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HomeMy WebLinkAbout98-008 AndersonOPINION OF THE COMMISSION Gentlemen: DATE DECIDED: 10/9/98 DATE MAILED: 10/20/98 William L. McCarrier Glenn L. Anderson Butler County Board of Commissioners 124 W. Diamond St., P.O. Box 1208 Butler, PA 16003 -1208 Before: Daneen E. Reese, Chair Austin M. Lee, Vice Chair Allan M. Kluger Julius Uehlein Louis W. Fryman John J. Bolger Frank M. Brown 98 -008 Re: Conflict; Simultaneous Service; County Commissioner; Director; Non - Profit Corporation; Community Development Corporation; Industrial Development Agency. This Opinion is issued in response to your advisory request of August 21, 1998. I. ISSUE: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon county commissioners with regard to simultaneously serving on the board of directors of a community development corporation that is the designated "industrial development agency" for the county, pursuant to the Industrial Development Assistance Law, 73 P.S. §351, et seq. II. FACTUAL BASIS FOR DETERMINATION: You have served as County Commissioners for Butler County since January, 1996 and January, 1992, respectively. You acknowledge that in your capacities as Butler County Commissioners, you are "public officials" subject to the Public Official and Employee Ethics Law. Both of you also serve on the Board of Directors of the Community Development Corporation of Butler County ( "CDC "). The CDC is a Pennsylvania non - profit corporation. You have submitted a copy of a portion of the CDC By -laws, which submission is incorporated herein by reference. Per the Articles of Incorporation, of which we take administrative notice, the incorporators were residents of Butler County. The CDC serves as the designated "industrial development agency" for Butler County, pursuant to the Industrial Development Assistance Law, 73 P.S. §351, et seq. You have submitted a copy of the May 6, 1976 Resolution of the Butler County Board of Commissioners so designating the CDC, which document is incorporated herein by reference. McCarrier /Anderson, 98 -008 October 20, 1998 Page 2 You state that Butler County has no authority to appoint members to the CDC Board of Directors. The CDC Board of Directors elects its own Members. Furthermore, Members of the CDC Board of Directors receive no compensation for their services. You state that as CDC Directors, neither of you receives any private benefit for yourself, for member(s) of your immediate family, or for any business with which you or member(s) of your immediate family are associated. You also state that neither of you, nor any member of either of your families, is employed by or associated with the CDC in any business relationship. During your respective tenures as Butler County Commissioners, Butler County has made budgetary appropriations to the CDC pursuant to Section 1985 of the County Code, which provides as follows: §1985. Appropriations to industrial development agencies by counties The board of commissioners of any county may appropriate, annually, such amounts as may be deemed necessary to any "industrial development agency ", as defined in the act of May 31, 1956 (P. L. 1911), known as the "Industrial Development Assistance Law ", to assist such agencies in the financing of their operational costs for the purposes of making studies, surveys and investigations, the compilation of data and statistics and in the carrying out of planning and promotional programs. 16 P.S. §1985. You state that the CDC has expended such funds in accordance with the purposes allowed by the County Code. Based upon the above facts which you have submitted, you request an advisory opinion from the State Ethics Commission as to whether you would have a conflict of interest under the Public Official and Employee Ethics Law in concurrently serving as Butler County Commissioners and as members of the Board of Directors of the Community Development Corporation of Butler County. By letter dated September 24, 1998, you were notified of the date, time, and location of the public meeting at which your request for an advisory Opinion was to be considered. III. DISCUSSION: It is initially noted that pursuant to Sections 7(10) and 7(11) of the Ethics Law, 65 P.S. § §407(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 P.S. § §407(10), (11). An advisory only affords a defense to the extent the requestor has truthfully disclosed all of the material facts. It is further initially noted that, pursuant to the same aforesaid Sections of the Ethics Law, 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 Law violations by a person who is subject to the Ethics Law. 