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HomeMy WebLinkAbout00-614 WhitmerHenry S. Pool, Esquire General Counsel, Corporate Banking PNC Bank, N.A. Fifth Avenue and Wood Street Pittsburgh, PA 15265 Dear Mr. Pool: ADVICE OF COUNSEL October 16, 2000 00 -614 Re: Public Official; Member, County Property Assessment Oversight Board; Advisory Board Exception; Conflict; Senior Vice President; PNC Bank; Contract. This responds to your letter dated September 13, 2000 by which you requested advice from the State Ethics Commission. Issue: Whether a member of a county property assessment oversight board is a "public official" subject to the provisions of the Public Official and Employee Ethics Act, 65 Pa.C.S. §1101 et seq. and if so, whether said member, who is also a senior vice president of a bank, would have a conflict as to engaging in business activities with the county on behalf of that bank. Facts: As General Counsel, Corporate Banking, for PNC Bank, National Association ( "PNC "), you seek an advisory on behalf of George Whitmer ( "Whitmer "), a Senior Vice President of PNC. The Allegheny County Chief Executive, James Roddey, has asked Whitmer to serve as his designee on the three member Allegheny County Property Assessment Oversight Board (Oversight Board "). Whitmer would serve on the Oversight Board without compensation. Whitmer is the highest ranking municipal finance lending officer within PNC. Additionally, the PNC Financial Services Group, Inc., PNC's parent, is, through various subsidiaries and affiliates, the owner of real estate in Allegheny County, including major office towers and a newly constructed operations building. You state that Whitmer feels that serving on the Oversight Board is his civic duty, and PNC encourages him to take the position. However, neither Whitmer nor PNC would want Whitmer to take a seat on the Oversight Board if taking that position would: (1) disqualify Whitmer from representing PNC as a municipal finance officer in PNC's dealings with Allegheny County; (2) impair in any way the ability of PNC or its affiliates Pool, 00 -614 October 16, 2000 Page 2 to provide banking, investment banking, or other financial or financial advisory or insurance services to Allegheny County; or (3) impair in any manner the ability of The PNC Financial Services Group, Inc., or its affiliates, to contest any of the new assessments on its properties. You have submitted a copy of Chapters 205, 207 and 209 of the Allegheny County Administrative Code ( "Code "). The Oversight Board was created as an agency of the County with the stated purpose of ensuring professional assessment processes. It is parenthetically noted that pursuant to Section 205.03 of the Code, all members of the Oversight Board are required to abide by the "Accountability, Conduct and Ethics Code' of Allegheny County, which has not been submitted. Section 205.06 of the Code delineates the Oversight Board's powers and duties as follows: Section 205.06 Powers and Duties of Board The Board shall have the power and its duty shall be to: A. Recommend to the County Council, within six (6) months of its formation, in accordance with Chapter 209 of this Administrative Code and consistent with all applicable laws, an Assessment Standards and Practices Ordinance based on a nationally recognized assessment policy; Confirm or reject the appointment of the Chief Assessment Officer by the County Manager; C. Certify, in a timely fashion, that assessments determined by the Office of Property Assessment have been made according to the Assessment Standards and Practices Ordinance. If the Board is unable to certify the assessments, the last certified assessments and assessments on new and altered property shall remain in effect. The Board shall not have the power to modify individual assessments; and Perform and exercise such other powers and duties as may be conferred or imposed upon it by applicable Law and the provisions of this Administrative Code. Provide semi - annual reports to County Council regarding the activities of the Board. Allegheny County Administrative Code, Section 205.06 (Emphasis added). Apparently as part of its powers and duties under paragraph C above, the Oversight Board performs an annual audit of the assessment practices of the Office of Property Assessments. Allegheny County Administrative Code, Section 209.08C. You state that the Oversight Board's overriding purpose is to ensure the existence of professional assessment processes, not to be actively involved in the actual assessment process (which is the function of the Office of Property Assessment) or in property assessment appeals and review (which is the function of the Board of Property Assessment Appeals and Review). Pool, 00 -614 October 16, 2000 Page 3 You state that Whitmer is to be appointed to the Oversight Board pursuant to Section 205.02 of the Code. You also state that the Oversight Board has the right to designate one or more solicitors pursuant to Section 205.04 of the Code. You state that the Board's ability to: (1) recommend an Assessment Standards and Practices Ordinance; (2) confirm or