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HomeMy WebLinkAbout02-574 McKennaWendy Feiss McKenna, Esquire Robert L. Brant & Associates 572 West Main Street P.O. Box 26865 Trappe, PA 19426 Dear Ms. McKenna: ADVICE OF COUNSEL July 17, 2002 02 -574 Re: Conflict; Public Official /Employee; Borough Manager; Economic Development Corporation; Acquisition By Economic Development Corporation of Real Estate Owned by Corporation; Borough Manager; Business With Which Associated; Immediate Family Member; Officer; Shareholder. This responds to your letters of June 7, 2002, and June 14, 2002, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 1a. =S. § 1101 et seq., presents any prohibition or restrictions upon a borough manager who, in his private capacity, is an officer and /or shareholder in a corporation, in matters pertaining to the possible acquisition by a non - profit economic development corporation of real estate owned by the corporation. Facts: With the authority of the Schwenksville Borough Council ( "Borough rind"), you seek an advisory from the State Ethics Commission regarding the conduct of the Schwenksville Borough Manager ( "Borough Manager "). You have submitted facts which may be fairly summarized as follows. Borough Council recently adopted a plan to improve and revitalize certain areas of Schwenksville Borough ( "Borough ") with the assistance of the Montgomery County Community Revitalization Program. Thereafter, your office was instructed to incorporate the Perkiomen Valle y Economic Development Corporation ("PVEDC"), a non - profit corporation organized by two Borough Council members to advance and promote the economic and commercial development and improvement of the Borough. You state that it is envisioned that the PVEDC will include members from neighboring communities as well as from the Borough and that the PVEDC may develop properties located in the Borough and in surrounding municipalities. One of the PVEDC's projects involves the acquisition of certain real estate owned by a corporate entity hereinafter referred to as the "Corporation." You state that the Borough Manager and certain members of the Borough Manager's family are officers and shareholders of the Corporation. You do not specify the particular relationship the Borough Manager and each such family member has with the Corporation or the particular familial relationships between the Borough Manger and such "family members." McKenna, 02 -574 July 17, 2002 Page 2 You state that Borough Council is considering contributing funds to the PVEDC for projects it may undertake including the aforesaid real estate acquisition. You further state that all discussions relating to the contribution of funds to the PVEDC and the possible acquisition of the real estate by the PVEDC have taken place in Executive Sessions of Borough Council at which the Borough Manager has not been present. You ask whether the Ethics Act would restrict the Borough Manager's conduct with relation to the contemplated transaction and any requisite procedures for its execution. Discussion: It is initially noted that ursuant 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 re uestor to truthfully disclose all of the material facts relevant to the inquiry. 65 Pa.C.S. 107(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 Act, 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 Borough Manager is a public official /public employee subject to the provisions of the Ethics 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. McKenna, 02 -574 July 17, 2002 Page 3 "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. "Immediate family." A parent, spouse, child, brother or sister. "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. 65 Pa.C.S. § 1102. The use of authority of office is more than the mere mechanics of voting and encompasses all of the tasks needed to perform the functions of a given position. See, Juliante, Order 809. Use of authority of office includes, for example, discussing, conferring with others, and lobbying for a particular result. 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 McKenna, 02 -574 July 17, 2002 Page 4 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. 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. In each instance of a conflict of interest, the public official /public employee would be required to abstain from participation and to satisfy the disclosure requirements of Section 1103(j) set forth above. Having established the above general principles, your specific inquiry shall now be addressed. In the instant matter, based upon your non - specific factual submission that the Borough Manager and certain members of his family are officers and shareholders in the Corporation, it cannot be determined with certainty whether the Corporation is a business with which either the Borough Manager or a member of his immediate family is associated, as such relationship is defined by the Ethics Act. Therefore, this Advice must necessarily be limited to providing general advice as follows: If and to the extent the Corporation is a business with which either the Borough Manager or a member of his immediate family is associated, the Borough Manager would have a conflict of interest in his public capacity in matters that would financially impact the Corporation, including but not limited to matters pertaining to the proposed acquisition by the PVEDC of land owned by the Corporation. See, Miller, supra; Snyder v. State Ethics Commission, 686 A.2d 843 (Pa. Commw. 1996), alloc. den., 0029 M.D. Allocatur Docket 1997 (Pa. December 22, 1997). As noted above, in ei instance of a conflict of interest, the Borough Manager would be required to abstain fully from participation in his public capacity and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 McKenna, 02 -574 July 17, 2002 Page 5 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 Borough Code. Conclusion: The Borough Manager for Schwenksville Borough is a public official /public employee subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Based upon the non - specific factual submission that the Borough Manager and certain members of his family are officers and shareholders in a corporation, hereinafter referred to as the "Corporation," it cannot be determined with certainty whether the Corporation is a business with which either the Borough Manager or a member of his immediate family is associated, as such relationship is defined by the Ethics Act. If and to the extent the Corporation is a business with which either the Borough Manager or a member of his immediate family is associated, the Borough Manager would have a conflict of interest in his public capacity in matters that would financially impact the Corporation, including but not limited to matters pertaining to the proposed acquisition by the Perkiomen Valley Economic Development Corporation ("PVEDC") of land owned by the Corporation. In each instance of a conflict of interest, the Borough Manager would be required to abstain fully from participation in his public capacity and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. 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 ij 13.2(h), The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission 1717 -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