SB-1024, As Passed Senate, May 13, 2004                                     

    SUBSTITUTE FOR

    SENATE BILL NO. 1024

(As amended May 12, 2004)                                                   

                                                                             A bill to amend 1994 PA 451, entitled                                             

"Natural resources and environmental protection act,"                       

by amending sections 50501, 50502, 50504, 50506, 50507, and 50508           

(MCL 324.50501, 324.50502, 324.50504, 324.50506, 324.50507, and             

324.50508), as added by 1995 PA 57.                                         

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 50501.  The purpose of this part and of the authority                  

2   created by this part is to preserve existing jobs, create new               

3   jobs, and alleviate and prevent unemployment through the                    

4   retention, promotion, and development of forestry and forest                

5   industries and to protect the health and vigor of forest                    

6   resources by doing all of the following:                                    

7   [

8                                                                               

9      

Senate Bill No. 1024 (S-2) as amended May 12, 2004

1   (a)]  Funding practices prescribed and approved by the                 

2   department that intensify management of certain highly productive           

3   portions of this state's forest system.                                     

4   [(b)]  Implementing a system of forest management that is               

5   investment-oriented, economically efficient, and environmentally            

6   sound.                                                                      

[(c)  Implementing a system of forest management that is consistent with principles of sustainable forestry and with part 525.]

7   (d)  (e) Promoting a stable and continuing supply of timber                

8   for future economic expansion.                                              

9   (e)  (d)  Providing dependable funding of scheduled forest                  

10  management operations.                                                      

11  (f)  (e)  Promoting effective investment of revenues from                   

12  timber sales for high future returns.                                       

13  (g)  (f)  Facilitating timely performance of forest                         

14  management operations.                                                      

15  (h)  (g)  Earning additional revenues for forest management                 

16  from timber sales.                                                          

17  (i)  (h)  Improving existing timber stands and establishing                 

18  new stands of trees.                                                        

19  (j)  (i)  Providing for reforestation, forest protection, and               

20  timber stand improvement.                                                   

21  (k)  (j)  Providing an additional funding source for the                    

22  purposes described in this section from indebtedness secured with           

23  revenues generated from future sale of timber harvested from                

24  state tax reverted lands,  and other from lands in the state               

25  forest system from which revenues derived from the sale of timber           

26  were previously deposited in the forest management fund created             

27  in former  Act No. 268 of the Public Acts of 1945 1945 PA 268,             

1   and from other lands as provided by law.                                    

2       Sec. 50502.  As used in this part:                                          

3       (a) "Authority" means the Michigan forest finance authority                 

4   created in section 50503.                                                   

5       (b) "Board" means the board of directors of the Michigan

6   forest finance authority, except where the context clearly                  

7   requires a different definition.                                            

8       (c) "Bonds" means bonds of the authority issued as provided                 

9   in this part.                                                               

10      (d) "Notes" means notes of the authority issued as provided                 

11  in this part, including commercial paper.                                   

12  (e) "State forester" means an employee of the department who                

13  has a 4-year degree in forest management from an accredited                 

14  college or university and experience in forest management and who           

15  is designated as the state forester by the director.                        

16      (f) "Sustainable forestry" means that term as it is defined                 

17  in section 52501.

18      Sec. 50504.  (1) The authority shall be governed by a board                 

19  of directors consisting of the director, the state treasurer, the           

20  director of the department of labor and economic growth, and  3

21  6 residents of the state, appointed by the governor with the                

22  advice and consent of the senate  . as follows:

23  (a) One individual shall represent the forest products                      

24  industry within the state.                                                  

25      (b) One individual shall be a commercial logging contractor.                

26  (c) One individual shall be an owner of nonindustrial,                      

27  private forestland.                                                         

1       (d) One individual shall be from the wood products                          

2   manufacturing industry.                                                     

3       (e) One individual shall represent hunters, anglers, and                    

4   other outdoor recreation interests.                                         

5       (f) One individual from a college or university in the state                

6   with knowledge and expertise in forest management.

7   (2) The  3 6 resident directors appointed under subsection                 

8   (1)(a) to (f) shall serve terms of 3 years.  In appointing the              

9   initial  3 6 resident members of the board, the governor shall             

10  designate  1 2 to serve for 3 years,  1 2 to serve for 2 years,           

11  and  1 2 to serve for 1 year.                                              

12  (3)  (2)  Upon appointment to the board under subsection (1),               

13  and upon the taking and filing of the constitutional oath of                

14  office, a member of the board shall enter the office and exercise           

15  the duties of the office.                                                   

16  (4)  (3)  Regardless of the cause of a vacancy on the board,                

17  the governor shall fill a vacancy in the office of a member of              

18  the board by appointment with the advice and consent of the                 

19  senate.  A vacancy shall be filled for the balance of the                   

20  unexpired term of the office.  A member of the board shall hold             

21  office until a successor has been appointed and has qualified.              

