IDA & LDC employees

As reported by the Watertown Daily Times, the Comptroller sent a letter out last week explaining that joint IDA-LDC employees aren’t eligible for the state’s pension benefits. This came as an unwelcome surprise to 12 employees who work for the Jefferson County IDA and related local development corporations, who’ve lost years of pension credits due to the decision.

The Comptroller first raised questions about using the IDA as a conduit to provide state benefits to LDC employees in 2009.

Then, in 2011, the Comptroller released an opinion concluding that IDAs don’t have the authority to hire employees and then assign them to serve as LDC staff. As the opinion explained:

[The IDA Act] does not provide IDAs with express authority to assign IDA employees to serve as the staff of another entity. In fact, IDAs’ express authority to use municipal employees (General Municipal Law § 858 [6]) lends support for reading article 18-A as not authorizing any other personnel sharing…, such as the use of IDA employees by a development corporation.

The opinion also rejected the contention that IDAs have implied authority to assign staff to work at LDCs, because IDAs’ implied powers only extend so far as necessary to carry out their own purposes, and “while an IDA and a development corporation may have common purposes, they are separate corporate entities…, the operations and activities of which are separate and distinct.” Additionally, the opinion noted that IDAs were created primarily to provide financial assistance to development projects, and “providing IDA personnel to staff a development corporation… is not a ‘project,’ and not even necessarily related to any particular ‘project.’”

While it’s convenient to draw a line between IDA and LDC employees, the distinction isn’t always so clear, especially when LDCs have basically the same purposes as IDAs. The problem is closely related to the whole issue of trying to figure out when LDCs qualify as local public authorities, and when they’re just private nonprofit corporations.