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HomeMy WebLinkAbout01-566 LiebermanKarl F. Longenbach Attorney at Law 528 North New Street P.O. Box 1920 Bethlehem, PA 18016 -1920 ADVICE OF COUNSEL June 28, 2001 01 -566 Re: Conflict; Public Official /Employee; County; Member; County Council; General Purpose Authority; Industrial Development Authority; Business With Which Associated; Law Firm; Attorney; Solicitor; Courthouse; Immediate Family; Spouse; Contracting /Excavating Business; Municipality; Bond; Ordinance; Vote. Dear Mr. Longenbach: This responds to your letter of May 21, 2001, 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 members of a county council with regard to two proposed ordinances authorizing the county to incur lease rental debt for various capital and economic development projects, including, inter alia the construction of a new county courthouse, where such debts would be evidenced by loan agreements or guaranties with a general purpose authority and an industrial development authority, and where: 1) one or more council members are also members of the general purpose authority and/or the industrial development authority; 2) one council member's spouse owns a contracting and excavating business that is 'theoretically" capable of bidding on project(s) financed by bond proceeds; 3) one council member is an attorney who has practiced and continues to practice before the judges of the county court of common pleas; 4) the aforesaid council member /attorney is associated with the same law firm as the assistant county solicitor, whose remuneration as assistant county solicitor is paid directly to him and not into the law firm; and 5) the law firm with which the council member /attorney is associated serves as solicitor to several municipalities which could be potential recipients of municipal grants from related bond proceeds. Facts: As Solicitor to the County Council of Northampton County ( "County ouncil ") you seek an advisory on behalf of the following individuals: Gregory A. Zebrowski ( "Zebrowski "), Marilyn A. Lieberman ( "Lieberman ") and Michael F. Corriere ( "Corriere "). Zebrowski, Lieberman and Corriere are three of the nine elected members Lonnenbach,01 -566 June 28, 2001 Page 2 of County Council. The material facts and documents which you have submitted may be fairly summarized as follows. Northampton County is a home rule municipality governed by the Northampton County Home Rule Charter, a copy of which has been submitted and is incorporated herein by reference. You state that the Northampton County Home Rule Charter places the executive and administrative powers in the office of County Executive, and the legislative powers in the County Council. In addition to serving on County Council, Zebrowski and Lieberman are members of the Board of Directors of the Northampton County General Purpose Authority ( "GPA "). Lieberman also serves as a board member and chairperson of the Northampton County Industrial Development Authority ( "IDA "). Lieberman's husband is the owner of L.V. Lieberman Excavating, a business engaged in construction and excavating activities in the Lehigh Valley. Corriere is a practicing attorney associated with the law firm of Haber, Corriere and Backenstoe, Professional Corporation (the "Law Firm "), where he holds the office of Assistant Treasurer. Corriere has practiced and continues to practice before the judges of the Court of Common Pleas of Northampton County. Another attorney associated with the Law Firm, David M. Backenstoe, Esquire ("Backenstoe"), is Assistant Secretary of the Law Firm and a part -time Assistant Northampton County Solicitor. The Northampton County Solicitor, in turn, reports to the County Executive of Northampton County. You state that the compensation for Attorney Backenstoe's services as Assistant County Solicitor is paid directly to Attorney Backenstoe and not into the Law Firm. However, the facts which you have submitted do not indicate whether such compensation is indirectly or "constructively" received by the Law Firm. The Law Firm serves as solicitor to the following political subdivisions: Plainfield Township, Moore Township, Lehigh Township, Lehigh Township Municipal Authority, Walnutport Borough, and Hellertown Borough. On May 3, 2001, two proposed ordinances, Ordinances 393 and 394, were introduced by County Council Members other than those on whose behalf you have inquired. You have submitted copies of both proposed ordinances, which are incorporated herein by reference. The proposed ordinances may be fairly summarized as follows. Under proposed Ordinance 393, Northampton County would authorize and approve certain capital and economic development projects to be undertaken by the County and the GPA. The County would incur lease rental debt to provide funding for such projects. The GPA would issue Series 2001 Authority Bonds of up to $125,000,000 in principal amount. The County would enter into appropriate agreement(s) with the GPA to provide the means of paying and securing payment of the bonds and to authorize actions to complete the issuance and sale of the bonds. Ordinance 393 as introduced proposes, inter alia that $42,000,000 of the bond proceeds be used to construct, equip, and furnish a new county courthouse and that $8,966,540 of the bond proceeds be used as grants to unspecified Northampton County municipalities for infrastructure and related improvements. Under proposed Ordinance 