HB-5688, As Passed Senate, December 4, 2012

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5688

A bill to provide for the creation of certain lighting

authorities for the purpose of operating lighting systems; to

provide for the powers and duties of the authorities; to provide

for the conveyance of operational jurisdiction over certain

operations to authorities; to provide for the assumption of certain

contracts, bonds, notes, and other evidences of indebtedness and

liabilities related to the provision of lighting authorities; to

authorize expenditures from certain funds; to finance the

acquisition of property and the development of certain public

improvements or related facilities; to provide for the issuance of

bonds and notes; to authorize certain investments; and to impose

certain powers and duties upon state and local departments,

agencies, and officers.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 1. This act shall be known and may be cited as the

"municipal lighting authority act".

Sec. 3. As used in this act:

(a) "Ancillary facility" means any revolving credit agreement,

agreement establishing a line of credit, or a letter of credit;

reimbursement agreement; interest rate exchange or similar

agreement; currency exchange agreement; commodity exchange

agreement; interest rate floor or cap; option, put, call, or

similar agreement to hedge payment, currency, commodity, rate,

spread, or similar exposure; investment agreement; float agreement;

forward agreement or other investment arrangement; insurance

contract; surety bond; commitment to purchase or sell securities;

purchase or sale agreement or commitment; or other contract or

agreement or other security agreement approved by an authority

under this act, including without limitation any arrangement

referred to in this act.

(b) "Authority" means a lighting authority incorporated under

this act.

be followed by an authority that encourages and considers bids from

locally headquartered companies and that considers use of the local

workforce.

(d) "Board" means the board of directors of an authority.

(e) "Chief executive officer" means the mayor of the city.

(f) "Lighting system" or "system" means plants, works,

instrumentalities, and properties used or useful in connection with

providing lighting and necessary resources and appurtenances for

the system.

(g) "Local government" means a city with a population of more

than 600,000.

Sec. 5. (1) It is the intent of this act to provide an

equitable and reasonable method and means of financing, operating,

and maintaining a lighting system to supply lighting in sufficient

quantities to a local government.

(2) The powers of the authority shall be carried out in a

manner authorized by this act.

(3) A local government, by majority vote of its governing

body, may incorporate an authority comprising the territory within

its respective limits for acquiring, constructing, consolidating,

purchasing, operating, or maintaining a municipally owned lighting

system. The authority is a public municipal corporation with the

rights, powers, and duties as provided in this act.

(4) Nothing in this act, nor the creation of an authority,

shall be construed as transferring the ownership of any lighting

system assets to the authority unless the transfer is specified in

the articles of incorporation of the authority as provided in

section 9 and the transfer is ratified in accordance with all

applicable laws.

(5) A transfer of ownership or operational control of a

lighting system to an authority shall not be considered a sale,

lease, or disposal of any kind of an asset by the local government

under any state or local law.

Sec. 7. Nothing in this act shall be considered to alter the

laws and regulations regarding utility franchises unless explicitly

stated. The creation of an authority shall not be considered to

create a new franchise as long as the authority only provides

service within its own territory, which shall be composed of the

territory within the local government and any area that the local

government may be serving or permitted to serve under law on the

effective date of this act.

Sec. 9. (1) A local government may adopt articles of

incorporation by a majority vote of its governing body and

incorporate an authority for the purpose of acquiring, owning,

improving, enlarging, extending, constructing, operating, or

maintaining a lighting system and providing lighting services.

(2) The articles of incorporation adopted under subsection (1)

shall be signed by the mayor and clerk of that local government.

(3) The articles of incorporation adopted by a local

government under subsection (1) shall be in a form substantially as

follows:

"The foregoing articles of incorporation were adopted by the

____________________________ of the _______________ of

________________ County, Michigan, at a meeting held on the ____

day of __________, ______.

____________________

____________________ of the

____________________."

(4) The articles of incorporation shall specify best value

objectives.

