HOUSE BILL No. 5837 April 9, 2002, Introduced by Rep. Julian and referred to the Committee on Tax Policy. A bill to amend 1986 PA 196, entitled "Public transportation authority act," by amending section 23 (MCL 124.473). THE PEOPLE OF THE STATE OF MICHIGAN ENACT: 1 Sec. 23. (1) A public authority may borrow money and issue 2 notes and bonds to acquire, construct, or purchase public trans- 3 portation facilities and to otherwise finance and carry out its 4 powers and duties. The notes and bonds may pledge, be payable 5 from, and may be issued in anticipation of payment of the pro- 6 ceeds of any of the methods of financing described in section 17 7 or elsewhere in this act or as may be provided by law. 8 (2) The public authority may issue bonds or notes at any 9 time to retire, fund, or refund, in whole or in part, outstanding 10 bonds or notes issued pursuant to this act, or for transportation 11 purposes under any other act including the payment of interest 02300'01 JLB 2 1 accrued, or to accrue, to the earliest or any subsequent date of 2 redemption, purchase, or maturity of the bonds or notes, redemp- 3 tion premium, if any, and any commission, service fees, and other 4 expenses necessary to be paid in connection with the bonds or 5 notes, whether the bonds or notes to be refunded have matured or 6 are redeemable or shall at a later date mature or become 7 redeemable. If considered advisable by the public authority, the 8 public authority may issue bonds or notes partly to refund out- 9 standing bonds or notes and partly for any other purpose contem- 10 plated by this act.Bonds or notes issued to refund outstanding11bonds or notes may be issued in a principal amount greater than,12the same as, or lesser than the principal amount of the bonds or13notes to be refunded, and may bear interest rates that are higher14than, the same as, or lower than the interest rates of the bonds15or notes to be refunded. The principal, interest, and redemption16premiums, if any, on bonds or notes issued by a public authority17pursuant to this section to refund outstanding bonds or notes18shall be payable from 1 or more of the following:19(a) The revenues pledged for payment of the bonds or notes20to be refunded.21(b) The proceeds of the refunding bonds or notes.22(c) Investment earnings on the proceeds of the refunding23bonds or notes.24(d) Debt service reserve or the funds held for repayment of25the bonds or notes to be refunded.26(e) Any other revenue described in this section.02300'01 3 1 (3) The bonds and notes issued pursuant to section 22 or 2 this section may be issued pursuant to, and shall be subject to 3 themunicipal finance act, Act No. 202 of the Public Acts of41943, being sections 131.1 to 139.3 of the Michigan Compiled5LawsREVISED MUNICIPAL FINANCE ACT, 2001 PA 34, MCL 141.2101 TO 6 141.2821. 7 (4) The public authority, by resolution of its board, shall 8 provide for the issuance of the notes or bonds for the purpose of 9 paying part or all of the cost of the public transportation 10 facilities or authorized programs, which cost may include an 11 allowance for legal, engineering, architectural, and consulting 12 services; interest on the bonds or notes becoming due before the 13 collection of the first revenue available for the payment of the 14 interest as determined by the authority; a debt service reserve; 15 and other necessary incidental expenses. Principal of, and 16 interest and redemption premiums on, the bonds or notes issued 17 under this section shall be payable solely from revenue, the 18 other sources described in this section, or otherwise described 19 in this act. Any interest shall be payable on the dates as 20 determined in the resolution authorizing the issuance of the 21 bonds or notes. The board of the public authority, in the reso- 22 lution authorizing the issuance of the bonds or notes shall 23 determine the principal amount of the bonds or notes to be 24 issued, the registration provisions, the bond or note denomina- 25 tions, the bond or note designations, the rights of prior redemp- 26 tion of the bonds or notes at the option of the public authority 27 or the holders of the bonds or notes, the maximum rate of 02300'01 4 1 interest, the method of execution of the bonds or notes, and any 2 other provisions respecting the bonds or notes, the rights of the 3 holders of the bonds or notes, the security for the bonds or 4 notes, and the procedures for disbursement of the bond or note 5 proceeds and for the investment of the proceeds of bonds or notes 6 and money for the payment of bonds or notes. The board OF THE 7 PUBLIC AUTHORITY in the resolution authorizing