SENATE BILL No. 406

April 21, 2005, Introduced by Senators CLARK-COLEMAN, JACOBS, THOMAS, BERNERO, PRUSI, SCOTT, BRATER, LELAND, EMERSON, CHERRY, SCHAUER, BARCIA, BASHAM, CLARKE, SWITALSKI and OLSHOVE and referred to the Committee on Appropriations.

A bill to prescribe the procedures, terms, and conditions for the

qualification or approval of school bonds and other bonds; to

authorize this state to make loans to certain school districts for the

payment of certain bonds and to authorize schools to borrow from this

state for that purpose; to prescribe the terms and conditions of

certain loans to school districts; to prescribe the powers and duties

of certain state agencies and certain state and local officials; to

provide for certain fees; to prescribe certain penalties; and to

repeal acts and parts of acts.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

bond qualification, approval, and loan act".

Sec. 2. The purpose of this act is to implement section 16 of

article IX of the state constitution of 1963 and to provide for loans

to school districts.

Sec. 3. As used in this act:

(a) "Bond year" means the 12-month period beginning the May 1

immediately following the date of issuance of jobs today bonds and

ending April 30 of the following calendar year.

(b) "Computed millage" means the number of mills in any year, not

less than 7 mills and not more than 13 mills, determined on the date

of issuance of the order qualifying the bonds or on a later date if

requested by the school district and approved by the state treasurer,

that, if levied by the school district, will generate sufficient

annual proceeds to pay principal and interest on all the school

district’s qualified bonds plus principal and interest on all loans

related to those qualified bonds no later than the date specified in

the note and repayment agreement entered into by the school district

under this act.

revolving fund secured bonds qualified or approved by the state

treasurer and issued by a school district before September 30, 2007,

for the purposes described in section 6.

(d) "Jobs today project" means a project described in section 6.

(e) "Qualified bond" means a bond that is qualified under this

act for state loans as provided in section 16 of article IX of the

state constitution of 1963. A qualified bond includes the interest

amount required for payment of a school district’s net interest

obligation under an interest rate exchange or swap, hedge, or other

agreement entered into pursuant to the revised municipal finance act,

2001 PA 34, MCL 141.2101 to 141.2821, but does not include a

termination payment or similar payment related to the termination or

cancellation of an interest rate exchange or swap, hedge, or other

similar agreement. A qualified bond does not include a bond issued to

refund loans owed to this state under this act unless otherwise

determined by the state treasurer to be in the best interests of this

state.

(f) "Qualified jobs today bonds" means qualified bonds issued for

the purposes described in section 6.

(g) "Qualified loan" means a loan made under this act or 1961 PA

108, MCL 388.951 to 388.963, from this state to a school district to

pay debt service on a qualified bond.

(h) "Qualified small high school" means a school building or a

discrete portion of a school building designed and used to provide

instruction for at least 400 and not more than 500 students, including

multiple high school components, and that emphasizes rigor, relevancy,

and relationships to prepare students for postsecondary success.

(i) "Revolving fund secured bond" means a limited tax general

obligation jobs today bond that is issued under section 1351a of the

revised school code, 1976 PA 451, MCL 380.1351a, and is approved under

section 6 of this act. A revolving fund secured bond shall be

considered sponsored or supported by this state and includes the

interest amount required for payment of a school district's net

interest obligation under an interest rate exchange or swap, hedge, or

other agreement entered into pursuant to the revised municipal finance

act, 2001 PA 34, MCL 141.2101 to 141.2821, but does not include a

termination payment or similar payment related to the termination or

cancellation of an interest rate exchange or swap, hedge, or other

similar agreement.

(j) "Revolving fund secured loan" means a loan made under this

act from this state to a school district to pay debt service on a

revolving fund secured bond.

(k) "Revolving loan fund" means the school loan revolving fund

created under section 16c of the shared credit rating act, 1985 PA

227, MCL 141.1066c.

