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HomeMy WebLinkAbout02-606 BrueningJeff Bruening, Councilman Stewartstown Borough Council 64 Poplar Springs Boulevard Stewartstown, PA 17363 ADVICE OF COUNSEL October 16, 2002 02 -606 Re: Conflict; Public Official; Member; Borough Council; Business With Which Associated; Business Relationship; Client; Homeowners Association. Dear Mr. Bruening: This responds to your letter of September 10, 2002, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.GS. § 1101 et seq., presents any prohibition or restrictions upon a upon a borough council member with regard to participating in matters before borough council involving: (1) former or ongoing clients of his business; or (2) a homeowners association to which he belongs. Facts: As a Member of the Stewartstown Borough Council ( "Borough Council "), you seek an advisory from the State Ethics Commission. You have submitted facts which may be fairly summarized as follows. In your private capacity, you are the owner and President of a small computer consulting firm ( "Firm "). The Firm is in the business of selling computer hardware and software and providing consulting services. The Firm was the subject of a prior Advice issued to you. See, Brueninq, Advice 01 -575 issued July 25, 2001. (It is noted that to the extent your most recent advisory request attempts to characterize the prior Advice, the prior Advice speaks for itself.) You now seek an advisory as to matters before Borough Council involving: (1) former or ongoing clients of the Firm; and (2) a homeowners association to which you belong. With regard to former or ongoing clients of the Firm, you have posed the following seven questions: 1. Whether you should abstain from voting on a matter before Borough Council involving a municipality to which you provide sales /services; Brueninq, 02 -606 October 16, 2002 Page 2 2. Whether there are situations in which it would be permissible for you to vote on a matter involving a municipality with which you have a business relationship; 3. If you would terminate a business relationship with a municipality, whether you could "resume" voting or whether a period of time should pass before you "resume" voting on issues involving that municipality; 4. In the event of a conflict of interest, whether, in addition to the requirements for abstention and verbal disclosures of the conflict, "letters" must be filed with the Borough documenting the conflict of interest, the reason(s) for abstention, and the relationship(s) involved; 5. In a conflict situation where a vote is unexpected, whether there is an acceptable time frame in which the "letters" referenced in question 4 above may be written and filed with the Borough; 6. In a situation involving an ongoing relationship that gives rise to recurring conflicts of interest, whether a single 'letter" may be filed with the borough to cover such recurring conflicts of interests; and 7. Whether there are penalties for failing to file such a "letter" documenting a conflict of interest. As for the homeowners association to which you belong, you state that you do not serve on the board of the association. However, each homeowner may send a representative to the annual meeting of the association. Such representative may cast a single vote as to issues discussed and voted upon at the annual meeting. You note that the homeowners association represents 140 homes or 17 -20 percent of the total number of homes in the Borough. You estimate that the development includes approximately 400 citizens. You pose the following three questions: 1. Whether you would be required to abstain from voting if Borough Council were presented with an issue requiring a vote that would impact the homeowners association or the specific neighborhood in which you live; 2. Whether you would be required to abstain from voting on a matter before Borough Council that would impact the annual dues that you would have to pay if all of the homeowners would be impacted to the same degree; and 3. Whether you would have a conflict of interest as a Borough Council Member if your wife would represent and cast the vote(s) for your household at the annual meeting of the homeowners association. 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. Brueninq, 02 -606 October 16, 2002 Page 3 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. As a Member of Borough Council, you are a public official 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. "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, 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. Brueninq, 02 -606 October 16, 2002 Page 4 "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. "Political subdivision." Any county, city, borough, incorporated town, township, school district, vocational school, county institution district, and any authority, entity or body organized by the aforementioned. 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(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 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 Brueninq, 02 -606 October 16, 2002 Page 5 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, you are advised that 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 or private client(s). Miller, Opinion 89 -024; Kannebecker, Opinion No. 92 -010. A reasonable and legitimate expectation that a business relationship will form may also support a finding of a conflict of interest. Amato, Opinion No. 89 -002; Garner, Opinion No. 93 -004; Snyder, Order No. 979 -2, affirmed Snyder v. SEC, 686 A.2d 843 (Pa. Commw. Ct. 1996), alloc. den., No. 0029 M.D. Allocatur Docket 1997 (Pa. December 22, 1997). 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. The abstention requirement would not be limited to merely voting, but would extend to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In Kannebecker, Opinion 92 -010, the State Ethics Commission determined that a township supervisor, who in his private capacity was an attorney, would have a conflict of interest as to matters before the township involving ongoing client(s) or client(s) for whom he was on retainer, even if he would not represent such client(s) as to the matter pending before the township. The Commission determined that as a general rule, a conflict would not exist as to former client(s), but that under certain circumstances, a conflict could exist as to former client(s) depending upon factors such as the number of prior representations of the given client and the period of time over which such occurred. In considering the above, it is clear that the Firm would be considered a business with which you, as its owner and President, are associated. As a general rule, pursuant to Section 1103(a) of the Ethics Act, you would have a conflict of interest as to matters before Borough Council pertaining to you, a member of your immediate family, the Firm, or the Firm's client(s). See, Kannebecker, supra. As noted above, in each instance of a conflict, you would be required to abstain fully and to satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Having established the above general principles, your specific questions shall now be addressed, first as to the Firm and then as to the homeowners association to which you belong. In response to your first and second questions relating to voting on a matter involving a municipality with which you have a business relationship, it is initially noted that a municipality is a "political subdivision," not a "business" as defined by the Ethics Act, 65 Pa.C.S. 1102. See, Warso, Order 974; Pavlovic, Opinion 02 -005. However, the fact that the municipality is a client of the business with which you are associated would constitute the basis for a conflict of interest as stated in Kannebecker, supra. Brueninq, 02 -606 October 16, 2002 Page 6 Thus, you are advised that generally you would have a conflict of interest under Section 1103(a) of the Ethics Act as to matter(s) before Borough Council involving a municipality with which you have /the Firm has an ongoing business relationship. The only exceptions would be those statutorily provided. Specifically, the statutory definition of 'conflict" or "conflict of interest" includes two exclusions, hereinafter referred to as the "de minimis" exclusion and the "class /subclass exclusion." The de minimis exclusion recludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. In order for the class /subclass exclusion to apply, two criteria must be met: (1) the affected public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be a member of a class consisting of the general public or a true subclass consisting of more than one member; and (2) the public official /public employee, immediate family member, or business with which the public official /public employee or immediate family member is associated must be affected "to the same degree" as the other members of the class /subclass. 