SENATE BILL No. 868

November 29, 2001, Introduced by Senator DE BEAUSSAERT and referred to the Committee

on Finance.

A bill to amend 1955 PA 233, entitled

"An act to provide for the incorporation of certain municipal

authorities to acquire, own, extend, improve, and operate sewage

disposal systems, water supply systems, and solid waste manage-

ment systems; to prescribe the rights, powers, and duties there-

of; to authorize contracts between such authorities and public

corporations; to provide for the issuance of bonds to acquire,

construct, extend, or improve the systems; and to prescribe pen-

alties and provide remedies,"

by amending sections 7, 9, and 12c (MCL 124.287, 124.289, and

124.292c), section 7 as amended by 1981 PA 154, section 9 as

amended by 1994 PA 36, and section 12c as amended by 1983 PA 30.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1 Sec. 7. (1) The authority and any of its constituent munic-

2 ipalities may enter into a contract or contracts providing for

3 the acquisition, construction, improvement, enlargement, exten-

4 sion, operation, and financing of a sewage disposal system, a

5 water supply system, a solid waste management system, or a

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1 combination of systems, which contract or contracts shall provide

2 for the allocation and payment of the share of the total cost to

3 be borne by each contracting municipality in annual installments

4 for a period of not exceeding 40 years. Each contracting munici-

5 pality may pledge its full faith and credit for the payment of

6 the obligation in the manner and times specified in the contract

7 or contracts, in which event each contracting municipality may

8 include in its annual tax levy an amount sufficient so that the

9 estimated collections from the tax levy will be sufficient to

10 promptly pay when due the portion of the obligation falling due

11 before the time of the following year's tax collection. IF THE

12 CONTRACT OR UNLIMITED TAX PLEDGE IN SUPPORT OF THE CONTRACT HAS

13 BEEN APPROVED BY THE ELECTORS OF THE MUNICIPALITY, THE CONTRACT

14 IS SUBJECT TO THE REVISED MUNICIPAL FINANCE ACT, 2001 PA 34,

15 MCL 141.2101 TO 141.2821. If the contract or an unlimited tax

16 pledge in support of the contract has been approved by the elec-

17 tors of a municipality, the tax may be in addition to any tax

18 which THAT the municipality may otherwise be authorized to levy

19 and may be imposed without limitation as to rate or amount but

20 shall not be in excess of the rate or amount necessary to pay the

21 contractual obligation. If at the time of making the annual tax

22 levy, there are other funds on hand earmarked for the payment of

23 the contractual obligation, then credit for those funds may be

24 taken upon the annual levy for the payment of the obligation.

25 Other funds may be raised by each contracting municipality by the

26 use of any, or all, or any combination of the following

27 additional methods:

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1 (a) The levy of special assessments on property benefited by

2 a sewage disposal system, water supply system, or a combination

3 of systems, the procedures relative to the levying and collection

4 of the special assessments to conform as near as is applicable to

5 charter or statutory provisions for the levying and collection,

6 except that a petition shall not be required from property

7 owners.

8 (b) The levy and collection of rates or charges to users and

9 beneficiaries of the service or services furnished by the sewage

10 disposal system, water supply system, solid waste management

11 system, or combination of systems.

12 (c) The exaction of connection charges to be paid by owners

13 of land directly or indirectly connected with the sewage disposal

14 system, water supply system, solid waste management system, or

15 combination of systems.

16 (d) The receipt of money derived from the imposition of

17 taxes by this state, except as the use of the money for the pur-

18 pose is expressly prohibited by the state constitution of 1963.

19 (e) The receipt of other funds which THAT may be validly

20 used for the purpose.

21 (2) The contract or contracts may provide for any and all

22 matters relating to the acquisition, construction, operation, and

23 financing of the sewage disposal system, water supply system,

24 solid waste management system, or combination of systems as are

25 considered necessary, including authorization to the authority to

26 issue bonds secured by the full faith and credit pledges of the

27 contracting municipalities, as authorized by section 9. The

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1 contract or contracts may provide for appropriate remedy or

2 remedies in case of default.

3 Sec. 9. (1) To obtain funds for the acquisition, construc-

4 tion, improvement, enlargement, or extension of the sewage dis-

5 posal system, water supply system, solid waste management system,

6 or combination of systems authorized by this act, the authority,

7 after the execution of the contract or contracts authorized by

8 sections 7 and 8, upon ordinance or resolution adopted by the

9 authority, may issue its negotiable bonds secured by the full

10 faith and credit pledges made by each contracting municipality

11 pursuant to authorization contained in this act and the contract

12 or contracts entered into pursuant to sections 7 and 8. The

13 bonds shall mature over not more than 40 years from the date of

14 issuance, and may provide for the use of money received from the

15 sale of the bonds to pay operation and maintenance costs of a

16 sewage disposal system, water supply system, solid waste manage-

17 ment system, or combination of systems before receipt of the

18 first revenues from the bonds.

19 (2) The authority may issue bonds to refund all or a por-

20 tion of bonds issued pursuant to this section if the aggregate

21 present value of the principal and interest to be paid on the

22 refunding bonds will be less than the aggregate present value of

23 the principal and interest to be paid on the bonds being

24 refunded.

25 (2) (3) Except as otherwise provided in this act, bonds

26 issued pursuant to this section shall be issued and sold and

27 subject to all other applicable provisions of the municipal

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1 finance act, Act No. 202 of the Public Acts of 1943, as amended,

2 being sections 131.1 to 139.3 of the Michigan Compiled Laws

3 REVISED MUNICIPAL FINANCE ACT, 2001 PA 34, MCL 141.2101 TO

4 141.2821.

