HB-5028, As Passed House, September 13, 2005

HOUSE BILL No. 5028

June 29, 2005, Introduced by Reps. Palsrok, Casperson, Farhat, Nofs, Kolb, Proos, Farrah, Garfield, Gosselin, Tobocman, Huizenga, Stahl, Lipsey, Amos and Lemmons, III and referred to the Committee on Natural Resources, Great Lakes, Land Use, and Environment.

A bill to create and provide for the operation of the Michigan

port authority; to provide for the creation and appointment of a

board to govern the authority and to prescribe its powers and

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

extend protections against certain liabilities to the authority; to

provide for the issuance of certain bonds, notes, and other

obligations; to facilitate the use and development of authority

property and port facilities; to promote economic growth; to exempt

property, income, and operations of an authority from tax; and to

provide an appropriation.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

"Michigan port authority act".

Sec. 2. As used in this act:

(a) "Authority" means the Michigan port authority created

under section 3.

(b) "Authorized purposes" means activities that enhance,

foster, aid, provide, or promote transportation, economic

development, housing, recreation, education, governmental

operations, culture, or research within this state.

described in section 4.

(d) "Department" means the department of labor and economic

growth described in Executive Order No. 2003-18.

(e) "Develop" means the acquisition, financing, purchase,

construction, reconstruction, rehabilitation, remodeling,

improvement, enlargement, repair, condemnation, maintenance, or

operation of port facilities.

(f) "Fund" means the Michigan port authority fund created in

section 20.

(g) "Governmental agency" means a department, agency, or

commission of this state or of a county, city, village, or township

of this state.

(h) "Local unit of government" means a city, county, township,

or village.

(i) "Michigan economic development corporation" means the

public body corporate created under section 28 of article VII of

the state constitution of 1963 and the urban cooperation act of

1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual

interlocal agreement effective April 5, 1999 between local

participating economic development corporations formed under the

economic development corporations act, 1974 PA 338, MCL 125.1601 to

125.1636, and the Michigan strategic fund under the Michigan

strategic fund act, 1984 PA 270, MCL 125.2001 to 125.2093.

(j) "Person" means an individual, partnership, corporation,

limited liability company, association, governmental entity, or

other legal entity.

(k) "Port facilities" means real or personal property, or any

combination of real or personal property, that is owned, leased, or

otherwise controlled or financed by a port authority and is related

to, useful for, or in furtherance of, 1 or more authorized

purposes.

Sec. 3. (1) There is created by this act a public body

corporate and politic known as the Michigan port authority. The

authority shall be located within the department.

(2) The authority shall exercise its prescribed statutory

powers, duties, and functions independently of the director of the

department. The budgeting, procurement, and related administrative

functions of the authority shall be performed under the direction

and supervision of the director of the department.

(3) The authority may contract with the department for the

purpose of maintaining the rights and interests of the authority.

(4) The accounts of the authority may be subject to annual

financial audits by the state auditor general. Records of the

authority shall be maintained according to generally accepted

accounting principles.

Sec. 4. (1) The authority created under this act shall be

governed by the Michigan port authority board, which shall consist

of 7 board members who are residents of this state. Of the members

first appointed under subsection (2)(d), 2 shall be appointed for a

term of 2 years and 2 shall be appointed for a term of 3 years.

(2) The members of the board shall be as follows:

(a) The chief executive officer of the Michigan economic

development corporation, or his or her designee, as chairperson of

the authority.

(b) The director of the department of labor and economic

growth, or his or her designee.

his or her designee.

(d) Four other members appointed by the governor by and with

the advice and consent of the senate who are not employed by this

state and who have knowledge, skill, and experience in economic

development. Of the members appointed by the governor under this

subsection, 1 shall be appointed from 1 or more nominees of the

majority leader of the senate and 1 shall be appointed from 1 or

more nominees of the speaker of the house of representatives.

(3) Upon appointment to the board under subsection (2) and

upon the taking and filing of the constitutional oath of office

prescribed in section 1 of article XI of the state constitution of

1963, a member of the board shall enter the office and exercise the

duties of the office.

(4) After the first appointment, each member shall serve a

term of 4 years, except that a person appointed to fill a vacancy

shall be appointed for the balance of the unexpired term. The

governor shall fill a vacancy in the office by appointment in the

same manner as an appointment under subsection (2). A member of the

board shall hold office until a successor has been appointed and

qualified. A member of the board is eligible for reappointment.

