Bill Text: MI HB5289 | 2011-2012 | 96th Legislature | Engrossed
Bill Title: Local government; financing; investments in certain deposit accounts; authorize. Amends sec. 1 of 1943 PA 20 (MCL 129.91).
Spectrum: Slight Partisan Bill (Republican 3-1)
Status: (Passed) 2012-05-30 - Assigned Pa 152'12 With Immediate Effect [HB5289 Detail]
Download: Michigan-2011-HB5289-Engrossed.html
HB-5289, As Passed Senate, May 16, 2012
HOUSE BILL No. 5289
January 26, 2012, Introduced by Reps. Ouimet, McBroom, Womack and Knollenberg and referred to the Committee on Banking and Financial Services.
A bill to amend 1943 PA 20, entitled
"An act relative to the investment of funds of public corporations
of the state; and to validate certain investments,"
by amending section 1 (MCL 129.91), as amended by 2009 PA 21.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) Except as provided in section 5, the governing
body by resolution may authorize its investment officer to invest
the funds of that public corporation in 1 or more of the following:
(a) Bonds, securities, and other obligations of the United
States or an agency or instrumentality of the United States.
(b)
Certificates of deposit, savings accounts, deposit
accounts,
or depository receipts of a
financial institution, but
only
if the financial institution complies with subsection (2); ,
or
certificates of deposit obtained
through a financial institution
as provided in subsection (5); or deposit accounts of a financial
institution as provided in subsection (6).
(c) Commercial paper rated at the time of purchase within the
2 highest classifications established by not less than 2 standard
rating services and that matures not more than 270 days after the
date of purchase.
(d) Repurchase agreements consisting of instruments listed in
subdivision (a).
(e) Bankers' acceptances of United States banks.
(f) Obligations of this state or any of its political
subdivisions that at the time of purchase are rated as investment
grade by not less than 1 standard rating service.
(g) Mutual funds registered under the investment company act
of
1940, title I of chapter 686, 54 Stat. 789, 15 USC 80a-1 to 80a-
3
and 80a-4 to 80a-64, with authority
to purchase only investment
vehicles that are legal for direct investment by a public
corporation. However, a mutual fund is not disqualified as a
permissible
investment solely by reason of either any of the
following:
(i) The purchase of securities on a when-issued or delayed
delivery basis.
(ii) The ability to lend portfolio securities as long as the
mutual fund receives collateral at all times equal to at least 100%
of the value of the securities loaned.
(iii) The limited ability to borrow and pledge a like portion of
the portfolio's assets for temporary or emergency purposes.
(h) Obligations described in subdivisions (a) through (g) if
purchased through an interlocal agreement under the urban
cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to
124.512.
(i) Investment pools organized under the surplus funds
investment pool act, 1982 PA 367, MCL 129.111 to 129.118.
(j) The investment pools organized under the local government
investment pool act, 1985 PA 121, MCL 129.141 to 129.150.
(2) Except as provided in subsection (5), a public corporation
that invests its funds under subsection (1) shall not deposit or
invest the funds in a financial institution that is not eligible to
be a depository of funds belonging to this state under a law or
rule of this state or the United States.
(3) Assets acceptable for pledging to secure deposits of
public funds are limited to assets authorized for direct investment
under subsection (1).
(4) The governing body by resolution may authorize its
investment officer to enter into written agreements with other
public corporations to pool or coordinate the funds to be invested
under this section with the funds of other public corporations.
Agreements allowed under this subsection shall include all of the
following:
(a) The types of investments permitted to be purchased with
pooled funds.
(b) The rights of members of the pool to withdraw funds from
the pooled investments without penalty.
(c) The duration of the agreement and the requirement that the
agreement shall not commence until at least 60 days after the
public corporations entering the agreement give written notice to
an existing local government investment pool which is organized
pursuant
to under the local government investment pool act, 1985 PA
121, MCL 129.141 to 129.150, in those counties where such a pool is
operating and accepting deposits on or before September 29, 2006.
(d) The method by which the pool will be administered.
(e) The manner by which the public corporations will respond
to liabilities incurred in conjunction with the administration of
the pool.
(f) The manner in which strict accountability for all funds
will be provided for, including an annual statement of all receipts
and disbursements.
(g) The manner by which the public corporations will adhere to
the requirements of section 5.
(5) In addition to the investments authorized under subsection
(1), the governing body by resolution may authorize its investment
officer to invest the funds of the public corporation in
certificates of deposit in accordance with all of the following
conditions:
(a) The funds are initially invested through a financial
institution that is not ineligible to be a depository of surplus
funds belonging to this state under section 6 of 1855 PA 105, MCL
21.146.
(b) The financial institution arranges for the investment of
the funds in certificates of deposit in 1 or more insured
depository institutions, as defined in 12 USC 1813, or 1 or more
insured credit unions, as defined in 12 USC 1752, for the account
of the public corporation.
(c) The full amount of the principal and any accrued interest
of each certificate of deposit is insured by an agency of the
United States.
(d) The financial institution acts as custodian for the public
corporation with respect to each certificate of deposit.
(e) At the same time that the funds of the public corporation
are deposited and the certificate or certificates of deposit are
issued, the financial institution receives an amount of deposits
from customers of other insured depository institutions or insured
credit unions equal to or greater than the amount of the funds
initially invested by the public corporation through the financial
institution.
(6) In addition to the investments authorized under subsection
(1), the governing body by resolution may authorize its investment
officer to invest the funds of the public corporation in deposit
accounts that meet all of the following conditions:
(a) The funds are initially deposited in a financial
institution that is not ineligible to be a depository of surplus
funds belonging to this state under section 6 of 1855 PA 105, MCL
21.146.
(b) The financial institution arranges for the deposit of the
funds in deposit accounts in 1 or more insured depository
institutions, as defined in 12 USC 1813, or 1 or more insured
credit unions, as defined in 12 USC 1752, for the account of the
public corporation.
(c) The full amount of the principal and any accrued interest
of each deposit account is insured by an agency of the United
States.
(d) The financial institution acts as custodian for the public
corporation with respect to each deposit account.
(e) On the same date that the funds of the public corporation
are deposited under subdivision (b), the financial institution
receives an amount of deposits from customers of other insured
depository institutions or insured credit unions equal to or
greater than the amount of the funds initially deposited by the
public corporation in the financial institution.
(7) (6)
A public corporation that initially
invests its funds
through a financial institution that maintains an office located in
this state may invest the funds in certificates of deposit as
provided under subsection (5).
(8) (7)
As used in this section,
"financial institution" means
a state or nationally chartered bank or a state or federally
chartered savings and loan association, savings bank, or credit
union whose deposits are insured by an agency of the United States
government and that maintains a principal office or branch office
located in this state under the laws of this state or the United
States.
(9) (8)
As used in this act:
(a) "Governing body" means the legislative body, council,
commission, board, or other body having legislative powers of a
public corporation.
(b) "Funds" means the money of a public corporation, the
investment of which is not otherwise subject to a public act of
this state or bond authorizing ordinance or resolution of a public
corporation that permits investment in fewer than all of the
investment options listed in subsection (1) or imposes 1 or more
conditions upon an investment in an option listed in subsection
(1).
(c) "Investment officer" means the treasurer or other person
designated by statute or charter of a public corporation to act as
the investment officer. In the absence of a statutory or charter
designation, the governing body of a public corporation shall
designate the investment officer.
(d) "Public corporation" means a county, city, village,
township, port district, drainage district, special assessment
district, or metropolitan district of this state, or a board,
commission, or another authority or agency created by or under an
act of the legislature of this state.