22  (5)  (4)  Members of the board and officers and employees of                

23  the authority are subject to  Act No. 317 of the Public Acts of             

24  1968, being sections 15.321 to 15.330 of the Michigan Compiled              

25  Laws 1968 PA 317, MCL 15.321 to 15.330.  A member of the board             

26  or an officer, employee, or agent of the authority shall                    

27  discharge the duties of his or her position in a nonpartisan                

1   manner, with good faith, and with that degree of diligence, care,           

2   and skill that an ordinarily prudent person would exercise under            

3   similar circumstances in a like position.  In discharging his or            

4   her duties, a member of the board or an officer, employee, or               

5   agent of the authority, when acting in good faith, may rely upon            

6   the opinion of counsel for the authority, upon the report of an             

7   independent appraiser selected with reasonable care by the board,           

8   or upon financial statements of the authority represented to the            

9   member of the board, officer, employee, or agent to be correct by           

10  the officer of the authority having charge of its books or                  

11  account, or stated in a written report by the auditor general or            

12  a certified public accountant or the firm of the accountants                

13  fairly to reflect the financial condition of the authority.                 

14  (6)  (5)  The board shall organize and make its own policies                

15  and procedures.  The board shall conduct all business at public             

16  meetings held in compliance with the open meetings act,  Act                

17  No. 267 of the Public Acts of 1976, being sections 15.261 to                

18  15.275 of the Michigan Compiled Laws 1976 PA 267, MCL 15.261 to            

19  15.275.  Public notice of the time, date, and place of each                 

20  meeting shall be given in the manner required by  Act No. 267 of            

21  the Public Acts of 1976 the open meetings act, 1976 PA 267, MCL            

22  15.261 to 15.275.   Three Five members of the board constitute a           

23  quorum for the transaction of business.  An action of the board             

24  requires a concurring vote by  3 5 members of the board.  A                

25  state officer  or director  who is a member of the board may                

26  designate a representative from his or her department to serve              

27  instead of that state officer  or director  as a voting member of           

1   the board for 1 or more meetings.  The state treasurer shall                

2   serve as chairperson of the board.

3       Sec. 50506.  Except as otherwise provided in this part, the                 

4   board may do all things necessary or convenient to implement the            

5   purposes, objectives, and provisions of this part, and the                  

6   purposes, objectives, and powers delegated to the board by other            

7   laws or executive orders, including, but not limited to, all of             

8   the following:                                                              

9       (a) Adopt an official seal and bylaws for the regulation of                 

10  its affairs and alter the seal or bylaws at its pleasure.                   

11      (b) Sue and be sued in its own name and plead and be                        

12  impleaded.                                                                  

13      (c) Borrow money and issue negotiable revenue bonds and notes               

14  pursuant to this part.                                                      

15      (d) Enter into contracts and other instruments necessary,                   

16  incidental, or convenient to the performance of its duties and              

17  the exercise of its powers.                                                 

18      (e) With the prior consent of the department, solicit and                   

19  accept gifts, grants, loans, and other aid from any person, or              

20  the federal, state, or local government or any agency of the                

21  federal, state, or local government, or participate in any other            

22  way in a federal, state, or local government program.                       

23      (f) Acquire standing timber, timber cutting rights, and the                 

24  state's interest in contracts granting cutting rights, on state             

25  tax reverted lands,  and  on  other  lands in the state forest              

26  system from which revenues derived from the sale of timber were             

27  previously deposited in the forest management fund created in               

1   former  Act No. 268 of the Public Acts of 1945 1945 PA 268, and            

2   on other lands as provided by law, to be used for any of the                

3   purposes provided in this part subject to the restrictions of               

4   section 50509.  However, the state shall not convey to the                  

5   authority fee title to any state forest lands.                              

6       (g) Procure insurance against loss in connection with the                   

7   property, assets, or activities of the authority.                           

8       (h) Invest money of the authority, at the board's discretion,               

9   in instruments, obligations, securities, or property determined             

10  proper by the board, and name and use depositories for its                  

11  money.                                                                      

12      (i) Contract for goods and services and engage personnel as                 

13  necessary and engage the services of private consultants,                   

14  managers, legal counsel, and auditors for rendering professional            

15  financial assistance and advice payable out of any money of the             

16  authority, subject to the restrictions of section 50507.                    

17      (j) Indemnify and procure insurance indemnifying members of                 

18  the board from personal loss or accountability from liability               

19  asserted by a person on bonds or notes of the authority, or from            

20  any personal liability or accountability by reason of the                   

21  issuance of the bonds or notes, or by reason of any other action            

22  taken or the failure to act by the authority.                               

23      (k) Do all other things necessary or convenient to achieve                  

24  the objectives and purposes of the authority, this part, rules              

25  promulgated under this part, or other laws that relate to the               

26  purposes and responsibilities of the authority.                             

