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The Going Rate, Statutes of Limitations, and Spousal-Dealing
Friday, April 27th, 2012
Robert Wechsler
A few issues arise in the case of a Pennsylvania state senator who
reached a settlement this week with the state's ethics commission
that included a fine of $21,000, according to an
article in yesterday's Montgomery County Times Herald.
Pennsylvania state senators are paid for the rental of their district offices. This senator's wife (and then the senator himself after their divorce) owned 50% of the company that owned the building where he had his district office, until the company was sold in 2008.
At first blush, it might not seem a problem for an official to rent an office from himself, as long as he is paying the going rate. But what is the going rate? And might the space not have been rented at all if the official didn't rent it to himself? Since these questions are hard to answer, it is best that an official not rent to himself.
Would it be reasonable to seek an advisory opinion on such a rental? If it's that important to rent from oneself, that suggests one of two things: either that the market is so tight, there are no comparable spaces in the area; or the market is so bad, the official really needs the income. In either case, it might be acceptable if the official agrees to a rental rate substantially lower than the market rate.
The second issue involves the Pennsylvania statute of limitations. At five years, it appears to be very generous. But the ethics violation ended in 2008, and was not discovered, presumably, until 2011. That means that the first six years of the senator's ongoing violation are outside the ethics commission's jurisdiction. That makes no sense.
It also makes no sense to start a statute of limitations for an ethics violation with the date of commission. It should start with the date it was discovered by the ethics commission. When an official has special obligations, a statute of limitations should limit how long the ethics commission has to bring the case. It should not reward an official for successfully hiding a violation, or for using his office to intimidate others into not reporting his misconduct.
Third, the ethics commission fined the senator only for the time after he took over the interest in the building from his wife. It should make no difference which member of a couple has an ownership interest. Renting from one's spouse is no different from renting from oneself. The money still goes into the same household.
Robert Wechsler
Director of Research-Retired, City Ethics
203-859-1959
Pennsylvania state senators are paid for the rental of their district offices. This senator's wife (and then the senator himself after their divorce) owned 50% of the company that owned the building where he had his district office, until the company was sold in 2008.
At first blush, it might not seem a problem for an official to rent an office from himself, as long as he is paying the going rate. But what is the going rate? And might the space not have been rented at all if the official didn't rent it to himself? Since these questions are hard to answer, it is best that an official not rent to himself.
Would it be reasonable to seek an advisory opinion on such a rental? If it's that important to rent from oneself, that suggests one of two things: either that the market is so tight, there are no comparable spaces in the area; or the market is so bad, the official really needs the income. In either case, it might be acceptable if the official agrees to a rental rate substantially lower than the market rate.
The second issue involves the Pennsylvania statute of limitations. At five years, it appears to be very generous. But the ethics violation ended in 2008, and was not discovered, presumably, until 2011. That means that the first six years of the senator's ongoing violation are outside the ethics commission's jurisdiction. That makes no sense.
It also makes no sense to start a statute of limitations for an ethics violation with the date of commission. It should start with the date it was discovered by the ethics commission. When an official has special obligations, a statute of limitations should limit how long the ethics commission has to bring the case. It should not reward an official for successfully hiding a violation, or for using his office to intimidate others into not reporting his misconduct.
Third, the ethics commission fined the senator only for the time after he took over the interest in the building from his wife. It should make no difference which member of a couple has an ownership interest. Renting from one's spouse is no different from renting from oneself. The money still goes into the same household.
Robert Wechsler
Director of Research-Retired, City Ethics
203-859-1959
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