HB-5009, As Passed House, April 30, 2008

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5009

 

July 10, 2007, Introduced by Rep. Coulouris and referred to the Committee on Commerce.

 

     A bill to amend 1984 PA 270, entitled

 

"Michigan strategic fund act,"

 

by amending section 23 (MCL 125.2023), as amended by 2002 PA 556.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 23. (1) The fund may borrow money and issue bonds or

 

notes for the following purposes:

 

     (a) To provide sufficient funds for achieving the fund's

 

purposes and objectives including, but not limited to, amounts

 

necessary to pay the costs of acquiring a project or part of a

 

project; to make loans for the costs of a project or part of a

 

project; to make loans pursuant to section 7(r) for an export

 

related transaction; for making grants; for providing money to

 

guarantee or insure loans, leases, bonds, notes, or other

 


indebtedness; for making working capital loans; for all other

 

expenditures of the fund incident to and necessary or convenient to

 

carry out the fund's purposes, objectives, and powers; and for any

 

combination of the foregoing. The cost of a project may include

 

administrative costs including, but not limited to, engineering,

 

architectural, legal, and accounting fees that are necessary for

 

the project.

 

     (b) To refund bonds or notes of the fund issued under this

 

act, of the job development authority issued under former 1975 PA

 

301, of the Michigan economic development authority issued under

 

former 1982 PA 70, of an economic development corporation issued

 

under the economic development corporations act, 1974 PA 338, MCL

 

125.1601 to 125.1636, or of a municipality issued under the

 

industrial development revenue bond act of 1963, 1963 PA 62, MCL

 

125.1251 to 125.1267, by the issuance of new bonds, whether or not

 

the bonds or notes to be refunded have matured or are subject to

 

prior redemption or are to be paid, redeemed, or surrendered at the

 

time of the issuance of the refunding bonds or notes; and to issue

 

bonds or notes partly to refund the bonds or notes and partly for

 

any other purpose provided for by this section.

 

     (c) To pay the costs of issuance of bonds or notes under this

 

act; to pay interest on bonds or notes becoming payable prior to

 

the receipt of the first revenues available for payment of that

 

interest as determined by the board; and to establish, in full or

 

in part, a reserve for the payment of the principal and interest on

 

the bonds or notes in the amount determined by the board.

 

     (2) The bonds and notes, including, but not limited to,

 


commercial paper, shall be authorized by resolution adopted by the

 

board, shall bear the date or dates, and shall mature at the time

 

or times not exceeding 50 years from the date of issuance, as the

 

resolution may provide. The bonds and notes shall bear interest at

 

the rate or rates as may be set, reset, or calculated from time to

 

time, or may bear no interest, as provided in the resolution. The

 

bonds and notes shall be in the denominations, be in the form,

 

either coupon or registered, carry the registration privileges, be

 

transferable, be executed in the manner, be payable in the medium

 

of payment, at the place or places, and be subject to the terms of

 

prior redemption at the option of the fund or the holders of the

 

bonds and notes as the resolution or resolutions may provide. The

 

bonds and notes of the fund may be sold at public or private sale

 

at the price or prices determined by the fund. For purposes of 1966

 

PA 326, MCL 438.31 to 438.33, this act and other acts applicable to

 

the fund shall regulate the rate of interest payable or charged by

 

the fund, and 1966 PA 326, MCL 438.31 to 438.33, does not apply.

 

Bonds and notes may be sold at a discount.

 

     (3) Bonds or notes may be 1 or more of the following:

 

     (a) Made the subject of a put or agreement to repurchase by

 

the fund or others.

 

     (b) Secured by a letter of credit or by any other collateral

 

that the resolution may authorize.

 

     (c) Reissued by the fund once reacquired by the fund pursuant

 

to any put or repurchase agreement.

 

     (4) The fund may authorize by resolution any member of the

 

board to do 1 or more of the following:

 


     (a) Sell and deliver, and receive payment for notes or bonds.