(5) One printed copy of the articles of incorporation

certified as a true copy by the person or persons designated by the

certification, with the date and place of the publication, shall be

filed with the secretary of state and the clerk of the county in

which the authority provides services. The authority becomes

effective at the time provided in the articles of incorporation,

but shall not be effective before the filing with the secretary of

state and the county clerk.

(6) The validity of an authority is conclusively presumed

unless questioned in an original action filed in the court of

appeals within 60 days after the creation of the authority. The

court of appeals has original jurisdiction to hear an action under

this subsection. The court of appeals shall hear the action in an

expedited manner.

Sec. 11. (1) An authority is a public municipal corporation.

The authority is a public body corporate with the power to sue and

be sued in any court of this state. The authority possesses all the

powers necessary to carry out the purposes of its incorporation.

The enumeration of any powers in this act shall not be construed as

a limitation on an authority's general powers.

(2) An authority may do any of the following:

(a) Adopt bylaws for the regulation of the authority's affairs

and the conducting of its business.

(b) Adopt an official seal and alter the seal at its pleasure.

as it may designate.

(d) Sue and be sued in its own name, plead, and be impleaded.

(e) Determine the location of any project constructed by it

under this act and determine, in its discretion and without

reference to any other provisions of this act or any other law, the

design, standards, and the materials of construction, and

construct, maintain, repair, and operate the project.

(f) Issue bonds of the authority for any of its corporate

purposes under those means as provided in this act.

(g) Adopt and promulgate rules and regulations for the use of

any project operated or constructed by it under the provisions of

this act.

(h) Acquire, hold, lease, and dispose of real and personal

property in the exercise of its powers and the performance of its

duties under this act.

(i) Engage engineering, legal, and other professional services

as considered necessary to effectuate the purposes of the

authority.

(3) The authority shall maintain its books and records and its

funds on an enterprise fund basis. An authority shall not pay any

net proceeds or profits to its local government, but may pay the

local government for services provided.

(4) Following the appointment of the authority board, the

board shall implement a best value supply chain and procurement

practice and shall annually report to the governing body of the

local government.

Sec. 13. (1) An authority created under this act shall be

directed and governed by a board of directors consisting of 5

members appointed as provided in this section.

(2) The board shall be appointed as follows:

House Bill No. 5688 as amended December 4, 2012

(a) <<Two>> members who are residents of the local government

appointed by the chief executive officer of the local government

for a term of service of 3 years, except that for the first

appointments to the board, 1 of the members shall be appointed for

a term of service of 4 years. If the chief executive officer of the

local government fails to make an appointment to the board of

directors within 42 days after the authority is created or fails to

fill a vacancy on the authority within 70 days of the vacancy

occurring, then the governing body of the local government has the

power to make the appointment.

(b) Two members who are residents of the local government

appointed by the governing body of the local government for a term

of service of 3 years, except that for the first appointments to

the board, 1 of the members shall be appointed for a term of

service of 4 years. If the governing body of the local government

fails to make an appointment to the board of directors within 42

days after the authority is created or fails to fill a vacancy on

the authority within 70 days of the vacancy occurring, then the

chief executive officer of the local government has the power to

make the appointment.

<<(c) One member who is a resident of the local government appointed by the governing body of the local government, from a list of 3 names provided by the chief executive officer of the local government, for a term of service of 3 years.

(3) Notwithstanding any other provision of this act, the term of a member appointed to the board of directors under subsection (2) shall expire upon expiration of the term of the chief executive officer or the governing body of the local government.

(4)>> At least 1 board member appointed to an authority board

shall be a professional engineer licensed under article 20 of the

occupational code, 1980 PA 299, MCL 339.2001 to 339.2014.

<<(5)>> At least 1 board member appointed to an authority board

shall be a certified public accountant who is licensed as a

certified public accountant under article 7 of the occupational

code, 1980 PA 299, MCL 339.720 to 339.736, or shall qualify as a

House Bill No. 5688 as amended December 4, 2012

financial expert as that term is defined by rule by the United

States securities and exchange commission pursuant to section 407

of the Sarbanes-Oxley act of 2002, Public Law 107-204.

<<(6)>> At least 1 board member appointed to an authority board

shall be an attorney licensed to practice in this state.

