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HomeMy WebLinkAbout89-545 MascaraFrank R. Mascara, Chairman Board of County Commissioners County of Washington Commonwealth of Pennsylvania Courthouse Square, Room 702 Washington, PA 15301 Dear Mr. Mascara: STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 17108 -1470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL May 31, 1989 89 -545 Re: FIS, Public. Official, County Commissioner, Financial Reporting Requirements This responds to your letter of April 28, 1989 in which you requested advice from the State Ethics Commission. Issue: What requirements the Ethics Act imposes upon a Public Official regarding the listing of various financial interests on the Statement of Financial Interests. Facts: You state that you are a County Commissioner in Washington County and that you have four questions concerning whether certain items of financial interest should be listed on your Statement of Financial Interests. As to the first item, you note that your wife and yourself are guarantors on your son's auto loan during 1987. After stating that your son makes all the loan payments, you question whether you are required to report this annually under Item 1 as creditors. As to the second item, you state that you and your wife are co- owners of a piece of property with another son who sold the property under Article of Agreement. You state that until January , 1989 you received no rents or payments under the agreement. You inquire as to whether you have to report this as an outstanding debt and secondly whether you would report this on Item 11 of the Statement of Financial Interest as income under the Articles of Agreement consisting of the repayment to you of the original down payment that you made to assist your son' -in purchasing the home. Thirdly, you state that you sold a. piece of property in 1983 wherein the purchase price was deferred for several years. You referenced Advice of Counsel 87 -575, wherein you were advised that capital gains from the sale of real estate would have to be Frank R. Mascara May 31, 1989 Page 2 reported on Item 11 on the Statement of Financial Interest; you then inquire as to whether amounts carried as deferred income either as installment sale or notes due would be reportable and, if so, where. Finally, you inquire as to whether the interest earned but not received from the Washington County Employees' Retirement Fund would be reportable on Item 11 of the Statement of Financial Interest. Discussion: As "public official" P.S. S402; 51 Pa. the provisions of applicable to you a Commission for Washington County, you are a that term is defined under the Ethics Act. 65 Code S1.1. As such, your conduct is subject to the Ethics Act and the restrictions therein are Section 4(a) of the Ethics Act provides: Section 4. Statement of financial interests required to be filed. (a) Each public employee employed by the Commonwealth shall file a statement of financial interests for the preceding calendar year with the department, agency or bureau in which he is employed no later than May 1, of each year that he holds such a position and of the year after he leaves such a position. Any other public employee shall file a statement of financial interests with the governing authority of the political subdivision by which he is employed no later than May 1 of each year that he holds such a position and of the year after he leaves such a position. 65 P.S. S404(a). In addition, "Section 5 S(b), S4, and S5" of the Ethics provide: Section 5. Statement of financial interests. (b) The statement shall include the following information for the prior calendar year with regard to the person required to file the statement and the members of his immediate family: (4) The name and address of each creditor to whom is owed in excess of $5,000 and the interest rate thereon. However, loans or credit extended between members of the immediate family and mortgages Securing real Act Frank R. Mascara May 31, 1989 Page 3 property which is the principle residence of the person filing or of his spouse shall not be included: (5) The name and address of any person who is the director indirect source of income totalling in the aggregate $500 or more. However, this provision shall not be construed to require the divulgence of confidential information protected by statute or existing professional codes of ethics. 65 P.S. . S405(b)(4),(5) Additionally, the term "income" is defined under the Ethics Act as follows: Section 2. Definitions "Income." Any money or thing of value received,or to be received as a claim on future services, whether in the form of a fee, salary,- expense, allowance, forbearance, forgiveness, interest, dividend, royalty, rent, capital gain or any other form of recompense - or any combination thereof. 65 P.S. S402. Under the Regulations of the State Ethics Act, "income" is defined as follows: Income - As defined in the act, but the term refers to gross income; prize winnings constitute income, not gifts; the term includes tax exempt income. The term does not include social security; welfare, general assistance, domiciliary care programs; retirement, pension, and annuity payments funded totally by contributions of the public official /employe; unemployment compensation, including employer and union funded programs; worker's compensation; or miscellaneous, incidental income of minor dependent children from newspaper routes, babysitting, lawn- mowing, and the like. 51 Pa: Code 1.1. The above provisions of the Ethics Act will now be applied to the four specific questions that you pose regarding the listing of certain financial interest in the Statement of Financial Interests form. As to the first item, since you and Frank R. Mascara May 31, 1989 Page 4 your wife have signed as guarantors for your son's loan, you would become liable for the loan in the event that there would be a default. Consequently the individual or firm or institution which has loaned the money would be a creditor as to your son and also to you and your. wife. Therefore, in the event that the liability exceeds $5,000, you are required to list the name of the lender together with the applicable rate of interest under Item 10 in the Statement of Financial Interests. As to the second item concerning the property which is co- owned by you, your wife, and your son, it appears from the facts that the property in question is not your primary residence. It appears that you have advanced a down payment for your son whom you assisted in purchasing the home. Therefore, if you and your wife are co- owners and the house is mortgaged, you are required to list the lender as a creditor provided the liability exceeds $5,000. Additionally, you are required to list the rate of interest under Item 10. As to the subsidiary question of whether you would have to report income which is a repayment of the original down payment you made to your son, the answer to that question would turn upon the financial arrangements in the Articles of Agreement. If the situation exists that you are merely receiving a repayment of an advancement that you made to your son without any additions or interest to the original amount, then in that case you would not be receiving any income but merely a return of the money you advanced to your son and in that event you would not have to list the item under Direct or Indirect Sources of Income. However, if the payment was in the form of a loan and you are receiving repayment consisting of principle and interest, then you would be required to list that item under Direct or Indirect Sources of Income provided it exceeds $500 or more. As to your third item regarding whether deferred income which would either be as an installment sale or notes due, you are advised that such would be reported on Item 10 under Direct or Indirect Sources of Income provided that it is $500 or more as per the filing requirements. Lastly, regarding your fourth inquiry, the interest from the Washington County Employees' Retirement Fund would not be reported on Item 10 under Direct or Indirect Sources of Income since the definition of income in the regulations of the State Ethics Commission specifically excludes such interest provided the retirement payments are totally funded by your contributions as per the regulation. Conclusions: As a Washington County Commissioner, you are a public official subject to the provisions of the Ethics Act. Frank R. Mascara May 31, 1989 Page 5 Section you owe thereon indirect more. 5(b)(4) and (5) require that you list all creditors whom in excess of $5,000 together with the interest rate and further that you are required to list all direct or sources of income totally in the aggregate of $500 or Pursuant to Section 7(9)(ii), 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 request that the full Commission review this Advice. A personal appearance before the Commission will be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be in writing and must be received at the Commission within 15 days of the date of this Advice pursuant to 51 Pa. Code S2.12. Sincerely, , Vincent incent J. Dopko, General Counsel