(5) Members of the board and officers and employees of the

authority are considered public servants subject to 1968 PA 317,

MCL 15.321 to 15.330, and 1968 PA 318, MCL 15.301 to 15.310. A

member of the board or an officer, employee, or agent of the

authority shall discharge the duties of the position in a

nonpartisan manner, in good faith, in the best interests of the

authority, and with the degree of diligence, care, and skill that

an ordinarily prudent person would exercise under similar

circumstances in a like position. In discharging duties of the

office, a member of the board or an officer, employee, or agent of

the authority, when acting in good faith, may rely upon a majority

vote of a quorum of the board, upon the opinion of counsel for the

authority, upon the report of an independent appraiser selected

with reasonable care by the board, or upon financial statements of

the authority represented to the member of the board, officer,

employee, or agent to be correct by the officer of the authority

having charge of its books or accounts or stated in a written

report by the auditor general or a certified public accountant or a

firm of accountants to fairly reflect the financial condition of

the authority.

(6) The board shall elect a vice-chairperson, secretary, and

any additional officers of the board considered necessary by the

board from among its members. All elected officers of the board

shall be elected annually by the board. Members of the board shall

serve without compensation, but shall be reimbursed for actual and

necessary expenses.

Sec. 5. (1) Upon the appointment of at least 4 members of the

board under section 4, the board may hold its first meeting. The

first meeting of the board shall be held not more than 60 days

after the date the authority is created.

(2) The board shall organize and adopt its own policies,

procedures, schedule of regular meetings, and a regular meeting

date, place, and time. The board shall conduct all business at

public meetings 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 each meeting shall be given in the manner required by the

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

(3) A writing prepared, owned, used, in the possession of, or

retained by the board 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.

(4) A board may act only by resolution. A majority of the

members of the board then in office, or of any committee of the

board, shall constitute a quorum for the transaction of business.

The board shall meet in person or by means of electronic

communication devices that enable all participants in the meeting

to communicate with each other. A vote of a majority of the members

of the board serving at the time of the vote is necessary to

approve the issuance by the authority of bonds, to approve or amend

the annual budget of the authority. Except as otherwise provided in

this act, a vote of the majority of the board members present at a

meeting at which a quorum is present constitutes the action of the

board or of the committee.

(5) Before the beginning of each fiscal year, the board shall

prepare a budget containing an itemized statement of the estimated

current operational expenses for the operation of the authority and

development of port facilities in this state, the amount necessary

to pay the principal and interest of any outstanding bonds or other

obligations of the authority maturing during the ensuing fiscal

year or that have previously matured and are unpaid, an estimate of

the revenue of the authority from all sources for the ensuing

fiscal year, and other amounts necessary to further the purposes of

this act. The authority's budget shall be funded by proceeds

derived from gifts, grants, loans, and other aids from any person

or the federal government, this state, or a local government or any

agency of the federal government, this state, or a local

government.

Sec. 6. (1) The board may appoint a person, other than a

member of the board, to serve as director of the authority, to whom

the authority may delegate any of its administrative powers and

authorization.

(2) Subject to the approval of the board, the director shall

supervise, and be responsible for, all of the following:

(a) The performance of the functions of the authority under

this act.

(b) A regular report describing the activities and financial

condition of the authority.

(d) All other activities or functions that the board considers

necessary.

(3) The board may employ legal and technical experts, private

consultants and engineers, accountants, and other agents or

employees for rendering professional and technical assistance and

advice as may be necessary. The authority shall determine the

qualifications, duties, and compensation of those it employs.

Sec. 7. Except as otherwise provided in this act, the

authority may do all things necessary to implement the purposes of

this act, including, but not limited to, all of the following:

(a) Adopt, amend, and repeal bylaws for the regulation of its

affairs and the conduct of its business.

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

of the board.

impleaded.

(d) Solicit and accept gifts, grants, loans, and other

assistance from any person or the federal, the state, or a local

government or any agency of the federal, the state, or a local

government or participate in any other way in any federal, state,

or local government program.

(e) Research and publish studies, investigations, surveys, and

findings on the developing and operations of port facilities.

(f) Finance, direct, or otherwise aid in the planning,

construction, and design of port facilities.

(g) Finance, direct, or otherwise aid in the securing of port

facilities and surrounding areas in this state.

(h) Make grants, loans, and investments; guarantee and insure

loans, leases, bonds, notes, or other indebtedness, whether public

or private; and issue letters of credit.

(i) Construct; acquire by gift, purchase, installment

purchase, or lease; and reconstruct, improve, repair, or equip a

port facility or any part of a port facility, including related

infrastructure.

