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HomeMy WebLinkAbout92-593John G. Shorall, II, Esquire Shorall and Shorall 15th Floor, Frick Building Pittsburgh, PA 15219 STATE ETHICS COMMISSION 309 FINANCE BUILDING PO. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 ADVICE OF COUNSEL June 1, 1992 92 -593 Re: Conflict, Public Official /Employee, Assistant City-Solicitor, Partner in Law Firm Acting as Underwriters' Counsel. Dear Mr. Shorall: This responds to your letter of April 28, 1992, in which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Law presents any prohibition or restrictions upon an assistant city solicitor who is a partner in a law firm that is acting as underwriters' counsel in a financing being undertaken by a municipal authority in that same municipality and by the county where the municipality is located. Facts: As an Assistant City Solicitor for the City of Pittsburgh ( "City "), you seek an advisory from the State Ethics Commission. You state that the law firm of Shorall and Shorall, of which you are a partner, is being retained to act as Underwriters' Counsel representing PNC Securities Corp and Mellon Bank Public Finance, as Underwriters (the "Underwriters ") in a financing being undertaken by the Public Auditorium Authority of Pittsburgh and Allegheny County as Issuer (the "Issuer "). You seek an advisory addressing the issue of whether any conflict of interest is presented by virtue of your simultaneous service as trial counsel for the City contemporaneously with your firm acting as Underwriters' Counsel in a transaction being undertaken by the Issuer. You note that you do not believe that any such conflict exists. You have submitted the following factual circumstances, set forth herein verbatim: The Issuer -was incorporated on February 3, 1954 pursuant to the Public Auditorium Authorities Law, Act of July 29, 1953, P.L. John G. Shorall, II, Esquire June 1, 1992 Page 2 1034, as amended (the "Auditorium Law "), as a joint authority organized by the City of Pittsburgh (the "City ") and the County of Allegheny (the "County ") for the purpose of benefiting the public by, among other things, increasing its educational, cultural, physical, civic, social and moral welfare. The Issuer is authorized under the Auditorium Law to authorize, construct, improve, maintain and operate public auditoriums and exhibit halls, to borrow money, to issue bonds therefor, and to secure the . payment of such bonds; to enter into contracts, leases and licenses with, and to accept grants from, private sources, the federal government, the Commonwealth of Pennsylvania (the "Commonwealth "), its agencies or any political subdivisions thereof, and to collect rentals, admissions and license fees for the use of it s projects. The Issuer is represented by its counsel, Eckert Seamans Cherin & Mellott of Pittsburgh, Pennsylvania. Bond Counsel in the transaction is Klett, Lieber, Ronney & Schorling of Pittsburgh, Pennsylvania. The Issuer's Board consists of five members, two of whom are appointed by the Mayor of the City, two by the County Commissioners and one by the Mayor and the Commissioners jointly. The Board members serve without compensation for terms of , five years, the term of one member expiring each year. The Bonds will be secured by an assignment and pledge to the Trustee of all payments made to the Issuer by the City and the County pursuant to a Supporting Agreement. Under the Supporting Agreement, the City and the County will each unconditionally agree to pay one- half of the principal and interest on the Bonds as the same shall become due and .payable. The Bonds will be special limited obligations of the Issuer payable solely from the amount held by the Trustee under the Indenture providing for the issuance of the Bonds and from the receipt's of the Issuer John G. Shorall, II, Esquire June 1, 1992 Page 3 pursuant to the Supporting Agreement. The Issuer has no taxing power. The obligations of the City and the County under the Supporting. Agreement will constitute general obligations of the City and the County. The full faith, credit and taxing power of the City and the County will 'be pledged for the payment of the obligations of the City and the County under the Supporting Agreement. The City and the County will undertake all necessary action to have the amounts of such payment included in their respective debt limits under the Local Government Unit Debt Act of the_Commonwealth, Act of July 12, 1973, P.L. 791, as reenacted and amended, and both the City and the County will receive approval ftom the Pennsylvania Department of Community Affairs for the incurrence of the debt in accordance with the provisions of the Local Government Unit Debt Act. The proceeds of the Bonds will be used to pay the costs of (i) the acquisition of certain property for expansion of the David L. Lawrence Convention . Center; (ii) the acquisition of certain property to be leased to the Historical Society of Western Pennsylvania for