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Another question about IDA/LDC employees: who should pay their attorneys fees?

February 22, 2012

As I mentioned in a post last week, the Comptroller struck 12 LDC employees in Jefferson County from the state’s retirement system, even though the county IDA claims that they’re actually IDA employees entitled to state benefits. Many LDCs assert that they shouldn’t be governed by state’s contracting, procurement, and transparency rules because they’re just not-for-profits. Taking them at their word, even though they might be classified as local public authorities by the Authorities Budget Office, the Comptroller seems to believe that as not-for-profits, participation in the state retirement system is impermissible.

The LDC employees are appealing the Comptroller’s ruling, but that’s raised another question—whether the IDA can pay for their legal defense. The answer isn’t exactly clear, but as the Watertown Daily News commented, “the question seems to strike at the heart of the larger debate about for whom these employees actually work.” Former Assemblyman Richard Brodsky, who spearheaded public authorities reform legislation in 2005 and 2009, agreed with this view, stating that “the whole issue may rest on that distinction…. If they are IDA employees, this is not a big legal issue. If they’re not IDA employees, it’s a big deal.”

David Kidera, the director of the Authorities Budget Office, had a somewhat different response, explaining that just because an LDC has to file audit reports under the Public Authorities Law doesn’t mean that its employees are entitled to state retirement benefits. “An LDC is a local authority for purposes of complying with the various provisions of these two [public authority] reform acts,” he said, but “when you start extending it to other requirements of state law, I think you’re getting on less solid ground.”

More details about the local development corporations involved in this fight were provided in an article in today’s Watertown Daily News, which also discusses a 1989 letter from state pension officials that denied retirement benefits to an LDC employee.

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