<<(7)>> At the time of his or her appointment to a board of

directors, and no later than January 31 of each year, a board

member of an authority board shall make a certification, signed

under penalty of perjury, to the attorney general that states all

of the following:

(a) Except as otherwise provided in this subdivision, he or

she is not currently employed by or receiving a pension or any

other form of income from any entity that has sought or received a

contract with the authority. For purposes of this subdivision,

income does not include stock dividends from or the sale of stock

of publicly traded shares constituting less than 0.1% ownership in

the entity.

(b) Except as otherwise provided in this subdivision, he or

she does not own an interest in any entity that has sought or

received a contract with the authority. For purposes of this

subdivision, own does not include the ownership in the form of

publicly traded shares constituting less than 0.1% ownership in the

entity.

similar decision-making role in any entity that has sought or

received a contract with the authority or that has a financial

interest contrary to the authority in connection with any financing

House Bill No. 5688 as amended December 4, 2012

of the authority.

<<(8)>> A person shall not begin service as a board member until

he or she completes and files the certification with the attorney

general as required under this section.

<<(9)>> The attorney general shall publish a report no later than

the last day of February of each year stating whether each member

of an authority's board has filed the required certification and

whether the certification was complete. The report shall be made

available to the public on the office of attorney general's website

as soon as practicable. If a report indicates that a board member

has failed to make the required certification, a copy of the report

shall be sent to the chief executive officer of each local

government that authorized the incorporation of the authority and

to the board member who failed to make the required certification.

The local government shall provide the last known address for that

board member to the attorney general upon request.

<<(10)>> If the required certification is not filed by a board

member by the third day of March following the publication of the

report by the attorney general, the term of office for that board

member who fails to make the required certification under this

section shall automatically terminate on the last day of March

following the publication of the report by the attorney general.

Sec. 15. (1) Within 30 days following the appointment of the

last board member to the board, the board shall hold its first

meeting.

(2) At its first meeting, the board shall select a

chairperson, treasurer, and any other officers as the board

considers necessary. The board shall require the treasurer to post

a suitable bond of not less than $100,000.00 issued by a

responsible bonding entity, with the cost of the premium of the

bond paid for by the authority.

(3) The board shall select, employ, and fix the compensation

for employees of the board and contract for those engineering,

legal, and other professional services that the board considers

necessary to effectuate the purposes of the authority.

(4) A majority of the members of the board constitute a quorum

for the purpose of conducting business and exercising powers of the

authority. Official action may be taken by an authority upon the

vote of a majority of the board members present, unless the

articles of incorporation or authority bylaws require a larger

number.

(5) The board shall adopt rules and bylaws governing its

procedures and the holding of meetings. The board shall designate

an office or location as its principal place of business.

(6) The business of the board shall be conducted at a public

meeting of the board held in compliance with the open meetings act,

1976 PA 267, MCL 15.261 to 15.275. Public notice of the time, date,

and place of the meeting shall be given in the manner required by

the open meetings act, 1976 PA 267, MCL 15.261 to 15.275. After

organization, a board shall adopt a schedule of regular meetings

and adopt a regular meeting date, place, and time.

(7) A board shall keep a written or printed record of each

meeting, which record and any other document or record prepared,

owned, used, in the possession of, or retained by the authority in

the performance of an official function shall be made available to

the public in compliance with the freedom of information act, 1976

PA 442, MCL 15.231 to 15.246.

(8) A board shall provide for a system of accounts for the

authority to conform to a uniform system required by law and for

the auditing of the accounts of the authority. The board shall

obtain an annual audit of the authority by an independent certified

public accountant and report on the audit and auditing procedures

in the manner provided by sections 6 to 13 of the uniform budgeting

and accounting act, 1968 PA 2, MCL 141.426 to 141.433. The audit

also shall be in accordance with generally accepted government

auditing standards and shall satisfy federal regulations relating

to federal grant compliance audit requirements.

(9) The board shall provide a monthly progress report to the

chief executive officer and the governing body of the local

government and shall make that monthly progress report available on

the authority's internet website.

