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HomeMy WebLinkAbout1357 MenzerIn Re: Ronald Eric Menzer File Docket: X -ref: Date Decided: Date Mailed: Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Daneen E. Reese Donald M. McCurdy Paul M. Henry Raquel K. Bergen 03 -063 Order No. 1357 2/28/05 3/14/05 This is a final adjudication of the State Ethics Commission. Procedurally, the Investigative Division of the State Ethics Commission conducted an investigation regarding a possible violation of the Public Official and Employee Ethics Act, Act 9 of 1989, P.L. 26, 65 P.S. § 401 et seq., as codified by Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., by the above -named Respondent. At the commencement of its investigation, the Investigative Division served upon Respondent written notice of the specific allegation(s). Upon completion of its investigation, the Investigative Division issued and served upon Respondent a Findings Report identified as an "Investigative Complaint." An Answer was not filed and a hearing was deemed waived. The record is complete. A Consent Agreement and Stipulation of Findings were submitted by the parties to the Commission for consideration. The Stipulation of Findings is quoted as the Findings in this Order. The Consent Agreement was subsequently approved. Effective December 15, 1998, Act 9 of 1989 was repealed and replaced by Chapter 11 of Act 93 of 1998, 65 Pa.C.S. § 1101 et seq., which essentially repeats Act 9 of 1989 and provides for the completion of pending matters under Act 93 of 1998. This adjudication of the State Ethics Commission is issued under Act 93 of 1998 and will be made available as a public document thirty days after the mailing date noted above. However, reconsideration may be requested. Any reconsideration request must be received at this Commission within thirty days of the mailing date and must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). A request for reconsideration will not affect the finality of this adjudication but will defer its public release pending action on the request by the Commission. The files in this case will remain confidential in accordance with Chapter 11 of Act 93 of 1998. Any person who violates confidentiality of the Ethics Act is guilty of a misdemeanor subject to a fine of not more than $1,000 or imprisonment for not more than one year. Confidentiality does not preclude discussing this case with an attorney at law. Menzer, 03 -063 Page 2 I. ALLEGATION: That Ronald Eric Menzer, a public official /public employee, in his capacity as Economic Development Director and Secretary to the York City Redevelopment Authority, violated Sections 1103(a), and 1103(g) provisions of the State Ethics Act (Act 93 of 1998), 65 Pa.C.S. § §1103(a), and 1103(g) when he represented Wagman Construction Company before the City and Redevelopment Authority within one year of leaving employment with the City of York and Redevelopment Authority; and when he participated in the process of approving City projects awarded to Wagman. II. FINDINGS: 1. Ronald Eric Menzer was employed by the City of York as it's [sic] Economic Development Director from 1994 through July 5, 2001. a. Menzer also served as the Secretary of the City's Redevelopment Authority from May 23, 2001 through June 13, 2001. 2. The City of York's position of Economic Development Director was the City's Chief administrative position reporting directly to the Mayor. a. The Economic Development Director had supervisory responsibility over all city departments with the exception of police, fire and finance b. The police, fire and finance departments reported directly to the Mayor. c. The City of York operates by a strong Mayor weak council form of Government. 3. Minutes of the City of York's Redevelopment Authority's May 23, 2001 meeting includes [sic] the following official action appointing Eric Menzer to the position of authority secretary: a. "Mr. Bacas moved to accept Leigh Smith's resignation as Secretary of the Redevelopment Authority and to appoint Eric Menzer as the Authority's new Secretary. Mrs. Johnson seconded. The motion passed unanimously." Present: Henry Leader, Charles Bacas, Ellen Johnson, David Cross Absent: Michael Black 4. As Secretary of the Redevelopment Authority Menzer was responsible for: a. Being the authorized signatory for the Authority. b. Other duties assigned by the Authority Board. c. Menzer performed these services for only one month. d. Menzer's service on the authority was simultaneous to his employment as Economic Development Director. 5. Menzer served as Authority Secretary for less than one month and was replaced as the Redevelopment Authority's Secretary during its June 13, 2001 meeting. Minutes from that meeting include the following official action taken replacing Menzer as Secretary: a. "Mr. Leader made a motion to dismiss Eric Menzer as the Secretary and to elect Andrew Dale as his replacement. The motion was seconded by Ms. Johnson and was unanimously carried" Present: Henry Leader, Ellen Johnson, Charles Bacas, Michael Black Menzer, 03 -063 Page 3 Absent: David Cross 6. Menzer's removal as Redevelopment Authority Secretary was the result of Menzer leaving the employ of the City of York. 7 Menzer resigned his city position to accept employment with Wagman Construction, Inc. 8. Menzer has been employed as the Vice President of Real Estate for Wagman Construction Inc., 3290 Susquehanna Trail North, York, PA 17405 since approximately July 6, 2001. a. Wagman Construction provides general construction and development services. b. Wagman Construction has experience in performing rehabilitation renovation work as well as low to moderate income projects. c. Wagman Construction's involvement in low to moderate income revitalization projects and distressed property rehabilitation predates Menzer's employment with Wagman. d. Menzer is a salaried employee of Wagman. 9. As Vice President of Real Estate for Wagman Construction Menzer's general job duties include negotiating contracts, signing documents and serving as the contact person on Wagman projects. a. Menzer also is responsible for identifying potential development sites for Wagman. b. Menzer does not play a role in the actual construction phase of a project. 10. Wagman Construction was involved in construction projects directly or indirectly involving the City of York several years prior to Menzer accepting employment in July 2001. 11. Within three months after terminating employment with the City of York, Menzer represented Wagman Construction and /or potential Wagman clients before the City of York's Redevelopment Authority. 12. Menzer's representation of clients on behalf of Wagman Construction within one year of leaving the City's employ related to a property at 44 West Market Street, York. 13. 44 West Market Street, York, PA was the site of an old Woolworth's department store. a. This property has been in the redevelopment authority's inventory since approximately June 11, 1999 b. Menzer took an active role in marketing this property as the City Economic Development Director. c. Menzer had regularly attended City Council and Redevelopment Authority meetings in his official capacity as Economic Development Director. Menzer, 03 -063 Page 4 1 This included making presentations to the authority regarding potential investors or uses for the property. 