McNees Wallace & Nurick LLC has launched a new public relations agency to provide strategic communications services to its clients and the regional business community.

Apollo Communications is headquartered in Harrisburg and will serve clients across Pennsylvania, Ohio and Maryland. McNees has selected veteran public relations professional and former journalist Brett Marcy to serve as president of Apollo Communications.

The company is just the latest initiative by McNees to provide enhanced value to clients and the community, said McNees Chair Brian Jackson. In recent years, the firm has added full-service government affairs, grassroots advocacy and nonprofit consulting to its professional services portfolio. Continue Reading McNees Launches Apollo Communications

The author thanks the assistance of Matthew Hoke in writing this post.  Matt was a law clerk with McNees in 2020, and is expected to graduate from the University of Virginia law school in May of 2021. 

The Pennsylvania Public Official and Employee Ethics Act (Act) has been in effect since 1979 and must be carefully followed by state and local officials and employees. The Act is enforced by the State Ethics Commission (Commission), which is comprised of seven appointed commissioners assisted by a staff of investigators and prosecutors.

Among other things, the Act prohibits public officials and employees from engaging in conduct that constitutes a conflict of interest. Section 1102 of the Act defines “conflict of interest” as:

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.

Public officials and employees who violate the Act may face administrative penalties, fines, and criminal prosecution. Under Section 1107(13) of the Act, the Commission is authorized to order violators to pay restitution plus interest. However, in its recent opinion in Sivick v. State Ethics Commission, the Pennsylvania Supreme Court significantly curtailed the Commission’s ability to impose restitution.

From 2004 to 2017, John Sivick was Chairman of the Board of Supervisors for Lehman Township, Pike County. During this time, Sivick also served as Roadmaster and Public Works Director and was responsible for hiring the Township’s employees. In 2009, a fellow supervisor decided to update the Township’s employee handbook to include a nepotism policy. Sivick voted for this policy change. But in 2012, he told his fellow supervisors that he wanted the Township to hire his son. After Sivick’s lobbying, the other two supervisors agreed to remove the nepotism policy. Sivick’s son was then hired by the Township in the position of Public Works Maintenance.

Sivick’s conduct was reported to the Commission. The Commission determined that Sivick had engaged in a conflict of interest by “using the authority of his public positions for the private pecuniary benefit of his son.” Specifically, the Commission found that Sivick illegally used his authority:

[1] when he participated in discussions and actions of the Board to eliminate the Township’s Nepotism Policy with the intent and for the purpose of having Son hired as a Township road crew employee; [2] when he discussed, recommended, lobbied, influenced, or sought the support of the Board to effectuate the hiring of Son as a Township employee; and [3] when he verified Township records enabling and/or otherwise directing the payment of salary/wage to Son from public monies.

The Commission ordered Sivick to pay $30,000 in restitution. Sivick appealed to the Commonwealth Court, which affirmed the Commission’s adjudication. Sivick then appealed to the Pennsylvania Supreme Court, which granted allowance of appeal on two issues:

  • First, did the Commission err in finding that Sivick committed a conflict of interest by approving and verifying his son’s payroll records?
  • Second, did the Commission have the authority to impose restitution on Sivick?

On the first issue, the Court held that the Commission had improperly found a conflict of interest. A public officer or employee performing an administrative or ministerial act that entails little or no discretion but “that benefits a subclass that includes an immediate family member does not, without more, constitute a conflict of interest violation.” Sivick verified the hours and approved the compensation for all Public Works employees, not just for his son. Under the subclass exception, the Supreme Court found there was no conflict of interest.

On the second issue, the Court found that the Commission did not have the authority under the Act to require Sivick to pay restitution. Specifically, the Court concluded that the plain language of the Act does not allow the Commission to impose restitution on a violator for an alleged monetary benefit that flows to an immediate family member. The Commission can only impose restitution on a public official or public employee who personally benefitted from violating the statute.

The Supreme Court admitted that this interpretation creates a risk of inconsistent application: a public employee or official can be required to pay restitution for illegally obtained personal financial gain but not for financial gain illegally obtained for his immediate relatives. The Court maintained that it was not its job to re-write the words of the Act. The General Assembly decided to not apply the restitution provision to close relatives. And, importantly for the Court, the General Assembly may have rationally concluded that restitution was not warranted when a family member reaps the financial benefit of the conflict of interest. In any case, the Court observed that “the Commission has other arrows in its quiver for sanctioning and deterring Conflicts of Interest.”

