HOUSE BILL No. 6030

November 9, 2016, Introduced by Rep. Irwin and referred to the Committee on Local Government.

A bill to amend 2012 PA 436, entitled

"Local financial stability and choice act,"

by amending sections 7, 7a, 8, 9, 11, 12, 13, 14, 15, 19, 20, 22,

24, and 25 (MCL 141.1547, 141.1547a, 141.1548, 141.1549, 141.1551,

141.1552, 141.1553, 141.1554, 141.1555, 141.1559, 141.1560,

141.1562, 141.1564, and 141.1565), section 7a as added by 2015 PA

113.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 7. (1) Notwithstanding section 6(3), upon the

confirmation of a finding of a financial emergency under section 6,

the governing body of the local government shall, by resolution

within 7 days after the confirmation of a finding of a financial

emergency, select 1 of the following local government options to

address the financial emergency:

(a) The consent agreement option pursuant to section 8.

(b) ~~The~~ Before the effective date of the 2016 amendatory act

that amended this section, the emergency manager option pursuant to

section 9.

25.

(d) The chapter 9 bankruptcy option pursuant to section 26.

(2) Subject to subsection (3), if the local government has a

strong mayor, the resolution under subsection (1) requires strong

mayor approval. If the local government is a school district, the

resolution shall be approved by the school board. The resolution

shall be filed with the state treasurer, with a copy to the

superintendent of public instruction if the local government is a

school district.

(3) If the governing body of the local government does not

pass a resolution as required under subsection (1), the local

government shall proceed under the neutral evaluation process

pursuant to section 25.

(4) ~~Subject to section 9(6)(c) and (11), unless authorized by~~

~~the governor,~~ Except for the local government option listed in

subsection (1)(b), a local government ~~shall not~~ may utilize 1 of

the local options listed in subsection ~~(1)(a) to (d)~~ (1) more than

1 time.

Sec. 7a. Notwithstanding section 7, if a school district is

subject to an enhanced deficit elimination plan under section 1220

of the revised school code, 1976 PA 451, MCL 380.1220, and the

state treasurer determines that the school district has failed to

submit or comply with the requirements of the enhanced deficit

elimination plan, the state treasurer may declare that a financial

emergency exists within the school district and before the

effective date of the 2016 amendatory act that amended this section

recommend that the governor appoint an emergency manager to address

the financial emergency within the school district under section 9

or beginning on the effective date of the 2016 amendatory act that

amended this section recommend that the local government select 1

of the local government options as provided in section 7.

Sec. 8. (1) The chief administrative officer of a local

government may negotiate and sign a consent agreement with the

state treasurer as provided for in this act. If the local

government is a school district and the consent agreement contains

an educational plan, the consent agreement shall also be signed by

the superintendent of public instruction. The consent agreement

shall provide for remedial measures considered necessary to address

the financial emergency within the local government and provide for

the financial stability of the local government. The consent

agreement may utilize state financial management and technical

assistance as necessary in order to alleviate the financial

emergency. The consent agreement shall also provide for periodic

financial status reports to the state treasurer, with a copy of

each report to each state senator and state representative who

represents that local government. The consent agreement may provide

for a board appointed by the governor to monitor the local

government's compliance with the consent agreement. In order for

the consent agreement to go into effect, it shall be approved, by

resolution, by the governing body of the local government and shall

be approved and executed by the state treasurer. ~~Nothing in the~~

~~consent agreement shall limit the ability of the state treasurer in~~

~~his or her sole discretion to declare a material breach of the~~

~~consent agreement.~~ A consent agreement shall provide that in the

event of a material uncured breach of the consent agreement, the

governor may place the local government in ~~receivership or in~~ the

neutral evaluation process. If within 30 60 days after a local

government selects the consent agreement option under section

7(1)(a), ~~or sooner in the discretion of the state treasurer,~~ a

consent agreement cannot be agreed upon, the state treasurer shall

require the local government to proceed under 1 of the other local

options provided for in section 7.

(2) A consent agreement as provided in subsection (1) may

require a continuing operations plan or a recovery plan if required

by the state treasurer.

(3) If the state treasurer requires that a consent agreement

include a continuing operations plan, the local government shall

prepare and file the continuing operations plan with the state

treasurer as provided for in the consent agreement. The continuing

operations plan shall have the objectives of assuring that the

local government is able to provide or cause to be provided

governmental services essential to the public health, safety, and

welfare and assuring the fiscal accountability of the local

government. In addition, the continuing operations plan for a

school district shall have the objective of assuring a quality

education for all of the students of the school district. The state

treasurer shall approve or reject the initial continuing operations

plan within 14 days of receiving it from the local government. If a

continuing operations plan is rejected, the local government shall

refile an amended plan within 30 days of the rejection, addressing

any concerns raised by the state treasurer or the superintendent of

public instruction regarding an educational plan. If the amended

plan is rejected, then the local government may be considered to be

in material breach of the consent agreement. The local government

shall file annual updates to its continuing operations plan. The

annual updates shall be included with the annual filing of the

local government's audit report with the state financial authority

as long as the continuing operations plan remains in effect.

(4) The continuing operations plan shall be in a form

prescribed by the state treasurer but shall, at a minimum, include

all of the following:

(a) A detailed projected budget of revenues and expenditures

over not less than 3 fiscal years which demonstrates that the local

government's expenditures will not exceed its revenues and that any

existing deficits will be eliminated during the projected budget

period.

(b) A cash flow projection for the budget period.

fiscal accountability for the local government.

(d) A plan showing reasonable and necessary maintenance and

capital expenditures so as to assure the local government's fiscal

accountability.

(e) An evaluation of the costs associated with pension and

postemployment health care obligations for which the local

government is responsible and a plan for how those costs will be

addressed within the budget period.

(f) A provision for submitting quarterly compliance reports to

the state treasurer demonstrating compliance with the continuing

operations plan, with a copy of each report to each state senator

and state representative who represents that local government. Each

quarterly compliance report shall be posted on the local

government's website within 7 days after the report is submitted to

the state treasurer.

(5) If a continuing operations plan is approved for a

municipal government, the municipal government shall amend the

budget and general appropriations ordinance adopted by the

municipal government under the uniform budgeting and accounting

act, 1968 PA 2, MCL 141.421 to 141.440a, to the extent necessary or

advisable to give full effect to the continuing operations plan. If

a continuing operations plan is approved for a school district, the

school district shall amend the budget adopted by the school

district under the uniform budgeting and accounting act, 1968 PA 2,

MCL 141.421 to 141.440a, to the extent necessary or advisable to

give full effect to the continuing operations plan. The chief

administrative officer, the chief financial officer, the governing

body, and other officials of the local government shall take and

direct such actions as may be necessary or advisable to maintain

the local government's operations in compliance with the continuing

operations plan.

