HB-4075, As Passed House, March 4, 2009

 

 

 

 

 

 

 

 

 

 

 

SUBSTITUTE FOR

 

HOUSE BILL NO. 4075

 

 

 

 

 

 

 

 

 

 

 

     A bill to amend 2001 PA 34, entitled

 

"Revised municipal finance act,"

 

(MCL 141.2101 to 141.2821) by adding section 518.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 518. (1) Through September 30, 2012, a county, city,

 

village, or township may by ordinance or resolution of its

 

governing body, and without a vote of its electors, issue a

 

municipal security under this section to pay the costs of the

 

unfunded accrued liability provided that the amount of taxes

 

necessary to pay the principal and interest on that municipal

 

security, together with the taxes levied for the same year, shall

 

not exceed the limit authorized by law. Postemployment health care

 

benefits may be funded by the county, city, village, or township.

 

The funding of postemployment health care benefits by a county,

 

city, village, or township as provided in this act shall constitute

 

a contract to pay the postemployment health care benefits.

 

     (2) Before a county, city, village, or township issues a

 

municipal security under this section, the county, city, village,

 

or township shall publish a notice of intent to issue the municipal

 

security. The notice of intent and the rights of referendum shall

 

meet the requirements of section 517(2) except that petitioners

 

shall have 60 days after the publication of the notice of intent to

 

file a petition and the registered elector requirement shall be not

 

less than 5% or 10,000 registered electors, whichever is less.

 

     (3) A county, city, village, or township by resolution and

 

with a vote of its electors may issue a municipal security pledging

 

its unlimited taxes to pay the costs of an unfunded accrued

 

liability.

 

     (4) The proceeds of a municipal security issued under this

 

section may be used to pay the costs of issuance of the municipal

 

security. The proceeds of a municipal security issued under this

 

section shall be deposited in a health care trust fund; a trust

 

created by the issuer which has as its beneficiary a health care

 

trust fund; or for a county, city, village, or township, a

 

restricted fund within a trust that would only be used to retire

 

the municipal securities issued under subsection (1) or (3). A

 

county, city, village, or township shall have the power to create a

 

trust to carry out the purposes of this subsection. The trust

 

created under this subsection shall invest its funds in the same

 

manner as funds invested by a health care trust fund. The trust

 

created under this subsection shall comply with all of the

 

following:

 

     (a) Report its financial condition according to generally

 

accepted accounting principles.

 

     (b) Be tax exempt under the internal revenue code.

 

     (5) Before a county, city, village, or township issues a

 

municipal security under this section, the county, city, village,

 

or township shall prepare and make available to the public a

 

comprehensive financial plan that includes all of the following:

 

     (a) Evidence that the issuance of the municipal security

 

together with other funds lawfully available will be sufficient to

 

eliminate the unfunded accrued liability.

 

     (b) A debt service amortization schedule and a description of

 

actions required to satisfy the debt service amortization schedule.

 

     (c) A certification by the person preparing the plan that the

 

comprehensive financial plan is complete and accurate.

 

     (d) Documentation that the issuance of municipal securities

 

will result in projected present value savings regarding the

 

unfunded accrued liability.

 

     (e) Subject to any collective bargaining agreement, a plan in

 

place from the county, city, village, or township to mitigate the

 

increase in health care costs and may include a wellness program

 

that promotes the maintenance or improvement of healthy behaviors.

 

     (6) Municipal securities issued under subsection (1) or (3) by

 

a county, city, village, or township, and currently outstanding,

 

shall not exceed 5% of the state equalized valuation of the

 

property assessed in that county, city, village, or township.

 

     (7) Municipal securities issued under subsection (1) or (3) by

 

a county, city, village, or township and the interest on and income

 

from the municipal securities are exempt from taxation by this

 

state or a political subdivision of this state.

 

     (8) A county, city, village, or township issuing municipal

 

securities under subsection (1) or (3) may enter into indentures or

 

other agreements with trustees and escrow agents for the issuance,

 

administration, or payment of the municipal securities.

 

     (9) Municipal securities issued under subsection (1) or (3) by

 

a county, city, village, or township shall not on a cumulative

 

basis exceed 75% of current unfunded accrued liabilities on

 

postemployment health care benefits owed to employees of the

 

county, city, village, or township that exist on the date of the

 

amendatory act that added this subsection.

 

     (10) A county, city, village, or township shall not issue a

 

municipal security under subsection (1) or (3) unless the county,

 

city, village, or township has been assigned a credit rating within

 

the category of A or higher by at least 1 nationally recognized

 

rating agency.

 

     (11) A county, city, village, or township shall not issue a

 

municipal security under subsection (1) or (3) unless the projected

 

difference between the assumed rate of return on the health care

 

trust fund investments and the projected actual interest rate paid

 

on the municipal securities issued under subsection (1) or (3) is

 

not less than 100 basis points.

 

     (12) Before a county, city, village, or township issues a

 

municipal security under this section, the county, city, village,

 

or township shall obtain the approval of the department of

 

treasury. The department of treasury shall review the proposed

 

issuance of municipal securities and if it verifies that the

 

county, city, village, or township meets the requirements of this

 

section, the department of treasury shall approve the issuance of

 

municipal securities under this section.

 

     Enacting section 1. This amendatory act does not take effect

 

unless all of the following bills of the 95th Legislature are

 

enacted into law:

 

     (a) House Bill No. 4074.

 

     (b) House Bill No. 4077.