(10) The board shall provide an annual progress report to the

chairpersons of the senate and house government operations

committees and shall make that annual progress report available on

the authority's internet website. The annual progress report shall

detail the authority's operating revenues, expenditures, vendor

contracts, and all major decisions on lighting within the local

government, including all rulings concerning the future locations

of streetlights within the local government.

Sec. 17. (1) On or before March 15 after the creation of the

authority, and on or before March 15 of every second year after the

creation of the authority, the board shall prepare and submit to

the governing body of the local government a plan for the next 3

succeeding fiscal years. The plan shall contain all of the

following:

(a) The number and placement of streetlights in the local

government composing the authority.

(b) A budget that includes, but is not limited to, the

following:

(i) Anticipated expenses of administration, operation, and

maintenance of the authority and the lighting system.

(ii) Any reserve to be established for the administration,

operation, and maintenance of the authority and the lighting

system.

(iii) A statement showing the amounts necessary to retire all

principal and interest on any bonds of the authority maturing

during the applicable fiscal years.

(iv) A plan to implement best value practices.

(v) Any other item specified in the articles of incorporation

of the authority.

any money derived from the collection of rates and charges shall be

applied and used by the authority in the following manner and in

the following priority:

(i) To provide for the payment during each fiscal year of all

current expenses of administration, operation, and maintenance as

may be necessary to preserve the lighting system in good repair and

working order, including payments required under bonded

indebtedness incurred in accordance with the authorization

contained in this act.

(ii) In the discretion of the board, there may be set aside

during each fiscal year money to provide a reserve fund for

replacements or major repairs and improvements not anticipated or

considered to be a part of current expenses of administration,

operation, or maintenance of the lighting system.

(2) The governing body of the local government composing the

authority may vote to accept or reject the plan. The governing body

of the local government does not have the power to amend the plan

in any respect. Unless the governing body of the local government

votes to reject the plan within 45 days of its submittal, the plan

is considered approved.

(3) If the governing body of the local government rejects the

plan as provided in subsection (2), the authority shall revise the

plan and shall submit the revised plan to the governing body of the

local government within 30 days of the vote that rejected the plan.

(4) The governing body of the local government may vote to

accept or reject the revised plan within 30 days of its submittal.

Unless the governing body of the local government votes to reject

the revised plan, the revised plan is considered approved.

(5) If the governing body of the local government votes to

reject the revised plan, the governing body of the local government

must contemporaneously adopt, by a vote of at least 2/3 of the

members of the governing body of the local government elected and

serving, a resolution that includes a list of items that, if

altered, would result in a vote to adopt the plan. Failure to adopt

a resolution in compliance with this subsection is considered

acceptance of the revised plan by the governing body of the local

government.

(6) If the governing body of the local government votes to

reject the revised plan and submits the required resolution as

provided in subsection (5), the authority shall prepare a final

proposed plan not more than 20 days following the vote to reject

the revised plan. The final proposed plan shall be sent to the

chief executive officer of the local government, and the chief

executive officer shall make the final proposed plan available on

the local government's internet website as soon as is practicable.

The final proposed plan shall also be made available at a public

hearing to be held not more than 10 days after the final proposed

plan is complete. Public comment shall be taken at the public

hearing concerning the final proposed plan. On or after the tenth

day after the public hearing, the authority shall vote on the final

proposed plan.

(7) Except as otherwise provided in this subsection, if 2/3 of

the board members of the authority vote to adopt the final proposed

plan, it is adopted. If the final proposed plan incorporates a

majority of the items identified in the appropriate resolution or

resolutions adopted by the governing body of the local government,

then the final proposed plan is adopted if approved by a majority

vote of the board of directors of the authority.

(8) If a plan is not adopted on or before July 1 of the year

in which a plan is required to be prepared under subsection (1),

then the adopted plan shall be the final proposed plan, except that

all changes identified in the resolution of the governing body

submitted under this act are considered amendments to the final

proposed plan so that the plan as adopted contains all changes

listed in the resolution from the governing body.

