conflict under Section 1103(a) of the Ethics Act if the prospective purchaser would proceed with the assumption of the Enterprise Zone Loan based upon your factual representations and conditioned upon the assumptions that you as a Council Member would have no involvement as to the Property, Property owners, purchaser, Enterprise Zone Loan, or Loan assumption. 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 respective municipal code. Leighton, 02 -533 March 13, 2002 Page 5 Conclusion: As Chairman of the Wilkes -Barre City Council, you are a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. If you would be a director, officer, owner, employee or have a financial interest in C.A. Leighton Company, Inc., that business would be a business with which you are associated. Pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest as to matters that would come before you in your capacity as a Member of the Wilkes -Barre City Council that would financially impact yourself, C.A. Leighton Company, Inc., or those doing business with C.A. Leighton Company, Inc., such as the Neys. You would also have a conflict as to any matter involving the Property given your potential sales commission as to that Property. In each instance of a conflict, you would be required to abstain and observe the disclosure requirements of Section 1103(j) of the Ethics Act. You would not have a conflict under Section 1103(a) of the Ethics Act if the prospective purchaser would proceed with the assumption of the Enterprise Zone Loan based upon your factual representations and conditioned upon the assumptions that you as a Council Member would have no involvement as to the Property, Property owners, purchaser, Enterprise Zone Loan, or Loan assumption. 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, Vincent J. Dopko Chief Counsel