reject the appointment of the Chief Assessment Officer; and (3) certify that assessments determined by the Office of Property Assessment have been made in accordance with the Assessment Standards and Practices Ordinance, implies that the Oversight Board has the ability to retain professional consultants. Your inquiry is twofold. First, you inquire as to whether membership on the Oversight Board would bring Whitmer within the Ethics Act's definition of "public official," such that Whitmer would be subject to the requirements of the Ethics Act. You state your opinion that the Oversight Board is an advisory board, and that Whitener as a Member would therefore not be a "public official" subject to the Ethics Act. You seek an advisory from the State Ethics Commission to that effect. In the event that it is determined that the Oversight Board is not merely an advisory board, you further ask the State Ethics Commission for an advisory stating that: 1. The Oversight Board is the only public body with which Whitmer or any other PNC employee or any of its affiliates may not contract; 2. Whitmer or any other PNC employee or affiliate may enter into business arrangements with Allegheny County, any of the County's departments or related authorities or any of the elected Allegheny County row offices — excluding the Oversight Board — without such business arrangements constituting an improper conflict of interest or otherwise being prohibited by Section 1103 of the Ethics Act; and 3. PNC or any of its affiliates may contest any assessment on any of their respective properties in Allegheny County despite Whitmer's position on the Oversight Board. As to the latter, you state that the enabling ordinance which created the Oversight Board did not contemplate individual assessments being reviewed by the Oversight Board. You also state that in the highly unlikely event that a review by the Oversight Board of an assessment of property owned by PNC or any of its affiliates would occur, Whitmer would act in accordance with Section 11030) of the Ethics Act. 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. In the instant matter, the threshold issue is whether Whitmer, as a member of the Allegheny County Property Assessment Oversight Board ( "Oversight Board "), would be a "public official" and therefore subject to the Ethics Act. The Ethics Act defines the term "public official" as follows: § 1102. Definitions Pool, 00 -614 October 16, 2000 Page 4 "Public official." Any person elected by the public or elected or appointed by a governmental body or an appointed official in the executive, legislative or judicial branch of this Commonwealth or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense or to otherwise exercise the power of the State or any political subdivision thereof. 65 Pa.C.S. §1102 (Emphasis added). The regulations of the State Ethics Commission similarly define the term "public official" and set forth the following additional criteria that are used to determine whether the advisory board exception applies: (i) The following criteria will be used to determine if the exception in this paragraph is applicable: (A) The body will be deemed to have the power to expend public funds if the body may commit funds or may otherwise make payment of monies, enter into contracts, invest funds held in reserves, make loans or grants, borrow money, issue bonds, employ staff, purchase, lease, acquire or sell real or personal property without the consent or approval of the governing body and the effect of the power to expend public funds has a greater than de minimis economic impact on the interest of a person. (B) The body will be deemed to have the authority to otherwise exercise the power of the Commonwealth or a political subdivision if one of the following exists: (I) The body makes binding decisions or orders adjudicating substantive issues which are appealable to a body or person other than the governing authority. (II) The body exercises a basic power of government and performs essential governmental functions. (III) The governing authority is bound by statute or ordinance to accept and enforce the rulings of the body. (IV) The body may compel the governing authority to act in accordance with the body's decisions or restrain the governing authority from acting contrary to the body's decisions. (V) The body makes independent decisions which are effective without approval of the governing authority. (VI) The body may adopt, amend and repeal resolutions, rules, regulations or ordinances. (VII) The body has the power of eminent domain or condemnation. Pool, 00 -614 October 16, 2000 Page 5 (VIII) The enabling legislation of the body indicates that the body is established for exercising public powers of the Commonwealth or a political subdivision. (ii) The term does not include judges and inspectors of elections, notary publics and political party officers. (iii) The term generally includes persons in the following offices: (A) Incumbents of offices filled by nomination of the Governor and confirmation of the Senate. (B) Heads of executive, legislative and independent agencies, boards and commissions. (C) Members of agencies, boards and commissions appointed by the General Assembly or its officers. (D) Persons appointed to positions designated as officers by the Commonwealth or its political subdivisions. (E) Members of municipal, industrial development, housing, parking and similar authorities. (F) Members of zoning hearing boards and similar quasi - judicial bodies. (G) Members of the public bodies meeting the criteria in paragraph (i)(A). 