394, Northampton County would authorize and approve the construction of a "shell building" as an economic development project undertaken in cooperation with the IDA. The County would incur lease rental debt to provide funding for the project. The IDA would issue IDA Shell Building Project Bonds of up to $2,000,000 in principal amount. The County would enter into appropriate Lonnenbach,01 -566 June 28, 2001 Page 3 agreement(s) with the IDA to provide the means of paying and securing payment of the bonds and to authorize actions to complete the issuance and sale of the bonds. At a public hearing on May 17, 2001, Mr. Bernie O'Hare, a private citizen, questioned whether Zebrowski, Lieberman and Corriere would violate Section 1103(a) of the Ethics Act (pertaining to conflict of interest) if they would deliberate and vote on the passage of proposed Ordinances 393 and 394. You have submitted a copy of Mr. O'Hare's written statement in this regard. Based upon the facts which you have submitted, you pose the following questions: 1. Whether Corriere has a conflict of interest under the Ethics Act that would bar him from deliberating or voting on proposed Ordinances 393 and 394 given that Backenstoe, a member of the Law Firm with which Corriere is associated, is an Assistant County Solicitor who serves the County Executive but receives compensation for such legal services directly, rather than through the Law Firm; 2. Whether Corriere has a conflict of interest under the Ethics Act that would bar him from deliberating or voting on proposed Ordinances 393 and 394, or on that section of proposed Ordinance 393 relating to General Purpose Authority Economic Development grants to Northampton County municipalities, given that proposed Ordinance 393 as introduced proposes that $8,966,540 of the bond proceeds be used as grants to unspecified Northampton County municipalities for infrastructure and related improvements, and the Law Firm with which Corriere is associated serves as solicitor to certain municipalities, one or more of which may receive municipal grant(s) from such bond proceeds; 3. Whether Corriere has a conflict of interest under the Ethics Act that would bar him from deliberating or voting on proposed Ordinances 393 and 394, or on that section of proposed Ordinance 393 relating to the use of bond proceeds for the County General Improvement courthouse project, given that proposed Ordinance 393 as introduced proposes that that $42,000,000 of the bond proceeds be used to construct, equip, and furnish a new county courthouse, and Corriere has practiced and will continue to practice before the judges of the Northampton County Court of Common Pleas; 4. Whether Zebrowski and Lieberman have a conflict of interest under the Ethics Act that would bar them from deliberating or voting on proposed Ordinances 393 and 394 in whole or part, given that in addition to serving as members of County Council, they are appointed members of the Board of Directors of the GPA which will play a role in the administration of bond proceeds; 5. Whether Lieberman has a conflict of interest under the Ethics Act that would bar her from deliberating or voting on proposed Ordinances 393 and 394 in whole or part, given that in addition to serving as a member of County Council, she serves as an appointed member (and Chair) of the IDA; 6. Whether Lieberman has a conflict of interest under the Ethics Act that would bar her from deliberating or voting on proposed Ordinances 393 and 394 in whole or part, given that her spouse owns a construction and excavating company which theoretically" could submit a bid for construction or excavating services on a bond financed project. 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 Lonnenbach,01 -566 June 28, 2001 Page 4 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. 107(10), (11). An advisory only affords a defense to the extent the requestor has truth fully disclosed all of the material facts. As members of the County Council, Zebrowski, Lieberman and Corriere are all public officials subject to 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 pertaining to conflict of interest are defined in the Ethics Act as follows: 65 Pa.C.S. §1102. §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. "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. Lonnenbach,01 -566 June 28, 2001 Page 5 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 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 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. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, 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, any member of his immediate family, or a business with which he or a member of his immediate family is associated. Lonnenbach,01 -566 June 28, 2001 Page 6 Your specific inquiries as to the three Council Members will now be addressed in the order listed above. Such responses are limited to the very narrow questions posed, that is, whether conflicts exists solely in the context of voting on Ordinances 393 and 394. The first question relates to whether Corriere would have a conflict as to the bond ordinances when Backenstoe belongs to the same Law Firm as Corriere and serves as an Assistant County Solicitor, who serves the County Executive and receives compensation for such legal services "directly." The resolution of this issue turns upon whether Corriere's actions would result in a financial gain through Backenstoe to the Law Firm