IV. Intergovernmental Entities

• Library: Municipal Law Deskbook (ABA) (2015 Ed.)

IV. INTERGOVERNMENTAL ENTITIES

Many IGAs, such as mutual aid agreements, simply specify that agency officials and employees will work together under existing state and local law. However, many IGAs create a new intergovernmental entity that is separate and distinct from the municipalities that created the entity. Typically, intergovernmental entities are still government entities.¹²² Intergovernmental entities may take several different forms, such as a joint board with representatives from each party or a board of separately appointed officials. Intergovernmental entities may spin off new intergovernmental entities.¹²³ There is little legal direction for what form an intergovernmental entity should take for a specific agreement; however, some state statutes contain specific requirements for forming intergovernmental entities ¹²⁴ and individuals may be legally unable to serve on two boards that interact.¹²⁵ In deciding what form to use, municipalities might consider factors similar to choosing between corporate types, such as the need for independence of the entity, liability issues for a particular type of entity, how state law addresses property taxation for different types of entities, and different formation and termination requirements for types of entities.¹²⁶

A. Intergovernmental Entity as a Separate Legal Entity

Some state statutes specify that intergovernmental entities are separate legal entities.¹²⁷ When this issue arises in cases, courts often conclude that an intergovernmental entity is a legal entity separate from the party agencies and municipalities.¹²⁸

The independent nature of an intergovernmental entity commonly arises when courts must consider whether the entity is an arm of the state that enjoys Eleventh Amendment immunity from suit in federal court.¹²⁹ In this analysis, courts consider the amount of control a state has over the entity, and the amount of state funding, including direct funding and responsibility for debts and liabilities. Where a state retains a high level of control and is responsible for a high level of funding, courts will typically conclude that the entity is an arm of the state that enjoys the state's Eleventh Amendment immunity. These are the same factors that the Supreme Court used when considering whether interstate compact agencies are an arm of the state that enjoy the compacting states' Eleventh Amendment immunity.¹³⁰

Other common questions about the independent nature of intergovernmental entities include whether an intergovernmental entity is subject to the administrative procedure and transparency statutes and requirements applicable to the parties to the agreement, whether an intergovernmental entity is a corporation or a person for the purpose of compliance with a particular statute,¹³¹ and whether an intergovernmental entity can be a successor entity for the purpose of debts and liabilities of municipal entities or state agencies.¹³² Other contexts in which independence may be an important factor include questions of who owns the attorney-client privilege,¹³³ workers' compensation requirements, and training, management, and supervision for tort and § 1983 claims.¹³⁴

B. Delegating Authority to an Intergovernmental Entity

Parties to an IGA must use proper means to delegate powers to an intergovernmental entity. A court may reverse an action by an intergovernmental entity if the parties did not properly delegate to the entity.¹³⁵

C. Funding Intergovernmental Entities and Projects

Intergovernmental entities may receive funding from many different sources. The parties to an IGA creating an entity may agree to provide funds; the parties may establish a special tax; or the entity may issue revenue bonds. One issue that arises with taxing to fund an intergovernmental entity is whether the tax would have statewide or local benefits in violation of a state constitutional restriction against a local or special tax.¹³⁶ Revenue bonds are more commonly used when the entity must construct public improvement projects; repayment may be the sole responsibility of the entity through taxation or rates for its services,¹³⁷ or it may be the responsibility of the par-ties.¹³⁸ Some states authorize entities created through an IGA to issue and sell bonds, securities, and other forms of indebtedness independent of the parties to the agreement.¹³⁹ Other states do not authorize intergovernmental entities to issue or hold debt.¹⁴⁰ State statutes may also specify how intergovernmental entities must hold funds.¹⁴¹ Intergovernmental entities are also typically subject to auditing requirements by specific statute, as a creation of municipalities that must conduct audits, or by outside requirements for specific types of financing.¹⁴²

D. Tax-Exempt Status of Intergovernmental Entities

Property owned by an intergovernmental entity may be exempt from taxation under general statutes exempting government property from taxation; however, property may be subject to taxation depending on how other relevant statutes characterize the entity.¹⁴³

E. Status of Intergovernmental Entity Employees

Another common issue for an intergovernmental entity is whether its employees are employees of the entity or...