HomeMy WebLinkAbout02-544 OMalleyTodd J. O'Malley, Esquire
O'Malley & Langan
Mulberry Professional Plaza, Suite 203
426 Mulberry Street
Scranton, PA 18503
ADVICE OF COUNSEL
April 1, 2002
02 -544
Re: Conflict; Tax Benefits Program; Participation by Public Official/ Public Employee;
Member; Scranton School Board; Keystone Opportunity Zone Program; Purchase
By School Director Of Property In The Keystone Opportunity Zone.
Dear Mr. O'Malley:
This responds to your letter of February 27, 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 school director may purchase property that has been
designated by the school district as Keystone Opportunity Zone property and participate in
the tax benefits associated with that Program.
Facts: You are a member of the Scranton School District Board of Directors
( "School Board "). Approximately 12 months ago, the School Board passed a resolution
designating about 100 separate properties as Keystone Opportunity Zone properties. The
designation accords tax exempt status from real estate taxes, business privilege mercantile
tax and sales tax. The purpose of the Keystone Opportunity Zone program was to
encourage economic development in economically blighted areas.
In order for a property to be designated as a Keystone Opportunity Zone property,
the community economic developers, taxing bodies, municipality, and school district all
had to vote to include that property in the Keystone Opportunity Zone. You participated in
the School Board's action by voting in favor of passing the resolution; however, you had no
intention or need to purchase any of the designated properties at that time.
Recently, you began to search for a suitable building that your law firm could
purchase to house your law offices. One of the properties available for purchase is a
property in the Keystone Opportunity Zone.
O'Malley, 02 -544
April 1, 2002
Page 2
You ask whether your casting a favorable vote 12 months ago now precludes you
from owning one of the Keystone Opportunity Zone properties, either as an individual
owner or as a shareholder in your law firm.
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 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 Member of the Scranton School District Board of Directors, 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. 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.
O'Malley, 02 -544
April 1, 2002
Page 3
"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 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.
In applying the above provisions of the Ethics Act to your inquiry, you are advised
that to the extent your inquiry relates to past conduct, in particular, whether your casting of
an affirmative vote 12 months ago now precludes you from owning a Keystone Opportunity
Zone property, you are advised that pursuant to Sections 1107(10) and (11) of the Ethics
Act, 65 Pa.C.S. §1107(10) and (11), an opinion /advice may be given only as to prospective
(future) conduct. If the activity in question has already occurred, the Commission may not
issue an opinion /advice, but any person may then submit a signed and sworn complaint
which will be investigated by the Commission if there are allegations of Ethics Act
violations by a person who is subject to the Ethics Act. To the extent you have inquired as
to conduct which has already occurred, such past conduct may not be addressed in the
context of an advisory opinion. However, to the extent you have inquired as to future
conduct, your inquiry may, and shall be addressed.
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.
O'Malley, 02 -544
April 1, 2002
Page 4
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, grant or tax benefits
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, funds, or tax benefits;
4. use no confidential information acquired during the holding of public office or
public employment to apply for or to obtain such grants, funds, or tax
benefits; 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 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 or benefits.
As long as you observe the restrictions of Section 1103(a), you may purchase a
property in the Keystone Opportunity Zone Program and participate in the tax benefits
associated with that Program.
This Advice is limited to addressing the applicability of Section 1103(a) 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
Pennsylvania Keystone Opportunity Zone Act or the Public School Code of 1949.
Conclusion: As a Member of the Scranton School Board, 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. Section 1103(a) of the Ethics Act would not preclude you from
purchasing a property in the Keystone Opportunity Zone Program and participating in the
tax benefits associated with that Program provided you 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 or in awarding
grants, funds, or tax benefits, used no confidential information and finally had no
involvement with the administration of the Program. Lastly, the propriety of the proposed
conduct has only been addressed under the Ethics Act.
O'Malley, 02 -544
April 1, 2002
Page 5
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