HOUSE BILL No. 5405 November 1, 2001, Introduced by Rep. Bishop and referred to the Committee on Commerce. A bill to amend 1961 PA 108, entitled "An act to provide for loans by the state of Michigan to school districts for the payment of principal and interest upon school bonds; to prescribe the terms and conditions of the loans and the conditions upon which levies for bond principal and interest shall be included in computing the amount to be so loaned by the state; to prescribe the powers and duties of the superintendent of public instruction and the state treasurer in relation to such loans; to provide for the repayment of such loans; to provide incentives for repayment of such loans; to provide for other mat- ters in respect to such loans; and to make an appropriation," by amending section 4 (MCL 388.954), as amended by 1992 PA 228. THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 4. (1) The superintendent of public instruction shall 2 issue his or her certificate qualifying an issue of bonds, upon 3 application for a certificate being made by the school district, 4 if the superintendent finds the following: 02350'01 JLB 2 1 (a) That the last maturity date of the issue of bonds is not 2 less than 10 years from the issuance date appearing on the bonds 3 subject to the following qualifications and exceptions: 4 (i) Except for bonds issued for a purpose described in sec- 5 tion 1274a of theschool code of 1976, Act No. 451 of the Public6Acts of 1976, being section 380.1274a of the Michigan Compiled7LawsREVISED SCHOOL CODE, 1976 PA 451, MCL 380.1274A, or as oth- 8 erwise provided in this subparagraph, if the ratio of debt to 9 valuation of the school district exceeds 4%, the last maturity 10 date of the issue of bonds shall be not less than 15 years from 11 the issuance date appearing on the bonds; if the ratio of debt to 12 valuation of the school district exceeds 7%, the last maturity 13 date of the issue of bonds shall be not less than 25 years from 14 the issuance date appearing on the bonds; or if the ratio of debt 15 to valuation of the school district exceeds 12%, the last matu- 16 rity date of the issue of bonds shall be not less than 29 years 17 from the issuance date appearing on the bonds. Regardless of the 18 ratio of debt to valuation of a school district, the state trea- 19 surer may authorize the last maturity date of an issue of bonds 20 of that school district to be not less than 10 years from the 21 issuance date appearing on the bonds if the state treasurer 22 determines it is financially beneficial to the state or to the 23 school district. As used in this section, "ratio of debt to 24 valuation" means that ratio arrived at by dividing the total tax 25 supported bonded indebtedness of the school district outstanding 26 as of the date of the filing of the application required by this 27 act, including the bonds proposed to be qualified, by the 02350'01 3 1 assessed valuation of the school district as last equalized by 2 the state. The refunding part of any proposed issue of bonds 3 shall not be included in the total indebtedness of the school 4 district for the purposes of this section. 5 (ii) If the bonds are issued for a purpose described in sec- 6 tion 1274a ofAct No. 451 of the Public Acts of 1976THE 7 REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1274A, the last matu- 8 rity of the issue of bonds may be less than 10 years from the 9 issuance date appearing on the bonds but not less than the number 10 of years approved by the superintendent of public instruction in 11 the certificate of qualification. The certificate of qualifica- 12 tion of the superintendent of public instruction shall contain a 13 certification and approval that the bonds are issued for such a 14 purpose, which approval shall be final and conclusive and shall 15 set forth the minimum number of years for the last maturity of 16 the bonds. 17 (b) That the yearly principal maturity date is not less than 18 5 months after the major part of the taxes for the bonds becomes 19 by law a lien upon the property assessed. 20 (c) Except as otherwise provided in this subdivision, that 21 the amount of principal maturing in any calendar year is not less 22 than the amount of principal maturing in any prior calendar year 23 and, except for bonds issued for a purpose described in section 24 1274a ofAct No. 451 of the Public Acts of 1976THE REVISED 25 SCHOOL CODE, 1976 PA 451, MCL 380.1274A, if the ratio of debt to 26 valuation of the school district exceeds 12%, that the first 10 27 principal maturities do not in the aggregate exceed 25% of the 02350'01 4 1 total principal amount of the bonds proposed to be qualified. 2 Regardless of the amount of principal maturing in any calendar 3 year and regardless of the ratio of debt to valuation of the 4 school district, the state treasurer may authorize principal 5 maturities in any amount if the state treasurer determines it is 6 financially beneficial to the state or to the school district. 7 At the request of the school district, the state treasurer may 8 grant that authorization as part of the procedure of preliminary 9 qualification under subdivision (f). 10 (d) That the cost of the project for which the bonds are to 11 be issued is within reasonable standards of cost as established 12 by the state board of education, which standards may vary as to 13 different localities in accordance with any variance in construc- 14 tion costs between localities. 15 (e) Except for bonds issued for a purpose described in sec- 16 tion 1274a ofAct No. 451 of the Public Acts of 1976THE 17 REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1274A, that there 18 exists a need for the project based upon current and probable 19 future enrollment and that the project is designed to provide 20 school facilities reasonably adequate to meet that need. 21 (f) Subject to subsection (3), if a bond issue requires an 22 election, that a bond issue that a school district wishes to 23 qualify has been given preliminary qualification prior to the 24 official action of the board of education calling for the elec- 25 tion on the bond issue. 26 (g) If the bonds are issued for a purpose described in 27 section 1274a ofAct No. 451 of the Public Acts of 1976THE 02350'01 5 1 REVISED SCHOOL CODE, 1976 PA 451, MCL 380.1274A, and if the bonds 2 have not been approved by a majority of the school electors 3 voting on the question, that the school district has demonstrated 4 and the state treasurer has approved the method of payment for, 5 and the ability to pay, the bonds.and that the school district6has received the prior approval of the department of treasury for7the issuance of the bonds under the municipal finance act, Act8No. 202 of the Public Acts of 1943, being sections 131.1 to 139.39of the Michigan Compiled Laws.10 (2) For refunding bonds issued to refund bonds issued before 11 May 4, 1955, the superintendent of public instruction shall issue 12 the certificate of qualification if the superintendent finds that 13 the refunding bonds comply with the requirements set forth in 14 subsection (1)(c). For refunding bonds issued to refund bonds 15 issued on or after May 4, 1955, or issued to refund loans from 16 the state made under the authority of this act, the superinten- 17 dent shall issue the certificate of qualification if the superin- 18 tendent finds that the refunding bonds comply with the require- 19 ments set forth in subsection (1)(c) and also that the refunding 20 bonds are being issued to refund loans from the state made under 21 the authority of this act or that the bonds representing the 22 original indebtedness either were qualified or satisfied the 23 requirements for qualification set forth in subsection (1)(d) and 24 (e) in effect when issued or would have satisfied the require- 25 ments set forth in subsection (1)(d) and (e) had those require- 26 ments been in effect when the bonds were issued. Refunding bonds 27 issued to refund loans from the state made under the authority of 02350'01 6 1 this act shall be considered as refunding bonds for all purposes 2 including section 16 of article IX of the state constitution of 3 1963. 4 (3) The requirement of subsection (1)(f) does not apply to a 5 bond issue that is approved by the school district electors 6 between December 31, 1990 and July 1, 1991 and that is in part 7 ineligible for qualification. A series of bonds for such a bond 8 issue may be qualified by the superintendent of public instruc- 9 tion if it is limited to either a project or projects eligible 10 for qualification or refunding of obligations issued for a pur- 11 pose described in section 1274a ofAct No. 451 of the Public12Acts of 1976THE REVISED SCHOOL CODE, 1976 PA 451, MCL 13 380.1274A, or both. 02350'01 Final page. JLB