HomeMy WebLinkAbout04-542 ConfidentialADVICE OF COUNSEL
May 12, 2004
04 -542
Re: Former Public Official; Section 1103(g); Former Board Member; Authority;
Purchasing Property From Authority.
This responds to your letter received on April 12, 2004, by which you requested
confidential 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 restrictions upon a former authority board member
with regard to purchasing property from the authority.
Facts: You are currently an elected Commissioner of A County. The A County
booarr of Commissioners is a three member board responsible for operating the County
government.
Prior to taking office as a County Commissioner, you served as an appointed
member of the Board of Directors of the B Authority, a non - profit organization that
promotes economic development in A County by providing low interest loans and other
assistance to businesses in A County. The Authority Board Members are appointed by
the County Commissioners. You resigned from the Authority Board on [date].
are interested in acquiring from the B Authority a parcel of real property
including a vacant building located on the property (hereinafter referred to as the
'Property "). While the B Authority is the deed holder to the Property, a private individual
is the Property's beneficial owner. The B Authority acquired the Property in order to
provide a low interest loan to the beneficial owner's predecessor in a pre - [year]
transaction. Prior to the passage of the federal Tax Reform Act of 1986, it was necessary
for the B Authority and other economic development authorities to become the deed
holder to property in order to take advantage of certain tax benefits when low interest
loans and other financial assistance were provided. The B Authority leased the Property
back to the beneficial owner, and the current beneficial owner assumed the lease.
Because the B Authority is tax exempt, the lease included a provision stating that
the beneficial owner would make payment to the B Authority in lieu of taxes and the B
Authority would pass the payment in lieu of taxes on to the taxing bodies so that those
taxing bodies would not lose any revenue as a result of the property being titled in the B
Authority's name. A County is one of the taxing bodies involved. You state that the
building that is located on the parcel of real property has been vacant for a number of
Confidential Advice 04 -542
May 12, 2004
Page 2
years and the beneficial owner has not made payment to the B Authority in lieu of taxes.
You state that the amount of outstanding taxes is [dollar amount].
You state that although the A County Tax Claim Bureau is currently listing the
above amount as a lien against the Property, it appears that it has no authority to lien
the Property or foreclose upon it because the B Authority is tax exempt. The B
Authority is interested in transferring the Property to a new owner so that it can be
developed. The beneficial owner is also interested in a sale of the property to be
relieved from any obligation for payment in lieu of taxes. You state that A County and
the other taxing bodies would benefit from a transfer to a party that is not tax exempt.
You propose to purchase the Property for an amount that would be agreed to by
the Authority and the beneficial owner. You state that the amount would not exceed
[dollar amount]. You further state that such amount would be paid over a period of time
per an arms length agreement bearing interest.
You ask whether the proposed transaction would transgress the Ethics Act.
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.
In the former capacity as a Member of the Board of Directors of the B Authority,
you would be considered a capacity official" subject to the Ethics Act and the Regulations
of the State Ethics Commission. See, 65 Pa.C.S. § 1102; 51 Pa. Code § 11.1.
Consequently, upon termination of public service, you became a "former public
official" subject to Section 1103(g) of the Ethics Act.
While Section 1103(g) does not prohibit a former public official /public employee
from accepting a position of employment, it does restrict the former public official /public
employee with regard to "representing" a "person" before "the governmental body with
which he has been associated ":
§ 1103. Restricted activities
(g) Former official or employee. - -No former public
official or public employee shall represent a person, with
promised or actual compensation, on any matter before the
governmental body with which he has been associated
one year after he leaves that body.
65 Pa.C.S. § 1103(g) (Emphasis added).
The terms "represent," "person," and "governmental body with which a public
official or public employee is or has been associated" are specifically defined in the
Ethics Act as follows:
§ 1102. Definitions
"Represent." To act on behalf of any other person in
any activity which includes, but is not limited to, the
following: personal appearances, negotiations, lobbying and
submitting bid or contract proposals which are signed by or
Confidential Advice 04 -542
May 12, 2004
Page 3
contain the name of a former public official or public
employee.
"Person." A business, governmental body,
individual, corporation, union, association, firm, partnership,
committee, club or other organization or group of persons.
"Governmental body with which a public official
or public employee is or has been associated." The
governmental body within State government or a political
subdivision by which the public official or employee is or has
been employed or to which the public official or employee is
or has been appointed or elected and subdivisions and
offices within that governmental body.
65 Pa.C.S. § 1102.
The term "person" is very broadly defined. It includes, inter alia, corporations and
other businesses. It also includes the former public employee - himself, Confidential
Opinion, 93 -005, as well as a new governmental employer. Ledebur, Opinion 95 -007.
The term "representation" is also broadly defined to prohibit acting on behalf of
any person in any activity. Examples of prohibited representation include: (1) personal
appearances before the former governmental body or bodies; (2) attempts to influence;
(3) submission of bid or contract proposals which are signed by or contain the name of
the former public official /public employee; (4) participating in any matters before the
former governmental body as to acting on behalf of a person; and (5) lobbying.
Popovich, Opinion 89 -005.