Finally, while the Court found that Sivick did not violate the Act when he verified the hours and approved the compensation for his son, it did not address the other actions that the Commission found to be a conflict of interest. The Supreme Court remanded the case to the Commission to determine the appropriate sanction and whether a new adjudication was warranted.

For public employees and officials, Sivick confirms that completing an administrative act for a subclass that includes a close relative who benefits from that act does not constitute a conflict of interest. More importantly, however, the Commission cannot require a public official or employee to pay restitution where the alleged financial benefit accrues to a close relative and not the public official himself. Of course, as the Court remarked, the Commission still has several other “arrows in its quiver” to sanction and deter conflicts of interest, so compliance remains top of mind.

A municipality or school district that is issuing debt (referred to herein as an “issuer”) needs to employ legal counsel to assist it with the debt issuance process. There are several legal roles in a bond issuance, two of which involve representing the issuer.  To begin with, the issuer already has its regular solicitor who serves as the issuer’s general counsel on a wide range of legal issues, such as labor matters, bidding and contracts, land development, and litigation.  When an issuer decides to issue debt to finance or refinance a capital project, it should also retain a special counsel, known as bond counsel, to assist both the issuer and its solicitor with the debt issuance process.  Bond counsel firms specialize in the legal aspects of debt issuance, including tax law, securities law, and state statutory law. Continue Reading The Relationship of Bond Counsel and Solicitor in a Bond Issue

On May 26, 2020 Representative Rob Freeman (Democrat – Northampton County) introduced House Bill 2548 in the Pennsylvania General Assembly, to provide a temporary reprieve to municipalities enrolled in Pennsylvania’s Municipal Financial Recovery Program. Mr. Freeman is the minority chair of the House Local Government Committee, the committee to which the bill was referred for consideration. Continue Reading COVID-19 Related Extension Proposed for Pennsylvania Municipal Financial Recovery Program

Attending public meetings is a big part of any municipal law practitioner’s routine, and, if I’m being honest, one of my favorite parts of my job. Before the COVID-19 pandemic, members of my group, myself included, frequently attended County, township and borough meetings. While I understand that a township board of supervisors meeting might not be everyone’s idea of a fun Thursday night, I like watching government at work. In today’s world, how many spaces exist where citizens can engage directly with their elected officials? Continue Reading Public Meetings in Pajama Pants

By now, public sector employers have navigated the first two weeks of employee eligibility for paid leave under the Families First Coronavirus Response Act (“FFCRA”).  At the same time, public employers have tried to digest the CARES Act and whether its provisions provide any economic relief.  Together, the two laws tell a single story – public sector employers have the same obligations as private sector employers but not the same level of financial support.  You are generally on your own to figure out how to manage and pay for your workforce during these unprecedented times.  Some aspects of the laws, however, can provide relief valves, provided the appropriate decisions are made and implemented. Continue Reading The Consolidated Impact of the FFCRA and CARES Act on Public Sector Employers: You’re on Your Own (for the most part)

With the onslaught of negative economic news related to the ongoing coronavirus crisis, many municipalities are scrambling to determine the impact of the pandemic on, among other things, their finances. Many may be staring down unbudgeted expenses related to this public health emergency, while at the same time anticipating substantial deficits due to drop-offs in real estate and income tax collections. Continue Reading Tax Anticipation Notes: A Short-Term Cure for the Coronavirus Budget Deficit?

COVID-19 has rightfully dominated the news over the last several weeks, leaving municipalities, nonprofit organizations and businesses scrambling to determine the impact of this pandemic on, among other things, their finances. Many organizations have contacted their lenders in the past two weeks to seek out short-term deferrals of their payment obligations on loans. But what are the tax implications of such deferrals when an organization has a tax-exempt loan? Continue Reading Considering a Temporary Deferral on a Tax-Exempt Obligation? Don’t Forget About the Reissuance Rules

On March 30, 2020, President Donald Trump declared that a major disaster exists in the Commonwealth of Pennsylvania (the “Commonwealth”) and ordered Federal assistance to supplement Commonwealth and local recovery efforts in the areas affected by the Coronavirus Disease 2019 (“COVID-19”) pandemic beginning on January 20, 2020, and continuing.  This declaration follows Governor Tom Wolf’s request on Sunday for a major disaster declaration from the President.