(j) Borrow money and issue bonds and notes to finance part or

all of the costs of developing port facilities and secure those

bonds and notes by mortgage, assignment, or pledge of any of its

money, revenues, income, and properties.

(k) Acquire or contract to acquire from a person, a

municipality, the federal or state government, or an agency of the

federal or state government, leaseholds, real or personal property,

or any interest in real or personal property and own, hold, clear,

improve, and rehabilitate and sell, assign, exchange, transfer,

convey, lease, mortgage, or otherwise dispose of or encumber

leaseholds, real or personal property, or any interest in real or

personal property, as is convenient for the accomplishment of the

purposes of this act and of the authority.

(l) Procure insurance against any loss in connection with the

authority's property, assets, or activities.

(m) Invest any money of the authority, at the board's

discretion, in any bond, note, or other obligation determined

proper by the board, and name and use depositories for its money.

(n) Contract for goods and services and engage personnel as

necessary and engage the services of private consultants, managers,

legal counsel, engineers, accountants, and auditors for rendering

professional financial assistance and advice payable out of any

money of the authority.

(o) Charge, impose, and collect fees and charges in connection

with any transaction and provide for reasonable penalties for

delinquent payment of fees or charges.

(p) Indemnify and procure insurance indemnifying any members

of the board or employees of the board from personal loss or

accountability from liability asserted by a person on the bonds or

notes of the authority or from any personal liability or

accountability by reason of the issuance of the bonds, notes,

insurance, or guarantees; by reason of acquisition, construction,

ownership, or operation of a project; or by reason of any other

action taken or the failure to act by the authority.

(q) Mortgage or create security interests in a port facility

or any part of a port facility, or in a lease or loan, or in the

rents, revenues, or sums to be paid under a lease or loan, in favor

of the holders of the bonds or notes issued by the authority.

(r) Convey or release a port facility or any part of a port

facility to a lessee, purchaser, or borrower under any agreement

after provision has been made for the retirement in full of the

bonds or notes issued for that port facility under terms and

conditions provided in the agreement or as may be agreed with the

holders of the bonds or notes, at any time where the obligation of

the lessee, purchaser, or borrower to make the payments prescribed

shall remain fixed as provided in the agreement notwithstanding the

conveyance or release, or as may otherwise be agreed with the

holders of the bonds or notes.

(s) Promulgate rules pursuant to the administrative procedures

act of 1969, 1969 PA 306, MCL 24.201 to 24.328, necessary to carry

out the purposes of this act.

(t) Do all other things necessary to promote and develop port

facilities in this state.

Sec. 8. (1) The authority may acquire real or personal

property or rights or interests in real or personal property by

gift, devise, transfer, exchange, foreclosure, purchase, or

otherwise on terms and conditions and in a manner the authority

considers proper. The authority may own, lease, convey, demolish,

relocate, or rehabilitate real or personal property or rights or

interests in real or personal property, consistent with the

purposes of this act.

(2) Real property acquired by the authority by purchase may be

obtained by any method considered desirable by the authority. The

authority may purchase real property or rights or interests in real

property for any purpose the authority considers necessary to carry

out the purposes of this act.

(3) The authority may acquire by condemnation lands, property

rights, rights of way, franchises, easements, and other property,

or parts of property or rights in property, of a person,

partnership, association, or corporation considered by the

authority to be necessary for the construction or efficient

operation of a port facility. A facility currently operated as a

port facility by a terminal operator or a facility owned or

operated by a common carrier or public utility shall be exempt from

this subsection. The condemnation shall be made in the manner

provided under 1966 PA 295, MCL 213.361 to 213.391, or the uniform

condemnation procedures act, 1980 PA 87, MCL 213.51 to 213.75,

except where that procedure may be inconsistent with this act.

Sec. 9. The authority may control, hold, manage, maintain,

operate, repair, lease, secure, prevent the waste or deterioration

of, demolish, and take all other actions necessary to preserve the

value of property held by the authority.

Sec. 10. (1) The authority may authorize and issue its bonds

or notes payable solely from revenues or funds available to the

authority. Bonds and notes of the authority are not a debt or

liability of this state and do not create or constitute any

indebtedness, liability, or obligations of this state or constitute

a pledge of the full faith or credit of this state. All authority

bonds and notes shall be payable solely from revenues or funds

pledged or available for their payment as authorized in this act.