with which Corriere and Backenstoe are associated. It is unclear as to whether the compensation the Assistant Solicitor receives is direct whereby the Assistant Solicitor, and not the Law Firm, receives the compensation, or whether the compensation goes to the Assistant Solicitor directly, who then turns it over to the Law Firm that indirectly receives the compensation. If Backenstoe as Assistant Solicitor does not have to turn over such compensation to the Law Firm, there could be no action by Corriere which would provide a financial gain to the Law Firm, and hence, Corriere would not have a conflict. Alternatively, assuming that the Law Firm does receive the compensation, no conflict would exist in that it has been factually represented that the Assistant Solicitor serves the County Executive, rather than the County Council so that Corriere could not use his position as to any financial gain for the Law Firm through Backenstoe. Thus, there would be no conflict based upon the factual assumption that Corriere's actions as to the ordinances would not have any pecuniary benefit to the Law Firm through Backenstoe. The second inquiry asks whether Corriere would have a conflict when the Law Firm represents several municipalities who may be potential recipients of municipal grants from bond proceeds. The Commission in Miller, Opinion 89 -024 and Kannebecker Opinion 92 -010, held that a conflict of interest exists where a public official /public employee, in his official capacity, participates, reviews or passes upon a matter involving a business with which he is associated and/or private clients. However, in the instant case, the matter before the County Council involves the County, GPA, and IDA rather than the Law Firm or its clients. The fact that Ordinance 393 designates a portion of the bond proceeds for unspecified Northampton County municipalities, does not create a conflict of interest where the submitted facts fail to establish a pecuniary benefit between voting on the ordinances and the Law Firm receiving compensation because some of its municipal clients may be among the grant recipients. Hence, Corriere would not have a conflict as to deliberating or voting on the bond ordinances as to this issue. The above follows the Commission's decision in Armstrong Opinion 97 -001, which involved a township supervisor who, in his private capacity, was the principal shareholder of a heating and air conditioning company. The supervisor's company submitted a bid to a general contractor to perform renovation work on an office building owned by a major landowner in the township. The company was awarded the subcontract for heating and air conditioning work as the low bidder. Subsequently, the landowner brought matters before the township board of supervisors unrelated to the renovation project. The issue was whether the supervisor would have a conflict in matters involving the landowner because of his work for the general contractor on the building owned by the landowner. The Commission noted that there was a business relationship between the supervisor and the landowner by virtue of the renovation subcontract. However, the Commission stated that the business relationship was not a direct one because first, the building owner retained the general contractor who awarded the contract to the supervisor's company as the low bidder; and second, the matter that was pending before the township involved an issue unrelated to the building renovation project. The Commission noted that although the certainty of financial gain is not required to establish a conflict, the interest cannot be considered to be remote. The Commission then found no conflict as to the supervisor's participation in matters before the township unrelated to the renovation project. Lonnenbach,01 -566 June 28, 2001 Page 7 The third question involves Corriere's practicing law before the judges of the Northampton County Court of Common Pleas when Ordinance 393 proposes, inter alia, that $42,000,000 of the bond proceeds be used for a new courthouse andrerelated improvements in Northampton County. From the submitted facts, Corriere would not have a conflict because neither Corriere, a member of his immediate family, nor a business with which he or a member of his immediate family is associated, would receive a private pecuniary benefit from his proposed conduct. See Armstrong supra. The fourth inquiry asks whether Zembrowski and Lieberman, who serve on the GPA Board, would have a conflict of interest that would bar them from deliberating or voting on the bond ordinances in whole or in part. This issue has been addressed b y the Commission in McCarrier /Anderson, Opinion 98 -008 wherein the Commission held that the use of authority of office by a county commissioner for a pecuniary benefit to another governmental body on which he also served would not, in and of itself, constitute a conflict of interest under the Ethics Law in that the elements of a conflict of interest do not encompass a pecuniary benefit that flows solely to another governmental body. Thus, assuming that GPA is a governmental body, no conflict would exist because these two public officials who serve on two governmental bodies would be taking action in one governmental body that would affect the other governmental body. The fifth question relates to whether Lieberman would have a conflict of interest as to the bond ordinances when she serves on the IDA. Lieberman would not have