14. Minutes from the City of York Redevelopment Authority meetings detail Menzer's participation in the marketing and proposed development of 44 West Market Street initially as a City Economic Development Director and later as an employee of Wagman Construction as follows: Presentations to Authority as Economic Development Director: a. 05/12/99: Item V Staff Reports 1. Staff updated the members on the Woolworth's property. b. 01/12/00 44 West Market Street — Joyce Frey Proposal — The developers propose to convert the structure to a food court and restaurant facility. They expect to spend up to $400,000 in renovation costs. Authority members questioned Joyce Frey, James Williams, the architect and Ron Perry and Jordan Kriner, the partners of the venture. The authority entered into a sixty (60) day option agreement with Design Concepts Unlimited LP granting the option to purchases the property for $60,000. Resolution No. 3758. c. 04/12/00: V — Staff Reports G. Woolworth Building — There is no recent discussion. The option expired. There have been the occasional phone calls but nothing really definite is occurring at present. d. 04/11/01 Proposal for 44 W. Market Street by John Woodward & Chris Tillotson had a meeting w /Eric Menzer & Leigh Smith on March 23, 2001, to go over their proposal. A presentation was made to the board. Tillotson and Woodward have clients looking for buildings. They propose to develop only the first floor at this time. e. 05/23/01 44 W. Market Street Sheldon Lloyd Wanted it for classic auto museum 60 day option granted resolution 3833 (07/05/01 Eric Menzer's last day as Economic Development Director) Within one year of leaving office Menzer made appearances to the Redevelopment Authority as follows, on behalf of Waltman: f. 09/12/01 IX Woolworth Building 44 Market Street Mr. Sheldon Lloyd is not doing the antique car museum. Wagman is suggesting a proposal which was received via a letter dated September 11, 2001. Mr. Menzer on behalf of Wagman will be making a presentation at the next meeting g. 10/10/01 IV 44 West Market Street Woolworth — option request "Mr. Eric Menzer appeared for Wagman Construction. Mr. Cross stated that he will be disqualified from participation in discussion of this matter and will abstain from voting. Mr. Menzer advised that the plan is to have a retail use which the authority has been consistent about for several years. Unfortunately it is the wrong size for retail use, being either too big for some or too small for others. By proposing the front be Menzer, 03 -063 Page 5 for retail use and the back for office to support the renovation costs, a moderate level office use is expected to be the best use. They are asking for a one -year option at the asking price of $75,000.00. Wagman will market the property under three (3) considerations. First evidence of a tenant lease or renovate the front for retail within 180 days; second if there is a lease to office space, the office tenant must be for profit. This would be 24 months from settlement since it is a KOZ site and three they will present monetary security to avoid restrictions on the deed. They expect a $30.00 square foot rehab cost, and a $6.00 square foot base rent. Alternative plans were all reviewed. Mrs. Johnson asked about the second floor plans were reviewed. The property is not in good condition in that area, but the second floor is part of the overall plan. Mrs. Johnson moved to grant the option. Mr. Bacas seconded. The motion passed unanimously 3 -0 with Mr. Leader and Mr. Cross both abstaining. Resolution 3864 15. As of July 6, 2002, One year after Menzer left the employment of the City of York, Wagman's interest in the Woolworth's building continued. 16. Menzer's actions relating to 44 Market Street, York as an employee of Wagman Construction within one year of leaving the City's employment consisted of making a presentation before the Redevelopment Authority on October 10, 2001. a. This presentation occurred approximately three (3) months after leaving the City's employ and terminating his position on the Redevelopment Authority. b. Menzer specifically appeared on behalf of Wagman Construction presenting a proposal by Wagman Construction to renovate the building into a combination of retail and office space. c. Menzer said Wagman Construction was requesting a one -year option at the asking price of $75,000.00. d. The Redevelopment Authority accepted the Wagman Construction proposal on October 10, 2001. (See Finding 24h) 17. Wagman Construction's one year option on this property expired without any development occurring. a. An option on the property gave Wagman Construction exclusive rights to market the property during the option period. b. Wagman Construction subsequently worked with Marie Wiley /Wiley Family Entertainment proposing an edutainment center for adults and children. c. This project did not come to fruition. 18. Menzer did not appear before York City Council on any issue relating to 44 Market Street, York within one year of leaving the City's employ. (June 5, 2001 — June 5, 2002) 19. Menzer in his official capacity as Economic Development Director took an active role on the City's part in the development of property known as the "smokestack Menzer, 03 -063 Page 6 track" which was developed by Susquehanna Pfaltzgraff /Creekside Investors as the Susquehanna Commerce Center. 20. City involvement with Susquehanna Pfaltzgraff dates back to at least February of 1998. a. The project itself evolved into two (2), six (6) story office buildings, renovation of the former Columbia Gas building, a parking garage and several surface parking lots. b. This project went before both the redevelopment Authority and City Council for review and approval. c. As Economic Development Director, Menzer actively participated in this review process. 21. City of York Redevelopment Authority records include discussion on the "smokestack tract" which ultimately ended up being developed by Susquehanna Pfaltzgraff. 22. Redevelopment Authority meeting minutes confirm various discussions on this parcel between February 11, 1998 and March 13, 2002. 23. Redevelopment Authority meeting minutes confirm Wagman Construction was involved with the Susquehanna Pfaltzgraff site prior to Menzer leaving the city's employ. a. Wagman Construction also performed additional work at the site after they hired Menzer. b. This work was valued in excess of $100,000. 24. Menzer did not represent Wagman before the Redevelopment Authority on this project within one year of leaving the City's employ or serving as Redevelopment Authority Secretary. (June 5, 2001 — June 5, 2002) a. All appearances were made by either Jack Kay or Tim Fulton employees of Susquehanna Pfaltzgraff. 25. In addition to review and approvals from the Redevelopment Authority, the Susquehanna Pfaltzgraff project was discussed and acted upon during City Council meetings between September 19, 2000 and June 19, 2001 while Menzer was employed by the City. 26. After Menzer left the employment of the City of York, Council continued to take actions to approve the Susquehanna Pfaltzgraff Project. 