Each bond and note shall contain on its face a statement to the

effect that the authority is obligated to pay the principal of and

the interest on the bond or note only from revenue or funds of the

authority pledged for the payment of principal and interest and

that this state is not obligated to pay that principal and interest

and that neither the full faith and credit nor the taxing power of

this state is pledged to the payment of the principal of or the

interest on the bond or note.

(2) All expenses incurred in carrying out this section shall

be payable solely from revenues or funds provided or to be provided

under this act. This act does not authorize the authority to incur

any indebtedness or liability on behalf of or payable by this

state.

(3) Bonds and notes issued under this act are not subject to

the revised municipal finance act, 2001 PA 34, MCL 141.2101 to

141.2821.

(4) The issuance of bonds and notes under this section is

subject to the agency financing reporting act, 2002 PA 470, MCL

129.171 to 129.177.

Sec. 11. (1) The authority may issue from time to time bonds

or notes in principal amounts the authority considers necessary to

provide funds for any purpose, including, but not limited to, all

of the following:

(a) The payment, funding, or refunding of the principal of,

interest on, or redemption premiums on bonds or notes issued by the

authority whether the bonds or notes or interest to be funded or

refunded has or has not become due.

(b) The establishment or increase of reserves to secure or to

pay authority bonds or notes or interest on those bonds or notes.

as the authority determines.

(d) The payment of all other costs or expenses of the

authority incident to and necessary or convenient to carry out its

authorized purposes and powers.

(2) The bonds or notes of the authority shall not be a general

obligation of the authority but shall be payable solely from the

revenues or funds, or both, pledged to the payment of the principal

of and interest on the bonds or notes as provided in the resolution

authorizing the bonds or notes.

(3) The bonds or notes of the authority:

(a) Shall be authorized by resolution of the authority.

(b) Shall bear the date or dates of issuance.

taxable bonds or notes for federal income tax purposes.

(d) Shall be serial bonds, term bonds, or term and serial

bonds.

(e) Shall mature at a time or times not exceeding 40 years

from the date of issuance.

(f) May provide for sinking fund payments.

(g) May provide for redemption at the option of the authority

at any time for any reason or reasons.

(h) May provide for redemption at the option of the bondholder

at any time for any reason.

(i) Shall bear interest at a fixed or variable rate or rates

of interest per year or at no interest.

(j) Shall be registered bonds, coupon bonds, or both.

(k) May contain a conversion feature.

(l) May be transferable.

(m) Shall be in the form, denomination or denominations, and

with such other provisions and terms as are determined necessary or

beneficial by the authority.

Sec. 12. (1) The authority may authorize and approve an

insurance contract, an agreement for a line of credit, a letter of

credit, a commitment to purchase notes or bonds, an agreement to

remarket bonds or notes, or any other transaction to provide

security to assure timely payment of a bond or note.

(2) The authority may authorize payment from the proceeds of

the notes or bonds, or other funds available, of the costs of

issuance, including, but not limited to, fees for placement,

charges for insurance, letters of credit, lines of credit,

remarketing agreements, reimbursement agreements, or purchase or

sales agreements or commitments, or agreements to provide security

to assure timely payment of notes or bonds.

Sec. 13. Within limitations contained in the issuance or

authorization resolution of the authority, the authority may

authorize a member of the board, the director, or other officer of

the authority 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

or are subject to redemption.

and partly for any other authorized purpose.

(d) Buy notes or bonds that are issued and resell those 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 authority or the holder,

the place of delivery and payment, and other matters and procedures

necessary to complete the transactions authorized.

(f) Direct the investment of any and all funds of the

authority.

(g) Approve the terms of a contract and execute and deliver

the contract subject to the restrictions of this part.

(h) Approve the terms of any insurance contract, agreement for

a line of credit, a letter of credit, a commitment to purchase

notes or bonds, an agreement to remarket bonds or notes, an

agreement to manage payment, revenue, or interest rate exposure, or

any other transaction to provide security to assure timely payment

of a bond or note.

(i) Perform any power, duty, function, or responsibility of

the authority.

Sec. 14. A resolution authorizing bonds or notes may provide

for all of the following that shall be part of the contract with

the holders of the bonds or notes:

(a) A pledge to any payment or purpose all or any part of

authority revenues or assets to which its right then exists or may

later come to exist, of money derived from the revenues or assets,

and of the proceeds of bonds or notes or of an issue of bonds or

notes, subject to any existing agreements with bondholders or

noteholders.

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

federal, state, or local government.

funds and the regulation and disposition of reserves or sinking

funds subject to this act.

