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HomeMy WebLinkAbout26-520 Bozovich 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 304 HARRISBURG, PA 17120-0400 ADVICE OF COUNSEL April 3, 2026 To the Requester: Heather L. Bozovich, Esquire 26-520 Dear Ms. Bozovich: This responds to your letter dated March 5, 2026, received March 16, 2026, by which you requested an advisory from the Pennsylvania State Ethics Commission (“Commission”), seeking guidance as to the general issue presented below: Issue: Whether Section 1103(a) of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1103(a), pertaining to conflict of interest, would prohibit an individual serving as a Member of the Clearfield County Recreation and Tourism Authority (“Authority”) Board of Directors (“Board”), who in his private capacity is the owner of a contracting business and a winery, restaurant and venue location, from: (1) providing contracting services to an individual or organization that needssuch services as a result of being approved to receive a grant from the Authority; (2) providing contracting services to the Authority itself; or (3) being awarded a grant from the Authority on behalf of any of his businesses. Brief Answer: NO. Because Section 1103(a) of the Ethics Act imposes restrictions upon the individual in his public capacity as a Member of the Authority Board rather than upon him in his private capacity, Section 1103(a) would not prohibit the individual, as a business owner, from: (1) providing contracting services to an individual or organization that needs such services as a result of being approved to receive a grant from the Authority; (2) providing contracting services to the Authority itself; or (3) being awarded a grant from the Authority on behalf of any of his businesses. However, in his capacity as a Member of the Authority Board, the individual generally would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in discussions, votes, or other Bozovich, 26-520 April 3, 2026 Page 2 actions of the Authority Board pertaining to the award of grants to his businesses or other matters that would financially impact him or his businesses. Facts: You have been authorized by Joshua J. Berndt (“Mr. Berndt”) to request an advisory from the Commission on his behalf. You have submitted facts that may be fairly summarized as follows. Mr. Berndt is a Member of the Authority Board. The Authority was established by Clearfield County pursuant to the Municipality Authorities Act, 53 Pa.C.S. § 5601 et seq. The Clearfield County Board of Commissioners appoints the Members of the Authority Board. The Authority is a tourism promotion agency. The Authority receives hotel tax funds on behalf of Clearfield County to promote regional travel, which is accomplished in large part by awarding various grants to individuals and organizations for tourism promotion, tourism attractions, sponsorships, and recreational projects. A grant committee reviews applications for these grants and makes recommendations on their approval to the Authority Board, which ultimately votes on whether to approve the grant applications. An applicant might need to use contracting services as a result of being awarded a grant from the Authority. Grant applications do not require a signed contract or specific quote from a contractor for contracting services that might be needed by the applicant if it would be awarded a grant. In his private capacity, Mr. Berndt is the owner of a contracting business named “R&B Contracting” (“the Firm”). Mr. Berndt is also the owner of a winery, restaurant and venue location commonly known as “the Eureka.” Based upon the above submitted facts, you pose the following questions: (1) Whether Mr. Berndt, through the Firm, would be permitted to provide contracting services to an individual or organization that needs such services as a result of being approved to receive a grant from the Authority; (2) Whether Mr. Berndt would be permitted to submit a bid to the Authority on behalf of the Firm in response to an Authority request for public bids for contracting services, and if so, whether Mr. Berndt would be permitted to be awarded a contract with the Authority if he would be the lowest responsible bidder; and (3) Whether Mr. Berndt would be permitted to be awarded a grant from the Authority for any of his businesses if he would abstain from the Authority Board’s vote on the approval of his grant application, and if so, whether Mr. Berndt would be required to abstain from Authority Board votes on other grant applications within the same category as his grant application if only a certain amount of money would be available for grants within that category. Bozovich, 26-520 April 3, 2026 Page 3 Discussion: It is initially noted that pursuant to Sections 1107(10) and 1107(11) of the Ethics Act, 65 Pa.C.S. §§ 1107(10), (11), advisories are issued to the requester based upon the facts that the requester has submitted. In issuing the advisory based upon the facts that the requester has submitted, the Commission does not engage in an independent investigation of the facts, nor does it speculate as to facts that have not been submitted. It is the burden of the requester to truthfully disclose all 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 requester has truthfully disclosed all of the 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), (j). The following terms related to Section 1103(a) are defined in the Ethics Act as follows: § 1102. Definitions Bozovich, 26-520 April 3, 2026 Page 4 “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 ora subclass consisting of an industry, occupation or other group which includes the public official or public employee, a member of his immediate family or a business with which he or a member of his immediate family is associated. “Authority of office or employment.” The actual power provided by law, the exercise of which is necessary to the performance of duties and responsibilities unique to a particular public office or position of public employment. “Business.” Any corporation, partnership, sole proprietorship, firm, enterprise, franchise, association, organization, self-employed individual, holding company, joint stock company, receivership, trust or any legal entity organized for profit. “Business with which he is associated.”Any business in which the person or a member of the person's immediate family is a director, officer, owner, employee or has a financial interest. 65 Pa.C.S. § 1102. Subject to the statutory exclusions to the Ethics Act’s definition of the term “conflict” or “conflict of interest,” 65 Pa.C.S. § 1102, a public official/public employee is prohibited from using the authority of public office or confidential information received by holding such a public position for the private pecuniary (financial) benefit of the public official/public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. The use of authority of office is not limited merely to voting but extends to any use of authority of office including, but not limited to, discussing, conferring with others, and lobbying for a particular result. Juliante, Order 809. In each instance of a conflict of interest, a public official/public employee would be required to abstain from participation, which would include voting unless one of the statutory exceptions of Section 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: Bozovich, 26-520 April 3, 2026 Page 5 § 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 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 $500.00 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 Bozovich, 26-520 April 3, 2026 Page 6 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 Member of the Authority Board, Mr. Berndt is a public official subject to the provisions of the Ethics Act. The Firm and Mr. Berndt’s winery, restaurant and venue location known as “Eureka” are businesses with which Mr. Berndt is associated in his capacity as the owner of the businesses. Pursuant to Section 1103(a) of the Ethics Act, Mr. Berndt generally would have a conflict of interest in matters before the Authority Board that would financially impact him or his businesses. Because Section 1103(a) of the Ethics Act imposes restrictions upon Mr. Berndt in his capacity as a Member of the Authority Board rather than upon him in his private capacity as a business owner, Section 1103(a) would not prohibit Mr. Berndt: (1) from providing contracting services through the Firm to an individual or organization that needs such services as a result of being approved to receive a grant from the Authority; (2) submitting a bid on behalf of the Firm in response to an Authority request for public bids for contracting services and being awarded a contract with the Authority if he would be the lowest responsible bidder; or (3) being awarded a grant from the Authority for any of his businesses if he would abstain from the Authority Board’s vote on the approval of his grant application. However, Mr. Berndt would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in discussions, votes, or other actions of the Authority Board on bids or grant applications that he would submit to the Authority on behalf of himself or any of his businesses. If Mr. Berndt would apply for a grant from a category that has only a certain amount of money available for grants, Mr. Berndt would have a conflict of interest under Section 1103(a) of the Ethics Act with regard to participating in discussions, votes, or other actions of the Authority Board on other applications for grants from that category. In each instance of a conflict of interest, Mr. Berndt 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. The restrictions and requirements of Section 1103(f) of the Ethics Act would have to be observed as to any contract between Mr. Berndt/the Firm and the Authority that would be valued at $500 or more. It is noted that a problem could exist under the Municipality Authorities Act as to contracting between Mr. Berndt/the Firm and the Authority. The Municipality Authorities Act provides, in pertinent part: § 5614. Competition in award of contracts Bozovich, 26-520 April 3, 2026 Page 7 (e) Conflict of interest. —No member of the authority or officer or employee of the authority may directly or indirectly be a party to or be interested in any contract or agreement with the authority if the contract or agreement establishes liability against or indebtedness of the authority. Any contract or agreement made in violation of this subsection is void, and no action may be maintained on the agreement against the authority. 53 Pa.C.S. § 5614(e). Because this Advice may not interpret the above quoted provision of the Municipality Authorities Act, it is suggested that Mr. Berndt seek legal advice in that regard. 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 theAdvice 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 scheduledand a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717-787-0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Respectfully, Bridget K. Guilfoyle Chief Counsel