BLDG AUTHORITY REFUNDING BONDS S.B. 629:
SUMMARY AS ENACTED
Senate Bill 629 (as enacted) PUBLIC ACT 37 of 2014
Senate Committee: Economic Development
House Committee: Tax Policy
CONTENT
The bill amended Public Act 31 of the 1st Extra Session of 1948, which authorizes the creation of local building authorities, to do the following:
-- Permit an authority to issue negotiable bonds to refund other refunding bonds.
-- Exempt refunding bonds issued before December 31, 2019, from certain provisions of the Revised Municipal Finance Act.
The bill took effect on March 20, 2014.
The Act allows a building authority to issue its negotiable bonds in anticipation of receiving rental payments from the local unit or units of government that incorporated the authority, for the purpose of defraying the costs of acquiring, improving, and enlarging buildings, parking lots or structures, recreational facilities, stadiums, and necessary sites, or to refund outstanding bonds. Bonds may not be issued unless the property has been leased by the authority to its incorporating unit or units.
In addition, for the purpose of defraying the cost of refunding capital appreciation bonds originally issued on May 17, 1990, a building authority may issue its negotiable bonds in anticipation of receiving rental payments from the incorporating unit, under a lease dated November 14, 1989. Under the bill, an authority also may issue these negotiable bonds to defray the cost of bonds issued to refund the refunding bonds.
Previously, if the refunding bonds were issued before January 1, 2011, they were not subject to provisions of the Revised Municipal Finance Act that govern the sale of a municipal security at a discount; limit the maturity time periods of a municipal security; and otherwise provide for the maturity or redemption of a municipal security. Under the bill, if the refunding bonds are issued before December 31, 2019, they are exempt from those provisions as well as a section of the Revised Municipal Finance Act that sets forth conditions and procedures for a municipality to issue a refunding security.
MCL 123.961 Legislative Analyst: Patrick Affholter
FISCAL IMPACT
The bill will likely alter the timing and amount of local expenditures by an unknown magnitude. The bill affects refunding obligations, which are generally issued to pay back an earlier debt issue with a new one that pays a lower interest rate and/or is payable over a different period of time. The new refunding obligation payments might be greater or
less than under prior law and the specific changes will depend on the terms of any affected refunding obligations. For example, a refunding obligation could conceivably pay a lower interest rate, which would reduce payments; but could accelerate the repayment period, which would increase the payments in the near term but reduce them in later years.
Fiscal Analyst: Elizabeth Pratt
This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.