(l) "School district" means a general powers school district

organized under the revised school code, 1976 PA 451, MCL 380.1 to

380.1852, or a school district of the first class as described in the

revised school code, 1976 PA 451, MCL 380.1 to 380.1852, having the

power to levy ad valorem property taxes.

(m) "State treasurer" means the state treasurer or his or her

duly authorized designee.

(n) "Superintendent of public instruction" means the

superintendent of public instruction appointed under section 3 of

article VIII of the state constitution of 1963.

(o) "Taxable value" means the value determined under section 27a

of the general property tax act, 1893 PA 206, MCL 211.1 to 211.157.

Sec. 4. (1) A school district may issue and market bonds as

qualified bonds if the state treasurer has issued an order granting

qualification under this act.

(2) Except with regard to qualification of new bonds, nothing in

this act shall be construed to alter the terms and conditions

applicable to outstanding qualified bonds issued in accordance with

1961 PA 108, MCL 388.951 to 388.963, and the loans associated with

those qualified bonds. Unless otherwise amended as permitted by this

act, outstanding qualified loans incurred in association with

outstanding qualified bonds described in this subsection shall

continue to bear interest and be due and payable as provided in the

repayment agreements entered into between the school district and the

state before the effective date of this act.

(3) A school district may issue and market bonds as revolving

fund secured bonds if the state treasurer has issued an approving

order granting revolving fund secured bond status under this act.

Sec. 5. (1) A school district may apply to the state treasurer

for preliminary qualification of a proposed school bond issue by

filing all of the following with the state treasurer:

(a) An application in the form and containing the information

required by this act.

(b) An application fee in the amount determined by the state

treasurer to be necessary to fund the costs of processing the

application, but not less than $500.00.

(2) An application for preliminary qualification of a school bond

shall contain all of the following information:

(a) The proposed ballot language to be submitted to the electors.

(b) A description of the project or projects proposed to be

financed.

mills the school district will levy to provide revenue the school

district will use to pay the qualified bonds. For the purpose of the

pro forma debt service projection, the school district may assume for

the first 5 years following the date of the application the average

growth in taxable value for the 5 years preceding the date of the

application and the lesser of that average growth rate or 3% for the

remaining term of the proposed bonds.

(d) Evidence that the rate of utilization of each project to be

financed will be at least 85% for new buildings and 60% for renovated

facilities. If the projected enrollment of the district would not

otherwise support utilization at the rates described in this

subsection, the school district may include an explanation of the

actions the school district intends to take to address the

underutilization, including, if applicable, actions to close school

buildings or other actions designed to assure continued assured use of

the facilities being financed.

(e) Evidence that the cost per square foot of the project or

projects will be reasonable in light of economic conditions applicable

to the geographic area in which the school district is located.

(f) Evidence that the school district will repay all outstanding

qualified loans at the times described in section 6 or 10.

(g) The weighted average age of all school buildings in the

school district based on square footage.

(h) The overall utilization rate of all school buildings in the

school district, excluding special education purposes.

(i) The taxable value per pupil.

(j) The total bonded debt outstanding of the school district and

the total taxable value of property in the school district for the

school district fiscal year in which the application is filed.

(k) A statement describing any environmental or usability

problems to be addressed by the project or projects.

(l) An architect’s analysis of the overall condition of the

facilities to be renovated or replaced as a part of the project or

projects.

(m) An amortization schedule demonstrating that the weighted

average maturity of the qualified bond issue does not exceed 120% of

the average reasonably expected useful life of the facilities,

excluding land and site improvements, being financed or refinanced

with the proceeds of the qualified bonds, determined as of the later

of the date on which the qualified bonds will be issued or the date on

which each facility is expected to be placed in service.

Sec. 6. (1) A school district may issue and market bonds as

qualified jobs today bonds if the state treasurer has issued an order

granting qualification under this act and the bonds meet the criteria

described in this section. A school district may issue and market

bonds as revolving fund secured bonds if the state treasurer has

issued an order approving the bonds in accordance with this section.

