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HomeMy WebLinkAbout06-582 LawrukAlan R. Krier, Esquire Jubelirer, Carothers, Krier & Halpern Park View Center 10 Sheraton Drive P.O. Box 2024 Altoona, PA 16603 Dear Mr. Krier: ADVICE OF COUNSEL September 1, 2006 06 -582 This responds to your letters of July 27, 2006 and August 2, 2006, by which you requested advice from the State Ethics Commission. Issue: Whether the Public Official and Employee Ethics Act ( "Ethics Act "), 65 Pa. .S. § 1101 et seq., presents any prohibition or restrictions upon an Authority from entering into a lease for office space with a limited liability corporation that has three members, one of which is another limited liability corporation owned by two sons of the chairman of the Authority. Facts: As Solicitor for the Altoona City Authority ( "Authority "), you seek an advisory on behalf of Maurice A. Lawruk ( "Lawruk "), who is the Chairman of the Authority. The Authority wishes to obtain 12,000 square feet of office space in the City of Altoona because it has outgrown its existing office space. The only available space that meets the Authority's needs is located in the Butterick building, which is owned by HLD Beale Avenue, LLC ("HLD Beale Avenue "). There are three equal members of HLD Beale Avenue, one of which is Lawruk Properties, LLC ( "Lawruk Properties "). Lawruk Properties is owned by Lawruk's sons, Daniel R. Lawruk and Maurice D. Lawruk. You seek guidance as to whether it would be permissible under the Ethics Act for the Authority, with approval of the Authority Board and with Lawruk abstaining from the vote, to enter into a lease with HLD Beale Avenue for the office space in the Butterick building. 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 Krier, 06 -582 September 1, 2006 Page 2 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 Chairman of the Authority, Lawruk is a public official as that term is defined in the Ethics Act, and hence he 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. (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 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 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 Krier, 06 -582 September 1, 2006 Page 3 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. "Immediate family." A parent, spouse, child, brother or sister. "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. 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. Subject to certain voting conflict exceptions, Section 1103(j) of the Ethics Act requires a public official /public employee with a conflict of interest to abstain and to publicly disclose the abstention and the reasons for same, both orally and by filing a written memorandum to that effect with the person recording the minutes or supervisor. Sections 1103(b) and 1103(c) of the Ethics Act provide in part that no person shall offer to a public official /public employee anything of monetary value and no public official /public employee shall solicit or accept anything of monetary value based upon the understanding that the vote, official action, or judgment of the public official /public 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(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 Krier, 06 -582 September 1, 2006 Page 4 65 Pa.C.S. § 1103(f). 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. The Ethics Act defines the term "contract" as follows: § 1102. Definitions "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 matters in consideration of his current public employment with the Commonwealth or a political subdivision. 65 Pa.C.S. § 1102. 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. Pursuant to Section 1103(f), an "open and public process" includes: (1) prior public notice of the employment or contracting possibility; (2) sufficient time for a reasonable and prudent competitor /applicant to be able to prepare and present an application or proposal; (3) public disclosure of all applications or proposals considered; and (4) public disclosure of the contract awarded and offered and accepted. Section 1103(f) of the Ethics Act also requires that the public official /employee may not have any supervisory or overall responsibility as to the implementation or administration of the contract with the governmental body. Having established the above general principles, your specific inquiry shall be addressed. As to whether it would be permissible under the Ethics Act for the Authority, with approval of the Authority Board and with Lawruk abstaining from the vote, to enter into a lease with HLD Beale Avenue for the office space in the Butterick building, you are advised that your inquiry cannot be addressed within the statutory parameters of the Krier, 06 -582 September 1, 2006 Page 5 Ethics Act, Sections 1107(10), (11), because the inquiry relates to the conduct of a governmental body, over with the Commission has no jurisdiction. The Ethics Act regulates the conduct of public officials /public employees. As to Lawruk, you are advised as follows. Lawruk's sons are members of his "immediate family" as that term is defined in the Ethics Act. Lawruk Properties, which is owned by Lawruk's sons, would be considered a business with which they are associated. In addition, HLD Beale Avenue, a limited liability corporation of which Lawruk Properties is a member, would be considered a business with which Lawruk's sons are associated. As a general rule, pursuant to Section 1103(a) of the Ethics Act, Lawruk, as Chairman of the Authority, would have a conflict of interest as to matters before the Authority that would financially benefit himself, a member of his immediate family, or a business with which he or a member of his immediate family is associated. Lawruk would specifically have a conflict as to business dealings between the Authority and HLD Beale Avenue. In each instance of a conflict, Lawruk would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Section 1103(f) of the Ethics Act applies to the proposed lease between HLD Beale Avenue and the Authority. The business with which Lawruk's sons are associated seeks to contract with the Authority. Lawruk is the Chairman of the Authority. It is administratively noted that the contract would be over $500. Accordingly, any lease that the Authority would enter into with HLD Beale Avenue would be subject to the open and public process restrictions of Section 1103(f). 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 applicability of the Municipality Authorities Act. Conclusion: As Chairman of the Altoona City Authority ( "Authority "), Lawruk 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. Lawruk Properties, LLC ( "Lawruck Properties"), which is owned by Lawruk's sons, would be considered a business with which Lawrucks' sons are associated. In addition, HLD Beale Avenue, LLC ( "HLD Beale Avenue "), a limited liability corporation of which Lawruk Properties is a member, would be considered a business with which Lawruk's sons are associated. Pursuant to Section 1103(a) of the Ethics Act, Lawruk, as Chairman of the Authority, would have a conflict of interest as to business dealings between the Authority and HLD Beale Avenue. In each instance of a conflict, Lawruk would be required to abstain and to observe the disclosure requirements of Section 1103(j) of the Ethics Act. Any lease that the Authority would enter into with HLD Beale Avenue, if over $500, would be subject to the open and public process restrictions of Section 1103(f). The question of whether it would be permissible under the Ethics Act for the Authority, with approval of the Authority Board and with Lawruk abstaining from the vote, to enter into a lease with HLD Beale Avenue for the office space in the Butterick building cannot be addressed within the statutory parameters of the Ethics Act, Sections 1107(10), (11), because the inquiry relates to the conduct of a governmental body rather than the conduct of a public official /public employee. Lastly, the propriety of the proposed conduct has only been addressed under the Ethics Act. Pursuant to Section 1107(11), an Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civil or criminal proceeding, provided the requester has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. Krier, 06 -582 September 1, 2006 Page 6 This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may appeal the Advice to the full Commission. A personal appearance before the Commission will be scheduled and a formal Opinion will be issued by the Commission. Any such appeal must be in writing and must be actually received at the Commission within thirty (30) days of the date of this Advice pursuant to 51 Pa. Code § 13.2(h). The appeal may be received at the Commission by hand delivery, United States mail, delivery service, or by FAX transmission (717 - 787 - 0806). Failure to file such an appeal at the Commission within thirty (30) days may result in the dismissal of the appeal. Sincerely, Vincent J. Dopko Chief Counsel