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HomeMy WebLinkAbout05-502 HealyPatrick S. Healy, Esquire Cohen & Grigsby 11 Stanwix Street, 15 Floor Pittsburgh, PA 15222 -1319 Re: Conflict; Public Official /Employee; Board Member; Airport Authority; Executive Director, County Industrial Development Authority; President /CEO, County Development Corporation; Hanger Project; Reciprocal Arrangements; Bassi, Opinion 86- 007 -R; Woodrinq, Opinion 90 -001; Elisco, Opinion 00 -003. Dear Mr. Healy: ADVICE OF COUNSEL January 13, 2005 05 -502 This responds to your letters dated December 17, 2004, and December 22, 2004, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., would present any prohibition or restrictions upon an airport authority member with regard to participating in matters involving a hanger project to house aircraft owned by a private business, when the principal stockholder of the private business is a board member of: (1) a county industrial development authority for which the airport authority member is executive director; and (2) a county development corporation for which the airport authority member is President CEO. Facts: You seek an advisory from the State Ethics Commission on behalf of Martin Marasco ( "Marasco "), a Board Member of the Blair County Airport Authority ( "Airport Authority ") in Blair County, Pennsylvania. You have submitted facts, the material portion of which may be fairly summarized as follows. In addition to serving on the Airport Authority Board, Marasco also serves as Executive Director of the Blair County Industrial Development Authority ( "Industrial Development Authority "), and as President /CEO of the Altoona -Blair County Development Corporation ( "County Development Corporation "). The County Development Corporation is a non - profit 501(c)(3) economic development organization serving the City of Altoona and Blair County. Its Board of Directors consists of 28 members representing City and County business, public and private organizations, and public officials. Its funding comes from a number of sources, although it is primarily self- sustaining through fee and program revenues. You state Healy /Marasco, 05 -502 January 13, 2005 Page 2 that it is unclear to you whether the County Development Corporation is a "governmental body" as that term is defined in the Ethics Act. The County Development Corporation has two committees that handle its personnel matters. Specifically, the Administrative and Finance Committee initially determines all personnel matters, including the selection and terms of employment, such as salary and benefits, of the President /CEO. The Administrative and Finance Committee then recommends such determinations to the Executive Committee. You state that historically, the Executive Committee has made the hiring decisions relative to the President /CEO without a vote from the full County Development Corporation Board. Although the full County Development Corporation Board does vote on the County Development Corporation's budget, it does not vote on matters such as the hiring, firing, retention, or any other specific aspect of the terms of employment of its President /CEO. The County Development Corporation serves as the administrative arm of the Industrial Development Authority. You state that the Industrial Development Authority has historically never exercised any power over the position of the President /CEO of the County Development Corporation. At a recent Airport Authority Board meeting, Marasco voted to approve the construction of a new hanger at the Blair County Airport to house certain aircraft owned by a private business named " Degol Enterprises." This Advice shall hereinafter refer to matters pertaining to the said hanger as the Hanger Project." The Airport Authority Board approved the Hanger Project by a vote of 5 to 1. Although you have already been informed that you cannot obtain an advisory from the State Ethics Commission as to the propriety of Marasco's past action(s) involving the Hanger Project, you request an advisory regarding Marasco's prospective action as to future matters before the Airport Authority involving the Hanger Project. Factually, your concern under the Ethics Act arises because the principal stockholder of Degol Enterprises, Mr. Bruno Degol, currently serves as a member of the Boards of the Industrial Development Authority and the County Development Corporation, for which Marasco serves as Executive Director and President /CEO respectively. You assure the Commission that Mr. Degol does not serve on either the Administrative and Finance Committee or the Executive Committee of the County Development Corporation and that he has never voted or participated in discussions on any terms of employment of Marasco as President /CEO of the County Development Corporation. It is noted that you have not offered any such assurances as to Mr. Degol's past actions as a member of the Industrial Development Authority Board that may have impacted Marasco. You reference certain Commission precedents that found similar situations to present conflicts of