(2) The proceeds of jobs today bonds may be used only for the

following purposes:

(a) Remodeling, refurbishing, renovating, or replacing existing

outmoded or dangerous classroom buildings meeting the tests described

in this section, and equipping or reequipping the renovated,

refurbished, or remodeled buildings for technology infrastructure,

security systems, and accommodations for physically disabled students.

(b) Demolishing classroom buildings that have been closed or are

scheduled to be closed either to address environmental or other

physical hazards, or to reduce the available classroom capacity to

meet enrollment projections.

reequipping, including equipping for technology, school buildings, and

acquiring, preparing, developing, or improving sites, or parts of

sites or additions to sites, for school buildings, to provide for a

qualified small high school.

(3) A school district seeking to issue jobs today bonds shall

file an application with the state treasurer that includes all of the

following:

(a) A description of the project or projects proposed to be

financed.

(b) For qualified jobs today bonds, a copy of the proposed ballot

question to be submitted to the electors of the school district. The

ballot shall include language that will inform the voters that the

school district will borrow from the state of Michigan to pay the

bonds and will be required to repay any loan from this state,

specifying the estimated annual mills and the period during which the

mills will be levied to repay this state.

years immediately preceding the date of the application.

(d) Except for a qualified small high school, evidence that the

rate of utilization of the project to be financed will be at least 85%

for new buildings and 60% for renovated facilities after completion of

the project. For purposes of this subsection, if utilization of the

renovated facilities is less than the percentage required by this

section on the date of the application, the school district shall

provide evidence that the steps taken before the date of the

application will enable the district to achieve the required

utilization rate specified in this section in the immediately

succeeding 2 years following the date of the application.

(e) For a qualified small high school, evidence that the rate of

utilization of the project to be financed will be at least 85% after

the third full school year of operation.

(f) Evidence that the per-square-foot costs of the projects will

be reasonable in light of economic conditions applicable to the

geographic area in which the school district is located.

(g) Other than for demolition projects, the age and condition of

technology infrastructure in the buildings scheduled to be remodeled,

renovated, replaced, or, for a qualified small high school,

constructed as a part of the project or project.

(h) Other than for demolition projects, the status of the

planning and design process for the proposed project or projects, as

certified by the school district’s architect.

(i) The weighted average age of all classroom buildings in the

school district based on square footage.

(j) The overall utilization rate of all classroom buildings in

the school district.

(k) The weighted average age of the classroom buildings that will

be replaced, demolished, refurbished, or renovated as part of the jobs

today bonds project, based on square footage.

(l) The overall condition of the facilities to be replaced,

demolished, refurbished, or renovated, as certified by an architect or

engineer.

(m) A description of any environmental or usability problems to

be addressed by the jobs today project, including, but not limited to,

any asbestos, lead or toxic mold abatement, energy conservation

improvements, or corrections necessary to accommodate physically

disabled students.

(n) If the project includes a qualified small high school, a

letter of approval from the superintendent of public instruction

stating that the school district meets all of the following

requirements:

(i) The school district has a membership of at least 800 students

in grades 9 to 12, as established by its most recent official pupil

membership count as of the effective date of this act.

(ii) The local school board has adopted a strategic plan involving

the use of qualified small high schools to improve either or both of

the following:

(A) The districtwide high school graduation rate, as measured

against that rate for the 2002-2003 school year.

(B) Districtwide high school student achievement in both English

language arts and mathematics, as determined by the assessments

administered to high school pupils in the 2003-2004 school year under

section 1279 of the revised school code, 1976 PA 451, MCL 380.1279, in

order to reach the current proficiency goals established by the

state’s no child left behind accountability plan.

(iii) The school district has committed to adopt a proven model for

the curriculum and operational structure for the qualified small high

school approved by the superintendent of public instruction in

accordance with guidelines established by the state board of

education.

(iv) The local school board has adopted a resolution committing

sufficient funds from private and public sources to pay for both the

planning and startup operating costs of the qualified small high

school.

(o) For a building or buildings to be demolished, a statement of

whether the school district plans to sell the land on which the

building or buildings were located.