27. As Economic Development Director for the City of York, Menzer participated in actions regarding upgrades to the sewer system for Susquehanna Pfaltzgraff. a. By way of correspondence dated January 3, 2001, to Jack R. Kay, Vice President, Real Estate, Susquehanna Pfaltzgraff Co., Menzer outlined the City's commitment to the project. b. Menzer informed Susquehanna Pfaltzgraff "that the City of York will bear the responsibility for replacement and upgrade of certain city -owned utilities that run through the Susquehanna Commerce Center site and the Creekside Investors will pay for any cost of that work in excess of $100,000." Menzer, 03 -063 Page 7 c. Menzer detailed the following services to be provided by the City. *upgrade /replace the 48- inches storm water line that runs in the abandoned Gas Alley right -of -way between Grant Street and the Codorus Creek, and *add an additional manhole to the sanitary sewer interceptor that runs generally north -south across a portion of the site. It is our understanding that engineering for these two items has been substantially completed and that you have received competitive bids for this work. Pending confirmation that the engineering work is appropriate and that the solicitation of bids was appropriately fair and open to meet our public- entity requirements, it is our intention to have this work performed by the same contractor that will be doing all of the site work for the Susquehanna Commerce Center project. 28. On 06/29/01 Mayor Robertson signed a memo of understanding for this project. The actual agreement was entered into between the City of York and Creekside Investors /Susquehanna Pfaltzgraff Company. Jack Kay, VP Real Estate for Susquehanna Pfaltzgraft [sic] signed the agreement on behalf of the company. a. Menzer negotiated the agreement which committed the City to pay for sewer work totaling up to $100,000. b. This agreement was finalized approximately one (1) week prior to Menzer leaving the City of York's employment. 29. Menzer actively was involved with the Susquehanna Commerce Center project as the City's Economic Development Director. a. Menzer did not appear before the Redevelopment Authority or City Council on the Suscom project within one year of leaving the City's employ (07/05/01 — 07/05/02). b. All appearances were made by Jack Kay and Tim Fulton employees of Susquehanna Pfaltzgraff. 30. Wagman Construction's involvement with the Susquehanna Commerce Center predated Menzer's employment by almost two years. a. Wagman Construction also had a prior business relationship with Susquehanna Pfaltzgraff /Susquehanna Real Estate dating back to at least the early 1990's. b. Jack R. Kay, President and CEO of Susquehanna Real Estate, a Division of Susquehanna Pfaltzgraff Co. also sat on the Board of Directors of Wagman Construction. 31. Menzer did not work on the Susquehanna Commerce Center project as an employee of Wagman Construction within one year of leaving the City's employ. a. Menzer's duties for Wagman do not relate to the construction phase of this project. (The following findings relate to Menzer's involvement with the Historic Fairmount Project.) Menzer, 03 -063 Page 8 32. Menzer in his official capacity as Economic Development Director had general supervisory responsibility over the City's Historic Fairmount Project. a. Housing Services and Redevelopment Authority Director Leigh Smith was the city employee responsible for the project. 33. The City's Historic Fairmount Project is a scattered site rehabilitation covering the 300, 400 and 500 blocks of north Beaver Street, York PA. a. Funding sources for this project included the Pennsylvania Housing Finance Agency and the United States Department of Housing and Urban Development (HUD). b. City departments including City Council, Housing Services and the Redevelopment Authority played roles in the planning and development phases of this project. c. City Council and the Redevelopment Authority acquired properties on North Beaver Street to be used for the project. d. The Housing Services Department was involved in assisting with finding [sic] sources and project scope. 34. City activities on the Historic Fairmount Project date back to at least November of 1998. a. The City's intent with the project was to eliminate urban blight on Beaver Street. 35. York City Redevelopment Authority Meeting Minutes confirm discussions and official actions on the Historic Fairmount Project AKA Beaver Street Project between November 11, 1998 and February 7, 2001 while Menzer was employed by the City. 36. Other discussions and actions by the Authority occurred between May 8, 2002 and March 10, 2004. a. Menzer did not make any appearances or presentations on behalf of Wagman at any of these meetings. 37. York City Council Meeting Minutes for April 6, 1999 confirm approval of Resolution No. 72, Session 1999, authorizing the City to submit the Section 108 application to HUD to use the Section 108 Loan Guarantee Program funds in the amount of $3,000,000 for the purpose of addressing priority community development and housing needs as identified in the City's Consolidated Plan. a. This resolution related to the Historic Fairmount Project. b. Menzer participated in the meeting, as a city employee. 38. City Council had discussions and took actions on the Historic Fairmount Project after Menzer left City employment. 39. Menzer, as an employee of Wagman Construction, did not appear before City Council or the City's redevelopment Authority on the Historic Fairmount Project between July 5, 2001 and July 5, 2002, one -year after leaving City employment. Menzer, 03 -063 Page 9 40. York City records related to Historic Fairmount project confirm the following regarding Wagman's interest and participation in the project: a. On or about February 28, 2002, Larry Richardson, Director, YMCA, faxed a letter to Robyn Liggins Smith regarding Wagman's interest in the project which noted, in part: "Following is a letter of interest from Wagman when we began working with them on the Scattered Site project. Official engagement of Wagman for the Beaver Street Project occurred on May 1, 2001, when I introduced Jim Shultz of HDC to Joe Wagman and Dave Cross from Wagman Construction. At that time, we had yet to receive tax credits for the Scattered site project. We did receive them, contracted with Wagman and, as you know, closed and began construction in September 2001. b. City Council Resolution 21 of 2002 adopted January 22, 2002, authorizes project funding for the Historic Fairmount project through the City's participation in the Federal Community Development Block Grant Program and Federal HOME program. Passed by a 5 -0 vote of council with Councilman Smallwood, Texter, Bacas, Musso and Smith all in favor. c. A pre - development and funding agreement for the project was entered into on February 1, 2002, between Housing Development Corporation of Lancaster County, Y Community Development Corporation and the Redevelopment Authority of the City of York. The agreement designates HDC and YCDC as the project developers. The developer is obligated to comply with all applicable rules and regulations pertaining to the CDBG program and HOME program issued by HUD. This agreement does not list or include Wagman Construction. Wagman was hired as the project's general contractor. d. On February 27, 2002, Eric Menzer, in his capacity as vice president of real estate of Wagman Construction submitted a cost analysis detail to the Y Community Development Corporation for historic tax credit. The cost analysis relates to categories including windows, doors, exterior trim and siding and interior trim. Total cost changes are identified as $558,656. 1. This document was submitted to YCDC who [sic] provided copies to the City of York. e. On March 1, 2002, Housing Development Corporation/YorkYCDC submitted an application to the Pennsylvania Housing Finance Agency for the Historic Fairmount Apartments, York. The application itself is twenty -four (24) pages in length. Specifically listed is Wagman Construction, 3290 Susquehanna Trail North, York, PA 17405 -7076. Eric Menzer is listed as the contact person with contact information including phone, (717) 767 -8311, and an e- mail address of emenzer@waqman.com. 41. The Y- Development Corporation in conjunction with the Housing Development Corporation of Lancaster partnered to serve as the Developer on the Historic Fairmount Project after being selected through a request for Proposal process handled by York Housing Services Director Leigh Smith in May and June 2000. 