HomeMy WebLinkAbout03-553 OttoRichard J. Otto, Jr.
82 Village Lane
Levittown, PA 19054 -1214
ADVICE OF COUNSEL
June 5, 2003
03 -553
Re: Conflict; Public Official /Employee; Supervisor; Second Class Township;
Business; Business with which Associated; Employee; Proposed KOIZ;
Exclusion; Class /Subclass; Ordinance; Tax Abatement
Dear Mr. Otto:
This responds to your letter received on May 6, 2003, by which you requested
advice from the State Ethics Commission.
Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65
1: § 1101 et seq., presents any prohibition or restrictions upon a upon a township
supervisor as to whether he may vote on an ordinance providing tax abatement for
businesses located in a proposed Keystone Opportunity Improvement Zone ( "KOIZ ")
when he is employed by one of those businesses.
Facts: You seek an advisory as to whether, under the facts set forth below, you
may vote on an ordinance providing tax abatement for businesses located in a
proposed KOIZ when you are employed by Novolog Bucks County, Inc. ( Novolog), a
business located within the KOIZ. With your submission, you include four appendices,
consisting of an Organizational Chart, a Collective Bargaining Agreement, Executive
Order, and USS Industrial Park KOIZ site, all of which are incorporated by reference.
These materials were received per a request of the Legal Division of the Commission
for "all material facts establishing or relating to the degree to which Novolog and any
others would be affected by the KOIZ."
As an elected Supervisor of Falls Township, Bucks County, PA, you have been a
member of the Board of Supervisors since January 5, 1998. After delineating the
powers and duties of the board of supervisors, you note the deterioration of the
business sector in the township, and the consequent loss of jobs and resulting blight.
You cite an example where several thousand jobs have been eliminated from the Naval
Air Warfare Center closing and U.S. Steel's downsizing and closing of its hot end steel
making in Falls Township as well as numerous other industries that continue to be
negatively affected. The U.S. Steel (USS) Industrial Park has a substantial number of
deteriorating industrial buildings, which have become vacant, thereby requiring removal
Otto 03 -553
June 5, 2003
Page 2
or rehabilitation. The Commonwealth Department of Environmental Protection in
conjunction with the U.S. Environmental Protection Agency inventoried and ranked the
USS Industrial Park "as a Brownfield site in the state designated Enterprise Zone in
Bucks County."
The General Assembly of the Commonwealth passed Act 92 of October 6, 1998,
P.L. 705, to provide for the creation of Keystone Opportunity Zones, Keystone
Opportunity Expansion Zones and Keystone Opportunity Improvement Zones to foster
economic opportunities, to facilitate economic development, stimulate industrial,
commercial and residential improvements; authorize expenditures; provide tax
exemptions, tax deductions, tax abatements and tax credits; create additional
obligations of the Commonwealth and local governments; and prescribe powers and
duties of certain state and local departments, agencies and officials.
On January 3, 2003, the Pennsylvania Department of Community and Economic
Development (DCED) provided Falls Township with notification of the designation of a
parcel of land as a proposed KOIZ. Under the KOIZ program, the taxing authorities,
Falls Township, the Pennsbury School District, and Bucks County, may authorize tax
abatement for 15 years on dormant industrial property to attract new businesses and
industry to the inactive land. Under the KOIZ program, each taxing authority must
agree to the designation of the land as a KOIZ and pass an ordinance or regulation
agreeing to an abatement of such taxes.
As a Union collective bargaining member of the United Steel Workers of America
( "Steelworkers "), you have been employed by Novolog since October 28, 1997, where,
pursuant to Novolog's Collective Bargaining Agreement with the Steelworkers, you
serve as the Steelworker's Safety and Health Representative for Union members
employed at the Novolog worksite. Per the collective bargaining agreement, you earn
an hourly wage. Novolog cannot change your hourly wage, discharge or promote you,
or change any of your duties without the approval of the Steelworkers.
You conclude by stating: "Novolog operates the deep water port of Bucks
County located in the proposed KOIZ and, along with other business located or to be
located in the KOIZ, would receive the benefit of tax abatement if the KOIZ were
ultimately approved. The proposed KOIZ consists of approximately 2,300 gross acres
(1,259 of which can be developed) owned by the United States Steel Corporation. The
Novolog worksite consists of about 60 acres of this parcel. Currently seven tenant
businesses, including Novolog, are located within the proposed KOIZ on approximately
300 acres and employ about 285 -300 workers. Under the development plans for the
proposed KOIZ, about 50 acres would be developed each year for 15 years, adding five
to seven companies per year, culminating in 75-100 new companies employing 2,500 to
4,000 workers by the end of the 15 year term."
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.
As a Supervisor for Falls Township, you are a public official as that term is
defined in the Ethics Act, and hence you are subject to the provisions of that Act.
Section 1103(a) of the Ethics Act provides:
Otto 03 -553
June 5, 2003
Page 3
§ 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.