51 Pa. Code §11.1. In applying the Ethics Act and the Regulations to the facts which you have submitted as to the Oversight Board, the necessary conclusion is that the Oversight Board is not an advisory body as contemplated by the Ethics Act's definition of "public official." Pursuant to Section 205.06(C) of the Code, the Oversight Board has the authority to ensure that assessments have been made according to uniform assessment standards and practices. Unless the Oversight Board certifies the assessments as having been made according to the Assessment Standards and Practices Ordinance, the assessments cannot be changed. As such, the Oversight Board exercises a basic power of government and performs essential governmental functions. Further, the Oversight Board makes independent decisions that are effective without the approval of the governing authority. See 51 Pa. Code §11.1(i)(B)(II), (V). Because the Oversight Board does not fall within the advisory board exception, Whitmer, as a member of the Oversight Board, would be a "public official" as defined in the Ethics Act. Accordingly, Whitmer would be subject to the Ethics Act and the Regulations of the State Ethics Commission. The remainder of your inquiry as to the applicable restrictions of the Ethics Act shall now be addressed. Section 1103(a) of the Ethics Act provides as follows: § 1103. Restricted activities Pool, 00 -614 October 16, 2000 Page 6 (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 pertaining to Section 1103(a) 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. "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(f) of the Ethics Act provides as follows: Pool, 00 -614 October 16, 2000 Page 7 § 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 pertaining to Section 1103(f) are defined in the Ethics Act as follows: § 1102. Definitions "Contract." An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other matters in consideration of his current public employment with the Commonwealth or a political subdivision. "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. "Governmental body with which a public official or public employee is or has been associated." The governmental body within State government or a political subdivision by which the public official or employee is or has been employed or to which the public official or employee is or has been appointed or elected and subdivisions and offices within that governmental body. Pool, 00 -614 October 16, 2000 Page 8 "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. The "governmental body with which a public official /public employee is or has been associated" is not limited to the particular subdivision of the agency or other governmental body where the public official /employee had influence or control but extends to the entire body. See Legislative Journal of House, 1989 Session, No. 15 at 290, 291; Sirolli Opinion No. 90 -006; Sharp Opinion 90- 009 -R. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official /public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500.00 or more, Section 1103(f) requires that an open and public process" be observed as to the contract with the governmental body. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Section 11030) 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 Pool, 00 -614 October 16, 2000 Page 9 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 11030) 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. The above provisions of the Ethics Act shall now be applied to your inquiry, beginning with Section 1103(a) of the Ethics Act. Subject to certain exceptions delineated in the definition of "conflict" or "conflict of interest" above, it is a conflict of interest under Section 1103(a) of the Ethics Act for a public official /public employee to use 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. Whitmer is a Senior Vice President of PNC. Therefore, PNC is a business with which Whitener is associated. Pursuant to Section 1103(a), Whitmer would be prohibited from using the authority of his office as a member of the Oversight Board or confidential information received by being in that position for the private pecuniary benefit of PNC. In each instance of a conflict of interest, Whitener would be required to abstain fully and to fully satisfy the disclosure requirements of Section 11030) as set forth above. As for PNC affiliates, the status of being affiliates of PNC would not make them businesses with which Whitmer is associated, conditioned upon the assumptions that: (1) they are separate corporations; and (2) Whitmer does not have a "financial interest" in them