October 27, 2009, Introduced by Rep. Mayes and referred to the Committee on Banking and Financial Services.
A bill to amend 2001 PA 34, entitled
"Revised municipal finance act,"
by amending section 611 (MCL 141.2611), as amended by 2002 PA 500.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 611. (1) Except as provided in section 515 or subsection
(2) or (3), a municipality shall not refund all or any part of its
outstanding securities by issuing a refunding security unless the
net present value of the principal and interest to be paid on the
refunding security, including the cost of issuance, and taking into
account an agreement entered into pursuant to section 317, is less
than the net present value of the principal and interest to be paid
on the outstanding security being refunded as calculated using a
method approved by the department. However, when a municipality is
issuing refunding securities for outstanding variable interest rate
securities, as determined by the department the net present value
calculation shall use the appropriate current fixed interest rate
and the fixed interest rate that would have been available for the
outstanding variable interest rate securities when originally
issued if the outstanding variable interest rate securities had
been issued as fixed interest rate securities or shall use another
procedure determined by the department.
(2) A municipality may, under procedures established by the
department, obtain an exception from the requirements of subsection
(1) if the department determines a reasonable basis for that
exception exists. As used in this subsection, reasonable basis
means 1 or more of the following:
(a) The refunding is required by a state or federal agency.
(b) The refunding is necessary to reduce or eliminate
requirements of ordinances or covenants applicable to the existing
outstanding security.
(c) The refunding is necessary to avoid a potential default on
an outstanding security.
(d) The refunding of a short-term municipal security issued
under section 413.
(3) A municipality may issue a refunding security to refund
all or any part of its outstanding securities before December 31,
2012 if those securities are not secured by the unlimited full
faith and credit pledge of the municipality.