Advisory Opinion 2000-03A

Dear Ms. Lensander:

This is in response to your request for an advisory opinion regarding the application of Title I of the Employee Retirement Income Security Act of 1974, as amended (ERISA). Specifically, you ask whether the Employees’ Money Purchase Pension Plan (the Money Purchase Plan) of the Housing Authority of the City of Santa Barbara (the Housing Authority) is a governmental plan within the meaning of section 3(32) of Title I of ERISA and, therefore, excluded by section 4(b)(1) from coverage under that title.

You advise that the Money Purchase Plan was established by the Housing Authority for its employees effective January 1, 1972, and was amended and restated effective April 1, 1987. Article X, Section I of the plan document states that the Housing Authority is the Plan Administrator. Section G of that article provides that the Housing Authority’s Board of Commissioners may amend or terminate the plan and may appoint and replace members of the Administrative Committee. Article X, Section H assigns certain administrative duties to the Administrative Committee. Article III, Section A of the plan document provides for the Housing Authority to contribute an amount equal to 12% of each participating employee’s compensation.

Your request contains the following additional facts and representations. The Housing Authority was created as a housing authority pursuant to the Housing Authorities Law codified commencing at section 34200 of the Health and Safety Code of the State of California. Section 34201(c) of the California Health & Safety Code provides, in part, “That the clearance, replanning, and reconstruction of the areas in which insanitary or unsafe housing conditions exist and the providing of safe and sanitary dwelling accommodations for persons of low income are public uses and purposes for which public money may be spent and private property acquired and are governmental functions of state concern; . . . .” The California Health & Safety Code authorizes a housing authority to “[p]repare, carry out, acquire, lease, and operate housing projects” (Section 34312(a)), “[p]rovide for the construction, reconstruction, improvement, alteration, or repair of all or part of any housing project” (Section 34312(b)), “[a]cquire any real property by eminent domain” (Section 34315(d)), “[c]onduct investigations, hear testimony, and take proof under oath . . .” (Section 34318(a)), and “[a]dminister oaths, issue subpenas requiring the attendance of witnesses or the production of books and papers . . .” (Section 34318(b)). The real property of a housing authority is exempt from “all taxes and special assessments of the State or any city, county, or political subdivision of the State.” (Section 34401). Housing authorities have the authority to issue bonds (Section 34350) and the bonds and property of housing authorities are exempt from state taxation (Section 34400). Section 34203 of the California Health & Safety Code defines a housing authority as a “public corporation.”

Section 34240 provides that “ [i]n each county and city there is a public body corporate and politic known as the housing authority of the county or city.” That section further provides that “[t]he authority shall not transact any business or exercise its powers unless, by resolution, the governing body of the county or city declares that there is need for an authority to function in it.” Section 34270 provides that, for a housing authority of a city, the mayor, if an elected official, of the city shall appoint five persons as commissioners of the authority and shall appoint an additional two commissioners who are tenants of the authority if the authority has tenants. Appointments must be confirmed by the governing body of the city. If the mayor is not an elected office, the commissioners are appointed by the governing body directly. Generally, commissioners are appointed for a term of four years except that the tenant commissioners are appointed for a term of two years. You represent that California state courts have found housing authorities in California to be governmental agencies.⁽¹⁾

You state that, in the case of the Housing Authority, the City Council by resolution dated June 10, 1969, declared there was a need for a housing authority in the City of Santa Barbara and empowered the Housing Authority to transact business and exercise its powers in accordance with Section 34240 of the California Health and Safety Code. Commissioners are appointed by the Mayor of Santa Barbara and confirmed by the City Council. You further advise that the Housing Authority is exempt from coverage under the Social Security Act. You state that the Housing Authority is funded by rental income, federal grants, and donations by the City of Santa Barbara. The Housing Authority’s administrative costs are paid from rental income and federal grants. The city’s donations are used for land acquisition and development for rental units. You also state that the City of Santa Barbara does not have budgetary authority over the Housing Authority.

Section 4(b)(1) of Title I of ERISA excludes governmental plans from coverage under that title. Section 3(32) defines the term “governmental plan” to include “a plan established or maintained for its employees by the Government of the United States, by the government of any State or political subdivision thereof, or by any agency or instrumentality of any of the foregoing.” According to the information provided, the Money Purchase Plan was established and is maintained by the Housing Authority for its employees and participation is limited to employees of the Housing Authority. The Housing Authority is a public corporation established pursuant to state statute. Its statutory purpose is to provide acceptable public housing for low- income persons and families. The Housing Authority exercises governmental powers, including the right of eminent domain and its property and revenues are exempt from state and local taxation. Further, the Housing Authority is controlled and supervised by the mayor and city council of the City of Santa Barbara. It is therefore our opinion that the Housing Authority is a governmental agency or instrumentality within the meaning of ERISA section 3(32) and that the Money Purchase Plan is a governmental plan within the meaning of that section. Accordingly, the Money Purchase Plan is excluded from ERISA Title I coverage by ERISA section 4(b)(1).

This letter constitutes an advisory opinion under ERISA Procedure 76-1, 41 Fed. Reg. 36281 (1976). Accordingly, this letter is issued subject to the provisions of that procedure, including section 10 thereof, relating to the effect of advisory opinions. This letter relates solely to the application of the provisions of Title I of ERISA and is not determinative of any particular tax treatment under the Internal Revenue Code.