42. Larry Richardson, President /CEO of the YMCA of York and York County/Y- Development Corporation was the contact person who appeared before the City of Menzer, 03 -063 Page 10 York. a. Richardson selected Wagman Construction to serve as the project general contractor. b. Richardson had a previous business relationship with Wagman Construction on a similar rehabilitation project on the 200 and 300 blocks of West Market Street. 1. Richardson wanted to use Wagman Construction on the Historic Fairmount Project since Wagman previously completed the West Market Street project on time and on budget. 2. Wagman Construction expressed its interest in serving as the project general contractor on December 11, 2000 approximately six (6) months prior to Menzer being employed by Wagman. 3. Neither Wagman nor Menzer made presentations directly to City Council. 43. On November 12, 2003, Historic Fairmount Associates, LP, entered into an agreement with the City of York for project funding. The agreement itself was signed by Larry Richards, President of YCDC and John Benner, Mayor. Funding was detailed as follows: Source Amount CDBG /Home Program $1,050,000 PHFA $1,140,000 Borrower $3,770,000 cash equity 44. Wagman Construction did not enter into a formal agreement to serve as the project general contractor until March 18, 2004. a. Wagman Construction was officially engaged to serve as the projects contractor as a result of a planning meeting held on May 1, 2001. b. David Cross and Joseph Wagman represented Wagman Construction at this meeting. c. Erick Menzer was not party to this meeting in any capacity. 45. Wagman Construction performed preliminary project work without compensation from May 1, 2001 until March 18, 2004. a. No funds were provided to Wagman Construction until the Y- Community Development Corporation (YCDC) closed on a Pennsylvania Housing Finance Administration loan May 18, 2004. b. No payments were made to Wagman Construction, by the YCDC, during Menzer's first year of employment with Wagman. c. Wagman Construction had an expectation of payment for services rendered on the project prior to the YCDC receiving PHFA funding. 46. Menzer's involvement with the Historic Fairmount Project as an employee of Wagman Construction within one year of leaving the City's employ included the following: a. Preparing a detailed cost analysis for historic tax credit dated February 27, Menzer, 03 -063 Page 11 2002 which was submitted to the YCDC. (see finding 40(d)). b. Serving as the projects contact person on behalf of Wagman Construction on the March 1, 2002 PHFA loan application. 1. This application did not require any city approval. 47. Menzer's continued participation in the Historic Fairmount Project as an employee of Wagman Construction within one year and after leaving the City's employ was the subject of a HUD conflict of interest inquiry. 48. By way of correspondence dated December 2, 2002, HUD determined that a conflict of interest did exist on the part of Eric Menzer and requested additional information from the city before determining whether an exception can be granted. Joyce M. Gaskins, Director, Office of Community Planning & Development for HUD, provided the following explanation for her conclusion that a conflict of interest exists. "After reviewing this information, we have determined that a conflict of interest does exist, in that Mr. Menzer was still in the employ of the City of York and was responsible for overseeing CDBG activity, during the RFP process for selection of the developer — Housing Development Corporation of Lancaster County and YMCA Community Development Corporation which plans to contract the services of Wagman Construction, Mr. Menzer's current employer. The information provided confirms the RFP was issued on May 22, 2000, was due on June 19, 2000, and the anticipated selection date was June 30, 2000. Mr. Menzer left the employ of the City of York on July 5, 2001, and the agreement between the developer and the City was issued on February 12, 2002. Thus, Mr. Menzer was in a position, where he was directly involved in the selection process. Relative to the exception request, before such a request can be considered, the City needs to provide the information required at 570.611(d)(1) and (2). The information provided in the letter, dated September 24, 2002, does not meet the public disclosure threshold, as it does not include a description of how the public disclosure was made. In addition, any request must address the "Factors to be considered for exceptions.'"' 49. HUD ruled that Menzer's continued involvement in the project as an employee of Wagman Construction within one year of leaving the City's employ constituted a conflict of interest. a. HUD did not cite any individual action on Menzer's part which constituted a conflict of interest, only his continued involvement in the project as an employee of Wagman Construction. b. HUD took no action on this issue determining that any sanctions against Wagman Construction or the Y- Community Development Corporation would negatively impact progress on the project including delaying completion and increasing costs. 50. On March 19, 2003, Larry Richardson, President of the Y Community Development Corporation, sent a letter to Joyce Gaskin, Director, Office of Community Planning and Development, U.S. Department of Housing & Urban Development requesting a conflict exception in relation to Wagman Construction's involvement in the project due to Menzer's prior employment with the City of York. Richardson's exception request was based on the following criteria: Menzer, 03 -063 Page 12 a. Wagman has specific expertise and capacity for low- income, historic, scattered site rehab projects. They have a relationship with the developer that has proven to bring projects in on budget and on time with a high level of quality. At this time, to engage another contractor, would be of significant cost to the project and produce undue harm to the clients we will serve in this project, which are at 40 %, 50% and 60% of median income in York. b. We responded to an open RFP with the City to become the developers for the project. We did not send out an RFP for a contractor for the project. For that matter, we did not issue an RFP for architectural, legal or relocation services either. Simply, these projects are very complicated and a great deal of comfort must exist between the project team members. Each member also needs to have special expertise in low income and historic tax credit projects. c. Contractors are regulated as to the amount they can realize in both overhead and profit due to the funding sources. This issue prevents many contractors from attempting such projects. In a previous project we completed, we sent out RFP's and received four interested contractors. As each began to realize these restrictions, they dropped out one by one. We were left with one contractor that struggled to bring the project in on budget. d. This particular project has been attempted on two other occasions by other developers and has failed. We have put together a team that through expertise; teamwork; passion for quality, affordable low income housing; and a track record of completing such projects on time and on budget; is poised to move forward. We are on the cusp of being funded and need to be prepared to move swiftly to close on the project and begin construction. 