(6) If the state treasurer requires that a consent agreement

include a recovery plan, the state treasurer, with input from the

local government, shall develop and adopt a recovery plan. The

recovery plan shall have the objectives of assuring that the local

government is able to provide or cause to be provided governmental

services essential to the public health, safety, and welfare and

assuring the fiscal accountability of the local government. In

addition, the recovery plan for a school district shall have the

objective of assuring a quality education for all of the students

of the school district. Within 10 days after a decision by the

state treasurer to require that a consent agreement include a

recovery plan, the state treasurer and the governing body of the

local government shall conduct a public informational meeting on

the proposed recovery plan. In addition, within 14 days after the

date a recovery plan is adopted, the state treasurer and the

governing body of the local government shall conduct a public

informational meeting on the adopted recovery plan. This subsection

does not mean that the state treasurer or the governing body of the

local government must receive public approval before adopting the

recovery plan. If a recovery plan is developed and adopted for the

local government, the local government shall file annual updates to

its recovery plan. The annual updates shall be included with the

annual filing of the local government's audit report with the state

financial authority as long as the recovery plan remains in effect.

(7) A recovery plan may include terms and provisions as may be

approved in the discretion of the state treasurer, including, but

not limited to, 1 or more of the following:

(a) A detailed projected budget of revenues and expenditures

over not less than 3 fiscal years that demonstrates that the local

government's expenditures will not exceed its revenues and that any

existing deficits will be eliminated during the projected budget

period.

(b) A cash flow projection for the budget period.

fiscal accountability for the local government.

(d) A plan showing reasonable and necessary maintenance and

capital expenditures so as to assure the local government's fiscal

accountability.

(e) An evaluation of costs associated with pension and

postemployment health care obligations for which the local

government is responsible and a plan for how those costs will be

addressed to assure that current obligations are met and that steps

are taken to reduce future unfunded obligations.

(f) Procedures for cash control and cash management,

including, but not limited to, procedures for timely collection,

securing, depositing, balancing, and expending of cash. Procedures

for cash control and cash management may include the designation of

appropriate fiduciaries.

(g) A provision for submitting quarterly compliance reports to

the state treasurer and the chief administrative officer of the

local government that demonstrate compliance with the recovery

plan, with a copy of each report to each state senator and state

representative who represents that local government. Each quarterly

compliance report shall be posted on the local government's website

within 7 days after the report is submitted to the state treasurer.

(8) The recovery plan may include the appointment of a local

auditor or local inspector, or both, in accordance with section

~~12(1)(p).~~12(1)(n).

(9) If a recovery plan is developed and adopted by the state

treasurer for a local government, the recovery plan shall supersede

the budget and general appropriations ordinance adopted by the

local government under the uniform budgeting and accounting act,

1968 PA 2, MCL 141.421 to 141.440a, and the budget and general

appropriations ordinance is considered amended to the extent

necessary or advisable to give full effect to the recovery plan. In

the event of any inconsistency between the recovery plan and the

budget or general appropriations ordinance, the recovery plan shall

control. The chief administrative officer, the chief financial

officer, the governing body, and other officers of the local

government shall take and direct actions as may be necessary or

advisable to bring and maintain the local government's operations

in compliance with the recovery plan.

~~(10) Except as otherwise provided in this subsection, the~~

~~consent agreement may include a grant to the chief administrative~~

~~officer, the chief financial officer, the governing body, or other~~

~~officers of the local government by the state treasurer of 1 or~~

~~more of the powers prescribed for emergency managers as otherwise~~

~~provided in this act for such periods and upon such terms and~~

~~conditions as the state treasurer considers necessary or~~

~~convenient, in the state treasurer's discretion to enable the local~~

~~government to achieve the goals and objectives of the consent~~

~~agreement. However, the consent agreement shall not include a grant~~

~~to the chief administrative officer, the chief financial officer,~~

~~the governing body, or other officers of the local government of~~

~~the powers prescribed for emergency managers in section 12(1)(k).~~

~~(11) Unless the state treasurer determines otherwise,~~

~~beginning 30 days after the date a local government enters into a~~

~~consent agreement under this act, that local government is not~~

~~subject to section 15(1) of 1947 PA 336, MCL 423.215, for the~~

~~remaining term of the consent agreement.~~

(10) Except as otherwise provided in this subsection, during

the 60 days after the date a local government enters into a consent

agreement under this act, the local government shall renegotiate

each collective bargaining agreement involving that local

government. If the parties to a collective bargaining agreement

cannot agree on a new collective bargaining agreement during the

60-day renegotiation period, an impartial arbitrator shall

determine in arbitration the issues in dispute. The parties to a

collective bargaining agreement may agree to seek arbitration on 1

or more issues before the end of the 60-day renegotiation period.

Within 7 days after receipt of a request from 1 or both parties for

arbitration of a dispute, the employment relations commission shall

select from its panel of arbitrators, as provided in section 5 of

1969 PA 312, MCL 423.235, 3 individuals as nominees for impartial

arbitrator. Within 5 days after the selection of nominees, each

party may peremptorily strike the name of 1 of the nominees. Within

7 days after this 5-day period, the employment relations commission

shall designate 1 of the remaining nominees as the impartial

arbitrator.

(11) ~~(12)~~ The consent agreement may provide for the required

retention by the local government of a consultant for the purpose

of assisting the local government to achieve the goals and

objectives of the consent agreement.

(12) ~~(13)~~ A local government is released from the requirements

under this section upon compliance with the consent agreement as

determined by the state treasurer.

Sec. 9. (1) ~~The~~ Before the effective date of the 2016

amendatory act that amended this section, the governor may appoint

an emergency manager to address a financial emergency within that

local government as provided for in this act.

(2) Upon appointment, an emergency manager shall act for and

in the place and stead of the governing body and the office of

chief administrative officer of the local government. The emergency

manager shall have broad powers in receivership to rectify the

financial emergency and to assure the fiscal accountability of the

local government and the local government's capacity to provide or

cause to be provided necessary governmental services essential to

the public health, safety, and welfare. Following appointment of an

emergency manager and during the pendency of receivership, the

governing body and the chief administrative officer of the local

government shall not exercise any of the powers of those offices

except as may be specifically authorized in writing by the

emergency manager or as otherwise provided by this act and are

subject to any conditions required by the emergency manager.

(3) All of the following apply to an emergency manager:

(a) The emergency manager shall have a minimum of 5 years'

experience and demonstrable expertise in business, financial, or

local or state budgetary matters.

(b) The emergency manager may, but need not, be a resident of

the local government.

(d) Except as otherwise provided in this subdivision and

section 7b(17), the emergency manager shall serve at the pleasure

of the governor. An emergency manager is subject to impeachment and

conviction by the legislature as if he or she were a civil officer

under section 7 of article XI of the state constitution of 1963. A

Before the effective date of the 2016 amendatory act that amended

this section, a vacancy in the office of emergency manager shall be

filled in the same manner as the original appointment. Beginning on

the effective date of the 2016 amendatory act that amended this

section, if a vacancy occurs in the office of emergency manager,

the local government shall select 1 of the other local government

options as provided in section 7.

