October 27, 2015, Introduced by Senator BRANDENBURG and referred to the Committee on Finance.
A bill to amend 1933 PA 94, entitled
"The revenue bond act of 1933,"
by amending the title and section 3 (MCL 141.103), the title as
amended by 1998 PA 196 and section 3 as amended by 2002 PA 465, and
by adding sections 7b, 21a, 22a, and 24a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to authorize public corporations, or officers of
certain public corporations, to purchase, acquire, construct,
improve, enlarge, extend, or repair public improvements within or
without their corporate limits, and to own, operate, and maintain
the same; to authorize the creation, operation, and financing of
certain delinquent tax systems; to authorize the condemnation of
property for such public improvements; to provide for the
imposition and collection of charges, fees, rentals, or rates for
the services, facilities, and commodities furnished by such public
improvements; to provide for the issuance of bonds or notes and
refunding bonds or notes payable from the revenues of public
improvements or from delinquent tax systems; to provide for a
pledge by public corporations of their full faith and credit and
the levy of taxes without limitation as to rate or amount to the
extent necessary for the payment of the bonds or notes, or for
advancing money from general funds for payment of bonds or notes;
to provide for payment, retirement, and security of such bonds; to
provide for the imposition of special assessment bonds for the
purpose of refunding outstanding revenue bonds; to prescribe the
powers and duties of the department of treasury and of the
municipal finance commission or its successor agency relative to
such bonds or notes and relative to private activity bonds issued
by a state or local governmental entity; to provide for other
matters in respect to such public improvements and bonds or notes
and to validate action taken and bonds issued; and to prescribe
penalties and provide remedies.
Sec. 3. As used in this act:
(a) "Public corporation" means a county, city, village,
township, school district, port district, or metropolitan district
of the state or a combination of these if authorized by law to act
jointly; an authority created by or under an act of the
legislature; or a municipal health facilities corporation or
subsidiary municipal health facilities corporation incorporated as
provided in the municipal health facilities corporations act, 1987
PA 230, MCL 331.1101 to 331.1507.
(b) "Public improvements" means only the following
improvements: housing facilities; garbage disposal plants; rubbish
disposal plants; incinerators; transportation systems, including
plants, works, instrumentalities, and properties used or useful in
connection with those systems; sewage disposal systems, including
sanitary sewers, combined sanitary and storm sewers, plants, works,
instrumentalities, and properties used or useful in connection with
the collection, treatment, or disposal of sewage or industrial
wastes; storm water systems, including storm sewers, plants, works,
instrumentalities, and properties used or useful in connection with
the collection, treatment, or disposal of storm water; water supply
systems, including plants, works, instrumentalities, and properties
used or useful in connection with obtaining a water supply, the
treatment of water, or the distribution of water; utility systems
for supplying light, heat, or power, including plants, works,
instrumentalities, and properties used or useful in connection with
those systems; approved cable television systems, approved cable
communication systems, or telephone systems, including plants,
works, instrumentalities, and properties used or useful in
connection with those systems; automobile parking facilities,
including within or as part of the facilities areas or buildings
that may be rented or leased to private enterprises serving the
public; yacht basins; harbors; docks; wharves; terminal facilities;
elevated highways; bridges over, tunnels under, and ferries across
bodies of water; community buildings; public wholesale markets for
farm and food products; stadiums; convention halls; auditoriums;
dormitories; hospitals and other health care facilities; buildings
devoted to public use; museums; parks; recreational facilities;
reforestation projects; aeronautical facilities; and marine
railways; or any right or interest in or equipment for these
improvements. The term "public improvement" means the whole or a
part of any of these improvements or of any combination of these
improvements or any interest or participation in these
improvements, as determined by the governing body. The definition
contained in this subdivision does not broaden or enlarge the
extent of a particular public improvement made by a public
corporation.
(c) "Borrower" means a public corporation exercising the power
to issue bonds as provided in this act or a county treasurer
exercising the power to issue notes as provided in this act.
(d) "Governing body" means for a county, the board of
commissioners; for a city, the body having legislative powers; for
a village, the body having legislative powers; for a township, the
township board; for a school district, the board of education; for
a port district, the port commission; for a metropolitan district,
the legislative body of the district; for a municipal health
facilities corporation, the board of trustees; for a nonprofit
subsidiary municipal health facilities corporation, the nonprofit
subsidiary board; and for an authority, the body in which is lodged
general governing powers. If the charter of a public corporation or
applicable law provides that a separate board has general
management over a public improvement, "governing body" means, with
respect to that public improvement, the separate board, subject to
review by the legislative body of the public corporation as the
charter or law may provide. Unless the charter or law specifically
provides otherwise, the separate board shall adopt the bond
authorizing ordinance, but shall not pledge full faith and credit.