51. On April 2, 2003, Assistant Solicitor Hoyt requested an exception under 24 CFR 570.611(d). Solicitor Hoyt provided in part, the following reasons for requesting the exception: (2) (i) The exception would provide a significant cost benefit and an essential degree of expertise to the project that would otherwise not be available. Enclosed with this letter is a letter form YCDC indicating why. (11) While the original RFP request in May 2000 was open (and during Mr. Menzer's employment with the City), YCDC and HDC have not engaged in an open competitive bidding or negotiation process for the reasons set forth in the YCDC letter. (iii) While the person affected by the conflict, Mr. Menzer, is not a member of such class, the real persons affected by this exception are members of a group or class intended to be the beneficiaries of the activity and the exception will permit them to receive generally the same interests or benefits as are being made available to others, as set forth in the YCDC letter. (iv) Mr. Menzer has withdrawn from his function or responsibilities because he left his employment with the City on July 5, 2001, and was not involved in the City's contract with YCDC and HDC on February 1, 2002. (v) The interest or benefit (YCDC's desire to use Wagman Construction stemmed from its relationship from the Market Street project in early 2000) existed before the City sent out RFP's, thus before Mr. Menzer was in a position to do anything about it. Menzer, 03 -063 Page 13 (vi) Undue hardship will result to the recipients when weighed against the public interest served, as set forth in the YCDC letter enclosed. (vii) While Mr. Menzer was involved in the preliminary selection process from mid 2000 until he retired in mid 2001, he was not involved in the final agreement to select YCDC and HDC in February 2002, and certainly was not involved in YCDC /HDC's desire to use Wagman Construction on this project. (b) This project will utilize low income tax credits and result in regulated profit margins, and has significant strictures on construction methods as well, which is why so few contractors are will to do this work, as discussed in YCDC's letter. 52. On July 31, 2003, HUD informed the City that a conflict of interest exception will be granted for the following reasons: Reasons: 1. The failure to approve the request would further delay the provision of affordable housing for low income persons, and thus, cause an undue hardship on persons the community development block grant program is to primarily benefit. 2. To engage another contractor would be of significant additional cost to the project; and 3. Contractors involved in low- income housing and historic tax credit projects are regulated as to the amount they can realize in both overhead and profit, due to the funding sources. 53. Menzer represented Wagman Constructions interests before the City of York Redevelopment Authority within one year of leaving office on 44 Market Street, York (former Woolworth site) a. Menzer's proposal did not come to fruition creating no financial gain for Wagman Construction. 54. Menzer did not represent Wagman Construction interests before the City of York within one year of leaving office on the Historic Fairmount Project or the Susquehanna Conference Center. a. Wagman Construction served as contractor on both projects. b. Menzer prepared and submitted a detailed cost analysis for historic tax credit dated February 27, 2002 which was submitted to YCDC and provided to the City. 1. Wagman contracted with YCDC. c. Menzer is listed as project contact person for Wagman on PHFA loan applications for the Historic Fairmount Projects. 55. Menzer played no role in the Susquehanna Commerce Center project on behalf of Wagman Construction. 56. Menzer was a salaried employee of Wagman Construction and did not receive any additional compensation as a result of any involvement in the Susquehanna Menzer, 03 -063 Page 14 Commerce Center and Historic Fairmount Projects or proposals for 44 Market Street, York. III. DISCUSSION: At all times relevant to this matter, the Respondent, Ronald Eric Menzer, hereinafter Menzer, has been a public employee subject to the provisions of the Public Official and Employee Ethics Law, Act 9 of 1989, Pamphlet Law 26, 65 P.S. § 401, et seq., as codified by the Public Official and Employee Ethics Act, Act 93 of 1998, Chapter 11, 65 Pa.C.S. § 1101 et seq., which Acts are referred to herein as the "Ethics Act." The allegations are that Menzer, as Economic Development Director of the City of York (City) and Secretary to the York City Redevelopment Authority (Authority), violated Sections 1103(a) and 1103(g) of the Ethics Act when he represented Wagman Construction Company before the City and Authority within one year of leaving public employment; and when he participated in the process of approving City projects awarded to Wagman. Pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from engaging in conduct that constitutes a conflict of interest. The term "conflict of interest" is defined under Act 93 of 1998 as follows: Section 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. "Conflict" or "conflict of interest" 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. 65 Pa.C.S. § 1102. 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. § 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 for one year after he leaves that body. 65 Pa.C.S. § 1103(g) (Emphasis added). Menzer, 03 -063 Page 15 Under Section 1103(g) of the Ethics Act, a former public official /public employee is prohibited from representing a person for compensation on any matter before the governmental body with which he was associated for a period of one year after he leaves that body. The terms "governmental body ", "person ", and "represent" are defined in the Ethics Law as follows: Section 1102. Definitions "Governmental body." Any department, authority, commission, committee, council, board, bureau, division, service, office, officer, administration, legislative body, or other establishment in the Executive, Legislative or Judicial Branch of a state, a nation or a political subdivision thereof or any agency performing a governmental function. "Person." A business, governmental body, individual, corporation, union, association, firm, partnership, committee, club or other organization or group of persons. "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 contain the name of a former public official or public employee. 