interest under the Ethics Act based upon the reciprocity of power between two or more individuals. You have discussed the situation with both Marasco and Mr. Degol. You offer the following proposed course of action in an attempt to avoid a conflict of interest under the Ethics Act. Specifically, you propose that: (1) Mr. Degol, as a member of the Board of the Industrial Development Authority and as a member of the Board of Directors of the County Development Corporation will recuse himself from any future votes involving Marasco and will comply with the disclosure requirements of Section 1103(j) of the Ethics Act; and Healy /Marasco, 05 -502 January 13, 2005 Page 3 (2) Mr. Degol will also decline to serve on the County Development Corporation's Administrative and Finance Committee or Executive Committee. As for the time period during which the above proposal would be in effect, you would prefer that Mr. Degol would take the above course of action for as long as Marasco would serve as an Airport Authority Board Member. In the alternative, you state that Mr. Degol could take the above course of action until such time as Marasco would no longer be employed by the County Development Corporation or Mr. Degol would no longer serve as a member of the Board of Directors of the County Development Corporation. It is noted that the alternative time frame that you propose makes no mention of Mr. Degol's service on the Board of the Industrial Development Authority. Finally, you state that the above, proposed course of action would only be undertaken if required by the Commission. Discussion: Several points must be initially noted as to advisories issued pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11) First, advisories under the Ethics Act are issued to the requestor based upon the facts that the requestor has submitted. In issuing the advisory based upon the facts that the requestor 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 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. Second, an opinion /advice may be given only as to prospective (future) conduct. If the activity in question has already occurred, the Commission may not issue an opinion /advice but any person may then submit a signed and sworn complaint, which will be investigated by the Commission if there are allegations of Ethics Act violations by a person who is subject to the Ethics Act. To the extent you have inquired as to conduct that has already occurred, such past conduct may not be addressed in the context of an advisory opinion. However, to the extent you have inquired as to future conduct, your inquiry may, and shall be addressed. Third, there are standing requirements for obtaining advisories from the State Ethics Commission. Therefore, this advisory shall only address the prospective conduct of Marasco, who has specifically given you permission to submit the inquiry on his behalf. To the extent you have inquired as to the prospective conduct of other individual(s) who have not given you permission to do so, you are considered a third party without legal standing. Having noted the above, you are advised that in his capacity as an Airport Authority Board Member, Marasco is a public official subject to the provisions of the Ethics Act. This Advice does not address Marasco's status under the Ethics Act with regard to his capacity as Executive Director of the Industrial Development Authority or as President /CEO of the County Development Corporation, as such determinations are neither necessary nor relevant to an analysis of your inquiry. Sections 1103(a) and 1103(j) of the Ethics Act provide: Healy /Marasco, 05 -502 January 13, 2005 Page 4 § 1103. Restricted Activities (a) Conflict of interest. —No public official or public employee shall engage in conduct that constitutes a conflict of interest. (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(a), (j). The following terms pertaining to conflicts of interest under the Ethics Act are defined 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. Healy /Marasco, 05 -502 January 13, 2005 Page 5 65 Pa. C. S. § 1102. 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. The use of authority of office is more than the mere mechanics of voting and encompasses all of the tasks needed to perform the functions of a given position. See, Juliante, Order 809. Use of authority of office includes, for example, discussing, conferring with others, and lobbying for a particular result. In each instance of a conflict, Section 1103(j) requires the public official /public employee to abstain completely 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, Pavlovic, Opinion 02 -005. 