5 Sec. 12c. (1) In the discretion of the governing body of

6 the authority, any series of bonds issued pursuant to the autho-

7 rization of section 12b may be secured by a trust indenture by

8 and between the authority and a corporate trustee, which may be

9 any trust company or bank having the powers of a trust company

10 within or without the state, but no trust indenture shall convey

11 or mortgage the project or any part of the project. Either the

12 resolution providing for the issuance of bonds or the trust

13 indenture may contain such THE provisions for the security and

14 payment of the bonds and for the protection and enforcement of

15 the rights and remedies of the bondholders as may be deemed

16 advisable by the governing body of the authority, not in viola-

17 tion of the constitution of this state, including specifically

18 covenants setting forth THE FOLLOWING:

19 (a) The duties of the authority in relationship to the con-

20 struction, maintenance, operation, repair, and insurance of the

21 project.

22 (b) The pledge of revenues of the project or any part of the

23 project.

24 (c) Limitations on the amount of money derived from the

25 operation of the project which THAT may be expended for operat-

26 ing, administrative, or other specified expenses of the

27 authority.

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1 (d) The safeguarding and application of the fund from which

2 the cost of the project is to be paid and of the revenues pledged

3 to the payment of the bonds, all of which may be deposited in as

4 received and paid out by such THOSE banks as may be therein

5 provided IN THE RESOLUTION OR INDENTURE.

6 (e) Provisions for the employment of consulting engineers to

7 supervise the construction of the project, and to supervise its

8 maintenance and operation, to which consulting engineers may be

9 delegated all rights and duties with respect thereto TO THE

10 PROJECT deemed advisable by the governing body of the authority

11 and the appointment of which consulting engineers shall be

12 subject to such THE approval by the purchasers or holders of

13 the bonds as may be provided in the resolution or indenture.

14 (f) Rights and remedies of the bondholders and the trustee,

15 if any, and such THE restrictions thereon as may be considered

16 advisable.

17 (g) Any other and additional provisions ordinarily found in

18 trust agreements securing bond issues protecting and enforcing

19 the rights and security of the holders of the bonds and designed

20 to make the bonds more attractive and salable at the best avail-

21 able prices.

22 (2) The resolution or trust indenture shall contain a provi-

23 sion requiring an annual audit of the books and records of the

24 authority, or any fiscal agent or trustee specified in the reso-

25 lution or trust indenture by a certified public accountant or

26 accountants to be selected by the governing body of the authority

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1 and approved by the manager or managers of the account purchasing

2 the bonds.

3 (3) Any bank or trust company designated as trustee or as

4 depositary for any funds, notwithstanding any provision of law to

5 the contrary, is authorized to pledge as collateral security for

6 moneys deposited in such bank or trust company direct obligations

7 of, or obligations the principal and interest of which are uncon-

8 ditionally guaranteed by the government of the United States, or

9 other marketable securities eligible as security for the deposit

10 of trust funds under regulations of the federal reserve board and

11 having a market value, exclusive of accrued interest, at least

12 equal to the amount of the deposit; or in lieu of the collateral

13 security as to all or any part of the deposit, there may be

14 lodged with the trustee, or with the governing body of the

15 authority in case of moneys deposited or remaining on deposit

16 with the trustee, and remain in full force and effect as security

17 for the moneys deposited, the indemnifying bonds of a surety com-

18 pany or companies qualified as surety for deposits of the govern-

19 ment of the United States and qualified to transact business in

20 the THIS state, in a sum at least equal to the amount of moneys

21 deposited with such bank or trust company, if such indemnity bond

22 or bonds be approved by the governing body of the authority. All

23 expenses incurred in carrying out the provisions appearing in any

24 trust indenture or bond resolution and the cost of any surety

25 bond furnished may be treated as part of the cost of maintaining

26 and operating the project. The resolution or trust indenture may

27 contain such other provisions as the governing body of the

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1 authority may deem reasonable and proper for the security of the

2 bondholders, including, but without limitation, covenants pre-

3 scribing all happenings or occurrences which THAT constitute

4 events of default and the terms and conditions upon which bonds

5 may become or be declared to be due before maturity and as to the

6 rights, liabilities, powers, and duties arising upon the breach

7 by the authority of any of its duties and obligations.

8 (4) Nothing contained in the 1958 amendments to this act

9 shall be construed to authorize the issuance of other than reve-

10 nue bonds.

11 (5) Unless an exception from prior approval is available

12 pursuant to subsection (6), a bond issued under section 12b and

13 this section shall be subject to the prior approval of the munic-

14 ipal finance commission or its successor agency in accordance

15 with the provisions of Act No. 202 of the Public Acts of 1943, as

16 amended, being sections 131.1 to 139.3 of the Michigan Compiled

17 Laws.

18 (6) The requirement of subsection (5) for obtaining the

19 prior approval of the municipal finance commission or its succes-

20 sor agency before issuing bonds under section 12b or this section

21 shall be subject to sections 10 and 11 of chapter III of Act

22 No. 202 of the Public Acts of 1943, being sections 133.10 and

23 133.11 of the Michigan Compiled Laws, and the department of trea-

24 sury shall have the same authority as provided by section 11 of

25 chapter III of Act No. 202 of the Public Acts of 1943 to issue an

26 order providing or denying an exception from the prior approval

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1 required by subsection (5) for bonds authorized by section 12b or

2 this section.

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