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HomeMy WebLinkAbout25-500 WolfePHONE: 717-783-1610 TOLL FREE: 1-800-932-0936 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 January 13, 2025 To the Requester: Marc R. Wolfe, Esquire Dear Mr. Wolfe: 25-500 This responds to your letter dated September 30, 2024, and your email received December 30, 2024, by which you requested an advisory from the Pennsylvania State Ethics Commission ("Commission"), seeking guidance as to the issues presented below: Issues: (1) Whether either of two individuals, each of whom serves as a Member of the Board of Directors of Pocono Mountains Industries, Inc. ("PMI" ), a Member of the Board of Directors of the Monroe County Industrial Development Authority ("MCIDA"), and a Member of the Board of Directors of the Pocono Mountains Industrial Park Authority ("PMIPA"), would 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 matters involving the sale of a property owned by PMI, where: (1) PMI has received a real estate listing contract from a real estate broker ("the Broker") that is partially owned by one of the individuals ("Individual One"); and (2) the other individual ("Individual Two") is a licensed associate broker with the Broker. Brief Answer: YES. The Broker is a business with which Individual One is associated in his capacity as an owner of the Broker and with which Individual Two is associated in his capacity as a licensed associate broker with the Broker. Individual One and Individual Two each would generally have a conflict of interest under Section 1103(a) of the Ethics Act in matters before the Board of Directors of PMI, the Board of Directors of MCIDA, or the Board of Directors of PMIPA that would financially impact him or the Broker. Individual One and Individual Two each would specifically have a conflict of interest with regard to participating in discussions or votes of the PMI Board of Directors pertaining to PMI entering into a real estate listing contract with the Broker regarding a sale of the property. Wolfe, 25-500 January 13, 2025 Page 2 (2) Whether Section 1103(a) of the Ethics Act would impose prohibitions or restrictions upon either Individual One or Individual Two, in their respective capacities as an owner of the Broker and a licensed associate broker with the Broker, with regard to participating in a sale of the property or receiving compensation from the commission received by the Broker as a result of a sale of the property. Brief Answer: NO. Because Section 1103(a) of the Ethics Act imposes restrictions upon Individual One and Individual Two in their public capacities as Directors rather than upon them in their respective private capacities, Section 1103(a) would not prohibit Individual One or Individual Two, in their respective private capacities as an owner of the Broker and a licensed associate broker with the Broker, from participating in a sale of the property or receiving compensation from the commission received by the Broker as a result of a sale of the property. Facts: You have been authorized by Brian Coyne ("Mr. Coyne") and Ronald "Troy" Nauman ("Mr. Nauman") to request an advisory from the Commission on their behalf. You have submitted facts that may be fairly summarized as follows. Mr. Coyne and Mr. Nauman each serve as: (1) a Member of the Board of Directors of PMI, a not -for -profit corporation formed under the Pennsylvania Nonprofit Corporation Law; (2) a Member of the Board of Directors of MCIDA, an industrial development authority formed under the Economic Development Financing Law; and (3) a Member of the Board of Directors of PMIPA, an authority formed under the Municipality Authorities Act. The Monroe County Board of Commissioners appoints the Members of these three Boards of Directors. PMI is a certified economic development organization that administers the Pennsylvania Industrial Development Authority Loan Program in Monroe County, Pennsylvania. Monroe County provides substantial financial assistance to PMI, MCIDA, and PMIPA to fund the administrative costs of providing and operating the economic development programs administered by each entity. Mr. Nauman is a fifty percent owner of a real estate broker, SER Commercial Real Estate ("the Broker"). Mr. Nauman is not a licensed Pennsylvania real estate broker. Mr. Coyne is a licensed associate broker with the Broker. PMI owns an improved lot ("the Property") in one of its business parks. PMI desires to sell the Property, and it has received a real estate listing contract from the Broker. If PMI would enter into a real estate listing contract with the Broker, PMI would determine a listing price for the Property based upon the Broker's analysis of comparable market prices. The Broker would assist PMI in procuring a buyer for the Property, and