Listing one's name as the person who will provide technical assistance on a
proposal, document, or bid, if submitted to or reviewed by the former governmental
body, an attempt to influence the former governmental body. Section
1103(g) also generally prohibits the inclusion of the name of a former public
official /public employee on invoices submitted by his new employer to the former
governmental body, even though the invoices pertain to a contract that existed prior to
termination of public service. Shay, Opinion 91 -012. However, if such a pre- existing
contract does not involve the unit where the former public employee worked, the name
of the former public employee may appear on routine invoices if required by the
regulations of the agency to which the billing is being submitted. Abrams/Webster,
Opinion 95 -011.
A former public official /public employee may assist in the preparation of any
documents presented to his former governmental body. However, the former public
official /public employee may not be identified on documents submitted to the former
governmental body. The former public official /public employee may also counsel any
person regarding that person's appearance before his former governmental body. Once
again, however, the activity in this respect should not be revealed to the former
governmental body. The Ethics Act would not prohibit or preclude making general
informational inquiries to the former governmental body to secure information which is
available to the general public, but this must not be done in an effort to indirectly
influence the former governmental body or to otherwise make known to that body the
representation of, or work for the new employer.
Section 1103(g) only restricts the former public official /public employee with
regard to representation before his former governmental body. The former public
official /public employee is not restricted as to representation before other agencies or
entities. However, the "governmental body with which a public official /public employee
is or has been associated" is not limited to the particular subdivision of the agency or
other governmental body where the public official /public employee had influence or
Confidential Advice 04 -542
May 12, 2004
Page 4
control but extends to the entire body. See, Legislative Journal of House, 1989
Session, No. 15 at 290, 291; Sirolli, Opinion 90 -006; Sharp, Opinion 90- 009 -R.
The governmental body with which you were associated upon termination of
public service is the B Authority in its entirety. Therefore, for the first year after
termination of service with the B Authority, Section 1103(g) of the Ethics Act would
apply and restrict "representation" of "persons" before the B Authority.
Having set forth the general restrictions of Section 1103(g) of the Ethics Act, your
specific inquiry shall now be addressed.
As to the question of whether Section 1103(g) would, for the first year following
your resignation from the B Authority, preclude you from entering into a contract to
purchase the Property from the B Authority, you have not provided any specifics as to
the transaction, particularly, with respect to the extent of the Authority's involvement or
role. Therefore, only the following general guidance may be given.
The Commission has held that Section 3(g)/1103(g) of the Ethics Act precludes a
public official /public employee ee from contracting with his former governmental body
during the one -year period restricted activity. See, Confidential Opinion, 93 -005;
Confidential Opinion, 97 -007; Confidential Opinion737 -008. See, also, McLaughlin,
Advice of Counsel, 01 -520. Therefore, to the extent your coH&ict would constitute
prohibited "representation" as delineated above, you would transgress Section 1103(g)
of the Ethics Act. Examples of conduct that would constitute prohibited "representation'
include contracting with the B Authority, interacting with the B Authority, submitting
written documents containing your name to the B Authority, or engaging in negotiations
with the B Authority as to the purchase price or other substantive matters.
However, you would not transgress Section 1103(g) of the Ethics Act if the B
Authority, as merely a holder of legal title, would only perform the perfunctory function of
transferring legal title, and all of your interactions, negotiations, or contacts would be with
the beneficial owner of the Property rather than the B Authority. Where the B Authority
would essentially be a straw party to the transaction, you could purchase the Property
without running afoul of Section 1103(g) of the Ethics Act.
Based upon the facts which have been submitted, this Advice has addressed the
applicability of Section 1103(g) only. It is expressly assumed that there has been no use
of authority of office for a private pecuniary benefit as prohibited by Section 1103(a) of the
Ethics Act. Further, you are advised that Sections 1103(b) and 1103(c) of the Ethics Act
provide in part that no person shall offer to a public official /public employee and no public
official /public employee shall solicit or accept anything of monetary value based upon the
understanding that the vote, official action, or judgment of the public official /public
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.
Lastly, 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.
Conclusion: In the former capacity as a Member of the Board of Directors of the B
Authority, you would be considered a "public official" as defined in the Public Official and
Employee Ethics Act ( "Ethics Act'), 65 Pa.C.S. § 1101 et seq. Upon termination of
service with the B Authority, you became a "former public official" subject to Section
1103(g) of the Ethics Act. The former governmental body is the B Authority in its entirety.
As to the question of whether Section 1103(g) would, for the first year following
your resignation from the B Authority, preclude you from entering into a contract to
purchase the Property from the B Authority, you have not provided any specifics as to
Confidential Advice 04 -542
May 12, 2004
Page 5
the transaction, particularly, with respect to the extent of the Authority's involvement or
role. Therefore, only the following general guidance may be given.
To the extent your conduct would constitute prohibited "representation" as
delineated above, you would transgress Section 1103(g) of the Ethics Act. However, if
the B Authority, as merely a holder of legal title, would only perform the perfunctory
function of transferring legal title, and all of your interactions, negotiations, or contacts
would be with the beneficial owner of the Property ather than the B Authority, you
would not run afoul of Section 1103(g) of the Ethics Act. The restrictions as to
representation outlined above must be followed. The propriety of the proposed conduct
has only been addressed under the Ethics Act.
Further, should service be terminated, as outlined above, the Ethics Act would
require that a Statement of Financial Interests be filed by no later than May 1 of the year
after termination of service.
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