(p) For revolving fund secured bonds, a pro forma debt service

projection showing the estimated annual percentage of operating funds

the school district will be required to dedicate for payment of the

revolving fund secured bonds. For the purpose of the pro forma debt

service projection, the school district may assume the lesser of the

average pupil count for the 5 years preceding the date of the

application or the pupil count as of the fiscal year in which the

application is filed, and the foundation allowance for the fiscal year

in which the application is filed.

(4) The state treasurer may qualify or approve no more than

$500,000,000.00 in jobs today bonds in the state fiscal years ending

September 30, 2005 through September 30, 2007. No more than

$180,000,000.00 of the $500,000,000.00 shall be for the purpose

described in subsection (2)(c).

(5) The maximum amount of any jobs today bond issued by a school

district for the purposes described in subsection (2)(a) shall be

$10,000,000.00. The maximum amount of any jobs today bond issued by a

school district for the purposes described in subsection (2)(b) shall

be $10,000,000.00. The maximum amount of any jobs today bond issued by

a school district having fewer than 20,000 students in membership in

grades K to 12, as established by its most recent official pupil

membership count as of the effective date of this act, for the

purposes described in subsection (2)(c) shall be $15,000,000.00. The

maximum amount of any jobs today bond issued by a school district

having an enrollment of 20,000 or more students in membership in

grades K to 12, as established by its most recent official pupil

membership count as of the effective date of this act, for the

purposes described in subsection (2)(c) shall be $30,000,000.00. A

school district may request qualification or approval from the state

treasurer to combine jobs today bond issues for purposes described in

subsection (2), but the maximum combined issue qualified or approved

per school district within 180 days after the effective date of this

act shall be $25,000,000.00 for a school district with a total

membership in grades K to 12 of less than 20,000 and $40,000,000.00

for a school district with a total membership in grades K to 12 of at

least 20,000.

(6) The state treasurer shall accept applications for

qualification of jobs today bonds beginning on the effective date of

this act. The state treasurer may not qualify or approve jobs today

bonds for applications received before the effective date of this act.

If, after 180 days after the effective date of this act, the total

amount of qualified jobs today bonds or revolving loan fund secured

jobs today bonds is less than $500,000,000.00 based on the

$25,000,000.00 limit per school district described in subsection (5),

the state treasurer may offer school districts that have obtained

qualification or approval additional amounts for approval or

qualification, awarding additional amounts based on the point factors

described in this section.

(7) If the requests for jobs today bonds prequalification or

preapproval exceed the amount permitted to be qualified, the state

treasurer shall prequalify or preapprove jobs today bonds based on the

criteria described in this subsection. In prequalifying or

preapproving jobs today bonds, the state treasurer shall weigh the

following factors, granting each factor the amounts specified in this

subsection:

(a) For jobs today bonds to be issued before September 30, 2005,

the readiness of the school district to issue those jobs today bonds,

as measured by the completeness of designing and planning, and cost

estimates, with greater weight applied according to readiness. If a

school district demonstrates readiness to issue jobs today bonds

before September 15, 2005, the state treasurer shall grant the

applicant 15 points for this factor.

(b) The average age of the classroom buildings of the school

district as a whole based on square footage, with greater weight

applied to older average age. If the average age of the classroom

buildings of the school district is 10 years or less, the state

treasurer shall grant the applicant 0 points. If the average age of

the classroom buildings of the school district is greater than 10 but

less than 21 years, the state treasurer shall grant the applicant 0.75

points for each number of years in excess of 10. If the average age

of the classroom buildings of the school district is greater than 20

but less than 31, the state treasurer shall grant the applicant 7.5

points plus 1.25 points for each number of years in excess of 20. If

the average age of the classroom buildings of the school district as a

whole is greater than 30, the state treasurer shall grant the

applicant 25 points.