renovations and for the operation of . a_ museum; (iii) the acquisition of certain property to be leased to the Pittsburgh Trust for Cultural Resources for the construction and operation of a theater; and (iv) payment of certain costs of issuance relating to the Bonds Shorall letter of April 28, 1992, at 1 -2. You note that the facts which you have presented are parallel to those addressed in an advisory which your office previously requested, specifically Advice 86-585. You seek confirmation of your understanding of the applicable law as set forth in the prior Advice, and setting forth a finding that no prohibition exists to the undertaking by your office of the professional engagement described above. Discussion: As an Assistant City Solicitor for the City of Pittsburgh, you are -a public employee as that term is defined under the Ethics Law, , and hence you are subject to the prov.3.sions..,gf ,that law. c „ John G. Shorall, II, Esquire June 1, 1992 Page 4 Section 3(a) of the Ethics Law provides: Section 3. Restricted Activities. (a) No public official or public employee shall engage in conduct that constitutes a conflict of interest. The following terms 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. "Immediate family." A parent, spouse, child, brother or sister. "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. " interest. ". Any financial interest in a legal entity engaged in business for pr1?. whioh `comprises more than, 5% of. the John G. Shorall, II, Esquire June 1, 1992 Page 5 equity of the business or more than 5% of the assets of the economic interest in indebtedness. In addition, Sections 3(b) and 3(c) of the Ethics Law 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 judgement 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 any transgression thereof but merely to provide a complete responseto the question presented. Section3(j) of the Ethics Law provides as follows: Section 3. Restricted activities. .¢(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 .r' made as otherwise provided herein. John G. Shorall, II, Esquire June 1, 1992 Page 6 If a conflict exists, Section 3(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. Having set forth the above provisions of the Ethics Law, a brief analysis is helpful before applying them directly to the circumstances which you have submitted. 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, any member of his immediate family, or a business with which he or a member of his immediate family is associated. It is noted that Section 3(a) of the Ethics Law does not prohibit public officials /employees from outside business activities or employment; however, the public official /employee may not use the authority of office for the advancement of his own private pecuniary benefit or that of a business with which he is associated. Pancoe, Opinion 89 -011. A public official /employee must exercise caution so that his private business activities do not conflict with his public duties. Crisci, Opinion 89 -013. Thus, a public official /employee could not perform private business using governmental facilities or personnel. In particular, the governmental telephones, postage, staff, equipment, research materials, personnel or any other property could not be used as a means, in whole or part, to carry out private business activities. In addition, the public official /employee could not during government working hours, solicit or promote such business activity. Pancoe, supra. Similarly, Section 3(a) would expressly prohibit the use of confidential information received by holding public office / employment for such a prohibited private pecuniary benefit. In the event that the private employer`or business has a matter pending before the .governmental body -or if the public official /public employee as part of such official duties must participate, review or pass upon that matter, a conflict would exist. Miller, Opinion 89 -024. In those instances, it will be necessary that the public officialfpublic employee be removed from that process. In such cases as noted above, Section 3(j) of the Ethics Law would require not only that the public official /public employee abstain from participation but also file a written memorandum to that effect -with . 