27      Sec. 50507.  (1) The authority shall finance only forest                    

1   management operations and practices consistent with part 525 that           

2   follow the guidelines, rules, and objectives prescribed and                 

3   approved by the department as these guidelines, rules, and                  

4   objectives are amended by the department.                                   

5       (2) Funds managed by the authority shall be applied in a                    

6   manner consistent with part 525 and the land management planning            

7   policies of the department on lands that have been identified for           

8   forest management practices.  In the absence of an approved state           

9   forest management plan covering a candidate area, an interim                

10  procedure, as adopted by the department, shall be used to assure            

11  that all forest values have been considered in selecting sites              

12  for investment with funds of the authority.  The department shall           

13  annually submit a list of activities and practices allocated from           

14  the funds generated under this part for the board's review and              

15  determination of consistency with the purposes of this part.                

16      (3) The executive director of the authority shall notify the                

17  department if the authority projects a probable default on any              

18  bonds or notes issued by the authority, and within 1 year of                

19  receipt of the notification, or within less than 1 year, if the             

20  notification indicates a shorter time period is necessary to                

21  avoid a default, the department shall identify and convey to the            

22  authority sufficient timber on tax reverted lands to enable the             

23  authority to avoid the projected default and to provide for                 

24  timely payment of principal of and interest on the authority's              

25  bonds or notes.  The authority may only issue contracts for the             

26  cutting and sale of timber that has been conveyed to the                    

27  authority under this section to avoid a default on any bonds or             

1   notes issued by the authority.  The determination of the board as           

2   to the need to cut and sell timber is conclusive.  Contracts for            

3   the cutting and sale of timber shall be consistent with part 525            

4   and with the guidelines, rules, and objectives prescribed by the            

5   department.                                                                 

6       (4) The authority shall establish a fund designated as the                  

7   "forest development fund".  Any money on hand or received in the            

8   future from bond proceeds and from contracts for the cutting and            

9   sale of timber on tax reverted lands shall be deposited in the              

10  forest development fund.  and utilized by the In addition, this            

11  fund may receive revenues from any other source.  The authority             

12  to shall use money in the forest development fund for 1 or more           

13  of the following:                                                           

14      (a) To provide for the payment of principal of and interest                 

15  on any bonds or notes issued by the authority.  and for

16  (b) For reforestation, forest protection, and timber stand                  

17  improvement.  and

18  (c) To obtain and maintain certification of sustainable                     

19  forestry standards in the state forest under section 52505.                 

20      (d) For any other purposes authorized by this part.   All                   

21  money in the special forest management fund established pursuant            

22  to former Act No. 268 of the Public Acts of 1945 shall be                   

23  transferred to the forest development fund.

24  (5) The auditor general shall audit the expenditures of the                 

25  forest development fund at least once every 3 years.

26      Sec. 50508.  (1) Except as provided in section 50507(3), the                

27  department shall act as the agent for the authority in                      

1   contracting for the cutting and sale of timber or other forest              

2   management operations and practices undertaken by the authority.            

3       (2) The state's interest in all existing and future contracts               

4   granting timber cutting rights on state tax reverted lands are              

5   conveyed to the authority to be used for any of the purposes of             

6   this part subject to the restrictions of this part.  The money              

7   received by the state from existing or future contracts for the             

8   cutting and sale of timber on state tax reverted lands,  and  on            

9   other  lands in the state forest system from which revenues                

10  derived from the sale of timber were previously deposited in the            

11  forest management fund created in former  Act No. 268 of the                

12  Public Acts of 1945 1945 PA 268, and on other lands as provided            

13  by law shall be deposited in the forest development fund and                

14  utilized as provided in section 50507(4).                                   

15      (3) In order to provide for additional security for                         

16  indebtedness of the authority, the department may convey to the             

17  authority title to timber on all or any portion of tax reverted             

18  lands,  and  on  other  lands in the state forest system from               

19  which revenues derived from the sale of timber were previously              

20  deposited in the forest management fund created in former  Act              

21  No. 268 of the Public Acts of 1945 1945 PA 268, and on other               

22  lands as provided by law.  The form of conveyance shall be                  

23  approved by the attorney general and by resolution of the state             

24  administrative board.  If the authority receives title to any               

25  timber, it may release and reconvey timber on state tax reverted            

26  lands,  and  on  other  lands in the state forest system from               

27  which revenues derived from the sale of timber were previously              

1   deposited in the forest management fund created in former  Act              

2   No. 268 of the Public Acts of 1945 1945 PA 268, and on other               

3   lands as provided by law if requested by the department, and the            

4   reconveyance from the authority to the department will not cause            

5   the authority to default on any obligation or covenant contained            

6   in any resolution of the authority authorizing issuance of bonds            

7   or notes.                                                                   

8       Enacting section 1.  This amendatory act does not take                      

9   effect unless all of the following bills of the 92nd Legislature            

10  are enacted into law:                                                       

11      (a) Senate Bill No. 1023.                                                   

12      (b) House Bill No. 5554.