demolished, refurbished, or renovated, based on square footage, with

greater weight applied to older average age. If the average age of the

classroom buildings to be replaced, demolished, refurbished, or

renovated is 10 years or less, the state treasurer shall grant the

applicant 0 points. If the average age of the classroom buildings to

be replaced, demolished, refurbished, or renovated is greater than 10

but less than 21 years, the state treasurer shall grant the applicant

0.75 points for each number of years in excess of 10. If the average

age of the classroom buildings to be replaced, demolished,

refurbished, or renovated is greater than 20 but less than 31, the

state treasurer shall grant the applicant 7.5 points plus 1.25 points

for each number of years in excess of 20. If the average age of the

classroom buildings to be replaced, demolished, refurbished, or

renovated is greater than 30, the state treasurer shall grant the

applicant 25 points.

(d) The overall condition of the facilities to be replaced,

demolished, refurbished, or renovated, as certified by an architect or

engineer, with greater weight applied to facilities in the worst

condition. The certificate of the architect or engineer shall disclose

the following factors affecting the condition of the facilities. If

the architect's or engineer’s certificate discloses 10 or less of the

following factors, the state treasurer shall grant the applicant 0

points. If the architect's or engineer’s certificate discloses more

than 10 but less than 21 of the following factors, the state treasurer

shall grant the applicant 10 points. If the architect's or engineer’s

certificate discloses more than 20 but less than 31 of the following

factors, the state treasurer shall grant the applicant 25 points. If

the architect's or engineer’s certificate discloses more than 30 of

the following factors, the state treasurer shall grant the applicant

50 points. The factors are as follows:

(i) The internal water supply is inadequate to meet health and

safety requirements.

(ii) The internal water supply does not have sufficient water

pressure to allow students to wash hands, drink, or flush toilets.

(iii) The internal water supply does not have sufficient hot water.

(iv) Water is entering the building and causing material damage

and health hazards.

(v) The structure contains friable asbestos-containing materials.

(vi) The federal environmental protection agency or the Michigan

department of community health has issued a citation for violation of

a health law that will be addressed by the jobs today bonds.

(vii) The school district has received reports from qualified

engineers that the building could cause health-related problems

associated with poor indoor air quality.

(viii) The building has loose and peeling paint exposed on indoor

surfaces.

(ix) The fire alarm system does not have pull stations at each

facility exit.

(x) The horns and strobes associated with the fire alarm system

are not located in classrooms, corridors, and toilet rooms.

(xi) The building lacks lighted exit signs at exterior doors and

at exits from other spaces that can be occupied by 50 or more people.

(xii) Lighted exit signs are not equipped with either battery

backup or generator backup.

(xiii) Emergency egress lights are not provided in corridors at a

maximum of 40-foot intervals or in other spaces that can be occupied

by 50 or more people.

(xiv) Interior and exterior doors that service more than 50 people

do not open outward or are not equipped with panic hardware.

(xv) Kitchen cooking facilities lack cooking hoods with a fire

suppression system.

(xvi) The building has been cited by appropriate authorities for

fire safety code violations.

(xvii) Fire or security shutters create dead-end corridors.

(xviii) Deteriorated stoops, stairs, or walks create hazards to

people entering or exiting the building.

(xix) There are other problems with the building that have

contributed to serious accidents for students or staff.

(xx) For buildings proposed to be demolished, the building is

located within 250 yards of a business, industry, traffic hazard, or

natural hazard that endangers the health and safety of the students

and staff.

(xxi) There are walls leaning or in danger of falling.

(xxii) Masonry is unsafe.

(xxiii) The foundation of the building is crumbling or has settled

in such a way as to create a hazard to students and staff.

(xxiv) There are signs of rotting, sagging, or buckling floors.

(xxv) There is evidence that the roof structure is sagging,

rotted, or unsound.

(xxvi) There is evidence of significant structural steel

corrosion.

(xxvii) There are cracks in concrete slabs, beams, columns, or

walls.

(xxviii) The outdoor air intake openings are blocked or permanently

closed.

(xxix) The boiler or furnace rooms have inadequate combustion air

intakes that do not meet current code requirements.

(xxx) The boilers or furnaces have been cited for code violations.