(9) A plan adopted by the board may be amended by a vote of 4

of the 5 members on the board.

Sec. 19. Unless the board, by resolution, establishes a

different fiscal year, the fiscal year of the authority shall

commence on July 1 of each year and end on the following June 30.

Sec. 20. (1) The local government has the responsibility,

authority, and right to manage and direct on behalf of the public

the services performed or exercised as provided in the articles of

incorporation to the extent the articles of incorporation are

consistent with, and not otherwise limited by, this act.

(2) The contents or language of the articles of incorporation

under this act shall be a permissive subject of collective

bargaining between the local government and a bargaining

representative of its employees. If the local government and a

bargaining representative of its employees engage in collective

bargaining before the articles of incorporation are approved and

the local government and that bargaining representative reach an

agreement on issues that would obligate an entity that will

function as an employer in the authority, the articles of

incorporation shall include those obligations.

(3) Nothing in this act creates an employment relationship

between the existing employees of the local government and the

proposed authority.

(4) An authority is effective through its articles of

incorporation at least 180 days before the actual transfer of

personnel and equipment. Before the authority's effective date, the

local government shall affirm in writing to the authority those

employees, if any, who will be transferred to the authority.

(5) If any employees who are transferred to the authority are

represented by a labor organization, those employees are subject to

their previous terms and conditions of employment until those terms

and conditions of employment are modified in accordance with 1947

PA 336, MCL 423.201 to 423.217, or for 6 months after the transfer

to the authority, whichever is earlier. Negotiations on a

collective bargaining agreement with an authority shall begin no

later than 180 days before the date the employees, if any, transfer

to the authority.

(6) Subject to subsection (7), a representative of the

employees or group of employees who previously represented or was

entitled to represent the employees or group of employees under

1947 PA 336, MCL 423.201 to 423.217, shall continue to represent

the employees or group of employees if those employees or group of

employees are transferred to the authority.

(7) This section does not limit the rights of employees, under

applicable law, to assert that a bargaining representative

protected by subsection (6) is no longer their representative. The

employees of the authority are eligible as of the day the authority

becomes effective through its articles of incorporation to choose

their representative under 1947 PA 336, MCL 423.201 to 423.217.

This subsection does not extend the time limits as provided in

subsection (4).

(8) If multiple labor organizations assert the right to

represent all or part of the authority's workforce or where a

substantial portion of the transferred employees were not

previously represented, in the absence of a voluntary mutual

agreement, at the request of any party or on the initiative of the

Michigan employment relations commission, the Michigan employment

relations commission shall conduct a representation election.

(9) In the absence of a voluntary mutual agreement, the

authority's workforce shall be merged by using a single seniority

list for each of the same or similar classifications. The single

seniority list shall be composed of all employees from the local

government employed or having recall rights on the date of transfer

and shall be used for purposes that include, but are not limited

to, initial assignments, layoffs, recalls, and job bidding.

Disputes concerning the single seniority list or use of the single

seniority list shall be heard by a single arbitrator appointed by

the Michigan employment relations commission.

(10) Nothing in this section requires a local government or an

authority to assume a collective bargaining agreement between

another local government and its employees.

(11) An employee who left the employ of the local government

to enter the military service of the United States shall have the

same employment rights as to the local government or the authority

as he or she would have had under 1951 PA 263, MCL 35.351 to

35.356.

Sec. 21. (1) For the purpose of constructing, acquiring,

improving, enlarging, or extending a lighting system, including the

payment of engineering, legal, and financing expenses, and after

the establishment of the initial service rates and the execution of

contracts for the provision of construction services, purchase of

power, and other related activities within the corporate limits of

the authority, the authority may borrow money and issue revenue

bonds and notes for the purposes provided in this section. The

aggregate principal amount of the bonds and notes at no time shall

exceed 5% of the total state equalized valuation of the property

assessed in the local government comprising the authority.