Under the major disaster declaration, state, county and municipal governments, as well as eligible private non-profits, can receive reimbursement for up to 75 percent of eligible expenses related to the response to the COVID-19 outbreak. Eligible expenses can include but are not limited to costs associated with paying overtime, or materials and equipment purchases. The declaration also provides direct federal assistance, which provides federal materials and supplies to support state and local response efforts.

In the coming weeks, staff from the Pennsylvania Emergency Management Agency will reach out to potential applicants to review the application process and necessary documentation. As the response period for the COVID-19 outbreak is continuing, the process will take weeks. All reimbursements will be handled electronically.

Governor Wolf said his request for other federal aid remains under consideration.

In determining if the declaration was warranted, the President considered state fiscal capacity and resources availability, uninsured home and personal property losses, disaster impacted population profile, impact to community infrastructure, casualties and disaster-related unemployment.

According to the President’s announcement, additional designations may be made at a later date if requested by the Commonwealth and warranted by the results of further assessments.

We will continue to monitor developments related to COVID-19 and the President’s declaration.  For any questions regarding the declaration, please contact a member of the McNees Public Finance & Government Services Group.

Collectively, Pennsylvania has more than 2,500 counties, townships, boroughs and cities, each of which is required to comply with Pennsylvania’s Sunshine Act (the “Act”).  The Act requires agencies to deliberate and take official action on agency business in an open and public meeting.  An “agency” is any state or local government body and all sub-units appointed by that body that perform an essential government function and exercises authority to take official action or render advice. It can include boards, councils, authorities, commissions and committees.

With calls to stay home and avoid gathering in public as a result of COVID-19, Pennsylvania’s agencies are left wondering how they can continue to safely serve their constituencies while still complying with the public meeting requirements contained in the Act. This is not an issue unique to Pennsylvania and, in fact, states nation-wide have taken various measurers to address and alter requirements contained in their respective open meeting laws.  For example, governors in Texas, Illinois, Louisiana, Massachusetts, Rhode Island, Michigan, Florida and Nebraska have all recently issued executive orders and proclamations that permit public bodies to meet virtually amid the spread of COVID-19.

In Pennsylvania, the Office of Open Records has issued guidance (the “Guidance”) to agencies on best practices for compliance with the Act in light of COVID-19.  According to this Guidance, public meetings should generally be held at public buildings with open public participation.  However, if an official emergency declaration prevents that from happening, a meeting via teleconference, webinar, or other electronic method that allows for two-way communication is permissible in most circumstances.  According to the Office of Open Records, any agency taking that step must provide a reasonably accessible method for the public to participate and comment pursuant to Section 710.1 of the Act. Further, the Office of Open Records strongly recommends that any agency holding such a meeting should record the meeting and proactively make the recording available (preferably online) so that a full and complete record of the meeting is available to the public.

In arriving at its conclusion, the Office of Open Records is relying on 35 Pa.C.S. § 7501(d), which allows agencies under a “declaration of disaster emergency” to suspend the need to comply with certain “formal requirements.” In context, any such suspensions must be related to the emergency.

In addition to the Act, Pennsylvania municipalities are subject to general governance laws, e.g., the Borough Code, the First Class Township Code, etc., that limit the ability of municipalities to take official actions at remotely-held public meetings. To provide additional clarity to municipalities on their ability to take official action at such meetings, the Pennsylvania General Assembly is considering a proposal, House Bill 1564, which would allow municipalities to hold meetings remotely when the Governor has made a declaration of disaster or emergency.  Among other things, HB 1564 includes the following requirements:

  • All members of the municipal governing body must be able to speak to and hear the comments and votes.
  • To the extent possible, the municipality must allow for public participation.
  • The municipality must post notice of the meeting on its publicly accessible Internet website and, except where emergency circumstances dictate otherwise, via a newspaper of general circulation.
  • The meeting must be livestreamed, recorded, or at a minimum, the draft minutes be made available within 48 hours of the meeting’s conclusion.

HB 1564 received third consideration and final passage (on a unanimous vote) by the House of Representatives on March 25, 2020.  The bill has not yet been acted on by the Senate.

For any questions regarding the guidance issued by the Office of Open Records or HB 1564, please contact a member of the McNees Public Finance & Government Services Group or a member of the McNees Real Estate Group.