(e) The emergency manager's compensation shall be paid by this

state and shall be set forth in a contract approved by the state

treasurer. The contract shall be posted on the department of

treasury's website within 7 days after the contract is approved by

the state treasurer.

(f) In addition to the salary provided to an emergency manager

in a contract approved by the state treasurer under subdivision

(e), this state may receive and distribute private funds to an

emergency manager. As used in this subdivision, "private funds"

means any money the state receives for the purpose of allocating

additional salary to an emergency manager. Private funds

distributed under this subdivision are subject to section 1 of 1901

PA 145, MCL 21.161, and section 17 of article IX of the state

constitution of 1963.

(4) In addition to staff otherwise authorized by law, an

emergency manager shall appoint additional staff and secure

professional assistance as the emergency manager considers

necessary to fulfill his or her appointment.

(5) The emergency manager shall submit quarterly reports to

the state treasurer with respect to the financial condition of the

local government in receivership, with a copy to the superintendent

of public instruction if the local government is a school district

and a copy to each state senator and state representative who

represents that local government. In addition, each quarterly

report shall be posted on the local government's website within 7

days after the report is submitted to the state treasurer.

(6) The emergency manager shall continue in the capacity of an

emergency manager as follows:

(a) Until removed by the governor or the legislature as

provided in subsection (3)(d). If Before the effective date of the

2016 amendatory act that amended this section, if an emergency

manager is removed, the governor shall within 30 days of the

removal appoint a new emergency manager. Beginning on the effective

date of the 2016 amendatory act that amended this section, if an

emergency manager is removed, the local government shall select 1

of the other local government options as provided in section 7.

(b) Until the financial emergency is rectified.

after his or her appointment under this act, the emergency manager

may, by resolution, be removed by a 2/3 vote of the governing body

of the local government. If the local government has a strong

mayor, the resolution requires strong mayor approval before the

emergency manager may be removed. ~~Notwithstanding section 7(4), if~~

If the emergency manager is removed under this subsection and the

local government has not previously breached a consent agreement

under this act, the local government may within 10 days negotiate a

consent agreement with the state treasurer. If a consent agreement

is not agreed upon within 10 days, the local government shall

proceed with the neutral evaluation process pursuant to section 25.

(7) A local government shall be removed from receivership when

the financial conditions are corrected in a sustainable fashion as

provided in this act. In addition, the local government may be

removed from receivership if an emergency manager is removed under

subsection (6)(c) and the governing body of the local government by

2/3 vote approves a resolution for the local government to be

removed from receivership. If the local government has a strong

mayor, the resolution requires strong mayor approval before the

local government is removed from receivership. A local government

that is removed from receivership while a financial emergency

continues to exist as determined by the governor shall proceed

under the neutral evaluation process pursuant to section 25.

(8) The governor may delegate his or her duties under this

section to the state treasurer.

(9) Notwithstanding section 3(1) of 1968 PA 317, MCL 15.323,

an emergency manager is subject to all of the following:

(a) 1968 PA 317, MCL 15.321 to 15.330, as a public servant.

(b) 1973 PA 196, MCL 15.341 to 15.348, as a public officer.

state officer.

(10) An emergency financial manager appointed under former

1988 PA 101 or former 1990 PA 72, and serving immediately ~~prior to~~

~~the effective date of this act,~~ before March 28, 2013, shall be

considered an emergency manager under this act and shall continue

under this act to fulfill his or her powers and duties.

Notwithstanding any other provision of this act, the governor may

appoint a person who was appointed as an emergency manager under

former 2011 PA 4 or an emergency financial manager under former

1988 PA 101 or former 1990 PA 72 to serve as an emergency manager

under this act.

(11) ~~Notwithstanding section 7(4) and subject~~ Subject to the

requirements of this section, if an emergency manager has served

for less than 18 months after his or her appointment under this

act, the governing body of the local government may pass a

resolution petitioning the governor to remove the emergency manager

as provided in this section and allow the local government to

proceed under the neutral evaluation process as provided in section

25. If the local government has a strong mayor, the resolution

requires strong mayor approval. If the governor accepts the

resolution, ~~notwithstanding section 7(4),~~ the local government

shall proceed under the neutral evaluation process as provided in

section 25.

Sec. 11. (1) An emergency manager shall develop and may amend

a written financial and operating plan for the local government.

The plan shall have the objectives of assuring that the local

government is able to provide or cause to be provided governmental

services essential to the public health, safety, and welfare and

assuring the fiscal accountability of the local government. The

financial and operating plan shall provide for all of the

following:

(a) Conducting all aspects of the operations of the local

government within the resources available according to the

emergency manager's revenue estimate.

(b) The payment in full of the scheduled debt service

requirements on all bonds, notes, and municipal securities of the

local government, contract obligations in anticipation of which

bonds, notes, and municipal securities are issued, and all other

uncontested legal obligations.

renegotiation of contracts. ~~pursuant to section 12.~~

(d) The timely deposit of required payments to the pension

fund for the local government or in which the local government

participates.

(e) For school districts, an educational plan.

(f) Any other actions considered necessary by the emergency

manager in the emergency manager's discretion to achieve the

objectives of the financial and operating plan, alleviate the

financial emergency, and remove the local government from

receivership.

(2) Within 45 days after the emergency manager's appointment,

the emergency manager shall submit the financial and operating

plan, and an educational plan if the local government is a school

district, to the state treasurer, with a copy to the superintendent

of public instruction if the local government is a school district,

and to the chief administrative officer and governing body of the

local government. The plan shall be regularly reexamined by the

emergency manager and the state treasurer and may be modified from

time to time by the emergency manager with notice to the state

treasurer. If the emergency manager reduces his or her revenue

estimates, the emergency manager shall modify the plan to conform

to the revised revenue estimates.

(3) The financial and operating plan shall be in a form as

provided by the state treasurer and shall contain that information

for each year during which year the plan is in effect that the

emergency manager, in consultation with the state financial

authority, specifies. The financial and operating plan may serve as

a deficit elimination plan otherwise required by law if so approved

by the state financial authority.

(4) The emergency manager, within 30 days of submitting the

financial and operating plan to the state financial authority,

shall conduct a public informational meeting on the plan and any

modifications to the plan. This subsection does not mean that the

emergency manager must receive public approval before he or she

implements the plan or any modification of the plan.

(5) For a local government in receivership immediately ~~prior~~

~~to the effective date of this act,~~ before March 28, 2013, a

financial and operating plan for that local government adopted

under former 2011 PA 4 or a financial plan for that local

government adopted under former 1990 PA 72 shall be effective and

enforceable as a financial and operating plan for the local

government under this act until modified or rescinded under this

act.