 

     (b) Refund notes or bonds by the delivery of new notes or

 

bonds whether or not the notes or bonds to be refunded have

 

matured, are subject to prior redemption, or are to be paid,

 

redeemed, or surrendered at the time of the issuance of refunding

 

bonds or notes.

 

     (c) Deliver notes or bonds, partly to refund notes or bonds

 

and partly for any other authorized purposes.

 

     (d) Buy notes or bonds so issued at not more than the face

 

value of the notes or bonds.

 

     (e) Approve interest rates or methods for fixing interest

 

rates, prices, discounts, maturities, principal amounts,

 

denominations, dates of issuance, interest payment dates,

 

redemption rights at the option of the fund or the holder, the

 

place of delivery and payment, and other matters and procedures

 

necessary to complete the transactions authorized.

 

     (5) Except as may otherwise be expressly provided by the fund,

 

every issue of its notes or bonds shall be general obligations of

 

the fund payable out of revenues, properties, or money of the fund,

 

subject only to agreements with the holders of particular notes or

 

bonds pledging particular receipts, revenues, properties, or money

 

as security for the notes or bonds.

 

     (6) The notes or bonds of the fund are negotiable instruments

 

within the meaning of and for all the purposes of the uniform

 

commercial code, 1962 PA 174, MCL 440.1101 to 440.11102, subject

 

only to the provisions of the notes or bonds for registration.

 

     (7) Bonds or notes issued by the fund are not subject to the

 


terms of the revised municipal finance act, 2001 PA 34, MCL

 

141.2101 to 141.2821. The bonds or notes issued by the fund are not

 

required to be registered. A filing of a bond or note of the fund

 

is not required under the uniform securities act, 1964 PA 265, MCL

 

451.501 to 451.818, or the uniform securities act (2002), MCL

 

451.2101 to 451.2703.

 

     (8) A resolution authorizing notes or bonds may contain any or

 

all of the following covenants, which shall be a part of the

 

contract with the holders of the notes or bonds:

 

     (a) A pledge of all or a part of the fees, charges, and

 

revenues made or received by the fund, or all or a part of the

 

money received in payment of lease rentals, or loans and interest

 

on the loans, and other money received or to be received to secure

 

the payment of the notes or bonds or of an issue of the notes or

 

bonds, subject to agreements with bondholders or noteholders as may

 

then exist.

 

     (b) A pledge of all or a part of the assets of the fund,

 

including leases, or notes or mortgages and obligations securing

 

the same to secure the payment of the notes or bonds or of an issue

 

of notes or bonds, subject to agreements with noteholders or

 

bondholders as may then exist.

 

     (c) A pledge of a loan, grant, or contribution from the

 

federal, state, or local government, or source in aid of a project

 

as provided for in this act.

 

     (d) A pledge of money directly derived from payments from the

 

heritage trust fund created by the heritage trust fund act of 1982,

 

former 1982 PA 327.

 


     (e) The use and disposition of the revenues and income from

 

leases, or from loans, notes, and mortgages owned by the fund.

 

     (f) The establishment and setting aside of reserves or sinking

 

funds and the regulation and disposition of reserves or sinking

 

funds subject to this act.

 

     (g) Limitations on the purpose to which the proceeds of sale

 

of the notes or bonds may be applied and limitations on pledging

 

those proceeds to secure the payment of other bonds or notes.

 

     (h) Authority for and limitations on the issuance of

 

additional notes or bonds for the purposes provided for in the

 

resolution and the terms upon which additional notes or bonds may

 

be issued and secured. Additional bonds pledging money derived from

 

the heritage trust fund as provided in subdivision (d) may only be

 

issued if the issuance meets the requirements of section 204 of the

 

resolution adopted by the Michigan economic development authority

 

authorizing issuance of its bonds dated December 1, 1982, and any

 

requirement of former 1982 PA 70, provided that these requirements

 

do not apply if those bonds have been defeased.

 

     (i) The procedure, if any, by which the terms of a contract

 

with noteholders or bondholders may be amended or abrogated, the

 

number of noteholders or bondholders who are required to consent to

 

an amendment or abrogation, and the manner in which the consent may

 

be given.