(2) Revenue bonds are payable upon the terms and conditions

specified by the authority in the resolution under which the

authority issues the bonds or in a related trust agreement or trust

indenture. The board of directors in the resolution authorizing the

bonds, a trust indenture, ancillary facility, or other agreement

entered into with respect to bonds of the authority may pledge any

funds received or to be received by the authority for the payment

of the bonds or other obligations of the authority under the

agreement and create a first lien in favor of the holders of the

bonds or a party subject to the agreement, including, but not

limited to, funds received pursuant to a contract entered into

under section 25. The principal of and interest on the bonds shall

be payable, except as provided in this act, solely from the

proceeds described in the resolution authorizing the bonds or trust

indenture, and the proceeds may include revenues pledged directly

to authority bonds pursuant to a contract entered into under

section 25 by the local government.

(3) The resolution authorizing the issuance of bonds under

this section shall include all of the following:

(a) A statement that the bonds are revenue bonds.

(b) A statement briefly describing the lighting system to be

constructed, acquired, improved, or extended and the estimated cost

of the lighting system.

authority have been entered into with the local government

comprising the authority.

(d) In the case of refunding bonds, identification of the

parameters under which the bonds can be issued.

(e) Delegation for a time period at the board of directors'

discretion to an officer, employee, or designated agent of the

authority the power to issue, sell, and deliver bonds within the

limits on those bonds established by the authority as to any of the

following:

(i) Form.

(ii) Maximum interest rates.

(iii) Maturity dates.

(iv) Purchase price.

(v) Denominations.

(vi) Redemption dates and premiums, if any.

(vii) Nature of the security.

(viii) Selection of an applicable interest rate index.

(ix) The terms of ancillary facilities entered into in

connection with the issuance of bonds.

(x) Other terms and conditions with respect to the bond issue

that the authority prescribes.

(f) Specification of other details and matters that are

considered necessary or advisable to provide for the prompt and

orderly retirement of the bonds and the interest on the bonds at

maturity.

(g) Provision for the deposit of revenues pledged for the

payment of bonds issued under this section into a separate account

for the purpose of paying principal and interest on those bonds,

the administrative costs associated with those bonds, and any other

bonds issued by the authority that are secured by those revenues.

For purposes of this subdivision, principal and interest may

include any fees related to an ancillary facility, if any.

(4) An authority may issue bonds under this section to refund

any bonds by issuing new bonds if it considers the refunding

expedient, whether or not the bonds to be refunded have matured,

and may issue bonds partly to refund bonds that are outstanding and

partly for restructuring or any of the authority's other authorized

purposes.

(5) Bonds issued under this act shall not mature more than 30

years from the date of the original issuance.

(6) An authority may issue bond anticipation notes secured by

the issuance of revenue bonds issued under this section in addition

to the revenues that the authority is permitted to pledge as

provided in this section.

(7) Any bonds issued under this act shall be sold to the

Michigan finance authority created by Executive Reorganization

Order No. 2010-2, MCL 12.194.

(8) Bonds issued by an authority under this act are not

subject to the revised municipal finance act, 2001 PA 34, MCL

141.2101 to 141.2821. Bonds issued by an authority under this act

are not subject to the revenue bond act of 1933, 1933 PA 94, MCL

141.101 to 141.140.

Sec. 23. (1) An authority may enter into, amend, or terminate,

as it determines necessary or appropriate, any ancillary facility

for any of the following purposes:

(a) To facilitate the issue, sale, resale, purchase,

repurchase, or payment of bonds, or the making or performance of

swap contracts, including without limitation bond insurance,

letters of credit, and liquidity facilities.

(b) To attempt to hedge risk or achieve a desirable effective

interest rate or cash flow.

(2) An authority may enter into, amend, or terminate any

ancillary facility as it determines necessary or appropriate or to

place the obligations or investments of the authority, as

represented by the bonds or the investment of bond proceeds, in

whole or in part, on the interest rate, cash flow, or other basis

desired by the authority. The ancillary facility may include

without limitation contracts commonly known as interest swap

agreements and futures or contracts providing for payments based on

levels of, or changes in, interest rates. The authority may enter

into these contracts or arrangements in connection with, or

incidental to, entering into, or maintaining any agreement that

secures bonds of the authority or any investment of reserves, or

contract providing for investment of reserves, or similar ancillary

facility guaranteeing an investment rate for a period of years.

