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JCIDA OKs plan to pull out of state pension system by April

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If all goes according to plan, the nine employees working for the Jefferson County Industrial Development Agency no longer will be enrolled in the state pension system by April 1, the agency’s board of directors decided Thursday. Board members decided to do so after waiting for months to learn whether the agency’s plan developed in 2012 to restructure its subagencies is OK with the state comptroller’s office.

But board members and agency officials say they’re tired of waiting for answers, and all agreed that opting out of the state pension program is the best plan. Under its approved plan, the board established an ad hoc committee to oversee the process of moving to a private pension plan, and decided to hire a law firm to get the work done by April 1. Officials said the private plan will include benefits similar to those that employees have received under the state plan. Once established, that plan would take effect retroactively for the nine employees to provide coverage starting Jan. 1., 2013.

The agency spent much of 2012 restructuring its subagencies to comply with a February ruling by the state comptroller that employees working for the nonprofit corporations technically did not work for JCIDA at the time. Administrative contracts with subagencies were terminated July 31 by the agency, and those now in the process of dissolving are the Jefferson County Job Development Corp., Jefferson County Agricultural Development Corp. and Carthage Industrial 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 now operates independently with two employees. Committees were established to subsume responsibilities of the JCJDC and JCADC.

The agency succeeded in its first order of business last summer by terminating administrative contracts that linked its employees to its LDCs, thus changing their status to JCIDA employees under state law. To do so, “home rule” legislation was passed by the state Legislature in June ensuring that all 12 employees — nine who worked for the nonprofit corporations and three who work for JCIDA — at the time would receive retroactive benefits through July 31, 2012.

But while the agency originally had decided to dissolve the Watertown Industrial Center subagency by terminating its contract, it changed its mind Thursday after learning about legal concerns related to JCIDA’s managing the business center, which would force it to assume environmental liability for the property. The agency, which took on landlord responsibilities on Aug. 1 that WIC previously managed, decided to reverse that decision and transfer the landlord responsibility back to WIC; to do so, the board of directors reinstated its former administrative contract in which the WICLDC is responsible for oversight of the business center. The three IDA employees who work for the business center, however, still will not technically have ties with the LDC because it’s legally regarded by the agency as an “IDA project,” said Donald C. Alexander, chief executive officer of the JCIDA.

In addition to the WICLDC, the agency still oversees two nonprofit LDCs under its revised structure: the Jefferson County Local Development Corp. and Jefferson County Civic Facility Development Corp.

Mr. Alexander said that by pulling out of the state retirement system in 2013, the agency will be better protected if the state comptroller’s office determines its structure is still unsound because of the LDCs with which it has connections. If the state still decides the structure doesn’t fall in line with requirements for IDAs, it then won’t be able to remove employees from the state pension system because they’d be enrolled in a private system, according to the plan approved Thursday. The only way the state would be able to retaliate would be to challenge the agency in court, he said, a scenario he called unlikely.

“We have a defendable position now, but the problem is we can’t get guidance from the state comptroller,” he said. “There’s an element of risk we’ll have by continuing our agreement with WIC, but that’s the object of moving out of the state system Jan. 1. We’ll be done with state pension concerns.”

JCIDA Secretary W. Edward Walldroff agreed that moving the agency’s employees to a private plan, which will guard it from requirements the state seeks to impose, makes the most sense. He pointed out that the Watertown Trust, which cut ties with the JCIDA this summer, enrolled its employees in a private plan that has been successful and has similar benefits.

“There was no loss for the Watertown Trust by moving the system to the private sector, and I don’t see any potential problems that would set us back,” he said.

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