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HomeMy WebLinkAbout03-585 WolfeFrederick J. Wolfe, Esquire Springer, Bush & Perry, E.C. Two Gateway Center, 15 Floor Pittsburgh, PA 15222 -1402 Dear Mr. Wolfe: ADVICE OF COUNSEL September 4, 2003 03 -585 Re: Conflict; Public Official /Employee; Borough; Council Members; School District Employees; Real Estate Developments; Assessed Value of Real Property; Millage Rate; Business With Which Associated; Exclusion; Class /Subclass; Vote. This responds to your letters of July 30, 2003, and August 4, 2003, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Ha.G.S. § 1101 et seq , presents any prohibition or restrictions upon borough council members who are either employed by the school district or have a spouse who is employed by the school district with regard to voting on matters that may affect the assessed value of real property within the borough, which in turn, may result in an increase in tax revenue for the school district. Facts: As Solicitor for the Borough of Grafton ( "Borough "), you seek an advisory ornhalf of three unidentified members of the Grafton Borough Council ( "Borough Council "). You have submitted facts, which may be fairly summarized as follows. The Carlynton School District ( "School District") is comprised of the communities of Grafton Borough, Roslyn Farms, and Carnegie. Borough Council consists of nine members, three elected from each of three wards. Three members of Borough Council are either employed by or are married to an employee of the School District. The first council member who currently serves as President of Borough Council is employed by the School District as Dean of Student Discipline and Head Football Coach. The second council member occasionally works for the School District as a part -time, on -call custodian. The third council member's spouse is employed by the School District as an aid. Recently, another council member whose prospective conduct is not at issue contended that the three aforementioned council members have a conflict of interest with regard to voting on matters relating to the proposed construction of townhouses within the Borough. The council member who raised the conflict issue argued that if the Wolfe 03 -585 September 4, 2003 Page 2 proposed development were to be approved, the assessed value of the property on which the project was to be constructed would substantially increase. Because the School District's millage rate of 21.5 mills is higher than the Borough's millage rate of 4.67 mills, the School District would receive an increase in the dollar amount of real estate tax revenue received by the Borough, should the assessed value of real property increase. The council member reasoned that by voting on matters affecting the assessed value of real property within the Borough, the three council members would be using the authority of their office to secure a private pecuniary benefit in the form of increased real estate tax revenue for their employer in a dollar amount that is greater than the dollar amount of the increase in real estate tax revenue recognized loy the Borough. You state that the council member who raised the conflict issue relied upon Hessler, Advice of Counsel, 98 -515, issued February 19, 1998. It is noted that to the extent your advisory request attempts to characterize Hessler, supra, that Advice speaks for itself. You do not believe that a conflict of interest would preclude the three council members from voting on matters that would affect the assessed value of real property within the Borough. You set forth various arguments, the pertinent portions of which may be summarized as follows. First, a financial gain in the form of an increase in the real estate tax revenue would not constitute a private pecuniary benefit because such gain would inure to the School District and not to the three council members themselves, members of their immediate families, or businesses with which they or members of their immediate families are associated. Second, the School District is not a "business" as that term is defined in the Ethics Act. Therefore, an increase in real property tax revenue to the School District would not constitute a private pecuniary benefit to a "business" with which the three council members or members of their immediate families are associated. Third, an increase in tax revenue could potentially result in (1) more money for the School District to spend; and /or (2) a decrease in the millage rate. As to the first possibility, it is speculative that an increase in the real estate tax revenue would result in more money for the School District to spend on School District employees' salaries, as council members do not control how the School District spends its money, and employees' salaries are the result of negotiations. Further, even if a salary increase would occur, it would benefit all School District employees, not only the three council members. As to the second ossibility, it is likewise speculative that an increase in the real estate tax revenue would result in a decrease in the millage rate. Further, should a decrease in the millage rate occur, it would benefit to the same degree a class comprised of all persons who pay real estate taxes to the School District. Fourth, Hessler, supra, is not controlling in this case. Fifth, in that it is not uncommon in small communities for employees of a school district or a county to be members of the governing body of a local municipality, if such members