(e) "Rates" means the charges, fees, rentals, and rates that
may be fixed and imposed for the services, facilities, and
commodities furnished by a public improvement.
(f) "Revenues" means the income derived from the rates charged
for the services, facilities, and commodities furnished by a public
improvement. Revenues include, to the extent provided in the
authorizing ordinance, earnings on investment of funds of the
public improvement and other revenues derived from or pledged to
operation of the public improvement.
(g) "Net revenues" means the revenues of a public improvement
remaining after deducting the reasonable expenses of
administration, operation, and maintenance of the public
improvement.
(h) "Project cost" or "costs" means the costs of purchasing,
acquiring, constructing, improving, enlarging, extending, or
repairing a public improvement, including any engineering,
architectural, legal, accounting, financial, and other expenses
incident to the public improvement. Project costs include interest
on the bonds, and other obligations of the borrower issued to pay
project costs, during the period of construction and until full
revenues are developed. Project costs include a reserve or addition
to a reserve for payment of principal and interest on the bonds and
the amount required for operation and maintenance until sufficient
revenues have developed.
(i) "Ordinance" means an ordinance, resolution, or other
appropriate legislative enactment of the governing body of a public
corporation.
(j) "Approved cable television system" or "approved cable
communication system" means a cable television or communication
system to which 1 of the following applies:
(i) A municipality acquires or establishes the system either
before January 1, 1987 or before a system is established in that
municipality by a private person.
(ii) A municipality acquires or establishes the system after a
system is established in that municipality by a private person and
after approval by a majority of the electors in the affected area
of that municipality voting on the question of the sale of revenue
bonds to finance the acquisition or establishment of the municipal
system.
(k) "County treasurer" means an elected county treasurer or a
county treasurer appointed under section 5 of 1923 PA 199, MCL
201.35, of a county.
(l) "Delinquent tax revenues" means the delinquent taxes,
interest, penalties and fees, and chargebacks of uncollected
delinquent taxes due or to become due to local units of government
to be collected by a county treasurer as agent for the local unit
of government in connection with a delinquent tax system and
pledged to any borrowing by a county treasurer under section 7b.
Delinquent tax revenues do not include fees, charges, and other
amounts due and payable to the county treasurer under section
87c(3) of the general property tax act, 1893 PA 206, MCL 211.87c.
(m) "Delinquent tax system" means the delinquent tax revolving
fund in any county created and designated under section 87b of the
general property tax act, 1893 PA 206, MCL 211.87b, and continued
under section 87f of the general property tax act, 1893 PA 206, MCL
211.87f.
(n) "Order" means the legislative enactment of a county
treasurer's powers under this act.
Sec. 7b. (1) A county treasurer in any county that has
continued a delinquent tax revolving fund under section 87b of the
general property tax act, 1893 PA 206, MCL 211.87b, may by order of
the county treasurer and without a vote of the electors borrow
money and issue its revenue notes on behalf of itself and the local
units of government secured by delinquent tax revenues from the
county's delinquent tax revolving fund.
(2) In the order authorizing the borrowing and issuance of
notes, the delinquent tax revenues from which the borrowing is to
be repaid shall be pledged as security for the payment of the
principal and interest on the notes and for no other purpose, and
these amounts shall not be used for any other purpose until the
notes are paid in full, including interest. Money and other
property held in the delinquent tax revolving fund, including
collections on the delinquent tax revenues, shall be kept separate
from and shall not be commingled with any other money in the
custody of the county treasurer. The segregated fund or account
shall be established as a part of the delinquent tax revolving fund
and shall be accounted for separately on the books of the county
treasurer.
(3) The proceeds of the notes shall be placed in and used as
the whole or part of the delinquent tax revolving fund established
under section 87b of the general property tax act, 1893 PA 206, MCL
211.87b, after the expenses of borrowing have been deducted.
(4) The notes issued pursuant to this section shall comply
with all of the following:
(a) Be in an aggregate principal amount not exceeding the
aggregate amount of all of the following:
(i) The delinquent tax revenues pledged, exclusive of
interest.
(ii) At the option of the county treasurer, a note reserve
fund in an amount not to exceed 15% of each borrowing.
(iii) The cost of issuance.
(b) Bear interest not exceeding 14.5% per annum.
(c) Be in those denominations, and mature on the date not
exceeding 6 years after their date of issue, as the county
treasurer by order determines.
(d) May be issued at an original issue discount not to exceed
2% of the face value of the note issued.
(e) The order authorizing issuance of the notes may provide
that all or part of the notes shall be subject to prepayment and,
if subject to prepayment, shall provide the amount of call premium
payable, if any, the number of days' notice of prepayment that
shall be given, and whether the notice shall be written or
published, or both. Otherwise, the notes shall not be subject to
prepayment.