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, McCarrier /Anderson, 98 -008 October 20, 1998 Page 3 to the extent you have inquired as to future service in the positions in question, your inquiry may, and shall be addressed. As Butler County Commissioners, you are public officials subject to the Public Official and Employee Ethics Law ( "Ethics Law "), P.L. 26, 65 P.S. §401 et seq. See, e.q., Wagner, Order No. 1069. Sections 3(a), 3(f), and 3(j) of the Ethics Law provide as follows: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. (f) 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 P.S. § §403(a), (f), (j). (j) 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. McCarrier /Anderson, 98 -008 October 20, 1998 Page 4 The following terms pertinent to our analysis are defined in the Ethics Law as follows: Section 2. 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. "Conflict" or "conflict of interest" 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." 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. "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. "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 65 P.S. §402. In applying the above provisions of the Ethics Law to the question of simultaneous service, it is initially noted that the General Assembly has the constitutional power to declare by law which offices are incompatible. Pa. Const. Art. 6, §2. However, even where there is no statutorily - declared incompatibility precluding simultaneous service, if simultaneous service would place the public official /public employee in a continual state of conflict under Section 3(a) of the Ethics Law, such as where in one position he would be accounting to himself in another position on a continual basis, an "inherent conflict" would exist (See, Johnson, Opinion 86 -004), and it would be impossible, as a practical matter, for the public official /public employee to function in the conflicting positions without running afoul of Section 3(a). Absent a statutorily - declared incompatibility or an inherent conflict under Section 3(a), the Ethics Law would not preclude simultaneous service in multiple public positions, but in each instance of a conflict of interest, the individual would be required to abstain and to satisfy the disclosure requirements of Section 3(j) as set forth above. McCarrier /Anderson, 98 -008 October 20, 1998 Page 5 As shall be discussed more fully below, it is not clear whether a CDC Directorship would be considered a public position, but in any event, there is no statutorily - declared incompatibility that would preclude your simultaneous service as Butler County Commissioners and as Members of the Board of Directors of the CDC. Furthermore, there would be no "inherent conflict" to preclude the proposed simultaneous service. As Butler County Commissioners, you would be reviewing and voting upon a multitude of issues, of which matters involving the CDC would form only a fraction. Consequently, such simultaneous service would be permitted within the parameters of Sections 3(a) and 3(j). We shall now turn our attention to those parameters. Pursuant to Section 3(a) of the Ethics Law, 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. You have factually submitted that neither you, member(s) of your immediate family(ies), nor business(es) with which you or member(s) of your immediate family(ies) are associated receive any private benefit from the CDC. Conditioned upon such being the case, the focus of our attention may be directed to matters before the Butler County Commissioners which would financially benefit the CDC itself, for example, budgetary appropriations to the CDC. In applying the elements of Section 3(a), the CDC would certainly financially benefit from matters such as budgetary appropriations by the Butler County Commissioners. It is also clear that as Directors of the CDC, you would be deemed to be "associated" with it. However, an interesting question is presented as to whether the CDC is a "business" as defined by the Ethics Law. The CDC is a privately formed, non - profit corporation. We have previously found non - profit corporations to be within the Ethics Law's definition of "business." Soltis- Sparano, Order No. 1045 at 31; See, also, Confidential Opinion, No. 89 -007; McConahy, Opinion No. 96 -006. Is the CDC therefore a "business "? On the other hand, a non - profit corporation may, under some circumstances, be a governmental body. For example, we have held that a non - profit corporation is a "political subdivision" where it has been formed by other political subdivisions (See, Area Loan Organizations under Capital Loan Fund Act, Opinion No. 95 -006; Opinion No. 95- 006 -R), and political subdivisions are within the definition of "governmental body." 65 P.S. §402. While it is clear that the CDC is not a political subdivision, since it does not qualify under any of the enumerated bodies within that definition, and it is not an "authority, entity, or body" organized by same, the CDC is arguably performing a governmental function as the industrial development agency for Butler County. Under Act 170 of 1978, the functions performed by an industrial development agency did not, in our view, make such a non- profit corporation a "governmental body." Meyer, Opinion No. 89 -015. However, the definition of "governmental body" changed under Act 9 of 1989 to include any agency performing a governmental function." Is the CDC an "agency performing a governmental function" so as to be within the Ethics Law's definition of "governmental body "? The above questions are significant, because If the CDC would be strictly a "governmental body," the use of the authority of office as a County Commissioner for a pecuniary benefit to such "governmental body" would not in and of itself constitute a conflict of interest under the Ethics Law. The elements of a conflict of interest do not encompass a pecuniary benefit which flows solely to a governmental body. On the other hand, if the CDC would be a "business," you would both have conflicts of interest in matters before the Butler County Commissioners which would financially benefit the CDC, such that Sections 3(a) and 3(j) would be implicated, and to the extent contracting would occur between the County and the CDC, Section 3(f) could be implicated as well. McCarrier /Anderson, 98 -008 October 20, 1998 Page 6 Unfortunately, there are no pertinent judicial rulings regarding the status of industrial development agencies. There is a 1962 Opinion of the Attorney General which concludes that an industrial development agency would not be a "public body" under the Pennsylvania Prevailing Wage Act unless organized by a political subdivision, See, 1962 Op. Atty. Gen. No. 252). In this case, under the unusual circumstances which you have submitted, we need not resolve the status of the CDC because, either way, the end result of our analysis would be that you would be able to vote in matters financially benefitting the CDC. If the CDC would be strictly a governmental body, under the facts which you have submitted, there would be no conflict of interest. If the CDC would be a business, there would be a conflict of interest, but the fact that you as two of the three County Commissioners would have conflicts would trigger the applicability of the following "voting conflict" exception in Section 3(j) of the Ethics Law: . 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 whenevera 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... . 65 P.S. §403(j) (Emphasis added). Thus, conditioned upon your initially abstaining from participation and satisfying the disclosure requirements of Section 3(j), you could vote despite the conflict. Additionally, under the reasoning set forth in this Commission's ruling in Garner, Opinion No. 93 -004, either of you would be able to second a motion to bring such matter(s) to a vote. Although the end result in either case would be that you could vote, you are cautioned that under the latter scenario where the CDC would be a business, the requirements of Section 3(j) would have to be observed. Since the status of the CDC cannot be definitively determined by this Commission, it would be advisable for you to satisfy the requirements of Section 3(j) in matters before the Butler County Board of Commissioners which would financially impact the CDC, that is, to limit your involvement to the actual voting process and to observe the disclosure requirements of Section 3(j), in order to avoid a possible transgression of the Ethics Law. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Law. Conclusion: County Commissioners are "public officials" subject to the provisions of the Ethics Law. Subject to the restrictions, conditions and qualifications set forth above, County Commissioners may, consistent with Section 3(a) of the Ethics Law, simultaneously serve as Directors of a non - profit corporation that is the designated Aindustrial development agency A for the County pursuant to the Industrial Development Assistance Law, 73 P.S. §351, et seq. There are no pertinent judicial decisions regarding the status of a privately formed non - profit corporation serving as a designated industrial development agency. Even if it would be a "business" such that the County Commissioners would have a conflict of interest in matters financially benefitting the industrial development agency, given that two of the three County Commissioners would have a conflict, they would be able to second motions and vote in such matters because one of the "voting conflict exceptions" in Section 3(j) of the Ethics Law would apply. In such matters, it would be advisable for the two County Commissioners to limit their involvement to the actual voting McCarrier /Anderson, 98 -008 October 20, 1998 Page 7 process and to observe the disclosure requirements of Section 3(j), in order to avoid a possible transgression of the Ethics Law. Lastly, the propriety of the proposed course of conduct has only been addressed under the Ethics Law. Pursuant to Section 7(11), this 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, providing 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. By the Commission, Daneen E. Reese, Chair