65 Pa.C.S. § 1102; see, Graham, Opinion 95 -002 (citing Van Rensler, Opinion 90 -017); Rubenstein, Opinion The first criterion of the exclusion is satisfied where the members of the proposed subclass are similarly situated as the result of relevant shared characteristics. The second criterion of the exclusion is satisfied where the individual /business in question and the other members of the class /subclass are reasonably affected to the same degree by the proposed action. Kablack, Opinion 02 -003. In response to your third question, based upon Kannebecker, supra, you generally would not have a conflict of interest under Section 1103(a) of the Ethics Act as to a municipality that is a former client. However, as noted above, you could have a conflict as to former client(s) depending upon factors such as the number of prior goods /services provided to such client(s), and the period of time over which such goods /services were provided. Id. In response to your fourth and sixth questions, the Ethics Act requires a public official /public employee with a conflict to: (1) abstain fully (not just from voting); and (2) 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. The foregoing abstention and disclosure requirements must be observed in each instance of a conflict of interest. Your fifth question has been fully addressed above. In response to your seventh question, Section 1109(b) of the Ethics Act provides, in pertinent part, as follows: "Any person who violates the provisions of section 1103(d) through (j) . .. commits a misdemeanor and shall, upon conviction, be sentenced to pay a fine of not more than $1,000 or to imprisonment for not more than one year, or both.' 65 Pa.C.S. § 1109(b). Your questions pertaining to the homeowners association to which you belong shall now be addressed. In response to your first question, you are advised that you would not have a conflict as to matter(s) before Borough Council that would financially impact the homeowners association of which you are a member conditioned upon the assumptions that: (1) neither you nor a member of your immediate family would be a director, officer, owner, or employee of the homeowners association or would have a financial interest (as defined above) in the homeowners association; and (2) there would be no other basis for a conflict of interest under the Ethics Act. Brueninq, 02 -606 October 16, 2002 Page 7 A conflict of interest could exist as to matter(s) before Borough Council financially impacting your neighborhood, subject to the aforementioned de minimis exclusion and class /subclass exclusion. In response to your second question, if the matter before Borough Council would impact the annual dues that you as a member of the homeowners association would be required to pay, but you would be affected to the same degree as all of the other homeowners association members, you could participate as to that matter because the class /subclass exclusion would apply. Finally, to the extent your third question relates to the conduct of your wife who is a third party, such question is beyond the jurisdiction of the State Ethics Commission, and cannot be addressed herein. As for your own conduct as a Borough Council Member, the principles set forth herein would apply. Subject to the de minimis exclusion and the class /subclass exclusion contained within the statutory definition of "conflict" or "conflict of interest," you would have a conflict of interest under Section 1103(a) of the Ethics Act as to matter(s) before you as a Borough Council Member that would result in a private pecuniary benefit to you, a member of your immediate family, or a business with which you or a member of your immediate family is associated. In each instance of a conflict, you would be required to abstain fully 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 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: As a Member of the Stewartstown Borough Council ("Borough Z;ouncil "), you are a public official subject to the provisions of the Public Official and Employee Ethics Act ("Ethics Act "), 65 Pa.C.S. § 1101 et seq. The computer consulting firm ( "Firm ") of which you are the owner and President is a business with which you are associated. Subject to the de minimis exclusion and the class /subclass exclusion contained within the Ethics Act's definition of "conflict" or "conflict of interest," you would have a conflict of interest under the Ethics Act as to matters before Borough Council that would result in a private pecuniary benefit to you, a member of your immediate family, the Firm, or the Firm's client(s). The Ethics Act requires a public official /public employee with a conflict to: (1) abstain fully (not just from voting); and (2) 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. The foregoing abstention and disclosure requirements must be observed in each instance of a conflict of interest. You would generally have a conflict of interest under Section 1103(a) of the Ethics Act as to matter(s) before Borough Council involving a municipality with which you have /the Firm has an ongoing business relationship. You generally would not have a conflict of interest under Section 1103(a) of the Ethics Act as to a municipality that is a former client. However, you could have a conflict as to former client(s) depending upon factors such as the number of prior goods /services provided to such client(s), and the period of time over which such goods /services were provided. You would not have a conflict as to matter(s) before Borough Council that would financially impact the homeowners association of which you are a member conditioned upon the assumptions that: (1) neither you nor a member of your immediate family would be a director, officer, owner, or employee of the homeowners association or would have a financial interest in the homeowners association; and (2) there would be no other basis for a conflict of interest under the Ethics Act. A conflict of interest could Brueninq, 02 -606 October 16, 2002 Page 8 exist as to matter(s) before Borough Council financially impacting your neighborhood, subject to the aforementioned de minimis exclusion and class /subclass exclusion. If a matter before Borough Council would impact the annual dues that you as a member of the homeowners association would be required to pay, but you would be affected to the same degree as all of the other homeowners association members, you could participate as to that matter because the class /subclass exclusion would apply. 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 § 13.2(h). 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