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. Having set forth the above provisions of the Ethics Act, certain relevant Commission precedents shall be reviewed. In Bassi, Opinion No. 86- 007 -R, the State Ethics Commission held, inter alia, that a County ommissioner (Edward Paluso) could not enter into a lease with a municipal authority, where one of the members of the authority (Norman Carson) was a county employee directly responsible to the commissioners of the county, unless the execution of the lease was accomplished after an open and public process, with the authority member abstaining from participating in the review and award of said lease, and the county commissioner abstaining from participating in any matter relating to the authority member in his position as a county employee. The Commission stated, inter alia: . we cannot ignore the fact that Mr. Carson is an authority member and has influence and control over authority decisions. In this respect, Mr. Carson, by voting on the final adoption of a lease, would be voting on a matter directly related to his employer. Even though that employer is another governmental body, we have held, in the past, that a public official may not vote or participate in a matter if it somehow relates to a financial interest which he may have. See, Welz, 86 -001. In the instant situation, Mr. Carson would be called upon to determine the advisability of renting property for the authority. The property which they are seeking to rent is owned by the individual or one of the individuals who currently supervises him and controls his public employment with the county. As a result of this, Mr. Carson, as an authority member, should abstain from participating in any matter relating to this particular lease. See, Bassi, 86 -007 at 3. The Commission further stated: Mr. Paluso as a county commissioner, is, in part, responsible for the general supervision of Mr. Carson. Mr. Carson, on the other hand, is an authority member in a position to grant Mr. Paluso a lease which results in Healy /Marasco, 05 -502 January 13, 2005 Page 6 that: Mr. Paluso receiving a financial gain. It may be difficult for the public to perceive how Mr. Paluso's actions as a county official, would not somehow be influenced by this potential leasing arrangement. It may be argued that Mr. Paluso, in dealing with Mr. Carson, to date, has done so in order to effect the favorable outcome of this lease. Additionally, it could be argued that Mr. Carson voted in favor of the lease in order to advance his position as a full -time county employee. The above factual scenarios, while hypothetical in nature, nonetheless create the types of conflicts of interest that are to be addressed by this Commission. Id. at 4. In Woodring, Opinion No. 90 -001, the State Ethics Commission reviewed a similar situation. Jesse Woodring, Chairman of the Sunbury Redevelopment Authority, had applied to the City for a rehabilitation grant through the Federal Rental Rehabilitation Program (hereinafter, the "Program ") Kenneth Pick, who was employed as the Executive Director of the Redevelopment Authority (chaired by Woodring) also served as the Community Development Coordinator for Sunbury. In the latter capacity, Pick was administrator in charge of the Program for the City. Pick's functions included administering the Program, reviewing all applications, and determining eligibility. The Commission stated: . we are concerned that Mr. Pick, who is an employee of the Redevelopment Authority of which you are Chairman, has the duty of reviewing all applications and determining eligibility in his capacity as Community Development Coordinator for the city. In particular, the potential exists, given the employer - employee relationship between the Redevelopment Authority and Mr. Pick, that your application might be reviewed in a more favorable light than other applications. To forestall such a situation, you must not participate or take any action as to Mr. Pick if your application is approved and you receive benefits. Bassi, Opinion 86 -007. In addition, Section 3(j) of the Ethics Law would require you to publicly note that you would have a conflict as to any matter involving Mr. Pick. In addition, you must file a written memorandum to that effect with the person responsible for recording the minutes. Woodrinq, Opinion No. 90 -001 at 6. In Elisco, Opinion 00 -003, the Commission similarly held that where a City Council Member was an Assistant Principal and another City Council Member's spouse was a Principal in a certain School District, both Council Members would have a conflict of interest with regard to voting to invest pension funds through an investment company and its sales representative who was a School Director in that School District. Likewise, in the instant matter, there is reciprocity of power that, without adequate preventive measures, would clearly present a conflict of interest for Marasco. Marasco as an Airport Authority Member is in a position to act favorably regarding the Hanger Project, while Mr. Degol is a member of the Boards of the Industrial Development Authority and the County Development Corporation, for which Marasco serves as Executive Director and President /CEO respectively. Without adequate preventive measures to avoid the obvious potential basis for a conflict of interest, the necessary conclusion would be that Marasco would have a conflict of interest under the Ethics Act in future matters before the Airport Authority involving the Hanger Project. In an attempt to avoid a