the issuance of 8 bonds or notes may provide for the assignment of the revenues 9 pledged to 1 of the paying agents for the bonds or notes or to a 10 trustee, ashereinafterprovided in this act. The board OF THE 11 PUBLIC AUTHORITY, in the resolution or resolutions authorizing 12 the bonds or notes, may provide for the terms and conditions upon 13 which the holders of the bonds or notes, or any portion of the 14 bond or noteholders or any trustee for the bond or noteholders, 15 shall be entitled to the appointment of a receiver. The resolu- 16 tion authorizing the bonds or notes may provide for the appoint- 17 ment of a trustee for the bond or noteholders, may give to the 18 trustee the appropriate rights, duties, remedies, and powers, 19 with or without the execution of a deed of trust or mortgage, 20 necessary and appropriate to secure the bonds or notes. 21 (5) All bonds and notes and the interest coupons attached to 22 the bonds or notes are declared to be fully negotiable and to 23 have all of the qualities incident to negotiable instruments 24 under the uniform commercial code,Act No. 174 of the Public25Acts of 1962, being sections 440.1101 to 440.11102 of the26Michigan Compiled Laws1962 PA 174, MCL 440.1101 TO 440.11102, 02300'01 5 1 subject only to the provisions for registration of the bonds or 2 notes which may appear on the bonds or notes. 3 (6) The property of the authority, its income and operation, 4 and any vendor, vendee, lessor, and lessee interest in any prop- 5 erty sold or leased pursuant to section 24 shall be exempt from 6 all taxation by this state or any of its political subdivisions 7 and all bonds and notes of the authority, the interest on the 8 bonds and notes, and their transfer shall be exempt from all tax- 9 ation by this state or any of its political subdivisions.,10except for estate, gift, and inheritance taxes. TheTHIS state 11 covenants with the purchasers and all subsequent holders and 12 transferees of notes and bonds issued by the authority under this 13 act, in consideration of the acceptance of and payment for the 14 notes and bonds, that the notes and bonds of the fund, issued 15 pursuant to this act, the interest on the notes and bonds, the 16 transferthereofOF THE BONDS OR NOTES, and all its fees, 17 charges, gifts, grants, revenues, receipts, and other money 18 received or to be received and pledged to pay or secure the pay- 19 ment of the notes or bonds shall at all times be free and exempt 20 from all state or local taxation as provided by the laws ofthe21 THIS state., except for estate, gift, and inheritance taxes.22 (7) The public authority may issue additional bonds or notes 23 with respect to the pledge of the revenues with previously issued 24 bonds or notes of the public authority for the purpose and under 25 the terms and conditions provided in the resolution authorizing 26 the previous issue of bonds. The public authority may enter into 27 agreements with the holders of the bonds or notes or with others 02300'01 6 1 for the bonds or notes to be delivered to the public authority or 2 others before the stated maturities of the bonds or notes. 3 (8)TheTHIS state, a political subdivision, or a private 4 corporation, partnership, or individual may advance money or 5 deliver property to the public authority to finance or to carry 6 out its powers and duties. The public authority may agree to 7 repay the advances or pay for the property within a period not 8 exceeding 40 years, from the proceeds of its bonds or notes or 9 from other funds legally available for use, with or without 10 interest as may be agreed at the time of advance or of 11 repayment. The obligation of the public authority to make the 12 repayment or payment may be evidenced by a contract or note or 13 notes, which contract or note may pledge the full faith and 14 credit of the public authority, but the contract or note shall 15 not be an obligation within the meaning of themunicipal finance16act, Act No. 202 of the Public Acts of 1943REVISED MUNICIPAL 17 FINANCE ACT, 2001 PA 34, MCL 141.2101 TO 141.2821. A political 18 subdivision, subject to applicable constitutional limitations and 19 procedures, may pledge its full faith and credit for the payment 20 of bonds or notes of the public authority upon adoption of a res- 21 olution or a majority vote of the members elected to and serving 22 on its governing body so providing.An obligation of a public23authority incurred pursuant to this section or a pledge of full24faith and credit by a political subdivision shall not be entered25into or made without the approval of the department of treasury.02300'01 Final page. JLB