(f) The sale and award of notes shall be conducted and made by
the county treasurer at a public or private sale. If a public sale
is held, the notes shall be advertised for sale once not less than
5 days before sale in a publication printed in the English language
and circulated in this state that carries as a part of its regular
service notices of the sales of municipal bonds and that has been
designated in the resolution as a publication complying with these
qualifications. The notice of sale shall be in the form designated
by the county treasurer. The notes may be sold subject to the
option of the county treasurer, and the county treasurer may
withhold a part of the issue from delivery if, in his or her
opinion, sufficient funds are available before delivery of the
notes to make full delivery unnecessary to the purposes of the
borrowing.
(5) If the county board of commissioners provides by
resolution, the notes may also be limited tax full-faith and credit
obligations of the county subject to the state constitution of 1963
as to the levying of any taxes not authorized by the voters or by
law unless the county has held an election pursuant to section 87d
of the general property tax act, 1893 PA 206, MCL 211.87d, if the
county's voters have approved the proposition found in section
87d(1) of the general property tax act, 1893 PA 206, MCL 211.87d,
permitting the county to pledge the county's unlimited taxing power
for the purpose of providing money for the delinquent tax revolving
fund. If the proceeds of the taxes pledged are not sufficient to
pay the principal and interest of the notes when due, the county
shall impose a general ad valorem tax without limitation as to rate
or amount on all taxable property in the county to pay the
principal and interest and may reimburse itself from delinquent
taxes collected.
(6) If the county board of commissioners provides by
resolution, the notes may be secured additionally by a pledge of
the county's general fund.
(7) Notwithstanding any other provisions of this section, all
the following apply:
(a) Interest on the notes may be payable at any time provided
in the order, and may be set, reset, or calculated as provided in
the order.
(b) Notes issued under this section may have 1 or more of the
following attributes:
(i) Made the subject of a put or agreement to repurchase by
the county treasurer.
(ii) Secured by a letter of credit issued by a bank under an
agreement entered into by the county treasurer or by any other
collateral that the county treasurer's order may authorize.
(iii) Callable as set forth in the order.
(iv) Reissued by the county treasurer once reacquired by the
county treasurer under any put or repurchase agreement.
(c) The county treasurer may by order do 1 or more of the
following:
(i) Authorize the issuance of renewal notes.
(ii) Refund or refund in advance notes by the issuance of new
notes, whether the notes to be refunded have or have not matured.
(iii) Issue notes partly to refund notes and partly for any
other purposes authorized by this act.
(iv) Buy and sell any notes issued under this section.
(d) Renewal, refunding, or advance refunding notes shall
comply with all of the following:
(i) Shall be sold and the proceeds applied to the purchase
redemption or payment of the notes to be renewed or refunded.
(ii) Shall not be subject to the revised municipal finance
act, 2001 PA 34, MCL 141.2101 to 141.2821.
(iii) May be sold or resold at a public or private sale.
(iv) May pledge the delinquent taxes pledged in the issue to
be refunded in advance after the original issue is defeased by the
advance refunding issue.
(e) Notes may be issued and secured by a second lien on
delinquent tax revenues, interest, and property tax administration
fees already the subject of a first lien because of the issuance of
a prior note issue.
(f) Any notes issued may be secured in whole or in part under
a trust or escrow agreement, which agreement may also govern the
issuance of renewal notes, refunding notes, and advance refunding
notes. The agreement may authorize the trustee or escrow agent to
make investments of any type authorized in the agreement.
(8) The notes issued under this section and interest on the
notes shall be payable in lawful money of the United States of
America and shall be exempt from all taxation by this state or a
taxing authority in this state.
(9) The notes issued under this section may be made payable at
a bank or trust company, or may be made registrable as to principal
or as to principal and interest under the terms and conditions
specified in the authorizing resolution or by the county treasurer
when awarding the notes.
(10) A county treasurer shall have all the powers granted by
this act to a public corporation and shall exercise those powers by
order. A copy of that order shall be maintained in the records of
the county treasurer, and a second copy shall be filed with the
county clerk on December 31 each year for all such orders issued
that year.
(11) Notwithstanding 1966 PA 293, MCL 45.501 to 45.521, a
county operating under a home rule charter shall not be restricted
by the provisions of the home rule charter in connection with the
powers granted to the county treasurer to issue notes by this
section. The treasurer of a county described in this subsection,
notwithstanding any charter provisions to the contrary, shall have
all of the powers granted to county treasurers by this section.
(12) If the treasurer so authorizes in the order authorizing
the notes, any notes issued may be secured in whole or in part
under a trust or escrow agreement. That agreement may authorize the
trustee or escrow agent to make investments of any type authorized
in the agreement.
