HOUSE BILL No. 5850


     April 9, 2002, Introduced by Rep. LaSata and referred to the Committee on Tax Policy.


        A bill to amend 1987 PA 230, entitled

   "Municipal health facilities corporations act,"

   by amending sections 401, 406, and 412 (MCL 331.1401, 331.1406,

   and 331.1412), as amended by 1988 PA 502.

               THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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             Sec. 401.  A board of trustees or subsidiary board may

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        borrow money and issue notes, which shall mature not more than 18

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        months from the date of their issuance, for the purpose of meet-

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        ing current expenses of operation and maintenance of its health

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        care facilities and health services.  The resolution authorizing

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        the issuance of the notes shall provide for the pledging of

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        income and revenues of the corporation or subsidiary corporation

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        for the payment of the notes, and may also provide for a special

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        sinking fund into which there shall be paid as collected, a

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        sufficient fund from the revenues of the corporation or


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        subsidiary corporation to retire both the principal and interest

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        of the notes at or before maturity.  The resolution may also pro-

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        vide for the mortgaging, pledging, or granting of security inter-

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        ests or other liens in other assets of the corporation or subsid-

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        iary corporation as additional security for the payment of the

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        notes.   Except to the extent the local governmental unit pledges

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        its full faith and credit to guarantee payment of notes issued

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        pursuant to this section, such  THE notes  shall not be  ARE

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        subject to the  municipal finance act, Act No. 202 of the Public

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        Acts of 1943, being sections 131.1 to 139.3 of the Michigan

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        Compiled Laws  REVENUE BOND ACT OF 1933, 1933 PA 94, MCL 140.101

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        TO 140.140.

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             Sec. 406.  (1) Corporation obligations shall be authorized

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        by resolution adopted by a majority vote of the members serving

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        on the board of trustees of the corporation or the subsidiary

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        board of the subsidiary corporation issuing  such  THE corpora-

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        tion obligations.  However, the resolution shall not take effect

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        until issuance of the corporation obligations has been approved

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        by a majority vote of the members serving on the county board of

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        commissioners, city council, or village council and, in the case

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        of issuance of corporation obligations by a subsidiary corpora-

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        tion, also by a majority vote of the members serving on the board

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        of trustees of its parent corporation.  Approval of issuance of

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        corporation obligations by the county board of commissioners,

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        city council, or village council and, if applicable, by the board

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        of trustees of the parent corporation, may take place before or





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        after adoption of the resolution authorizing issuance by the

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        issuing corporation or subsidiary corporation.

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             (2) Corporation obligations shall be dated, have  such  THE

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        maturities, bear interest at  such  THE times and  such  THE

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        rates, be in  such  THE denominations, be in  such  THE form,

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        either coupon or registered or both and either certificate or

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        book entry, carry  such  THE registration privileges, be executed

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        in  such  THE manner, be payable in  such  THE medium of payment,

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        at  such  THE place or places and be subject to  such  THE terms

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        of redemption and other terms as the resolution provides.

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        Corporation obligations may be sold and remarketed by the corpo-

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        ration or subsidiary corporation or by an authorized officer or

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        agent of the corporation or subsidiary corporation, at public or

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        private sale, at  such  THE price or prices,  such  THE interest

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        rates, and  such  THE maturities as the corporation or subsidiary

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        corporation or an authorized officer or agent of the corporation

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        or subsidiary corporation determines in accordance with limits

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        established by the corporation or subsidiary corporation.  The

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        corporation or subsidiary corporation may authorize rates of

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        interest  which  THAT are variable by reference to 1 or more

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        interest rate indices designated by the corporation or subsidiary

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        corporation or to the rate or rates of interest borne by 1 or

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        more series of obligations of the state or the United States, or

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        to a rate or rates of interest announced by  such  THE bank or

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        savings and loan association organized under the laws of the

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        United States or any state as the corporation or subsidiary

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        corporation may designate.  The corporation obligations may be



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        sold at a discount and at an interest rate or rates  which  THAT

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        may be varied by an authorized officer or agent of the corpora-

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        tion or subsidiary corporation within the limits established by

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        the corporation or subsidiary corporation as provided in the

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        resolution.  Corporation obligations shall not be sold at a price

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         which  THAT would make the interest costs on the money borrowed

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        exceed  18% or  the maximum interest rate then permitted by the

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         municipal finance act, Act No. 202 of the Public Acts of 1943,

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        being sections 131.1 to 139.3 of the Michigan Compiled Laws,

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        whichever is greater  REVISED MUNICIPAL FINANCE ACT, 2001 PA 34,

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        MCL 141.2101 TO 141.2821.

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             Sec. 412.   (1) Unless an exception from prior approval is

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        available pursuant to subsection (2), corporation obligations

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        shall be approved by the department of treasury prior to their

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        issuance but, except  EXCEPT as provided in section 406, and

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        except to the extent the local governmental unit pledges its full

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        faith and credit to guarantee the payment of  such  corporation

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        obligations, THE CORPORATION OBLIGATIONS shall not  otherwise  be

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        subject to the provisions of the  municipal finance act, Act

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        No. 202 of the Public Acts of 1943, being sections 131.1 to 139.3

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        of the Michigan Compiled Laws  REVISED MUNICIPAL FINANCE ACT,

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        2001 PA 34, MCL 141.2101 TO 141.2821.   Before approving the

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        issuance of corporation obligations, the department of treasury

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        shall determine that the amount of the proposed issue is suffi-

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        cient, but not excessive, that the revenue and properties obli-

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        gated for the payment thereof are sufficient, and that the

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        corporation obligations and the proceeds authorizing the



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        corporation obligations comply with this act and other applicable

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        law.

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             (2) The requirement of subsection (1) for obtaining the

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        prior approval of the department of treasury before issuing cor-

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        poration obligations under this act shall be subject to sections

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        10 and 11 of chapter III of Act No. 202 of the Public Acts of

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        1943, being sections 133.10 and 133.11 of the Michigan Compiled

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        Laws, and the department of treasury shall have the same author-

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        ity as provided in section 11 of chapter III of Act No. 202 of

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        the Public Acts of 1943 to issue an order providing or denying an

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        exception from the prior approval required by subsection (1) for

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        corporation obligations authorized by this act.

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             (3) An order of the department of treasury permitting the

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        issuance of corporation obligations under this act or providing

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        exemption from prior approval shall not be considered to be an

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        approval of the legality of such corporation obligations.  The

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        issuance of an order by the department of treasury granting per-

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        mission to issue any corporation obligation shall imply that the

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        department of treasury has made such determinations of facts or

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        circumstances, has given such approvals, and has reached such

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        opinions as are a necessary prerequisite to the issuance of such

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        order.













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