Sec. 12. (1) An emergency manager may take 1 or more of the

following additional actions with respect to a local government

that is in receivership, notwithstanding any charter provision to

the contrary:

(a) Analyze factors and circumstances contributing to the

financial emergency of the local government and initiate steps to

correct the condition.

(b) Amend, revise, approve, or disapprove the budget of the

local government, and limit the total amount appropriated or

expended.

federal, state, and local funds earmarked for the local government.

These funds may include, but are not limited to, funds for specific

programs and the retirement of debt.

(d) Require and approve or disapprove, or amend or revise, a

plan for paying all outstanding obligations of the local

government.

(e) Require and prescribe the form of special reports to be

made by the finance officer of the local government to its

governing body, the creditors of the local government, the

emergency manager, or the public.

(f) Examine all records and books of account, and require

under the procedures of the uniform budgeting and accounting act,

1968 PA 2, MCL 141.421 to 141.440a, or 1919 PA 71, MCL 21.41 to

21.55, or both, the attendance of witnesses and the production of

books, papers, contracts, and other documents relevant to an

analysis of the financial condition of the local government.

(g) ~~Make, approve, or disapprove~~ Disapprove any appropriation,

contract, expenditure, or loan, the creation of any new position,

or the filling of any vacancy in a position by any appointing

authority.

(h) Review payrolls or other claims against the local

government before payment.

(i) Notwithstanding any minimum staffing level requirement

established by charter or contract, establish and implement

staffing levels for the local government.

~~(j) Reject, modify, or terminate 1 or more terms and~~

~~conditions of an existing contract.~~

~~(k) Subject to section 19, after meeting and conferring with~~

~~the appropriate bargaining representative and, if in the emergency~~

~~manager's sole discretion and judgment, a prompt and satisfactory~~

~~resolution is unlikely to be obtained, reject, modify, or terminate~~

~~1 or more terms and conditions of an existing collective bargaining~~

~~agreement. The rejection, modification, or termination of 1 or more~~

~~terms and conditions of an existing collective bargaining agreement~~

~~under this subdivision is a legitimate exercise of the state's~~

~~sovereign powers if the emergency manager and state treasurer~~

~~determine that all of the following conditions are satisfied:~~

(i~~) The financial emergency in the local government has~~

~~created a circumstance in which it is reasonable and necessary for~~

~~the state to intercede to serve a significant and legitimate public~~

~~purpose.~~

(ii~~) Any plan involving the rejection, modification, or~~

~~termination of 1 or more terms and conditions of an existing~~

~~collective bargaining agreement is reasonable and necessary to deal~~

~~with a broad, generalized economic problem.~~

(~~iii~~~~) Any plan involving the rejection, modification, or~~

~~termination of 1 or more terms and conditions of an existing~~

~~collective bargaining agreement is directly related to and designed~~

~~to address the financial emergency for the benefit of the public as~~

~~a whole.~~

(iv~~) Any plan involving the rejection, modification, or~~

~~termination of 1 or more terms and conditions of an existing~~

~~collective bargaining agreement is temporary and does not target~~

~~specific classes of employees.~~

(j) (l) Act as sole agent of the local government in

collective bargaining with employees or representatives and approve

any contract or agreement.

(k) ~~(m)~~ If a municipal government's pension fund is not

actuarially funded at a level of 80% or more, according to the most

recent governmental accounting standards board's applicable

standards, at the time the most recent comprehensive annual

financial report for the municipal government or its pension fund

was due, the emergency manager may remove 1 or more of the serving

trustees of the local pension board or, if the state treasurer

appoints the emergency manager as the sole trustee of the local

pension board, replace all the serving trustees of the local

pension board. For the purpose of determining the pension fund

level under this subdivision, the valuation shall exclude the net

value of pension bonds or evidence of indebtedness. The annual

actuarial valuation for the municipal government's pension fund

shall use the actuarial accrued liabilities and the actuarial value

of assets. If a pension fund uses the aggregate actuarial cost

method or a method involving a frozen accrued liability, the

retirement system actuary shall use the entry age normal actuarial

cost method. If the emergency manager serves as sole trustee of the

local pension board, all of the following apply:

(i) The emergency manager shall assume and exercise the

authority and fiduciary responsibilities of the local pension board

including, to the extent applicable, setting and approval of all

actuarial assumptions for pension obligations of a municipal

government to the local pension fund.

(ii) The emergency manager shall fully comply with the public

employee retirement system investment act, 1965 PA 314, MCL 38.1132

to ~~38.1140m,~~ 38.1141, and section 24 of article IX of the state

constitution of 1963, and any actions taken shall be consistent

with the pension fund's qualified plan status under the federal

internal revenue code.

(iii) The emergency manager shall not make changes to a local

pension fund without identifying the changes and the costs and

benefits associated with the changes and receiving the state

treasurer's approval for the changes. If a change includes the

transfer of funds from 1 pension fund to another pension fund, the

valuation of the pension fund receiving the transfer must be

actuarially funded at a level of 80% or more, according to the most

recent governmental accounting standards board's applicable

standards, at the time the most recent comprehensive annual

financial report for the municipal government was due.

(iv) The emergency manager's assumption and exercise of the

authority and fiduciary responsibilities of the local pension board

shall end not later than the termination of the receivership of the

municipal government as provided in this act.

(l) ~~(n)~~ Consolidate or eliminate departments of the local

government or transfer functions from 1 department to another and

appoint, supervise, and, at his or her discretion, remove

administrators, including heads of departments other than elected

officials.

(m) ~~(o)~~ Employ or contract for, at the expense of the local

government and with the approval of the state financial authority,

auditors and other technical personnel considered necessary to

implement this act.

(n) ~~(p)~~ Retain 1 or more persons or firms, which may be an

individual or firm selected from a list approved by the state

treasurer, to perform the duties of a local inspector or a local

auditor as described in this subdivision. The duties of a local

inspector are to assure integrity, economy, efficiency, and

effectiveness in the operations of the local government by

conducting meaningful and accurate investigations and forensic

audits, and to detect and deter waste, fraud, and abuse. At least

annually, a report of the local inspector shall be submitted to the

emergency manager, the state treasurer, the superintendent of

public instruction if the local government is a school district,

and each state senator and state representative who represents that

local government. The annual report of the local inspector shall be

posted on the local government's website within 7 days after the

report is submitted. The duties of a local auditor are to assure

that internal controls over local government operations are

designed and operating effectively to mitigate risks that hamper

the achievement of the emergency manager's financial plan, assure

that local government operations are effective and efficient,

assure that financial information is accurate, reliable, and

timely, comply with policies, regulations, and applicable laws, and

assure assets are properly managed. At least annually, a report of

the local auditor shall be submitted to the emergency manager, the

state treasurer, the superintendent of public instruction if the

local government is a school district, and each state senator and

state representative who represents that local government. The

annual report of the local auditor shall be posted on the local

government's website within 7 days after the report is submitted.

