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JCIDA to consider removing employees from state pension program

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The Jefferson County Industrial Development Agency’s board of directors will consider pulling out of the state pension program to enroll in a private plan today.

Agency leaders say doing so is a proactive move that will take the agency’s nine employees out of limbo because the state comptroller’s office hasn’t told the agency if it will be eligible for the state system again. Comptroller’s staff members ruled Aug. 1 that retirement benefits were improperly provided for employees of several local development corporations under the JCIDA’s umbrella.

In February, state Comptroller Thomas P. DiNapoli revoked pension benefits for those employees because he ruled they did not work directly for the IDA but for the nonprofit LDCs. In June, the state Legislature’s passage of home-rule legislation ensured the employees who worked for the JCIDA and LDCs received retroactive benefits to July 31, 2011.

To secure those benefits, the agency terminated administration agreements with four of its LDCs to comply with state requirements by July 31. The LDCs now in the process of dissolving are the Jefferson County Job Development Corp., Jefferson County Agricultural Development Corp., Carthage Industrial Development Corp. and Watertown Industrial Center Development Corp. The Watertown Local Development Corp., or Watertown Trust, was an IDA subagency that enrolled in a private pension system to comply with the plan and it now operates independently. The LDCs’ work has been transferred to JCIDA committees.

But there’s still uncertainty, said JCIDA CEO Donald C. Alexander, about whether the state will approve the agency’s revised structure. That’s because the agency still has two local development corporations under its wing it doesn’t plan to dissolve: the Jefferson County Civic Facility Development Corp. and Jefferson County Local Development Corp.

Called blended component LDCs, those agencies are used by the IDA to secure bonds and loans for projects it otherwise wouldn’t have the authority to do as an IDA. The CFDC, for example, recently approved a bonding agreement for more than $28.5 million needed for Samaritan Medical Center to start Samaritan Summit Village, a 288-bed long-term care center that will open on Route 11 in Watertown this year.

Mr. Alexander said the lack of clarity offered by the state comptroller’s office ultimately spurred the agency to consider enrolling in a private pension program. The agency’s law firm that led the restructuring process, Harris Beach of Rochester, sent a comprehensive document to the state comptroller’s office in November detailing how the subagencies are being dissolved. The document requested a formal opinion to ensure the agency’s retooled structure is compliant with state regulations, but it still hasn’t received a response.

“We can’t afford to have this hanging over our heads and jeopardizing the people working here,” Mr. Alexander said Wednesday. “I’m not comfortable with this. Even though we’ve taken steps to dissolve the individual LDCs, I’m still not sure if this same logic doesn’t apply to our other LDCs until I get some sort of reaction from the state comptroller. I don’t know what’s so difficult for him to advise us about our course of action. All we want to know is if it’s aligned to what he would like to see happen.”

At today’s meeting, Mr. Alexander said, the board will evaluate the merits of leaving the state’s pension system and vote on the plan.

David J. Converse, the JCIDA board of directors chairman, said the board is expected to approve the plan to enroll the agency’s staff in a private pension plan. If the board approves the plan, the agency’s nine employees will likely still receive pension benefits from the state from Aug. 1 through Dec. 31, which the state comptroller’s office has tentatively agreed to do. After the agency signs up for a private pension plan — a process that will take about six months to finish — its employees would then be eligible receive retroactive benefits that take effect Jan. 1, 2013.

Mr. Converse said most of the IDAs in the state are now enrolled in private retirement systems for their employees.

“The intent of this is a practical one,” he said of the plan. “We want to make 100 percent sure that our employees are kept in a pension system, and if we move forward in this direction, we will make sure employees are taken care of with whatever plan is implemented.”

The move would also make the agency more autonomous, restricting the state’s authority to use the state pension system as leverage as it did with the state comptroller’s ruling.

“The state definitely has leverage over us right now,” Mr. Converse said, “and this will benefit the agency and fall in line with what other agencies in the state are doing. The money we used to resolve this issue would have been better spent on projects, but we had to move in the direction we did to protect the agency’s employees. There is frustration with the state because we want some clear direction on what we’re doing.”

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