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HomeMy WebLinkAbout25-530 Kannebecker PHONE: 717-783-1610 STATE ETHICS COMMISSION FACSIMILE: 717-787-0806 TOLL FREE: 1-800-932-0936 FINANCE BUILDING WEBSITE: www.ethics.pa.gov 613 NORTH STREET, ROOM 309 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL August 7, 2025 To the Requester: Charles Kannebecker, Esquire 25-530 Dear Mr. Kannebecker: This responds to your letters dated May 23, 2025, June 19, 2025, and July 21, 2025, by which you requested an advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the issue presented below: Issue: Whether the Public Official and Employee Ethics Act, 65 Pa.C.S. § 1101 etseq., would prohibit an individual serving as aschool director for a school district from purchasing a property owned by the school district, where the individual has retained a real estate firm co-owned by another school directorto act as the individual’s agent with respect to the individual’s proposed purchase of the property. Brief Answer: The Ethics Act would not prohibit the individual from purchasing the property from the school district subject to the conditions that: (1) the individual would not use the authority of his public position as a school director or confidential information received as a result of being in his public position to further his purchase of the property from the school district in contravention of Section 1103(a) of the Ethics Act (pertaining to conflict of interest); and (2) the restrictions and requirements of Section 1103(f) of the Ethics Act(pertaining to contractingand the requirements for an “open and public process”) would be observed as to any contract between the individual and the school district for the purchase of the property. Kannebecker, 25-530 August 7, 2025 Page 2 Facts: You have been authorized by Jack Fisher (“Mr. Fisher”) to request an advisory from the Commission on his behalf based upon submitted facts, the material portion of which may be fairly summarized as follows. Mr. Fisher is a School Director for the Delaware Valley School District (the “School District”). Another School Director for the School District, Carl Will (“Mr. Will”), is a realtor and co-owner of Keller Williams Real Estate (the “Real Estate Firm”). The School District owns a 329-acre property (the “Property) located on Route 739 in Pike County. On December 1, 2023, the School District, through its listing agency, Chant Realtors, listed the Property for sale with a listing price of $1.4 million. On September 12, 2024, the School District School Board (the “School Board”) decided to reduce the listing price to $700,000. At the School District’s request, on November 21, 2024, Henkelman Real Estate Company (“Henkelman”) appraised the Property to establish its fair market value. Henkelman’s appraisal established a fair market value of $660,000 for the Property. Henkelman recommended that in light of the lack of credible offers for the Property, offers in excess of $500,000 should be seriously considered by the School District. On January 9, 2025, Christie M. Davies (“Ms. Davies”), a Pennsylvania Certified General Appraiser, appraised the Property for the School District. Although Ms. Davies estimated the fair market value of the Property to be $700,000, she recommended that the School District should accept any offer to purchase the Property for an amount in excess of $600,000. After the School Board received several offers to purchase the Property that were either rejected by the School Board or rescinded by the offeror, Mr. Fisher indicated a desire to put in a bid for the Property. Mr. Fisher retained the Real Estate Firm to be his agent with respect to his proposed purchase of the Property, and he has offered to purchase the Property from the School District for $535,000. Based upon the above submitted facts, the question that is presented by your advisory request is whether the Ethics Act would impose any prohibitions or restrictions upon Mr. Fisher with regard to purchasing the Property from the School District. To the extent that your advisory request raises questions regarding the conduct of Mr. Will, you have not established legal standing to request an advisory as to the conduct of anyone other than Mr. Fisher. Additionally, to the extent that your advisory request raises questions regarding the conduct of the School Boardas a whole, the Ethics Act governs the conduct of public officials and public employees individually rather than governmental bodies as a whole. Therefore, this advisory must be limited to addressing only Mr. Fisher’s prospective conduct. 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 Kannebecker, 25-530 August 7, 2025 Page 3 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 1103(j) 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. (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), 1103(j). 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 Kannebecker, 25-530 August 7, 2025 Page 4 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. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest” (i.e., the “de minimis exclusion” or the “class/subclass exclusion”), 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 employeehimself, 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 1103(j) of the Ethics Act would be applicable. Additionally, the disclosure requirements of Section 1103(j) of the Ethics Act would have to be satisfied in the event of a voting conflict. Section 1103(f) of the Ethics Act, pertaining to contracting, provides as follows: § 1103. Restricted activities (f) Contract.-No public official or public employee or his spouse or child or any business in which the person or his spouse or child is associated shall enter into any contract valued at $500 or more with the governmental body with which the public official or public employee is associated or any subcontract valued at $500 or more with any person who has been awarded a contract with the governmental body with which the public official or public employee is associated, unless the contract has been awarded through an open and public process, including prior public notice and subsequent public disclosure of all proposals considered and Kannebecker, 25-530 August 7, 2025 Page 5 contracts awarded. In such a case, the public official or public employee shall not have any supervisory or overall responsibility for the implementation or administration of the contract. Any contract or subcontract made in violation of this subsection shall be voidable by a court of competent jurisdiction if the suit is commenced within 90 days of the making of the contract or subcontract. 65 Pa.C.S. § 1103(f). The term “contract” is defined in the Ethics Act as follows: “Contract.” An agreement or arrangement for the acquisition, use or disposal by the Commonwealth or a political subdivision of consulting or other services or of supplies, materials, equipment, land or other personal or real property. The term shall not mean an agreement or arrangement between the State or political subdivision as one party and a public official or public employee as the other party, concerning his expense, reimbursement, salary, wage, retirement or other benefit, tenure or other mattersin consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1101. Section 1103(f) does not operate to make contracting with the governmental body permissible where it is otherwise prohibited. Rather, where a public official/public employee, his spouse or child, or a business with which he, his spouse or child is associated, is otherwise appropriately contracting with the governmental body, or subcontracting with any person who has been awarded a contract with the governmental body, in an amount of $500 or more, Section 1103(f) requires that an “open and public process” be observed as to the contract with the governmental body. Section 1103(f) of the Ethics Act also provides that the public official/public employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Conclusion: In applying the above provisions of the Ethics Act to the instant matter, you are advised as follows. As a School Director for the School District, Mr. Fisher is a public official subject to the provisions of the Ethics Act. An agreement or arrangement whereby Mr. Fisher would purchase the Property from the School District would constitute a “contract” as that term is defined in the Ethics Act. The Ethics Act would not prohibit Mr. Fisher from purchasing the Property from the School District subject to the conditions that: (1) Mr. Fisher would not use the authority of his public position as a School Director or confidential information received as a result of being in his Kannebecker, 25-530 August 7, 2025 Page 6 public position to further his purchase of the Property from the School District in contravention of Section 1103(a) of the Ethics Act; and (2) the restrictions and requirements of Section 1103(f) of the Ethics Act would be observed as to any contract between Mr. Fisher and the School District for the purchase of the Property. See, Kistler v. State Ethics Commission, 610 Pa. 516, 22 A.3d 223 (2011) (regarding the requirements for an “open and public process”). It is specifically noted that Mr. Fisher would have a conflict of interest with regard to participating in any matters related to his offer to purchase the Property from the School District; therefore, Mr. Fisher would be required to abstain from voting on or otherwise participating in any matters related to his offer to purchase the Property from the School District. 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 receivedat 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