PMI would pay the Broker a commission from the proceeds received upon a sale of the Property. Based upon the above submitted facts, you pose the following questions: Wolfe, 25-500 January 13, 2025 Page 3 (1) To what extent, if any, would Mr. Coyne and Mr. Nauman be permitted to participate in PMI's efforts to sell the Property; (2) Whether Mr. Coyne and Mr. Nauman each would be permitted to participate in the sales transaction acting as both a Member of the PMI Board of Directors and a representative of the Broker; (3) Whether Mr. Coyne and Mr. Nauman would be permitted to receive compensation from the Broker in the form of a commission, distribution, or other payment from the commission paid to the Broker by PMI upon a sale of the Property; (4) Whether Mr. Coyne and Mr. Nauman should physically remove themselves from meetings of the PMI, MCIDA, and PMIPA Boards of Directors when the issue of the sale of the Property is going to be discussed; and (5) Whether Mr. Coyne and Mr. Nauman would permitted to participate in a sale of the Property in any of their public capacities as Directors or in their respective private capacities as a licensed associate broker with the Broker and a part owner of the Broker. 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 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 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 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 Wolfe, 25-500 January 13, 2025 Page 4 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), 11030). 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, 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. 65 Pa.C.S. § 1102. Wolfe, 25-500 January 13, 2025 Page 5 Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or "conflict of interest," 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. In each instance of a conflict of interest, a public official/public employee 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. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As Members of the PMI Board of Directors, the MCIDA Board of Directors, and the PMIPA Board of Directors, Mr. Coyne and Mr. Nauman are public officials subject to the provisions of the Ethics Act. The Broker is a business with which Mr. Coyne is associated as a licensed associate broker with the Broker and with which Mr. Nauman is associated as an owner. Mr. Coyne and Mr. Nauman each would generally have a conflict of interest under Section 1103(a) of the Ethics Act in matters before the PMI Board of Directors, the MCIDA Board of Directors, or the PMIPA Board of Directors that would financially impact him or the Broker. In response to your specific questions, you are advised as follows. Given that there is a likelihood that PMI may enter into a real estate listing contract with the Broker for a sale of the Property, Mr. Coyne and Mr. Nauman each would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in matters before any of the three Boards of Directors pertaining to PMI's efforts to sell the Property. Section 1103(a) would specifically prohibit Mr. Coyne and Mr. Nauman from participating in discussions or votes of the PMI Board of Directors pertaining to PMI entering into a real estate listing contract with the Broker for a sale of the Property. If PMI would enter into such a real estate listing contract, Mr. Coyne and Mr. Nauman would have a conflict with regard to participating in a sale of the Property in any of their public capacities as Directors. Section 1103(a) of the Ethics Act would not require Mr. Coyne and Mr. Nauman to physically remove themselves from meetings of the PMI, MCIDA, or PMIPA Boards of Directors when the issue of the sale of the Property is going to be discussed. However, Section 1103(a) would prohibit Mr. Coyne and Mr. Nauman from participating in such discussions or from using any confidential information received for the private pecuniary benefit of themselves or the Broker. Wolfe, 25-500 January 13, 2025 Page 6 In each instance of a conflict of interest, Mr. Coyne and Mr. Nauman 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. Because Section 1103(a) of the Ethics Act imposes restrictions upon Mr. Coyne and Mr. Nauman in their public capacities as Directors rather than upon them in their private capacities, Section 1103(a) would not prohibit Mr. Coyne and Mr. Nauman from: (1) participating in a sale of the Property in their respective capacities as a licensed associate broker with the Broker and a part owner of the Broker; or (2) receiving compensation from the Broker in the form of a commission, distribution, or other payment from the commission paid to the Broker by PMI upon a sale of the Property. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. 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