(o) ~~(q)~~ An emergency manager may initiate court proceedings in

the Michigan court of claims or in the circuit court of the county

in which the local government is located in the name of the local

government to enforce compliance with any of his or her orders or

any constitutional or legislative mandates, or to restrain

violations of any constitutional or legislative power or his or her

orders.

(p) ~~(r)~~ Subject to ~~section~~ sections 15 and 19, if provided in

the financial and operating plan, or otherwise with the prior

written approval of the governor or his or her designee, sell,

lease, convey, assign, or otherwise use or transfer the assets,

liabilities, functions, or responsibilities of the local

government, provided the use or transfer of assets, liabilities,

functions, or responsibilities for this purpose does not endanger

the health, safety, or welfare of residents of the local government

or unconstitutionally impair a bond, note, security, or uncontested

legal obligation of the local government.

(q) ~~(s)~~ Apply for a loan from the state on behalf of the local

government, subject to the conditions of the emergency municipal

loan act, 1980 PA 243, MCL 141.931 to 141.942.

(r) ~~(t)~~ Order, as necessary, 1 or more millage elections for

the local government consistent with the Michigan election law,

1954 PA 116, MCL 168.1 to 168.992, sections 6 and 25 through 34 of

article IX of the state constitution of 1963, and any other

applicable state law.

(s) ~~(u)~~ Subject to section 19, authorize the borrowing of

money by the local government as provided by law.

(t) ~~(v)~~ Approve or disapprove of the issuance of obligations

of the local government on behalf of the local government under

this subdivision. An election to approve or disapprove of the

issuance of obligations of the local government pursuant to this

subdivision shall only be held at the general November election.

(u) ~~(w)~~ Enter into agreements with creditors or other persons

or entities for the payment of existing debts, including the

settlement of claims by the creditors.

(v) ~~(x)~~ Enter into agreements with creditors or other persons

or entities to restructure debt on terms, at rates of interest, and

with security as shall be agreed among the parties, subject to

approval by the state treasurer.

(w) ~~(y)~~ Enter into agreements with other local governments,

public bodies, or entities for the provision of services, the joint

exercise of powers, or the transfer of functions and

responsibilities.

(x) ~~(z)~~ For municipal governments, enter into agreements with

other units of municipal government to transfer property of the

municipal government under 1984 PA 425, MCL 124.21 to 124.30, or as

otherwise provided by law, subject to approval by the state

treasurer.

(y) ~~(aa) Enter into~~ Approve agreements with 1 or more other

local governments or public bodies for the consolidation of

services.

(z) ~~(bb)~~ For a city, village, or township, the emergency

manager may recommend to the state boundary commission that the

municipal government consolidate with 1 or more other municipal

governments, if the emergency manager determines that consolidation

would materially alleviate the financial emergency of the municipal

government and would not materially and adversely affect the

financial situation of the government or governments with which the

municipal government in receivership is consolidated. Consolidation

under this subdivision shall proceed as provided by law.

~~(cc) For municipal governments, with approval of the governor,~~

~~disincorporate or dissolve the municipal government and assign its~~

~~assets, debts, and liabilities as provided by law. The~~

~~disincorporation or dissolution of the local government is subject~~

~~to a vote of the electors of that local government if required by~~

~~law.~~

(aa) ~~(dd)~~ Exercise solely, for and on behalf of the local

government, all other authority and responsibilities of the chief

administrative officer and governing body concerning the adoption,

amendment, and enforcement of ordinances or resolutions of the

local government as provided in the following acts:

(i) The home rule city act, 1909 PA 279, MCL 117.1 to 117.38.

(ii) The fourth class city act, 1895 PA 215, MCL 81.1 to

113.20.

(iii) The charter township act, 1947 PA 359, MCL 42.1 to

42.34.

(iv) 1851 PA 156, MCL 46.1 to 46.32.

(v) 1966 PA 293, MCL 45.501 to 45.521.

(vi) The general law village act, 1895 PA 3, MCL 61.1 to

74.25.

(vii) The home rule village act, 1909 PA 278, MCL 78.1 to

78.28.

(viii) The revised school code, 1976 PA 451, MCL 380.1 to

380.1852.

(ix) The state school aid act of 1979, 1979 PA 94, MCL

388.1601 to 388.1896.

(bb) ~~(ee)~~ Take any other action or exercise any power or

authority of any officer, employee, department, board, commission,

or other similar entity of the local government, whether elected or

appointed, relating to the operation of the local government. The

power of the emergency manager shall be superior to and supersede

the power of any of the foregoing officers or entities.

(cc) ~~(ff)~~ Remove, replace, appoint, or confirm the

appointments to any office, board, commission, authority, or other

entity ~~which~~ that is within or is a component unit of the local

government.

(2) Except as otherwise provided in this act, during the

pendency of the receivership, the authority of the chief

administrative officer and governing body to exercise power for and

on behalf of the local government under law, charter, and ordinance

shall be suspended and vested in the emergency manager.

(3) Except as otherwise provided in this subsection, any

contract involving a cumulative value of $50,000.00 or more is

subject to competitive bidding by an emergency manager. However, if

a potential contract involves a cumulative value of $50,000.00 or

more, the emergency manager may submit the potential contract to

the state treasurer for review and the state treasurer may

authorize that the potential contract is not subject to competitive

bidding.

(4) ~~An emergency manager appointed for a city or village shall~~

~~not sell or transfer a public utility furnishing light, heat, or~~

~~power without the approval of a majority of the electors of the~~

~~city or village voting thereon, or a greater number if the city or~~

~~village charter provides, as required by section 25 of article VII~~

~~of the state constitution of 1963. In addition, an~~ An emergency

manager appointed for a city or village shall not utilize the

assets of a public utility furnishing heat, light, or power, the

finances of which are separately maintained and accounted for by

the city or village, to satisfy the general obligations of the city

or village.

Sec. 13. Upon appointment of an emergency manager and during

the pendency of the receivership, the salary, wages, or other

compensation, including the accrual of postemployment benefits, and

other benefits of the chief administrative officer and members of

the governing body of the local government shall not be eliminated

or reduced. ~~This section does not authorize the impairment of~~

~~vested pension benefits. If an emergency manager has reduced,~~

~~suspended, or eliminated the salary, wages, or other compensation~~

~~of the chief administrative officer and members of the governing~~

~~body of a local government before the effective date of this act,~~

~~the reduction, suspension, or elimination is valid to the same~~

~~extent had it occurred after the effective date of this act. The~~

~~emergency manager may restore, in whole or in part, any of the~~

~~salary, wages, other compensation, or benefits of the chief~~

~~administrative officer and members of the governing body during the~~

~~pendency of the receivership, for such time and on such terms as~~

~~the emergency manager considers appropriate, to the extent that the~~

~~emergency manager finds that the restoration of salary, wages,~~

~~compensation, or benefits is consistent with the financial and~~

~~operating plan.~~

Sec. 14. In addition to the actions otherwise authorized in

this act, an emergency manager for a school district may take 1 or

more of the following additional actions with respect to a school

district that is in receivership:

(a) Negotiate, renegotiate, approve, and enter into contracts

on behalf of the school district.