"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.
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
Otto 03 -553
June 5, 2003
Page 4
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
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.
As to your specific inquiry of whether you may participate in actions of the Board
of Supervisors with regard to tax abatement as to the proposed KOIZ when you are
employed by Novolog which is one of the businesses in the proposed KOIZ, you are
advised as follows.
Pursuant to Section 1103(a) of the Ethics Act, you would generally have a
conflict of interest in matters that would financially impact yourself, a member of your
immediate family, or a business with which you or a member of your immediate family is
associated. Since Novolog is a business with which you are associated, given your
employment by that corporation, you would have a conflict in participating in matters
that would financially impact Novolog. See, Rubenstein, Opinion 01 -007. A tax
abatement, being a financial gain, is a pecuniary benefit.
However, 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 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 upon a public official, a member of his immediate family,
or a business with which he or a member of his immediate family is associated, a
Otto 03 -553
June 5, 2003
Page 5
conflict would not exist and Sections 1103(a) and 1103(1) of the Ethics Act would not
restrict participation in such matter. See, Schweinsburq, Order 900. In that your inquiry
involves participation in actions of the Board of Supervisors with regard to the
abatement of taxes for 15 years for Novolog, such action would not have a de minimis
economic impact, and therefore, this exclusion would not apply.
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 considering the first criterion, it would appear that the correct identification of
the subclass to which Novolog belongs is the subclass consisting of one or more
businesses within the proposed KOIZ that would have the approximate same amount of
tax abatement as Novolog.
The submitted facts, however, do not disclose any facts as to the amount of the
tax abatement for Novolog or any other businesses in the proposed KOIZ. Therefore, a
determination cannot be made as to whether Novolog would be reasonably affected to
the same degree as one or more other businesses in the proposed KOIZ. Thus, no
factual information has been presented to determine whether there is one or more
businesses in the proposed KOIZ that would receive the approximately same amount of
tax abatement as Novolog. When a factual insufficiency exists as to the impact of
proposed action as to members of the subclass, the advisory must necessarily be
limited to providing general guidance. In this regard, you were asked to provide such
specifics as to the degree to which Novolog and others would be affected as the
proposed KOIZ by letter dated April 28, 2003, but no such specifics have been supplied.
If, as a result of your proposed action, Novolog would be affected to the same
degree (the approximate same amount of tax abatement) as one or more other
members of the subclass, the class /subclass exclusion would apply and you would not
have a conflict of interest under Section 1103(a) of the Ethics Act as to participating in
discussions of the Board of Supervisors with regard to the tax abatement as to the
businesses in the proposed KOIZ.
If, as a result of your proposed action, Novolog would not be affected to the same
degree as one or more other members of the subclass, the class /subclass exclusion
would not apply and you would have a conflict of interest under Section 1103(a) of the
Ethics Act as to participating in actions of the Board of Supervisors. In any instance of a
conflict, you would be required to abstain from participating and observe 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 respective municipal code.
Otto 03 -553
June 5, 2003
Page 6
Conclusion: As a Supervisor for Falls Township, 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. Pursuant to Section 1103(a) of the Ethics Act, you would
generally have a conflict of interest in matters that would financially impact yourself, a
member of your immediate family, or a business with which you or a member of your
immediate family is associated. Since Novolog is a business with which you are
associated, given your employment by that corporation, you would have a conflict in
participating in matters that would financially impact upon Novolog. There are two
exclusions from conflict: de minimis and class /subclass.
The de minimis exclusion does not apply in that your action involves participating
in a proposed KOIZ which could result in the abatement of taxes for Novolog for 15
years. Such a tax abatement is a sizeable financial gain and would not de minimis. As
to the class /subclass exclusion, 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. 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.
As to the subclass of Novolog and one or other businesses within proposed KOIZ
that would have the approximate same amount of tax abatement as Novolog, the
submitted facts do not disclose any facts as to the amount of the tax abatement for
Novolog or any other businesses in the KOIZ. Therefore, a determination cannot be
made as to whether Novolog would be reasonably affected to the same degree as one
or more other businesses in the KOIZ. If, as a result of your proposed action, Novolog
would be affected to the same degree as one or more other members of the subclass,
the class /subclass exclusion would apply and you would not have a conflict of interest
under Section 1103(a) of the Ethics Act as to participating in discussions of the Board of
Supervisors with regard to the tax abatement as to the businesses in the proposed
KOIZ. If, as a result of your proposed action, Novolog would not be affected to the
same degree as one or more other members of the subclass, the class /subclass
exclusion would not apply and you would have a conflict of interest under Section
1103(a) of the Ethics Act as to participating in actions of the Board of Supervisors. In
any instance of a conflict, you would be required to abstain from participating and
observe the disclosure requirements of Section 1103(j) 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.
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.
Otto 03 -553
June 5, 2003
Page 7
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