conflict of interest under the Ethics Act, you propose Healy /Marasco, 05 -502 January 13, 2005 Page 7 (1) Mr. Degol, as a member of the Board of the Industrial Development Authority and as a member of the Board of Directors of the County Development Corporation will recuse himself from any future votes involving Marasco and will comply with the disclosure requirements of Section 1103(j) of the Ethics Act; and (2) Mr. Degol will also decline to serve on the County Development Corporation's Administrative and Finance Committee or Executive Committee. As for the time period during which the above proposal would be in effect, you would prefer that Mr. Degol would take the above course of action for as long as Marasco would serve as an Airport Authority Board Member. In the alternative, you state that Mr. Degol could take the above course of action until such time as Marasco would no longer be employed by the County Development Corporation or Mr. Degol would no longer serve as a member of the Board of Directors of the County Development Corporation. Finally, you state that the above, proposed course of action would only be undertaken if required by the Commission. You essentially seek a determination that your proposal would be sufficient to avoid a conflict of interest for Marasco as to the Hanger Project. Such a blanket approval cannot be given for multiple reasons. First, the facts that you have submitted do not completely exclude the possibility of past conduct by Mr. Degol as to Marasco for which future action by Marasco as to the Hanger Project could complete the elements for a conflict of interest. Second, the proposed alternative timeframes as to Mr. Degol's conduct fail to take into account Mr. Degol's service on the Industrial Development Authority. Third, the proposed alternative timeframes are based upon an unfounded assumption that there would be some precise cut -off point beyond which Mr. Degol's favorable action as to Marasco would necessarily be unrelated to Marasco's favorable actions as an Airport Authority Member. Therefore, you are advised that Marasco would have a conflict of interest under the Ethics Act as to future matters before the Airport Authority involving the Hanger Project unless factually: (1) there would be no past conduct by Mr. Degol involving Marasco that could form the basis for a conflict of interest for Marasco; and (2) there would be no future conduct by Mr. Degol involving Marasco that could form the basis for a conflict of interest for Marasco. This conclusion would not be limited as applying within any particular timeframe. In each instance of a conflict of interest, Marasco would be required to abstain from participation and to fully satisfy the disclosure requirements of Section 1103(j) as set forth above. Finally, given that the purpose of an advisory is to advise, it is noted that it is never advisable for a public official to take actions that could place him in jeopardy of violating the Ethics Act based upon the assurances of a third party. 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 Healy /Marasco, 05 -502 January 13, 2005 Page 8 interpretation of the Ethics Act. Specifically not addressed herein is the applicability of the Municipality Authorities Act; the Pennsylvania Industrial and Commercial Development Authority Law; and case law pertaining to bias. Conclusion: In his capacity as a Board Member of the Blair County Airport Authority ( "Airport Authority "), Martin Marasco ( "Marasco" ) is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq. Marasco's status under the Ethics Act with regard to his capacity as Executive Director of the Blair County Industrial Development Authority ( "Industrial Development Authority ") or as President /CEO of the Altoona -Blair County Development Corporation ( "County Development Corporation ") has not been addressed herein. With respect to the specific issue of whether Marasco, as an Airport Authority Board Member would have a conflict of interest as to future matters involving a hanger that is to be constructed at the Blair County Airport to house certain aircraft owned by a private business named " Degol Enterprises," hereinafter referred to as the "Hanger Project," you are advised as follows. Given the submitted facts that the principal stockholder of Degol Enterprises, Mr. Bruno Degol, currently serves as a member of the Boards of the Industrial Development Authority and the County Development Corporation, for which Marasco serves as Executive Director and President /CEO respectively, Marasco would have a conflict of interest under the Ethics Act as to future matters before the Airport Authority involving the Hanger Project unless factually: (1) there would be no past conduct by Mr. Degol involving Marasco that could form the basis for a conflict of interest for Marasco; and (2) there would be no future conduct by Mr. Degol involving Marasco that could form the basis for a conflict of interest for Marasco. This conclusion would not be limited as applying within any particular timeframe. 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