(b) Receive and disburse on behalf of the school district all

federal, state, and local funds earmarked for the school district.

These funds may include, but are not limited to, funds for specific

programs and the retirement of debt.

instruction for a reduced class schedule in accordance with

administrative rules governing the distribution of state school

aid.

(d) Subject to ~~section~~ sections 15 and 19, sell, assign,

transfer, or otherwise use the assets of the school district to

meet past or current obligations or assure the fiscal

accountability of the school district, provided the use,

assignment, or transfer of assets for this purpose does not impair

the education of the pupils of the school district. The power under

this subdivision includes the closing of schools or other school

buildings in the school district.

(e) Approve or disapprove of the issuance of obligations of

the school district.

(f) Exercise solely, for and on behalf of the school district,

all other authority and responsibilities affecting the school

district that are prescribed by law to the school board and

superintendent of the school district.

(g) With the approval of the state treasurer, employ or

contract for, at the expense of the school district, school

administrators considered necessary to implement this act.

Sec. 15. (1) ~~Unless the potential sale and value of an asset~~

~~is included in the emergency manager's financial and operating~~

~~plan, the~~ An emergency manager shall not sell an asset of the local

government valued at more than ~~$50,000.00 without the state~~

~~treasurer's approval.~~$10,000.00, and an emergency manager shall not

sell any real property owned by the local government.

(2) A provision of an existing collective bargaining agreement

that authorizes the payment of a benefit upon the death of a police

officer or firefighter that occurs in the line of duty shall not be

impaired and is not subject to any provision of this act

authorizing an emergency manager to reject, modify, or terminate 1

or more terms of an existing collective bargaining agreement.

Sec. 19. (1) Except as otherwise provided in this subsection,

before an emergency manager executes an action under section

~~12(1)(k), (r), or (u)~~ 12(1)(p) or (s) or section 14(d), he or she

shall submit his or her proposed action to the governing body of

the local government. The governing body of the local government

shall have 10 days from the date of submission to approve or

disapprove the action proposed by the emergency manager. If the

governing body of the local government does not act within 10 days,

the proposed action is considered approved by the governing body of

the local government and the emergency manager may then execute the

proposed action. For an action under section ~~12(1)(r)~~ 12(1)(p) or

section 14(d), this subsection only applies if the asset,

liability, function, or responsibility involves an amount of

~~$50,000.00~~ $10,000.00 or more.

(2) If the governing body of the local government disapproves

the proposed action within 10 days, the governing body of the local

government shall, within 7 days of its disapproval of the action

proposed by the emergency manager, submit to the local emergency

financial assistance loan board an alternative proposal that would

yield substantially the same financial result as the action

proposed by the emergency manager. The local emergency financial

assistance loan board shall have 30 days to review both the

alternative proposal submitted by the governing body of the local

government and the action proposed by the emergency manager and to

approve either the alternative proposal submitted by the governing

body of the local government or the action proposed by the

emergency manager. The local emergency financial assistance loan

board shall approve the proposal that best serves the interest of

the public in that local government. The emergency manager shall

implement the alternative proposal submitted by the governing body

of the local government or the action proposed by the emergency

manager, whichever is approved by the local emergency financial

assistance loan board.

Sec. 20. (1) An emergency manager is immune from liability as

provided in section 7(5) of 1964 PA 170, MCL 691.1407. A person

employed by an emergency manager is immune from liability as

provided in section 7(2) of 1964 PA 170, MCL 691.1407.

(2) The attorney general shall defend any civil claim, demand,

or lawsuit ~~which~~ that challenges any of the following:

(a) The validity of this act.

(b) The authority of a state official or officer acting under

this act.

manager is or was acting within the scope of authority for an

emergency manager under this act.

(3) With respect to any aspect of a receivership under this

act, the costs incurred by the attorney general in carrying out the

responsibilities of subsection (2) for attorneys, experts, court

filing fees, and other reasonable and necessary expenses shall be

~~at the expense of the local government that is subject to that~~

~~receivership and shall be reimbursed to the attorney general by the~~

~~local government. The failure of a municipal government that is or~~

~~was in receivership to remit to the attorney general the costs~~

~~incurred by the attorney general within 30 days after written~~

~~notice to the municipal government from the attorney general of the~~

~~costs is a debt owed to this state and shall be recovered by the~~

~~state treasurer as provided in section 17a(5) of the Glenn Steil~~

~~state revenue sharing act of 1971, 1971 PA 140, MCL 141.917a. The~~

~~failure of a school district that is or was in receivership to~~

~~remit to the attorney general the costs incurred by the attorney~~

~~general within 30 days after written notice to the school district~~

~~from the attorney general of the costs is a debt owed to this state~~

~~and shall be recovered by the state treasurer as provided in the~~

~~state school aid act of 1979, 1979 PA 94, MCL 388.1601 to~~

~~388.1896.~~borne by this state and shall be paid from the general

fund of this state.

(4) An emergency manager may procure and maintain, at the

expense of the local government for which the emergency manager is

appointed, worker's compensation, general liability, professional

liability, and motor vehicle insurance for the emergency manager

and any employee, agent, appointee, or contractor of the emergency

manager as may be provided to elected officials, appointed

officials, or employees of the local government. The insurance

procured and maintained by an emergency manager may extend to any

claim, demand, or lawsuit asserted or costs recovered against the

emergency manager and any employee, agent, appointee, or contractor

of the emergency manager from the date of appointment of the

emergency manager to the expiration of the applicable statute of

limitation if the claim, demand, or lawsuit asserted or costs

recovered against the emergency manager or any employee, agent,

appointee, or contractor of the emergency manager resulted from

conduct of the emergency manager or any employee, agent, appointee,

or contractor of the emergency manager taken in accordance with

this act during the emergency manager's term of service.

(5) If, after the date that the service of an emergency

manager is concluded, the emergency manager or any employee, agent,

appointee, or contractor of the emergency manager is subject to a

claim, demand, or lawsuit arising from an action taken during the

service of that emergency manager, and not covered by a procured

worker's compensation, general liability, professional liability,

or motor vehicle insurance, litigation expenses of the emergency

manager or any employee, agent, appointee, or contractor of the

emergency manager, including attorney fees for civil ~~and criminal~~

proceedings and preparation for reasonably anticipated proceedings,

and payments made in settlement of civil proceedings both filed and

anticipated, shall be ~~paid out of the funds of the local government~~

~~that is or was subject to the receivership administered by that~~

~~emergency manager, provided that the litigation expenses are~~

~~approved by the state treasurer and that the state treasurer~~

~~determines that the conduct resulting in actual or threatened legal~~

~~proceedings that is the basis for the payment is based upon both of~~

~~the following:~~borne by this state and shall be paid from the

general fund of this state.

