Loading...
HomeMy WebLinkAbout06-001 CONFIDENTIALOPINION OF THE COMMISSION Before: Louis W. Fryman, Chair John J. Bolger, Vice Chair Donald M. McCurdy Paul M. Henry Raquel K. Bergen Nicholas A. Colafella DATE DECIDED: 2/23/06 DATE MAILED: 3/3/06 06 -001 Re: Conflict; Public Official; Commonwealth Agency A; C; Sale of Real Property Owned by C in Private Capacity; Business Relationship. This responds to your letter of February 2, 2006, by which you requested a confidential advisory from the State Ethics Commission. I. ISSUE: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. § 1101 et seq., presents any prohibition or restrictions upon a C of Commonwealth Agency A with regard to selling real estate to purchasers in a private transaction when the purchasers have applied to participate in a loan program administered by another Commonwealth agency and the C has no administrative authority over that loan program. II. FACTUAL BASIS FOR DETERMINATION: As Chief Counsel for Commonwealth Agency A, you seek a confidential advisory on behalf of B, C of Commonwealth Agency A. You have submitted facts that may be fairly summarized as follows. B is the owner of a certain tract of land and improvements thereon situate in Township D, County E, Pennsylvania consisting of [number] acres and having an address of [street address] (Property). The Property is a F with a G and [number] H's. On [date], B entered into an Agreement of Sale for the Property with I (Purchasers). You have submitted a copy of the Agreement of Sale, which is incorporated herein by reference. The Purchasers and B executed the Agreement of Sale providing B with a down payment to secure the title. Subsequent to signing the Agreement of Sale, the Purchasers applied for a loan from the Department of Community and Economic Confidential Opinion, 06 -001 March 3, 2006 Page 2 Development (DCED) J Loan Program. You state that the Agreement of Sale was not made contingent upon the Purchasers obtaining State funds or loans. You make the following points with respect to the sale of the Property. First, while B currently retains legal title until final closing of the transaction, equitable title to the property currently resides with the Purchasers. Second, DCED administers the J Loan Program on behalf of the Commonwealth Financing Authority (CFA), an independent state agency. Third, as C of Commonwealth Agency A, B has no powers or duties whatsoever with either DCED or CFA that might affect the review and /or approval of the loan for which the Purchasers have applied. Fourth, neither B nor staff of Commonwealth Agency A has the authority to participate in any way in DCED's review of the subject application. Fifth, neither B nor staff of Commonwealth Agency A has participated in any review of the subject application. Based upon the foregoing facts, you pose the following specific inquiries: 1. Whether the Ethics Act would present any prohibitions or restrictions upon B with respect to the sale of the Property to the Purchasers; and 2. Whether the Purchasers may apply for a loan under DCED's J Loan Program. By letter dated February 3, 2006, you were notified of the date, time and location of the executive meeting at which your request would be considered. III. 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, this 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. As C for Commonwealth Agency A, B is a public official as that term is defined in the Ethics Act, and hence B is subject to the provisions of that Act. Section 1103(a) of the Ethics Act provides: § 1103. Restricted activities (a) Conflict of interest. - -No public official or public employee shall engage in conduct that constitutes a conflict of interest. 65 Pa.C.S. § 1103(a). The following terms 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 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 Confidential Opinion, 06 -001 March 3, 2006 Page 3 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. In addition, Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /employee anything of monetary value and no public official /employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /employee would be influenced thereby. Reference is made to these provisions of the law not to imply that there has been or will be any transgression thereof but merely to provide a complete response to the question presented. Section 1103(j) of the Ethics Act provides as follows: § 1103. Restricted activities (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(j). In each instance of a conflict, Section 1103(j) requires the public official/ employee to abstain and to publicly disclose the abstention and reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. Confidential Opinion, 06 -001 March 3, 2006 Page 4 In the event that the required abstention results in the inability of the governmental body to take action because a majority is unattainable due to the abstention(s) from conflict under the Ethics Act, then voting is permissible provided the disclosure requirements noted above are followed. See, Pavlovic, Opinion 02 -005. In applying the above provisions of the Ethics Act to the instant matter, pursuant to Section 1103(a) of the Ethics Act, a public official /public employee is prohibited from using the authority of public office /employment or confidential information received by holding such a public position for the private pecuniary benefit of the public official/ public employee himself, any member of his immediate family, or a business with which he or a member of his immediate family is associated. In response to your first question, the Ethics Act would not present any prohibition or restrictions upon B with regard to selling the Property to the Purchasers in that B would be taking such action in a private capacity and not as a public official. However, in B's public capacity as C for Commonwealth Agency A, he would have a conflict of interest in participating in matters that would come before him that would financially impact the Purchasers or the F that he is selling. This conclusion is consistent with prior Commission rulings in which we have held that it is a conflict of interest under Section 1103(a) of the Ethics Act for a public official /public employee to use the authority of office or confidential information for the private pecuniary benefit of an individual(s) with whom he has an ongoing business relationship. See, Miller, Opinion 89 -024; Kannebecker, Opinion 92 -010. In any instance of a conflict of interest, B would be required to abstain from participating and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. Your second question which asks whether the Purchasers may apply for a loan under DCED's J Loan Program may not be addressed for the following two reasons. First, this Commission may only address the conduct of those individuals who have specifically given you their permission to submit your inquiry on their behalf. As to all others, you are considered a third party without legal standing. Second, the question posed is beyond the jurisdiction of this Commission. The propriety of the proposed conduct has only been addressed under the Ethics Act; the applicability of any other statute, code, ordinance, regulation or other code of conduct other than the Ethics Act has not been considered in that they do not involve an interpretation of the Ethics Act. Specifically not addressed herein is the Governor's Code of Conduct. Conclusion: A C for Commonwealth Agency A is a public official subject to the provisions of the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa.C.S. 1101 et seq. The Ethics Act would not present any prohibition or restrictions upon the C with regard to selling real estate to purchasers in a private transaction in that the C would be taking such action in a private capacity and not as a public official /public employee. However, in the C's public capacity, he would have a conflict of interest in participating in matters that would come before him that would financially impact the purchasers with whom he has an ongoing business relationship or the F that he is selling. In any instance of a conflict of interest, the C would be required to abstain from participating and to fully satisfy the disclosure requirements of Section 1103(j) of the Ethics Act. The propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(10), the person who acts in good faith on this Opinion issued to him shall not be subject to criminal or civil penalties for so acting provided the material facts are as stated in the request. This letter is a public record and will be made available as such. Confidential Opinion, 06 -001 March 3, 2006 Page 5 Finally, a party may request the Commission to reconsider its Opinion. The reconsideration request must be received at this Commission within thirty days of the mailing date of this Opinion. The party requesting reconsideration must include a detailed explanation of the reasons as to why reconsideration should be granted in conformity with 51 Pa. Code § 21.29(b). By the Commission, Louis W. Fryman Chair