65 Pa. C. S. § 1102. As noted above, the parties have submitted a Consent Agreement and Stipulation of Findings. The parties' Stipulated Findings are reproduced above as the Findings of this Commission. We shall now summarize the relevant facts as contained therein. Menzer was employed by the City as its Economic Development Director from 1994 through July 5, 2001, and as the Secretary of the Authority from May 23, 2001, through June 13, 2001. Menzer held the City's Chief administrative position and reported directly to the Mayor. Menzer had supervisory responsibility over all city departments with the exception of police, fire and finance. Minutes of the Authority for the May 23, 2001, meeting reflect official action appointing Menzer to the position of Authority Secretary. Menzer was the Authority Secretary for less than one month and was replaced during its June 13, 2001, meeting. As Secretary of the Authority Menzer was the authorized signatory for the Authority and was responsible for duties as assigned by the Authority Board. Menzer was removed as Authority Secretary because he terminated employment with the City. Menzer resigned his City position to accept employment with Wagman Construction, Inc. as the Vice President of Real Estate. Wagman Construction provides general construction and development services, performs rehabilitation renovation work and low to moderate income projects. Menzer, as Vice President of Real Estate for Wagman Construction, is a salaried employee with general job duties that include negotiating contracts, signing documents and serving as the contact person on Wagman projects. Although Menzer is responsible for identifying potential development sites for Wagman, he does not play a role in the actual construction phase of projects. Wagman Construction was involved in construction projects directly or indirectly involving the City several years prior to Menzer's acceptance of employment in July 2001. Within three months after terminating employment with the City, Menzer Menzer, 03 -063 Page 16 represented Wagman Construction or potential Wagman clients before the Authority. Menzer's representation of clients on behalf of Wagman Construction within one year of leaving City employment related to a property at 44 West Market Street, York. That property has been in the Authority's inventory since approximately June 11, 1999. Menzer took an active role in marketing that property as the City Economic Development Director. Menzer regularly attended City Council and Authority meetings in his official capacity as Economic Development Director. The foregoing included making presentations to the Authority regarding either potential investors or uses for the property. Minutes from the Authority meetings detail Menzer's participation in the marketing and proposed development of 44 West Market Street initially as a City Economic Development Director and later as an employee of Wagman Construction. See, Fact Finding 14. Within one year of leaving public employment, Menzer made appearances before the Authority on behalf of Wagman. Id. As to the 44 Market Street, York Project, Menzer, as an employee of Wagman Construction, made a presentation before the Authority on October 10, 2001, approximately three months after leaving the City's employ and terminating his position on the Authority. Menzer specifically appeared on behalf of Wagman Construction and presented a proposal by Wagman Construction to renovate the building into a combination of retail and office space. Menzer stated that Wagman Construction was seeking a one - year option at the asking price of $75,000.00. The Authority accepted the Wagman Construction proposal on October 10, 2001. Wagman Construction's one year option on the property expired without any action having occurred. Menzer in his official capacity as Economic Development Director took an active role in the development of another property known as the "smokestack track" which was developed by Susquehanna Pfaltzgraff /Creekside Investors as the Susquehanna Commerce Center. The project evolved into two, six -story office buildings, renovation of the former Columbia Gas building, a parking garage and several surface parking lots. This project was submitted to both the Authority and City Council for review and approval. As Economic Development Director, Menzer actively participated in the review process. Authority records include discussions on the "smokestack tract" which was ultimately developed by Susquehanna Pfaltzgraff. Authority meeting minutes confirm various discussions on this parcel and Wagman Construction's involvement with the Susquehanna Pfaltzgraff site prior to Menzer leaving City employment. Menzer did not represent Wagman before the Authority on the project within one year of leaving the City's employ or the Authority as its Secretary. See, Fact Findings 54, 55. All appearances were made by employees of Susquehanna Pfaltzgraff. In addition to the review and approvals from the Authority, the Susquehanna Pfaltzgraff project was discussed and acted upon during City Council meetings between September 19, 2000, and June 19, 2001, while Menzer was employed by the City. As Economic Development Director for the City of York, Menzer participated in actions regarding upgrades to the sewer system for Susquehanna Pfaltzgraff. Menzer informed Susquehanna Pfaltzgraff that the City of York will bear the responsibility for replacement and upgrade of certain city -owned utilities that run through the Susquehanna Commerce Center site and the Creekside Investors will pay for any cost of that work in excess of $100,000." On June 29, 2001, the Mayor signed a memo of understanding for this project. The actual agreement was entered into between the City and Creekside Investors/ Susquehanna Pfaltzgraff Company. Menzer negotiated the agreement which committed the City to pay for sewer work totaling up to $100,000. This agreement was finalized approximately one week prior to Menzer leaving employment with the City. Menzer had active involvement with the Susquehanna Commerce Center project as the City's Economic Development Director. Menzer did not appear before the Authority or City Council on the "Suscom" (Fact Finding 29) project within one year of leaving the City's employ. Menzer did not work on the Susquehanna Commerce Center project as an Menzer, 03 -063 Page 17 employee of Wagman Construction within one year of leaving the City's employ. Menzer's duties for Wagman did not relate to the construction phase of this project. Separate and apart from the above, Menzer, as Economic Development Director, had general supervisory responsibility over the City's Historic Fairmount Project. Funding sources for this project included the Pennsylvania Housing Finance Agency and the United States Department of Housing and Urban Development (HUD). City departments including City Council, Housing Services and the Authority played roles in the planning and development phases of this project. City Council and the Authority acquired properties on North Beaver Street to be used for the project. The Housing Services Department assisted with funding sources and the scope of the project. The City's intent with the project was to eliminate urban blight on Beaver Street. Authority Meeting Minutes confirm discussions and official actions on the Historic Fairmount Project AKA Beaver Street Project between November 11, 1998, and February 7, 2001, while Menzer was employed by the City. Other discussions and actions by the Authority occurred between May 8, 2002, and March 10, 2004. Menzer did not make any appearances or presentations on behalf of Wagman at any of these meetings after he left City employment. City Council Meeting Minutes for April 6, 1999, confirm approval of Resolution No. 72, Session 1999, authorizing the City to submit the Section 108 application to HUD to use the Section 108 Loan Guarantee Program funds in the amount of $3,000,000 for the purpose of addressing priority community development and housing needs as identified in the City's Consolidated Plan. This resolution related to the Historic Fairmount Project. Menzer participated in the meeting as a City employee. City Council had discussions and took actions on the Historic Fairmount Project after Menzer left City employment. Menzer, as