(13) Notes issued under this act are exempt from the revised
municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.
Sec. 21a. (1) Delinquent tax revenues shall be fixed before
the issuance of the notes and shall be sufficient to provide for
all of the following:
(a) The payment of the expenses of collection of delinquent
taxes, the administration and operation of the delinquent tax
system, and the payment of costs of issuance for the notes.
(b) The payment of the interest on and the principal of notes
payable from the delinquent tax revenues when the notes become due
and payable.
(c) The creation of any reserve for the notes as required in
the order authorizing the issuance of those notes.
(d) Other expenditures and funds for the delinquent tax system
as the order may require.
(2) The county treasurer shall covenant and agree in the order
authorizing the issuance of the notes and on the face of each note
to collect at all times the amounts pledged to repay the notes
which shall be sufficient to provide for the amounts described in
subsection (1). The amounts pledged that are fixed and established
pursuant to the order shall not be subject to revision or change.
(3) Notes issued and sold under this section shall be secured
by a statutory lien on the delinquent taxes and on all other
property and assets and any revenues derived from the delinquent
taxes and other property or assets. The lien shall automatically
attach without further action or authorization by the county
treasurer. The lien on the delinquent taxes and all other property
and assets and any revenues derived from the delinquent taxes and
other property or assets shall be valid and binding from the time
the notes are executed and delivered. The lien shall automatically
attach and be effective, binding, and enforceable against the
county, the county treasurer, its successors, transferees, and
creditors, and all others asserting rights in the secured property,
irrespective of whether those parties have notice of the lien and
without the need for any physical delivery, recordation, filing, or
further act. In addition, the amounts collected which are subject
to the lien shall be held in trust for the owners of the notes
authorized by this section.
Sec. 22a. (1) In the authorizing order, the county treasurer
shall also provide that the delinquent tax revenues of the
delinquent tax system are all subject to a statutory lien and shall
be kept separate from and shall not be commingled with any other
money in the custody of the county treasurer. The delinquent tax
revenues of the delinquent tax system shall be paid in the
following order of recorded priority:
(a) After provision for the payment for the next succeeding
period of all current expenses of administration and operation of
the delinquent tax system, the current expenses for that period
shall be paid by collection of the delinquent taxes, interest,
penalties, fees, and chargebacks as may be necessary to preserve
and operate the delinquent tax system.
(b) There shall be next set aside a sum sufficient to provide
for the payment of the principal of and the interest upon all notes
payable from those revenues, as and when the notes become due and
payable. This account shall be designated note and interest
redemption account and shall be subject to the statutory lien. In
the event that the delinquent tax revenues of any operating year
over and above those necessary for the operation and maintenance
expenses shall be insufficient to pay the principal of and interest
on the notes maturing in any operating year, then an additional
amount sufficient to pay the principal and interest shall be set
aside out of the delinquent tax revenues of the next succeeding
operating year, after provision for the expenses of operation and
maintenance. In respect to the allocation and use of money in the
note and interest redemption account, due recognition shall be
given as to priority rights, if any, between different issues or
series of outstanding notes. The county treasurer may provide by
order that a reasonable excess amount shall be set aside in the
note and interest redemption account from time to time so as to
produce and provide a reserve to meet any possible future
deficiencies, which reserve shall also be subject to the statutory
lien.
(c) Next, there shall be set aside, in the manner and priority
provided by the order, the sum or sums necessary for the additional
accounts as may be required.
(d) No revenues pledged to the repayment of any notes are the
property of the county or the county treasurer until those notes
and the interest due on those notes are repaid in full.
(2) Revenues remaining, after satisfaction of subsection (1),
at the end of any operating year shall be considered surplus and
shall be disposed of by the county treasurer as provided in section
87b of the general property tax act, 1893 PA 206, MCL 211.87b.
Sec. 24a. Money in the several accounts of the delinquent tax
system shall be deposited as designated by the county treasurer of
the county. Money in the several accounts of the delinquent tax
system, except money in the note and interest redemption account
and money derived from the proceeds of sale of the notes each of
which shall be kept in a separate deposit account, may be kept in 1
deposit account, provided, however, that only delinquent tax
revenues of the delinquent tax systems shall be held in or credited
to that deposit account and those funds and other property shall
not be commingled with any other money of or in the custody of the
county treasurer. In that case, the money in the combined deposit
accounts shall be allocated on the books and records of the county
treasurer to the various accounts in the manner provided in the
authorizing order. The county treasurer of the county may provide
that the money in the several accounts of the delinquent tax system
be kept in separate depository accounts. The money in the note and
interest redemption account shall be accounted for separately.