(3) An authority's determination that an ancillary facility,

or the amendment or termination of an ancillary facility, is

necessary or appropriate is conclusive. The authority may determine

the terms and conditions of an ancillary facility, including

without limitation provisions as to security, default, termination,

payments, remedy, and consent to service of process.

(4) Before an authority enters into any ancillary facility,

the authority must have the consent of the Michigan finance

authority.

Sec. 25. (1) An authority and the local government comprising

the authority may enter into a contract providing for the

construction, acquisition, improvement, enlargement, or extension

of a lighting system, including the payment of engineering, legal,

and financing expenses in connection with the lighting system, and

after the establishment of the initial service rates and the

execution of contracts for the provision of construction services,

purchase of power, and other related activities within the

corporate limits of the authority. Contracts shall provide for the

rates and charges for the local government. The local government

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

obligation in the manner and times specified in the contract. If

the local government makes this pledge, it may include in its

annual tax levy an amount sufficient so the estimated collections

from the tax levy will be sufficient to promptly pay when due the

portion of the obligation falling due before the time of the

following year's tax collection, subject to constitutional,

statutory, and charter limitations. If the contract or an unlimited

tax pledge in support of the contract has been approved by the

electors of the local government, the tax may be in addition to any

tax that the local government may otherwise be authorized to levy

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

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

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

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

the contractual obligation, credit for those funds may be taken

upon the annual levy for the payment of the obligation. The

contract is not subject to the revised municipal finance act, 2001

PA 34, MCL 141.2101 to 141.2821.

(2) The contract may provide for other funds to be raised and

pledged by the local government by the use of 1 or more of the

following additional methods:

(a) The levy of special assessments to the extent legally

permitted by the local government. The procedures relative to the

levying and collection of the special assessments shall conform as

nearly as is applicable to charter or statutory provisions for the

levying and collection, except that a petition is not required from

property owners.

(b) The levy and collection of charges to users and

beneficiaries of the service or services furnished by the lighting

system.

the local government under the city utility users tax act, 1990 PA

100, MCL 141.1151 to 141.1177, as provided in subsection (3).

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

by this state, except to the extent that the use of the money for

this purpose is expressly prohibited by the state constitution of

1963.

(e) The receipt of other funds that may be validly used for

this purpose.

(3) If an authority issues bonds pursuant to this section to

be paid from revenues from a contract entered into pursuant to this

section, the local government, in furtherance of its obligations

under the contract, may by resolution or order pledge revenues to

be received by the local government pursuant to the city utility

users tax act, 1990 PA 100, MCL 141.1151 to 141.1177, to bonds of

the authority issued pursuant to the contract. If the local

government pledges these revenues, all of the following apply:

(a) Before the pledge and the contract become effective, the

local government shall do all of the following:

(i) Enter into a trust agreement with the authority, the

Michigan finance authority, and a trustee to provide for both of

the following:

(A) Collection of pledged revenues by public utilities and

resale customers.

(B) Direct payment of those pledged revenues to the trustee

for the purposes provided in this act.

(ii) Levy the tax.

(iii) Send a notice to each public utility and resale customer

collecting the tax to remit those collections to the trustee

designated in the trust agreement, pursuant to the city utility

users tax act, 1990 PA 100, MCL 141.1151 to 141.1177.

(iv) Take all other steps necessary and convenient to arrange

for and ensure the orderly collection of the taxes.

(b) After the pledge and contract become effective, the local

government shall continue to do all of the following:

(i) Levy the tax at not lower than the rate at which the tax is

levied when the contract becomes effective.

(ii) Take all other steps necessary and convenient to ensure

orderly collection of the taxes.

(iii) Perform all of its other lawful obligations under the

contract.

public utilities and resale customers shall be held in trust to be

applied for the sole and exclusive benefit of authority bondholders

to the extent and in the manner provided for by this act, the

contract, and the trust agreement, and may not be commingled with

any other funds.