~~(a) The scope of authority of the person or entity seeking the~~

~~payment.~~

~~(b) The conduct occurred on behalf of a local government while~~

~~it was in receivership under this act.~~

~~(6) The failure of a municipal government to honor and remit~~

~~the legal expenses of a former emergency manager or any employee,~~

~~agent, appointee, or contractor of the emergency manager as~~

~~required by this section is a debt owed to this state and shall be~~

~~recovered by the state treasurer as provided in section 17a(5) of~~

~~the Glenn Steil state revenue sharing act of 1971, 1971 PA 140, MCL~~

~~141.917a. The failure of a school district to honor and remit the~~

~~legal expenses of a former emergency manager or any employee,~~

~~agent, appointee, or contractor of the emergency manager as~~

~~required by this section is a debt owed to this state and shall be~~

~~recovered by the state treasurer as provided in the state school~~

~~aid act of 1979, 1979 PA 94, MCL 388.1601 to 388.1896.~~

Sec. 22. (1) If an emergency manager determines that the

financial emergency that he or she was appointed to manage has been

rectified, the emergency manager shall inform the governor and the

state treasurer.

(2) If the governor disagrees with the emergency manager's

determination that the financial emergency has been rectified, the

governor shall inform the emergency manager and the term of the

emergency manager shall continue. ~~or the governor shall appoint a~~

~~new emergency manager.~~

(3) Subject to subsection (4), if the governor agrees that the

financial emergency has been rectified, the emergency manager has

adopted a 2-year budget as required under section 21, and the

financial conditions of the local government have been corrected in

a sustainable fashion as required under section 9(7), the governor

may do either of the following:

(a) Remove the local government from receivership.

(b) Appoint a receivership transition advisory board as

provided in section 23.

(4) Before removing a local government from receivership, the

governor may impose 1 or more of the following conditions on the

local government:

(a) The implementation of financial best practices within the

local government.

(b) The adoption of a model charter or model charter

provisions.

official responsibilities are properly discharged.

Sec. 24. The governor may, upon his or her own initiative or

after receiving a recommendation from a receivership transition

advisory board, determine that the financial conditions of a local

government have not been corrected in a sustainable fashion as

required under section 9(7), and ~~appoint a new emergency~~

~~manager.~~the local government shall select 1 of the other local

government options as provided in section 7.

Sec. 25. (1) A neutral evaluation process may be utilized as

provided for in this act. The state treasurer may, in his or her

own discretion, determine that the state monitor the neutral

evaluation process initiated by a local government under this

section and may identify 1 or more individuals who may attend and

observe the neutral evaluation process. A local government shall

initiate the neutral evaluation process by providing notice by

certified mail of a request for neutral evaluation process to all

interested parties. If the local government does not provide notice

under this subsection to all interested parties within 7 days after

selecting the neutral evaluation process option, the treasurer ~~may~~

~~require the local government to go into receivership and proceed~~

~~under section 9.~~shall provide notice to any interested parties who

were not notified by the local government.

(2) An interested party shall respond within 10 business days

of receipt of notice of the local government's request for neutral

evaluation process.

(3) The local government and the interested parties agreeing

to participate in the neutral evaluation process shall, through a

mutually agreed-upon process, select a neutral evaluator to oversee

the neutral evaluation process and facilitate all discussions in an

effort to resolve their disputes.

(4) If the local government and interested parties fail to

agree on a neutral evaluator within 7 days after the interested

parties have responded to the notification sent by the local

government, the local government shall, within 7 days, select 5

qualified neutral evaluators and provide their names, references,

and backgrounds to the participating interested parties. Within 3

business days, a majority of participating interested parties may

disqualify up to 4 names from the list. If a majority of

participating interested parties disqualify 4 names from the list,

the remaining candidate shall be the neutral evaluator. If the

majority of participating parties disqualify fewer than 4 names,

the local government shall choose which of the remaining candidates

shall be the neutral evaluator.

(5) If an interested party objects to the qualifications of

the neutral evaluator after the process for selection in subsection

(4) is complete, the interested party may appeal to the state

treasurer to determine if the neutral evaluator meets the

qualifications under subsection (6). If the state treasurer

determines that the qualifications have been met, the neutral

evaluation process shall continue. If the state treasurer

determines that the qualifications have not been met, the state

treasurer shall select the neutral evaluator.

(6) A neutral evaluator shall have experience and training in

conflict resolution and alternative dispute resolution and have at

least 1 of the following qualifications:

(a) At least 10 years of high-level business or legal

experience involving bankruptcy or service as a United States

bankruptcy judge.

(b) At least 10 years of combined professional experience or

training in municipal finance in 1 or more of the following areas:

(i) Municipal organization.

(ii) Municipal debt restructuring.

(iii) Municipal finance dispute resolution.

(iv) Chapter 9 bankruptcy.

(v) Public finance.

(vi) Taxation.

(vii) Michigan constitutional law.

(viii) Michigan labor law.

(ix) Federal labor law.

(7) The neutral evaluator's performance shall be impartial,

objective, independent, and free from prejudice. The neutral

evaluator shall not act with partiality or prejudice based on any

participant's personal characteristics, background, values, or

beliefs, or performance during the neutral evaluation process.

(8) The neutral evaluator shall avoid a conflict of interest

and the appearance of a conflict of interest during the neutral

evaluation process. The neutral evaluator shall make a reasonable

inquiry to determine whether there are any facts that a reasonable

individual would consider likely to create a potential or actual

conflict of interest. Notwithstanding subsection (16), if the

neutral evaluator is informed of the existence of any facts that a

reasonable individual would consider likely to create a potential

or actual conflict of interest, the neutral evaluator shall

disclose these facts in writing to the local government and all

interested parties involved in the neutral evaluation process. If

any participating interested party to the neutral evaluation

process objects to the neutral evaluator, that interested party

shall notify the local government and all other participating

interested parties to the neutral evaluation process, including the

neutral evaluator, within 15 days of receipt of the notice from the

neutral evaluator. The neutral evaluator shall withdraw, and a new

neutral evaluator shall be selected as provided in subsections (3)

and (4).

(9) Before commencing a neutral evaluation process, the

neutral evaluator shall not establish another fiscal or fiduciary

relationship with any of the interested parties or the local

government in a manner that would raise questions about the

integrity of the neutral evaluation process, except that the

neutral evaluator may conduct further neutral evaluation processes

regarding other potential local public entities that may involve

some of the same or similar constituents to a prior mediation.