4e. person recording the minutes or his supervisor. John G. Shorall, II, Esquire June 1, 1992 Page 7 In summary, the Ethics Law would restrict the following: 1. The use of authority of office to obtain any business in a private capacity; 2. utilization of confidential information gained through public position; 3.,, participating in discussions, reviews, or recommendations on matters which relate to the - business /private employer which may come before the governmental body and in such cases publicly announcing the relationship or advising the supervisor as well as filing a written memorandum as per the requirements of Section 3(j) of the Ethics Law. Brooks, Opinion 89 -023. Turning to the factual circumstances which you have submitted, it is clear that pursuant to Section 3(a) you may riot use the authority of your public position or any confidential information obtained through holding your public position for the private pecuniary benefit of yourself, any member of your immediate family, or any business with which you or a member of immediate family is associated, which would include but not be limited to your law firm. In the instant situation, it is clear that you would have a conflict of interest in your capacity as a public employee as to the "Supporting Agreement" to which the City will be a party, as to which you would be required to abstain from any participation of any nature whatsoever and to satisfy the disclosure requirements of Section 3(j). Otherwise the facts do not suggest a conflict of interest for you under the Ethics Law. The City of Pittsburgh is a separate and distinct entity from the Public Auditorium Authority of Pittsburgh and Allegheny County. Authorities that have been created under the Pennsylvania Municipality Authorities Act are deemed to be separate and distinct from the municipality under which they were created and, in effect, are considered to be entities of the Commonwealth of, Pennsylvania. Commonwealth v. Erie Metropolitan Transit Authority, 444 Pa. 345, 281 A.2d 822 (1971). In light of this, the Public Auditorium Authority of Pittsburgh is not, represented by the office of the Pittsburgh City Solicitor but is rather represented by its own solicitor. Similarly, Allegheny County would be represented by its own solicitor. It is assumed for the purposes of this Advice therefore, that the City Solicitor's Officer performs no functions in relation to the Public Auditorium Authority of Pittsburgh and /or Allegheny County, and, consequently, has no responsibilities in relation thereto. Thus, although you would not be able to use your position as an Assistant City Solicitor to advance the interests of yourself or your lava firm in relation to this particular project, insofar as you perform no duties or responsibilities in your public position in relation to John G. Shorall, II, Esquire June 1, 1992 Page 8 the Public Auditorium Authority of Pittsburgh and /or Allegheny County, there would appear to be no per se prohibition precluding your appointment as Underwriters' Counsel. gni, Richards, Order No.. 376. It is conceivable that other circumstances may arise which would cause a conflict of interest to develop for you. For example, if there would be litigation in relation to this situation and for some reason, the Pittsburgh Office of City Solicitor were to. be involved, Section 3(a) could, in some instances, be iapl,cated., _ Should such circumstances arise, it is recommended \ that';further ; advice be sought from this Commission. The propriety of the proposed conduct has only been addressed under the Ethics Law; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Law has not been considered in that they do not involve an interpretation of the Ethics Law. Specifically not addressed herein is the applicability of the respective municipal code or Home Rule Charter, or the Rules of Professional Conduct. Conclusion: As an Assistant City Solicitor for the City of Pittsburgh, you are a public employee subject to the provisions of the Ethics Law. Section'3(a) of the Ethics Law would not preclude you from outside employment /business activity subject to the restrictions and qualifications as noted above. In the event that the employer /business has matters pending before your governmental body, then you could not participate in that matter and the disclosure requirements of Section 3(j) of the Ethics Law as outlined above must be satisfied. Under the facts which you have submitted, the Ethics Law presents no per se prohibition upon your service as a part -time Assistant City Solicitor while at the same time you are a member of a law firm which has been appointed as Underwriters' Counsel in a financing being undertaken by the Public Auditorium Authority of Pittsburgh and Allegheny County. In your capacity as a public employee, you would have a conflict of interest as to the related Supporting Agreement to which the City of Pittsburgh will be a party, as to which you must abstain from any participation of any nature whatsoever and must satisfy the disclosure requirements of Section 3(j). Should additional circumstances arise, such as, for example, the involvement of the Office of City Solicitor in litigation in relation to this situation, it is recommended that the further advice of this Commission be sought. Lastly, the propriety of the proposed 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 John G. Shorall, II, Esquire June 1, 1992 Page 9 the material facts and committed the acts complained of in reliance on the Advice given. such. This letter is a public record and will be made available as 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 52.12. Sincerely, ig . Vincent J. Dopko Chief Counsel