(d) Authorization for and limitations on the issuance of

additional bonds or notes for the purposes provided for in the

resolution and the terms upon which additional notes or bonds may

be issued and secured.

(e) 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

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

given.

(f) A contract with the bondholders as to the custody,

collection, securing, investment, and payment of any money of the

authority. Money of the authority and deposits of money may be

secured in the manner determined by the authority. Banks and trust

companies may give security for the deposits.

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

income, revenue, receipts, rights, remedies, powers, and duties in

trust or otherwise as the authority determines necessary or

appropriate to adequately secure and protect noteholders and

bondholders or to limit or abrogate the right of the holders of

bonds or notes of the authority to appoint a trustee under this act

or to limit the rights, powers, and duties of the trustee.

(h) Provide the trustee, the noteholders, or the bondholders

remedies that may be exercised if the authority fails or refuses to

comply with this act or defaults in an agreement made with the

holders of an issue of bonds or notes, which may include, but are

not limited to, the following:

(i) By mandamus or other action or proceeding at law or in

equity, to enforce the rights of the bondholders or noteholders and

require the authority to carry out any other agreement with the

holders of those notes or bonds and to perform the duties of the

authority under this act.

(ii) Bring action upon the notes or bonds.

(iii) By action, require the authority to account as if it were

the trustee of an express trust for the holders of the notes or

bonds.

(iv) By action in equity, enjoin any acts or things that may be

unlawful or in violation of the rights of the holders of the notes

or bonds.

(v) Declare the notes or bonds due and payable and, if all

defaults shall be made good, then, as permitted by the resolution,

annul that declaration and its consequences.

(i) Any other matters of like or different character that in

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

Sec. 15. A pledge made by the authority shall be valid and

binding from the time the pledge is made. The money or property

pledged and then received by the authority immediately is subject

to the lien of the pledge without 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

authority and is valid and binding as against the transfers of

money or property pledged, irrespective of whether parties have

notice. The resolution, the trust agreement, or any other

instrument by which a pledge is created is not required to be

recorded in order to establish and perfect a lien or security

interest in the property pledged.

Sec. 16. The members of the board and any person executing

bonds or notes issued as provided in this act and any person

executing any agreement on behalf of the authority is not

personally liable on the bonds or notes by reason of their

issuance.

Sec. 17. The authority may hold, cancel, or resell authority

bonds or notes subject to or in accordance with an agreement with

holders of authority bonds or notes.

Sec. 18. This state pledges to and agrees with the holders of

bonds or notes issued in accordance with this act that this state

shall not limit or restrict the rights vested in the authority by

this act to fulfill the terms of an agreement made with the holders

of authority bonds or notes or in any way impair the rights or

remedies of the holders of the bonds or notes of the authority

until the bonds and notes, together with interest on the bonds or

notes and interest on any unpaid installments of interest, and all

costs and expenses in connection with an action or proceedings by

or on behalf of those holders are fully met, paid, and discharged.

Sec. 19. Notwithstanding any restriction in any other law,

this state and a public officer, local unit of government, agency

of this state or a local unit of government, an intergovernmental

entity created under the laws of this state; a bank, trust company,

savings bank and institution, savings and loan association,

investment company, or other person carrying on a banking business;

an insurance company, insurance association, or other person

carrying on an insurance business; or an executor, administrator,

guardian, trustee, or other fiduciary may legally invest funds

belonging to them or within their control in bonds or notes issued

under this act, and authority bonds or notes shall be authorized

security for public deposits.

Sec. 20. (1) The Michigan port authority fund is created under

the jurisdiction and control of the authority and may be

administered for the general operations of the authority and to

secure any notes and bonds of the authority.

(2) The authority may receive money or other assets from any

source for deposit into the fund. The authority shall credit to the

fund interest and earnings from fund investments.

(3) Money in the fund at the close of the fiscal year shall

remain in the fund and shall not lapse to the general fund.

(4) The authority shall expend money from the fund only for

the authorized purposes provided in this act.

Sec. 21. The authority created under this act shall be exempt

from and shall not be required to pay taxes on property, both real

and personal, belonging to the authority, which is used for a

public or governmental purpose. Property of the authority is public

property devoted to an essential public or governmental function

and purpose. The authority's income and operation, including bonds

or notes issued by the authority or the interest and income derived

from the bonds or notes, are exempt from all taxes and special

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

Sec. 22. This act shall be construed liberally to effectuate

the legislative intent and its purposes. All powers granted shall

be cumulative and not exclusive and shall be broadly interpreted to

effectuate the intent and purposes and not as a limitation of