an employee of Wagman Construction, did not appear before City Council or the Authority on the Historic Fairmount Project between July 5, 2001, and July 5, 2002, that is, within one -year after leaving City employment. City records as to the Historic Fairmount project reflect Wagman's interest and participation in the project: on or about February 28, 2002, Larry Richardson, Director, YMCA, faxed a letter regarding Wagman's interest in the project which noted, in part: ".. . Official engagement of Wagman for the Beaver Street Project occurred on May 1, 2001. . .. At that time, we had yet to receive tax credits for the Scattered site project. We did receive them, contracted with Wagman and closed and began construction in September 2001. A pre - development and funding agreement for the project was entered into on February 1, 2002, between Housing Development Corporation of Lancaster County, YCDC and the Redevelopment Authority of the City of York. The agreement designates HDC and YCDC as the project developers. . Wagman was hired as the project's general contractor. On February 27, 2002, Menzer, in his capacity as vice president of real estate of Wagman Construction submitted a cost analysis detail to the Y Community Development Corporation for historic tax credit...." This document was submitted to YCDC which provided copies to the City. On March 1, 2002, Housing Development Corporation/York YCDC submitted an application to the Pennsylvania Housing Finance Agency for the Historic Fairmount Apartments, York. Wagman Construction was specifically listed with Menzer as the contact person. The Y- Development Corporation in conjunction with the Housing Development Corporation of Lancaster partnered to serve as the Developer on the Historic Fairmount Project after being selected through a request for proposal process handled by the York Housing Services Director in mid -2000. Wagman Construction expressed its interest in serving as the project general contractor on December 11, 2000 approximately six months prior to Menzer being employed by Wagman. Neither Wagman nor Menzer made presentations directly to City Council. On November 12, 2003, Historic Fairmount Associates, LP, entered into an agreement with the City for project funding. The agreement was signed by the President of YCDC and the Mayor. Menzer, 03 -063 Page 18 Wagman Construction did not enter into a formal agreement to serve as the project general contractor until March 18, 2004. Wagman Construction was officially engaged to serve as the project contractor as a result of a planning meeting held on May 1, 2001. David Cross and Joseph Wagman represented Wagman Construction at this meeting. Menzer was not party to this meeting in any capacity. Wagman Construction performed the preliminary project work from May 1, 2001, until March 18, 2004, without compensation. No funds were provided to Wagman Construction until the Y- Community Development Corporation (YCDC) closed on a Pennsylvania Housing Finance Administration loan May 18, 2004. No payments were made to Wagman Construction by YCDC during Menzer's first year of employment with Wagman. Wagman Construction had an expectation of payment for services rendered on the project prior to the YCDC receiving PHFA funding. Menzer's involvement with the Historic Fairmount Project as an employee of Wagman Construction within one year of leaving the City's employ included the following: preparing a detailed cost analysis for historic tax credit dated February 27, 2002, which was submitted to the YCDC, and serving as the project contact person on behalf of Wagman Construction on the March 1, 2002, PHFA loan application. The application did not require any City approval. Menzer's participation in the Historic Fairmount Project as an employee of Wagman Construction was the subject of a HUD conflict of interest inquiry. By letter dated December 2, 2002, HUD determined that a conflict of interest existed on the part of Menzer and requested additional information from the City before determining whether an exception could be granted. HUD ruled that Menzer's continued involvement in the project as an employee of Wagman Construction within one year of leaving the City's employ constituted a conflict of interest. HUD did not cite any individual action on Menzer's part which constituted a conflict of interest, only his continued involvement in the project as an employee of Wagman Construction. On March 19, 2003, the President of the YCDC, sent a letter requesting a conflict exception in relation to Wagman Construction's involvement in the project, due to Menzer's prior employment with the City. On July 31, 2003, HUD informed the City that a conflict of interest exception would be granted for the following reasons: the failure to approve the request would further delay the provision of affordable housing for low income persons; the engagement of another contractor would be a significant additional cost to the project; and contractors involved in low- income housing and historic tax credit projects are regulated as to the amount they can realize in both overhead and profit. Menzer represented Wagman Construction's interests as to the 44 Market Street, York project, before the Authority within one year of leaving office. Menzer's proposal did not come to fruition creating no financial gain for Wagman Construction. Wagman Construction served as contractor on both the Historic Fairmount Project and the Susquehanna Conference Center projects. Menzer prepared and submitted a detailed cost analysis for historic tax credit dated February 27, 2002, which was submitted to YCDC and provided to the City. See, Fact Finding 40.d. Wagman contracted with YCDC. Menzer is listed as project contact person for Wagman on PHFA loan applications for the Historic Fairmount Projects. See, Fact Finding 46.b. Menzer, as a salaried employee of Wagman Construction, did not receive any additional compensation as a result of any involvement in the Susquehanna Commerce Center and Historic Fairmount Projects or the proposal for 44 Market Street, York. Menzer played no role in the Susquehanna Commerce Center project on behalf of Wagman Construction. Menzer did not represent Wagman Construction interests before the City within one year of leaving office on the Historic Fairmount Project or the Susquehanna Conference Center. See, Fact Finding 54. Menzer, 03 -063 Page 19 Having highlighted the Stipulated Findings and issues before us, we shall now apply the Ethics Act to determine the proper disposition of this case. The parties' Consent Agreement sets forth a proposed resolution of the allegations. The Consent Agreement proposes that this Commission find: "a. That no violation of Section 1103(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(a) occurred in relation to Menzer's participation in the process of approving city projects awarded to Wagman Construction Company. b. That an unintentional violation of Section 1103(g) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(g) occurred in relation to Menzer's representation of Wagman Construction Company, on one occasion, before the City of York Redevelopment Authority within one year of leaving employment with the City of York and Redevelopment Authority on 44 Market Street, York, PA. c. That no violation of Section 1103(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(a) occurred in relation to Menzer's involvement as a public official/ employee on the Historic Fairmont Project. d. That no violation of Section 