Attorney General: James B. Holmes, Chairman, State Insurance Purchasing Board, 1990-025 Formal Opinion, Attorney General of Connecticut

Attorney General's Opinion

Attorney General, Richard Blumenthal

June 28, 1990

James B. Holmes
Chairman
State Insurance Purchasing Board
55 Elm Street
Hartford, CT 06106

Dear Mr. Holmes:

This letter is in response to your request for advice concerning the State Insurance Purchasing Board's authority to obtain surety bonds for members of the board of directors of the Connecticut Convention Center Authority.

The Connecticut Convention Center Authority ("Authority") was created by 1989 Conn. Pub. Acts 89-381. Section 4(a) of the Act states:

There is created a body politic and corporate to be known as the "Connecticut Convention Center Authority." Said authority shall be a public instrumentality and political subdivision of this state and the exercise by the authority of the powers conferred by this act shall be deemed and held to be the performance of an essential public and governmental function. The Connecticut Convention Center Authority shall not be construed to be a department, institution or agency of the state.

Under Section 4(d) of the Act, each member of the board of directors of the Authority and the executive director of the Authority are required to execute surety bonds or "in lieu thereof, the chairperson of the board shall execute a blanket position bond covering each member, the executive director and the employees of the authority ...."

The statutory duties of the Insurance Purchasing Board ("Board") are set forth at Conn. Gen. Stat. 4a-20. Section 4a-20 provides in part: "Said board shall determine the method by which the state shall insure itself against losses by the purchase of insurance governed by the provisions of chapters 678 and 682a and sections 38-176 to 38-182 [relating to surety bonds], inclusive, to obtain the broadest coverage at the most reasonable cost." (Emphasis added). Since the text of 1989 Conn. Pub. Acts 89-381 4(a) states that the Authority is not a department, institution or agency of the State, but is a "public instrumentality and political subdivision" of the state the question is whether that is the equivalent of "the state" for purposes of the Board's authority to obtain surety bonds.

In State ex rel. Maisano v. Mitchell, 155 Conn. 256 (1967), the Connecticut Supreme Court discussed the meaning of the term "political subdivision":

"'The term "political subdivision" is broad and comprehensive and denotes any division of the State made by the proper authorities thereof, acting within their constitutional powers, for the purpose of carrying out a portion of those functions of the State which by long usage and the inherent necessities of government have always been regarded as public."' Commissioner of Internal Revenue v. Shamberg's Estate, 144 F.2d 998, 1004 (2d Cir.) (quoting from 30 Opp. Atty. Gen. 252, 253 [U.S. 1914]; Commissioner of Internal Revenue v. White's Estate, 144 F.2d 1019, 1020 (2d Cir.).

Id. at 263-64. For example, cities, towns and boroughs are political subdivisions of the State. Dugas v. Beauregard, 155 Conn. 573 (1967).

Although the Authority is a political subdivision of the State, the language in Public Act 89-381 indicates that it is an entity distinct from the State. As indicated previously, the Act expressly states that the Authority is not a department, institution or agency of the State. See Section 4(a).

The Act declares that "bonds notes or other obligations" of the Authority issued by the Authority to finance its operations "shall not be deemed to constitute a debt or liability of the state," and shall so state on their face. Section 7(g). Rights and properties acquired by the Authority "pass to and [be] vest[ed] in the state" only when the existence of the Authority is terminated by law. Section 4(f). Section 6 prescribes the adoption of "procedures" by the Authority, which is a process separate and distinct from the regulation-making process required for state agencies under the Uniform Administrative Procedures Act, Conn. Gen. Stat. 4-166 et seq. Among the procedures to be adopted are procedures for the "hiring, dismissing, promoting and compensating employees of the authority," Section 6(a)(2), indicating that existing laws and regulations pertaining to state employees do not apply to employees of the Authority. Under Section 4(c) the board of directors is directed to "be accountable to and cooperate with the state whenever, pursuant to this act, the state may audit the authority or the project or at any other time as the state may inquire as to either, including allowing the state reasonable access to the project and records of the authority ...." Such a provision would be redundant if the authority were encompassed within "the state," as it would direct the State to cooperate with itself and allow itself access to its own property and records.

The foregoing provisions demonstrate that the Connecticut Convention Center Authority has been created as a public entity separate and distinct from the State. Accordingly, it is our conclusion that it is not within the authority of the Insurance Purchasing Board to obtain surety bonds for the directors of the Authority. This is in accord with a previous opinion to the Insurance Purchasing Board in which we concluded the Board was not authorized to purchase insurance for the Connecticut Resources Recovery Authority. See 74 Conn. Op. Atty. Gen. (9/25/74).

Although the Insurance Purchasing Board is not authorized to purchase surety bonds for the directors of the Connecticut Convention Center Authority, the chairperson of the board of directors of the Authority is empowered under the Act to obtain the necessary bonding. Section 4(d). The approval procedure for such surety bonds also is outlined in Section 4(d).

We trust that this is responsive to your inquiry.

Very truly yours,

Clarine Nardi Riddle
Attorney General

Shelagh P. McClure
Assistant Attorney General


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