(d) The pledged revenues are exempt from being levied upon,

taken, sequestered, or applied toward paying the debts or

liabilities of the local government other than for payment of debt

service on the authority bonds and related administrative costs to

which the contract and trust agreement apply. The pledged revenues

shall be exempt from any further taxes or special assessments of

this state or a political subdivision of this state.

(e) Although the pledged revenues are held in trust, to the

extent that the local government or authority retains any interest

in the pledged revenues, and solely to that extent, the pledged

revenues shall be subject to a lien in favor of the authority

bondholders. This lien is paramount and superior to all other liens

and interests of any kind, including any interest of the local

government or the authority, and shall be for the sole purpose of

ensuring payment of the principal, interest, and related

administrative costs of authority bonds secured by the contract and

the trust agreement. The lien created is effected and perfected

without delivery, recording, or notice.

(4) A trust agreement may provide that, should the trustee

determine that it holds funds in excess of those it reasonably

considers necessary to make bond payments obligated under the

contract and trust agreement, the trustee may release some or all

of the excess funds from the trust and distribute them to the local

government.

(5) The local government may not enter into a contract

pledging revenues pursuant to subsection (3) that would result in

outstanding bonds secured by those pledged revenues having an

aggregate annual debt service that exceeds $12,500,000.00 in any 1

year taking into account any anticipated federal credits as

determined by the authority.

(6) As used in this section:

(a) "Bonds" includes any ancillary facility or other financing

instruments entered into by the authority if the facilities are

permitted by the contract entered into between the local government

and the authority.

(b) "Pledged revenues" means all money to be received by the

local government pursuant to the city utility users tax act, 1990

PA 100, MCL 141.1151 to 141.1177, to the extent pledged for

repayment of authority bonds under the contract.

as defined in the city utility users tax act, 1990 PA 100, MCL

141.1151 to 141.1177.

Sec. 27. (1) The property of an authority created under this

act is public property devoted to an essential public and

governmental purpose. Income of an authority is for a public and

governmental purpose.

(2) Except as otherwise provided in this subsection, the

property of an authority created under this act and its income,

activities, and operations are exempt from all taxes and special

assessments of this state or a political subdivision of this state.

Property of an authority and its income, activities, and operations

that are leased to private persons are not exempt from any tax or

special assessment of this state or a political subdivision of this

state. Property of an authority is exempt from any ad valorem

property taxes levied under the general property tax act, 1893 PA

206, MCL 211.1 to 211.155, or other law of this state authorizing

the taxation of real or personal property. An authority is an

entity of government for purposes of section 4a(1)(a) of the

general sales tax act, 1933 PA 167, MCL 205.54a, and section

4(1)(h) of the use tax act, 1937 PA 94, MCL 205.94.

Sec. 29. An authority may acquire property for a lighting

system by purchase, construction, lease, gift, or devise, either

within or outside its corporate limits. The authority may hold,

manage, control, sell, exchange, or lease the property, except that

House Bill No. 5688 as amended December 4, 2012

if the property at issue was purchased, <<constructed, gifted,>> devised,

leased, or

otherwise came into the authority's ownership or control from the

local government, the authority may not sell, exchange, or

otherwise dispose of the property unless the other party to the

transaction is the local government that previously owned the

property so that the property will return to the ownership of the

local government that owned the property before the transfer to the

authority.

Sec. 31. The governing body of the local government comprising

the authority may advance or loan to the authority any money

required for administrative expenses or for the purpose of

obtaining maps, plans, designs, specifications, and cost estimates

of a proposed lighting system. An advance or loan may be included

as a part of any bond issue by the authority under this act and

repaid to the local government upon the sale of the bonds.

Sec. 33. The powers granted under this act are in addition to

those granted by any charter or statute.

Sec. 35. This act shall be liberally construed in the interest

of the public health, safety, and welfare of the persons and

property within an authority created under this act.

Enacting section 1. This act does not take effect unless all

of the following bills of the 96th Legislature are enacted into

law:

(a) Senate Bill No. 970.

(b) House Bill No. 5705.