1103(g) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(g) occurred in relation to Menzer's involvement on the Historic Fairmont Project as an employee of Wagman Construction within one year of leaving employment with the City of York and Redevelopment Authority. e. That no violation of Section 1103(a) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(a) occurred in relation to Menzer's involvement as a public official/ employee on the Susquehanna Commerce Center Project. f. That no violation of Section 1103(g) of the Public Official and Employee Ethics Law, 65 Pa.C.S. §1103(g) occurred in relation to Menzer's involvement on the Susquehanna Commerce Center Project as an employee of Wagman Construction within one year of leaving employment with the City of York and Redevelopment Authority." The above charges and the proposed disposition by the parties will be now addressed. As to the three allegations concerning Section 1103(a) of the Ethics Act, there must be a use of authority of office by Menzer for a private pecuniary benefit to himself or Wagman Construction after he became an employee so that it is a business with which he is associated. The record before us does not establish a use of office by Menzer whereby he received a pecuniary benefit for himself or acted through a use of office to obtain future employment with Wagman Construction. Without a use of authority of office, there can be no violation of Section 1103(a) of the Ethics Act. See, Marchitello & McGuire vs. SEC, 657 A.2d 1346 (Pa. Commw. 1995). Accordingly, Menzer did not violate Section 1103(a) of the Ethics Act when he participated in the process as to municipal projects awarded to Wagman Construction Company or relating to the Historic Fairmont Project and the Susquehanna Commerce Center Project because there was no use of authority of office on his part to obtain a private pecuniary benefit. See, Pappas, Order 971. Turning to the 1103(g) allegations, Menzer, on behalf of Wagman Construction, appeared before the Authority a few months after he left public employment. Menzer appeared on behalf of Wagman as to the 44 West Market Street Project, a renovation for a combination of retail /office space. Menzer informed the Authority that Wagman wanted a one year option on the property which was obtained from the Authority for $75,000. Wagman did not exercise the option and no development occurred. The stipulated findings reflect representation by Menzer on behalf of his new employer for consideration (his salary) before his former governmental body (Authority) within one year of termination Menzer, 03 -063 Page 20 of public service. Accordingly, Menzer unintentionally violated Section 1103(g) of the Ethics when he represented Wagman Construction Company as to the 44 Market Street, York Project, on one occasion, before the Authority within one year of leaving employment with the City and Authority. As to the remaining two Section 1103(g) violations, these involve alleged representation by Menzer of Wagman Construction before his former governmental bodies, the City and the Authority. One allegation concerns the Historic Fairmount Project and the other involves the Susquehanna Commerce Center. As to the Historic Fairmont Project, the stipulated findings reflect that Menzer, on behalf of Wagman Construction, submitted a cost analysis to YCDC for a tax credit and YCDC in turn provided a copy to the City. Menzer was also the contact person for Wagman Construction on a PHFA loan application. Both of these actions occurred within one year after Menzer left public employment with the City /Authority. Although these actions would otherwise fall within the ambit of representation under Section 1103(g), we must assume that such actions occurred within the judicially created exception to Section 1103(g) of the Ethics Act. See, Stephens v. SEC, 571 A.2d 1120 (Pa. Commw. 1990). This analysis obviates any potential inconsistency between Fact Findings 40.d., 46 and 54. As to the Susquehanna Commerce Project, the stipulated findings do not reflect any role by Menzer as to that project. See, Fact Finding 55. In addition, there is a stipulated finding by the parties to the effect that Menzer did not represent Wagman Construction before the City as to both of these projects. See, Fact Finding 54. Accordingly, based upon the stipulations of the parties, Menzer did not violate Section 1103(g) of the Ethics Act as to any actions by Menzer for Wagman Construction concerning the Historic Fairmont Project and the Susquehanna Commerce Center Project in that Menzer did not engage in representation of Wagman Construction as to those two projects. We determine that the Consent Agreement submitted by the parties sets forth the proper disposition for this case, based upon our review as reflected in the above analysis and the totality of the facts and circumstances. IV. CONCLUSIONS OF LAW: 1. Menzer, as Economic Development Director and Secretary to the York City Redevelopment Authority, was a public employee subject to the provisions of Act 9 of 1989 as codified by Act 93 of 1998. 2. Menzer did not violate Section 1103(a) of the Ethics Act when he participated in the process as to municipal projects awarded to Wagman Construction Company or relating to the Historic Fairmont Project and the Susquehanna Commerce Center Project in that Menzer did not use the authority of office for a private pecuniary benefit for himself or a business with which he is associated. 3. Menzer unintentionally violated Section 1103(g) of the Ethics Act when he represented Wagman Construction Company as to the 44 Market Street, York Project, on one occasion, before the City of York Redevelopment Authority within one year of leaving employment with the City of York and Redevelopment Authority. 4. Menzer did not violate Section 1103(g) of the Ethics Act as to any actions by Menzer for Wagman Construction concerning the Historic Fairmont Project and the Susquehanna Commerce Center Project in that Menzer did not engage in representation of Wagman Construction as to those two projects before his former governmental bodies within one year of termination of service. Menzer, 03 -063 Page 21 In Re: Ronald Eric Menzer ORDER NO. 1357 File Docket: 03 -063 Date Decided: 2/28/05 Date Mailed: 3/14/05 1 Menzer, as Economic Development Director and Secretary to the York City Redevelopment Authority, did not violate Section 1103(a) of the Ethics Act when he participated in the process as to municipal projects awarded to Wagman Construction Company or relating to the Historic Fairmont Project and the Susquehanna Commerce Center Project in that Menzer did not use the authority of office for a private pecuniary benefit for himself or a business with which he is associated. 2. Menzer unintentionally violated Section 1103(g) of the Ethics Act when he represented Wagman Construction Company as to the 44 Market Street, York Project, on one occasion, before the City of York Redevelopment Authority within one year of leaving employment with the City of York and Redevelopment Authority. 3. Menzer did not violate Section 1103(g) of the Ethics Act as to any actions by Menzer for Wagman Construction concerning the Historic Fairmont Project and the Susquehanna Commerce Center Project in that Menzer did not engage in representation of Wagman Construction as to those two projects before his former governmental bodies within one year of termination of service. 4. The Commission will take no further action on this case which is closed. BY THE COMMISSION, Louis W. Fryman, Chair