a conflict for the reasons set forth in addressing the fourth question, assuming that IDA is a governmental body. See McCarrier /Anderson supra. The sixth question asks whether Lieberman would have a conflict as to the bond ordinances given that her spouse owns a construction /excavating company that could "theoretically' bid on such services on the bond financed project. Lieberman s spouse is a member of her immediate family as that term is defined in the Ethics Act. L.V. Lieberman Excavating, which Lieberman's spouse owns, is a business with which her spouse is associated. Regarding whether Lieberman has a conflict regarding the two ordinances vis -a -vis L.V. Lieberman Excavating, the Commission in Amato Opinion 89- 002, held that a conflict exists as to matters where there is a "reasonable and legitimate anticipation" that a business relationship will develop after the official action, resulting in a prohibited financial gain. The question becomes whether Lieberman has a reasonable and legitimate expectation that by voting on the two ordinances, L.V. Lieberman Excavating could receive construction /excavating contracts from bond financed projects. If such an expectation exists, Lieberman would have a conflict and could not participate. A reasonable expectation in this case can exist based upon the factual circumstances including, but not limited to: 1) any prior construction /excavating contracts by L.V. Lieberman Excavating arising out of prior bond financed projects; 2) any past work performed by L.V. Lieberman Excavating as to projects that are of the magnitude /nature of bond financed projects; or 3) a likelihood of receiving a contract based upon L.V. Lieberman Excavating's size, location, capability, and the circumstances of its competitors. 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. Conclusion: As members of the County Council of Northampton County ( "County Council "), Gregory A. Zebrowski ( "Zebrowski "), Marilyn A. Lieberman ( "Lieberman ") and Michael F. Corriere ( "Corriere "), are all public officials subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. §1101 et seq. Lonnenbach,01 -566 June 28, 2001 Page 8 Lieberman's spouse is a member of her immediate family. L.V. Lieberman Excavating, which is owned by Lieberman's spouse, is a business with which Lieberman's spouse is associated. Haber, Corriere and Backenstoe, Professional Corporation (the "Law Firm "), of which Corriere is a member, is a business with which Corriere is associated. As to the first question relating to Corriere's participation in the bond ordinances when Backenstoe, a member of the Law Firm with which Corriere is associated, is an Assistant County Solicitor who serves the County Executive and receives compensation for such legal services "directly," in that the Assistant Solicitor serves the County Executive rather than County Council and based upon the factual assumption that Corriere's actions as to the ordinances could not result in any pecuniary benefit to the Law Firm through Backenstoe, Corriere would not have a conflict of interest on that issue. As to the second inquiry involving whether Corriere would have a conflict when the Law Firm represents several municipalities who may be potential recipients of municipal grants from bond proceeds, Corriere would not have a conflict where the submitted facts fail to establish a pecuniary benefit between voting on the ordinances and the Law Firm receiving compensation because some of its municipal clients may be among the grant recipients. As to the third question regarding Corriere practicing law before the judges of the Northampton County Court of Common Pleas which may receive funding from the bond proceeds, Corriere would not have a conflict where neither he, a member of his immediate family, nor a business with which he or a member of his immediate family is associated, would receive a private pecuniary benefit from his proposed conduct. As to the fourth question pertaining to whether Zembrowski and Lieberman would have a conflict as to the bond ordinances when they also serve on the General Purpose Authority ( "GPA ") Board, assuming GPA is a governmental body, no conflict would exist because Zembrowski and Lieberman, who serve on the two governmental bodies, would be taking action in one governmental body that would affect the other governmental body. As to the fifth inquiry which similarly asks whether Lieberman would have a conflict because she serves on the Northampton County Industrial Development Authority ("IDA"), Lieberman would not have a conflict for the reasons set forth in addressing the fourth question. As to the sixth question involving a possible conflict by Lieberman by virtue of her spouse's ownership in L.V. Lieberman Excavating, which could "theoretically" bid on projects financed by bond proceeds, a conflict would exist if Lieberman has a reasonable and legitimate expectation that by voting on the two bond ordinances, L.V. Lieberman Excavating could receive construction /excavating contracts from bond financed projects. If such an expectation exists, Lieberman would be required to abstain and observe the disclosure requirements of Section 11030) 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. Lonnenbach,01 -566 June 28, 2001 Page 9 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 wil 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 §13.20. 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