 

     (j) Vest in a trustee or a secured party the property, income,

 

revenues, receipts, rights, remedies, powers, and duties in trust

 

or otherwise as the fund may determine necessary or appropriate to

 

adequately secure and protect noteholders and bondholders or to

 


limit or abrogate the rights of the noteholders and bondholders. A

 

trust agreement may be executed by the fund with any trustee who

 

may be located inside or outside this state to accomplish any of

 

the foregoing.

 

     (k) Pay maintenance and repair costs of a project.

 

     (l) The insurance to be carried on a project and the use and

 

disposition of insurance money and condemnation awards.

 

     (m) The terms, conditions, and agreements upon which the

 

holder of the bonds, or a portion of the bonds, is entitled to the

 

appointment of a receiver by the circuit court. A receiver who is

 

appointed may enter and take possession of the project and maintain

 

it or lease or sell the project for cash or on an installment sales

 

contract and prescribe rentals and payments therefor and collect,

 

receive, and apply all income and revenues thereafter arising in

 

the same manner and to the same extent as the fund.

 

     (n) Any other matters, of like or different character, which

 

in any way affect the security or protection of the notes or bonds.

 

     (9) A pledge made by the fund is valid and binding from the

 

time the pledge is made. The money or property so pledged and

 

thereafter received by the fund is immediately subject to the lien

 

of the pledge without a physical delivery or further act. The lien

 

of a pledge is valid and binding as against parties having claims

 

of any kind in tort, contract, or otherwise against the fund and is

 

valid and binding as against the transfer of the money or property

 

pledged, irrespective of whether the parties have notice. Neither

 

the resolution, the trust agreement, nor any other instrument by

 

which a pledge is created need be recorded.

 


     (10) A member of the board or a person executing the notes or

 

bonds is not liable personally on the notes or bonds and is not

 

subject to personal liability of accountability by reason of the

 

issuance of the notes or bonds.

 

     (11) This state is not liable on notes or bonds of the fund,

 

and the notes or bonds shall not be considered a debt of this

 

state. The notes and bonds shall contain on their face a statement

 

indicating this fact.

 

     (12) The notes and bonds of the fund are securities in which

 

the public officers and bodies of this state; municipalities and

 

municipal subdivisions; insurance companies, associations, and

 

other persons carrying on an insurance business; banks, trust

 

companies, savings banks, savings associations, and savings and

 

loan associations; investment companies; administrators, guardians,

 

executors, trustees, and other fiduciaries; and all other persons

 

who are authorized to invest in bonds or other obligations of this

 

state may properly and legally invest funds.

 

     (13) The property of the fund and its income and operation is

 

exempt from all taxation by this state or any of its political

 

subdivisions, and all bonds and notes of the fund, the interest on

 

the bonds and notes, and their transfer are exempt from all

 

taxation by this state or any of its political subdivisions, except

 

for estate, gift, and inheritance taxes. The state covenants with

 

the purchasers and all subsequent holders and transferees of notes

 

and bonds issued by the fund under this act, in consideration of

 

the acceptance of and payment for the notes and bonds, that the

 

notes and bonds of the fund, issued pursuant to this act, the

 


interest on the notes and bonds, the transfer of the notes and

 

bonds, and all its fees, charges, gifts, grants, revenues,

 

receipts, and other money received or to be received and pledged to

 

pay or secure the payment of the notes or bonds shall at all times

 

be free and exempt from all state or local taxation provided by the

 

laws of this state, except for estate, gift, and inheritance taxes.

 

     (14) The issuance of bonds and notes under this act is subject

 

to the agency financing reporting act.

 

     (15) For the purpose of more effectively managing its debt

 

service, the fund may enter into an interest rate exchange or swap,

 

hedge, or similar agreement with respect to its bonds or notes on

 

the terms and payable from the sources and with the security, if

 

any, as determined by a resolution of the board.

 

     Enacting section 1. This amendatory act does not take effect

 

unless Senate Bill No.____ or House Bill No. 5008(request no.

 

00420'07) of the 94th Legislature is enacted into law.