(10) The neutral evaluator shall conduct the neutral

evaluation process in a manner that promotes voluntary, uncoerced

decision making in which each participant makes free and informed

choices regarding the neutral evaluation process and outcome.

(11) The neutral evaluator shall not impose a settlement on

the participants. The neutral evaluator shall use his or her best

efforts to assist the participants to reach a satisfactory

resolution of their disputes. Subject to the discretion of the

neutral evaluator, the neutral evaluator may make oral or written

recommendations for a settlement or plan of readjustment to a

participant privately or to all participants jointly.

(12) The neutral evaluator shall inform the local government

and all participants of the provisions of chapter 9 relative to

other chapters of title 11 of the United States Code, 11 USC 101 to

1532. This instruction shall highlight the limited authority of

United States bankruptcy judges in chapter 9, including, but not

limited to, the restriction on federal bankruptcy judges' authority

to interfere with or force liquidation of a local government's

property and the lack of flexibility available to federal

bankruptcy judges to reduce or cram down debt repayments and

similar efforts not available to reorganize the operations of the

local government that may be available to a corporate entity.

(13) The neutral evaluator may request from the participants

documentation and other information that the neutral evaluator

believes may be helpful in assisting the participants to address

the obligations between them. This documentation may include the

status of funds of the local government that clearly distinguishes

between general funds and special funds and the proposed plan of

readjustment prepared by the local government. The participants

shall respond to a request from the neutral evaluator in a timely

manner.

(14) The neutral evaluator shall provide counsel and guidance

to all participants, shall not be a legal representative of any

participant, and shall not have a fiduciary duty to any

participant.

(15) If a settlement with all interested parties and the local

government occurs, the neutral evaluator may assist the

participants in negotiating a pre-petitioned, pre-agreed-upon plan

of readjustment in connection with a potential chapter 9 filing.

(16) If at any time during the neutral evaluation process the

local government and a majority of the representatives of the

interested parties participating in the neutral evaluation process

wish to remove the neutral evaluator, the local government or any

interested party may make a request to the other interested parties

to remove the neutral evaluator. If the local government and a

majority of the interested parties agree that the neutral evaluator

should be removed and agree on who should replace the neutral

evaluator, the local government and the interested parties shall

select a new neutral evaluator.

(17) The local government and all interested parties

participating in the neutral evaluation process shall negotiate in

good faith.

(18) The local government and each interested party shall

provide a representative to attend all sessions of a neutral

evaluation process. Each representative shall have the authority to

settle and resolve disputes or shall be in a position to present

any proposed settlement or plan of readjustment to the participants

in the neutral evaluation process.

(19) The local government and the participating interested

parties shall maintain the confidentiality of the neutral

evaluation process and shall not at the conclusion of the neutral

evaluation process or during any bankruptcy proceeding disclose

statements made, information disclosed, or documents prepared or

produced unless a judge in a chapter 9 bankruptcy proceeding orders

that the information be disclosed to determine the eligibility of a

local government to proceed with a bankruptcy proceeding under

chapter 9, or as otherwise required by law.

(20) A neutral evaluation process authorized by this act shall

not last for more than 60 days following the date the neutral

evaluator is initially selected, unless the local government or a

majority of participating interested parties elect to extend the

neutral evaluation process for up to 30 additional days. The

neutral evaluation process shall not last for more than 90 days

following the date the neutral evaluator is initially selected.

(21) The local government shall pay 50% of the costs of a

neutral evaluation process, including, but not limited to, the fees

of the neutral evaluator, and the interested parties shall pay the

balance of the costs of the neutral evaluation process, unless

otherwise agreed to by the local government and a majority of the

interested parties.

(22) The neutral evaluation process shall end if any of the

following occur:

(a) The local government and the participating interested

parties execute a settlement agreement. However, if the state

treasurer determines that the settlement agreement does not provide

sufficient savings to the local government, the state treasurer

shall provide notice to the local government that the settlement

agreement does not provide sufficient savings to the local

government and the local government shall proceed under 1 of the

other local government options as provided in section 7.

(b) The local government and the participating interested

parties reach an agreement or proposed plan of readjustment that

requires the approval of a bankruptcy judge.

following the date the neutral evaluator was selected, the local

government and the participating interested parties have not

reached an agreement, and neither the local government nor a

majority of the interested parties elect to extend the neutral

evaluation process past the initial 60-day time period.

(d) The local government initiated the neutral evaluation

process under subsection (1) and did not receive a response from

any interested party within the time specified in subsection (2).

(e) The fiscal condition of the local government deteriorates

to the point that necessitates the need to proceed under the

chapter 9 bankruptcy option pursuant to section 26.

(23) If the 60-day time period for a neutral evaluation

process expires, including any extension of the neutral evaluation

process past the initial 60-day time period under subsection (20),

and the neutral evaluation process is complete with differences

resolved, the neutral evaluation process shall be concluded. If the

neutral evaluation process does not resolve all pending disputes

with the local government and the interested parties, or if

subsection (22)(b), (c), or (d) applies, the governing body of the

local government shall adopt a resolution recommending that the

local government proceed under either a consent agreement or

chapter 9 bankruptcy and submit the resolution to the governor and

the state treasurer. ~~Except as otherwise provided in this~~

~~subsection, if~~ If the local government has a strong mayor, the

resolution requires strong mayor approval before the local

government proceeds under chapter 9. ~~The resolution shall include a~~

~~statement determining that the financial condition of the local~~

~~government jeopardizes the health, safety, and welfare of the~~

~~residents who reside within the local government or service area of~~

~~the local government absent the protections of chapter 9. If the~~

~~governor approves the resolution for the local government to~~

~~proceed under chapter 9, the governor shall inform the local~~

~~government in writing of the decision. The governor may place~~

~~contingencies on a local government in order to proceed under~~

~~chapter 9 including, but not limited to, appointing a person to act~~

~~exclusively on behalf of the local government in the chapter 9~~

~~bankruptcy proceedings. If the governing body of the local~~

~~government fails to adopt a resolution within 7 days after the~~

~~neutral evaluation process is concluded as provided in this~~

~~subsection, the governor may appoint a person to act exclusively on~~

~~behalf of the local government in chapter 9 bankruptcy proceedings.~~

~~If the governor does not appoint a person to act exclusively on~~

~~behalf of the local government in chapter 9 bankruptcy proceedings,~~

~~the chief administrative officer of the local government shall act~~

~~exclusively on behalf of the local government in chapter 9~~

~~bankruptcy proceedings. Upon receiving written approval from the~~

~~governor under section 26, the local government may file a petition~~

~~under chapter 9 and exercise powers under federal bankruptcy law.~~

Enacting section 1. This amendatory act takes effect 90 days

after the date it is enacted into law.

Enacting section 2. This amendatory act does not take effect