and is not a director, officer, or employee of them. See, Confidential Opinion, 92 -003. However, any such affiliate(s) for which Whitmer would have a "financial interest," or would be a director, officer, or employee, would be business(es) with which he is associated for purposes of applying Section 1103(a). Section 1103(a) which pertains to conflicts of interest of public officials and public employees would not operate to restrict PNC or its affiliates. Thus, under the Ethics Act, the potential for conflicts of interest for Witmer would not preclude PNC or its affiliates from contesting any assessment on any of their respective properties in Allegheny County, or from contracting with Allegheny County, its departments, row offices, boards, or related authorities. However, Section 1103(f) of the Ethics Act would clearly apply to impose restrictions upon contracting /subcontracting involving business(es) with which Witmer is associated and his "governmental body." Based upon the Commission's decision in Hitt, Opinion 90 -005, Witmer's "governmental body" would include the Oversight Board and the Office of Property Assessment which the Oversight Board audits. Pool, 00 -614 October 16, 2000 Page 10 In applying Section 1103(f), for contracts valued at $500 or more between Witmer's governmental body (whether the Oversight Board, the Office of Property Assessment, or both) and Whitmer or a business with which Whitmer is associated, or for subcontracts valued at $500 or more between Whitmer or a business with which Whitmer is associated and any "person" awarded a contract with Witmer's governmental body (whether the Oversight Board, the Office of Property Assessment, or both), the requirements imposed by Section 1103(f) of the Ethics Act would have to be satisfied. Those requirements as to an open and public process for the contract(s) and Whitmer's inability to have any supervisory or overall responsibility for the implementation or administration of such contract(s) are set forth above. 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 "Accountability, Conduct and Ethics Code" of Allegheny County. Conclusion: Upon becoming a Member of the Allegheny County Property Assessment Oversight Board "Oversight Board "), George Whitmer ( "Whitmer") would be a "public official" subject tote Public Official and Employee Ethics Act ( "Ethics Act ") and the Regulations of the State Ethics Commission. Given Whitmer's status as a Senior Vice President of PNC Bank, National Association ( "PNC "), PNC is a business with which Whitmer is associated. PNC affiliates are not businesses with which Whitmer is associated, conditioned upon the assumptions that: (1) they are separate corporations, and (2) Whitener does not have a "financial interest" in them and is not a director, officer, or employee of them. Any such affiliate(s) for which Whitener would have a "financial interest," or would be a director, officer, or employee, would be business(es) with which he is associated for purposes of applying Section 1103(a). Pursuant to Section 1103(a), Whitmer would be prohibited from using the authority of his office as a member of the Oversight Board or confidential information received by being in that position for the private pecuniary benefit of PNC or any other business with which he is associated. In each instance of a conflict of interest, Whitmer would be required to abstain fully and to fully satisfy the disclosure requirements of Section 1103(1) as set forth above. Section 1103(a) which pertains to conflicts of interest of public officials and public employees would not operate to restrict PNC or its affiliates. Under the Ethics Act, the potential for conflicts of interest for Witmer would not preclude PNC or its affiliates from contesting any assessment on any of their respective properties in Allegheny County, or from contracting with Allegheny County, its departments, row offices, boards, or related authorities. Witmer's governmental body would include the Oversight Board and the Office of Property Assessment which the Oversight Board audits. For contracts valued at $500 or more between Witmer's governmental body (whether the Oversight Board, the Office of Property Assessment, or both) and Whitmer or a business with which Whitmer is associated, or for subcontracts valued at $500 or more between Whitmer or a business with which Whitmer is associated and any "person" awarded a contract with Witmer's governmental body (whether the Oversight Board, the Office of Property Assessment, or both), the requirements imposed by Section 1103(f) of the Ethics Act would have to be satisfied. Those requirements as to an open and public process for the contract(s) and Whitmer's inability to have any supervisory or overall responsibility for the implementation or administration of such contract(s) are set forth above. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 11 07(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith Pool, 00 -614 October 16, 2000 Page 11 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 ). TThe 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