SB-0224, As Passed Senate, June 7, 2005

SUBSTITUTE FOR

SENATE BILL NO. 224

     A bill to amend 2002 PA 49, entitled

"Michigan broadband development authority act,"

by amending section 7 (MCL 484.3207), as amended by 2003 PA 265.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 7. (1) The powers of the authority shall include all

those necessary to carry out and effectuate the purposes of this

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

     (a) To borrow money and issue bonds and notes to fund

operations of the authority, to finance or refinance part or all of

the development costs of the broadband infrastructure, to refinance

existing debt for technology that constitutes a part of or is

related to the broadband infrastructure, and to secure bonds and

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

assets.

     (b) To invest any money of the authority at the authority's

discretion, in any obligations determined proper by the authority,

and name and use depositories for its money.

     (c) To enter into joint venture and partnership arrangements

subject to subsections (2) and (3) with persons that will acquire,

construct, develop, maintain, and operate all or portions of the

broadband infrastructure.

     (d) To be designated the state program manager for federal

telecommunications assistance, to represent this state in

negotiations with the federal government regarding

telecommunications assistance, and to receive and distribute

federal funding, including loans, grants, and other forms of

funding and assistance on this state's behalf.

     (e) To receive and distribute state or local funding including

grants, loans, general appropriations, or an appropriation made for

the purposes under subsection (4).

     (f) To make loans and to enter into any joint venture and

partnership arrangements subject to subsections (2) and (3) with

broadband developers and broadband operators that will acquire,

construct, maintain, and operate all or portions of the broadband

infrastructure.

     (g) To provide operating assistance to make broadband services

more affordable to broadband developers, broadband operators, and

broadband customers, in conjunction with broadband infrastructure

financed by the authority.

     (h) To impose and collect charges, fees, or rentals for the

services furnished by those portions of the broadband

infrastructure financed by the authority under this act.

     (i) To set construction, operation, and financing standards

for the broadband infrastructure in connection with authority

financing and to provide for inspections to determine compliance

with those standards.

     (j) To acquire from any person interests in real or personal

property necessary for the operation of the authority.

     (k) To procure insurance against any loss in connection with

the broadband infrastructure and any other property, assets, or

activities of the authority.

     (l) To sue and be sued, to have a seal, and to make, execute,

and deliver contracts, conveyances, and other instruments necessary

to the exercise of the authority's powers.

     (m) To enforce financial, operational, warranty, security,

lease, and guaranty terms and conditions established under

financings by the authority. The authority may under this

subsection acquire, construct, develop, lease, create, and maintain

all or portions of the broadband infrastructure and acquire from

any person interests in real and personal property.

     (n) To make and amend bylaws.

     (o) To indemnify and procure insurance indemnifying any

members of the board of the authority from personal liability by

reason of their service as a board member.

     (p) To investigate, evaluate, and assess the current broadband

infrastructure and the future broadband infrastructure needs of

this state and to encourage and participate in aggregation

strategies for the broadband services of all public entities and

nonprofit corporations in this state to maximize the

interconnectivity and efficiencies of the broadband infrastructure.

     (2) Notwithstanding any other provision of this act, the

authority shall not make loans to, or enter into any joint venture

and partnership arrangements or participation with, any

governmental entity or nonprofit organization except in connection

with the financing or refinancing of development costs for that

allocable portion of the broadband infrastructure used or to be

used exclusively by governmental entities or nonprofit

organizations, including, but not limited to, universities,

colleges, hospitals, school districts, public safety agencies,

judicial organizations, libraries, cities, townships, and counties.

No allocable portion of the broadband infrastructure financed by a

loan to a governmental entity or a nonprofit organization shall be

used to serve residential, business, or other commercial customers.

     (3) Notwithstanding any other provision of this act, except in

connection with financing or refinancing under subsection (2) or

enforcement procedures authorized under subsection (1)(m), the

authority shall acquire real or personal property constituting

portions of the broadband infrastructure only in connection with

the participation of persons other than governmental entities or

nonprofit organizations through joint ventures and partnership

arrangements, or other co-ownership arrangements and only if the

participation is necessary to assure availability of financing or

refinancing derived from the issuance by the authority of bonds or

notes, the interest on which is exempt from taxation under the

United States internal revenue code, and the financing derived from

the tax-exempt bonds or notes is allocated only to those

development costs relating to that portion of the broadband

infrastructure that is to be used by governmental bodies or

nonprofit organizations.

     (4) The authority shall establish a seed capital loan program

to make capital loans to persons planning to apply to the authority

for financing of broadband infrastructure. Priority for the seed

capital loan program shall be given for developments targeted to

underserved areas.  During the initial 2 years of operations, the

authority shall designate a minimum of $500,000.00 to be targeted

to rural underserved areas and a minimum of $500,000.00 targeted to

urban underserved areas. Community economic development programs

and small providers shall be given a preference to receive loans

under this subsection. The terms and conditions for the seed

capital loans shall be established by the authority. As used in

this act, "underserved areas" means geographical areas of this

state identified by the authority as having the greatest need for

broadband development. In identifying underserved areas, the

authority shall consider the area's economic conditions, including,

but not limited to, family income, affordability of access, lack of

options available, low percentage of residents subscribing, and any

other criteria considered important by the authority in determining

whether an area is underserved.

     (5) Except as otherwise provided by subsection (6), not less

than 55% of the loans issued by the authority during a fiscal year

shall go to rural underserved areas. As used in this section,

"rural" means a county with a population of less than 70,000.

     (6) The authority may issue less than the 55% required under

subsection (5), if the authority does not receive a sufficient

number of qualified rural loan applications to meet the 55%

requirement.

     (7) On or before March 1 of each year, the authority shall

file with both houses of the legislature a report providing

detailed information on the expenditures and the recipients of

loans under this subsection. The report shall include information

regarding the selection process and the criteria used by the

authority in determining an area to be underserved.

(8)  (5) As part of an application for financing under this

act, the broadband developer and broadband operator shall file with

the authority a participation plan for small and minority owned

businesses and a communitywide outreach plan to educate the public

of the availability of broadband services. The authority shall not

approve an application unless a plan is submitted under this

subsection.

(9)  (6) Priority shall be given to the application of any

broadband developer who applies to develop broadband capability

within a recovery zone as that term is defined in section 8d of the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2688d.