Loading...
HomeMy WebLinkAbout22-535 TadkenPHONE: 717-783-1610 TOLL FREE: 1-800-932-0936 To the Requester: Ms. Pamela Tadken Dear Ms. Tadken: STATE ETHICS COMMISSION FINANCE BUILDING 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 FACSIMILE: 717-787-0806 WEBSITE: www.ethics.pa.gov ADVICE OF COUNSEL September 12, 2022 22-535 This responds to your correspondence received August 15, 2022, by which you requested an advisory from the Pennsylvania State Ethics Commission (Commission), seeking guidance as to the general issue presented below: Issue: As a member of Council for Indian Lake Borough (Borough) and/or as Chairman of the Borough's Planning Commission, would you have a conflict of interest under Section 1103(a) of the Public Official and Employee Ethics Act (Ethics Act), 65 Pa.C.S. § 1103(a), with regard to participating in discussions with Borough Council regarding revisions to a short-term rental ordinance and in crafting the revised ordinance as Chairman of the Planning Commission when you are the owner of a short-term rental property in the Borough? Brief Answer: YES. Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict of interest," you would have a conflict of interest and would violate Section 1103(a) of the Ethics Act by participating in discussions with Borough Council regarding revisions to a short-term rental ordinance and then crafting the revised ordinance as Chairman of the Planning Commission. Facts: You request an advisory from the Commission based upon submitted facts, the material portion of which may be fairly summarized as follows. Tadken, 22-535 September 12, 2022 Page 2 You reside in Indian Lake Borough (Borough), which is located in Somerset County, Pennsylvania. You are an elected official for Borough Council, as well as Chairman of the Borough Planning Commission. The Borough is struggling with the suitability and legality of short-term rentals (STRs) in the community. You are the owner of an STR in the Borough and have recused yourself from voting on the issue when before Borough Council. The Borough established an STR committee to review an ordinance within the Borough that restricts commercial activity in an R-1 zone. The STR committee hosted a hearing to review opinions from the community regarding the pros and cons of STRs. You listened but did not participate in the committee hearing or deliberations. The STR committee does not have any representatives from the STR community causing the STR community to feel they were underrepresented at the hearing. The STR Committee recommended upholding the current STR ordinance but suggested that the Planning Commission investigate revising the ordinance. As Chairman of the Planning Commission, you plan to speak at a Borough Council meeting to summarize the issues raised and the shortfalls of the current ordinance and to give assurances that all voices from the community will be considered in crafting a revised STR ordinance. You also will participate in drafting the revised rental ordinance that will go through the hearing and enactment process in accordance with the Pennsylvania Municipalities Planning Code. You seek guidance as to whether there would be an impermissible conflict of interest or any other ethical issues with regard to you participating in discussions with Borough Council regarding revisions to the short-term rental ordinance, and crafting the revised ordinance as Chairman of the Planning Commission, when you are the owner of a short-term rental property in the Borough. Discussion: Pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all the material facts relevant to the inquiry. 65 Pa.C.S. §§ 1107(10), (11). An advisory only affords a defense to the extent the requester has truthfully disclosed all the material facts. Sections 1103(a) and 11030) of the Ethics Act provide: § 1103. Restricted activities (a) Conflict of interest. -- No public official or public employee shall engage in conduct that constitutes a conflict of interest. 0) Voting conflict. -- Where voting conflicts are not otherwise addressed by the Constitution of Pennsylvania or by any Tadken, 22-535 September 12, 2022 Page 3 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(a), 0). The following terms related 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, Tadken, 22-535 September 12, 2022 Page 4 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. "De minimis economic impact." An economic consequence which has an insignificant effect. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or "conflict of interest" (i.e., the "de minimis exclusion" and the "class/subclass exclusion"), 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office or confidential information received by holding such a public position for the private pecuniary (financial) 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. The use of authority of office is not limited merely to voting but extends 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. Per the Pennsylvania Supreme Court' s decision in Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011), in order to violate Section 1103(a) of the Ethics Act, a public official/public employee: ... must act in such a way as to put his [office/public position] to the purpose of obtaining for himself a private pecuniary benefit. Such directed action implies awareness on the part of the [public official/public employee] of the potential pecuniary benefit as well as the motivation to obtain that benefit for himself. Kistler, supra, 610 Pa. at 523, 22 A.3d at 227. To violate Section 1103(a) of the Ethics Act, a public official/public employee "must be consciously aware of a private pecuniary benefit for himself, his family, or his business, and then must take action in the form of one or more specific steps to attain that benefit." Id., 610 Pa. at 528, 22 A. 3d at 231. A conflict of interest would not exist to the extent the "de minimis exclusion" and/or the "class/subclass" exclusion set forth within the Ethics Acts definition of the term "conflict" or "conflict of interest," 65 Pa. C. S. § 1102, would be applicable. The de minimis exclusion precludes a finding of conflict of interest as to an action having a de minimis (insignificant) economic impact. Thus, when a matter that would otherwise constitute a conflict of interest under the Ethics Act would have an insignificant economic impact, a conflict would not exist and Section 1103(a) of the Ethics Act would not be implicated. See, Kolb, Order 1322; Schweinsburg, Order 900. The Commission has determined the applicability of the de Tadken, 22-535 September 12, 2022 Page 5 minimis exclusion on a case -by -case basis, considering all relevant circumstances. In the past, the Commission has found amounts up to approximately $ 1,200 to be de minimis. 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" (in no way differently) than the other members of the class/subclass. 65 Pa. C. S. § 1102; see, Kablack, Opinion 02- 003; Rubenstein, Opinion 01 -007. 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, supra. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a Member of Borough Council, you are a public official subject to the provisions of the Ethics Act. The STR you own and/or operate is a business with which you are associated. Section 1103(a) of the Ethics Act pertaining to conflicts of interest does not prohibit public officials from having outside business activities or employment; however, the public official 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 is associated in his private capacity or private clients(s). Miller, Opinion 89-024; Kannebecker, Opinion No. 92-010. In the instant matter, as the owner or an STR in the Borough, you would violate Section 1103(a) of the Ethics Act in your official capacity as a Member of Borough Council and Chairman of the Planning Commission by speaking to Borough Council on STRs and drafting the revised STR ordinance as Chairman of the Planning Commission if: (1) you would be consciously aware of a private pecuniary benefit for yourself or the rental property; (2) your action(s) would constitute one or more specific steps to attain that benefit; and (3) neither the de minimis exclusion nor the class/subclass exclusion set forth within the Ethics Act's definition of the term "conflict" or "conflict of interest,' 65 Pa. C. S. § 1102, would be applicable. Tadken, 22-535 September 12, 2022 Page 6 The submitted facts do not enable a conclusive determination as to whether the de minimis exclusion or the class/subclass exclusion would be applicable as to any potential financial impact upon you or the rental property. To the extent that you have a conflict of interest, you would be prohibited from acting in your capacity as a public official as to such matters, including drafting the revised STR ordinance and communicating or engaging in formal or informal discussions regarding STRs with Borough Council and the Planning Commission. However, Section 1103(a) of the Ethics Act would not prohibit you from acting in your private capacity as a citizen in matters pertaining to STRs, including appearing before Borough Council or the Planning Commission in your private capacity as a citizen, subject to the condition that your conduct/communications would clearly and unequivocally establish that you are acting in your private capacity rather than in your capacity as a public official. Cf., Confidential Advice, 08-531; Braun, Advice 00-633. In each instance of a conflict of interest, you would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 11030) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 11030) of the Ethics Act would have to be satisfied in the event of a voting conflict. 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. Pursuant to Section 1107(11) of the Ethics Act, 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 requester 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. Respectfully, Bridget K. Guilfoyle Chief Counsel