Opinion 90-7

This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

INDUSTRIAL DEVELOPMENT AGENCIES -- Employees (defense and indemnification by municipality)
PUBLIC OFFICERS AND EMPLOYEES -- Legal Expenses (defense and indemnification by municipality of employees of industrial development agency)

GENERAL MUNICIPAL LAW, §856; PUBLIC OFFICERS LAW, §18: A city may defend and indemnify the members and employees of an industrial development agency established for the benefit of the city.

You ask whether, pursuant to Public Officers Law, §18, a city may indemnify the members of an industrial development agency (IDA) established for the benefit of the city. Section 18 generally authorizes certain "public entities", including cities, to defend and indemnify public officers and employees in any civil action arising out of an act or omission which occurred while the officer or employee was acting within the scope of his or her responsibilities.

Subdivision 2(b) of section 18 of the Public Officers Law provides as follows:

2. The provisions of this section shall apply to any public entity:

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(b) where the governing body of a municipality, for whose benefit the public entity has been established, has agreed by the adoption of local law or resolution (i) to confer the benefits of this section upon the employees of such public entity, and (ii) to be held liable for the costs incurred under these provisions.

The term "public entity" is defined broadly in subdivision 1(a) of section 18 to include "... (iv) a public authority, commission, agency or public benefit corporation, or (v) any other separate corporate instrumentality or unit of government...".

The IDA in question was established in 1976 (L 1976, ch 783; General Municipal Law, §903-e) to have the powers and duties, and to be subject to the provisions, of title one of article 18-A of the General Municipal Law (§§850-888). General Municipal Law, §856(2) provides that an industrial development agency "shall be a corporate governmental agency, constituting a public benefit corporation." It is clear, therefore, that the IDA is a "public entity" within the meaning of Public Officers Law, §18. Further, the IDA was expressly established "[f]or the benefit of the city ... and the inhabitants thereof ..." (General Municipal Law, §903-e). It is our opinion, therefore, that the city, pursuant to Public Officers Law, §18(2)(b), may adopt a local law or resolution under which the city confers the defense and indemnification benefits of section 18 upon the employees of the IDA and agrees to be held liable for the costs incurred under these provisions. The Public Officers Law, §18(1)(b) defines the term "employee" to include "any commissioner, member of a public board or commission, trustee, director, officer, employee, ... or any other person holding a position by election, appointment or employment in the service of a public entity, whether or not compensated". Accordingly, members of the IDA board are "employees" within the meaning of Public Officers Law, §18 and, upon the adoption of a local law or resolution pursuant to subdivision 2(b) thereof, would be entitled to be defended and indemnified by the city.

March 29, 1990
William W. Oliver, Esq., Deputy Corporation Counsel
City of Schenectady