of the governing body would be precluded from voting upon matters that could result in an increase in the assessed value of real property within the municipality simply because there could also be an increase in the real estate tax revenue recognized by the school district or county, then school district and county employees would be precluded from effectively exercising the authority of their office. Such a result does not appear to have been the intent of the Ethics Act. Based upon the foregoing facts and arguments, you ask whether the three council members have a conflict of interest under the Ethics Act as to voting on matters relating to the proposed construction of townhouses within the Borough or other matters affecting the assessed value of real property within the Borough. Wolfe 03 -585 September 4, 2003 Page 3 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. The three members of the Grafton Borough Council ( "Borough Council ") on whose behalf you seek an advisory are public officials as that term is defined in the Ethics Act, and hence they are subject to the provisions of that 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. "Immediate family." A parent, spouse, child, brother or sister. "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 Wolfe 03 -585 September 4, 2003 Page 4 immediate family is a director, officer, owner, employee or has a financial interest. 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 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. Section 1103(a) of the Ethics Act prohibits a public official /public employee 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. Wolfe 03 -585 September 4, 2003 Page 5 Having established the above general principles, your specific inquiry shall now be addressed. As to the question you have posed, you are advised that the three council members would not have a conflict under Section 1103(a) of the Ethics Act as to voting on proposed real estate developments within the Borough or on other matters that may affect the assessed value of real property within the Borough absent a private pecuniary benefit to the three council members themselves, members of their immediate families, or businesses with which they or members of their immediate families are associated. A pecuniary benefit flowing to the School District would be insufficient to establish a conflict, as the School District would not be considered a "business" as defined in the Ethics Act. 65 Pa.C.S. § 1102. See, Warso, Order 974. With respect to the argument that the three council members have a conflict of interest as to voting on matters relating to the proposed construction of townhouses within the Borough because approval of the construction project would result in an increase in the assessed value of the property on which the property is to be constructed, which in turn would result in the receipt by the School District of an increase in real estate tax revenue, which tax revenue increase could potentially lead to: (1) an increase the salaries of School District employees; and /or (2) a decrease in the millage rate necessitating a reduction in real estate taxes paid byte council members, the necessary conclusion is that no conflict would exist. See, Armstrong, Opinion 97- 001 (wherein the Commission held that a township supervisor who was a principal shareholder of a heating and air conditioning business that received a subcontract as to a renovation of a building owned by a waste management company would not have a conflict of interest in waste management matters that did not involve the renovation project due to the fact that the connection between the supervisor and the waste management company was an attenuated business relationship, and the financial benefit to the township supervisor was remote). 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 or the Public School Code of 1949. Conclusion: The three members of the Grafton Borough Council ("Borough Z;ouncil ") on whose behalf you seek an advisory are public officials subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. The three council members would not have a conflict under Section 1103(a) of the Ethics Act as to voting on proposed real estate developments within the Borough or on other matters that may affect the assessed value of real property within the Borough absent a private pecuniary benefit to the three council members themselves, members of their immediate families, or businesses with which they or members of their immediate families are associated. A pecuniary benefit flowing to the School District would be insufficient to establish a conflict, as the School District would not be considered a "business" as defined in the Ethics Act. The three council members would not have a conflict of interest as to voting on matters relating to the proposed construction of townhouses within the Borough where approval of the construction project would result in an increase in the assessed value of the property on which the property is to be constructed, which in turn would result in the receipt by the School District of an increase in real estate tax revenue, which tax revenue increase could potentially lead to: (1) an increase the salaries of School District employees; and /or (2) a decrease in the millage rate necessitating a reduction in real Wolfe 03 -585 September 4, 2003 Page 6 estate taxes paid by the council members, because any financial benefit would be remote. 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