(xxxi) The heating system cannot maintain comfortable temperature

levels throughout the building.

(xxxii) The cooling system cannot maintain comfortable temperature

levels throughout the building.

(xxxiii) Separate exhaust systems for bathrooms, locker rooms, and

laboratories are either nonoperational or nonexistent.

(xxxiv) The lighting system does not provide adequate intensity,

diffusion, and distribution of illumination.

(xxxv) Electrical controls are not safely protected or lack

disconnect switches that are easily accessible.

(xxxvi) The building lacks emergency lighting throughout the

building or the emergency lighting is not carried on separate

circuits.

(xxxvii) Each classroom does not contain sufficient outlets to

prevent use of extension electrical cords for ordinary use.

(xxxviii) Electrical outlets in the building are not grounded.

(xxxix) Classroom laboratories lack emergency gas shut-off systems,

or the emergency gas shut-off systems are nonoperational.

(xl) Standing water is located near electrical systems or panels.

(xli) There are exposed wires or hazardous switches in the

facility.

(xlii) There has been a fire due to faulty wiring.

(e) The overall utilization rate of classroom facilities in the

school district, with greater weight applied to schools having a

higher utilization rate projected after completion of the jobs today

bond projects. If the overall utilization rate of classroom facilities

of the school district will be less than 51%, the state treasurer

shall grant the applicant 0 points. If the overall utilization rate

of classroom facilities of the school district will be greater than

50% but less than 61%, the state treasurer shall grant the applicant 5

points. If the overall utilization rate of classroom facilities of

the school district will be greater than 60% but less than 76%, the

state treasurer shall grant the applicant 10 points. If the overall

utilization rate of classroom facilities of the school district will

be greater than 75% but less than 91%, the state treasurer shall grant

the applicant 15 points. If the overall utilization rate of classroom

facilities of the school district will be greater than 90%, the state

treasurer shall grant the applicant 20 points.

(f) The taxable value per pupil, with greater weight applied to

the lower taxable value per pupil. If the taxable value per pupil is

less than $110,500.00, the state treasurer shall grant the applicant

35 points. If the taxable value per pupil is greater than $110,500.00

but less than $135,800.00, the state treasurer shall grant the

applicant 28 points. If the taxable value per pupil is greater than

$135,800.00 but less than $172,500.00, the state treasurer shall grant

the applicant 21 points. If the taxable value per pupil is greater

than $172,500.00 but less than $246,000.00, the state treasurer shall

grant the applicant 14 points. If the taxable value per pupil is

greater than $246,000.00 but less than $500,000.00, the state

treasurer shall grant the applicant 7 points. If the taxable value

per pupil is greater than $500,000.00, the state treasurer shall grant

the applicant 0 points.

(g) The severity of any environmental or usability problems being

addressed by the jobs today project, as certified by an independent

architect or engineer, with greater weight applied to lead, toxic mold

or asbestos abatement, energy conservation, or corrections necessary

to meet the physical needs of disabled students. The state treasurer

shall grant an applicant 5 points if the architect's or engineer’s

certificate discloses that the classroom facility being replaced,

renovated, or refurbished does not currently meet accessibility

requirements imposed by law. The state treasurer shall grant an

applicant 5 points if the architect's or engineer’s certificate

discloses that the classroom facility being replaced, renovated, or

refurbished contains friable asbestos, toxic mold, or unprotected

lead. The state treasurer shall grant an applicant 5 points if the

architect's or engineer’s certificate discloses that the classroom

facility being replaced, renovated, or refurbished requires

improvements to improve the energy efficiency of the building.

(h) The technological needs of the facilities being renovated or

refurbished, with greater weight applied to the lack of adequate

technology infrastructure and security protection as certified by an

independent architect or engineer. If the architect's or engineer’s

certificate discloses that the facility lacks technology

infrastructure, the state treasurer shall grant the applicant 5

points. If the architect's or engineer’s certificate discloses that

the facility lacks sufficient computers for students, the state

treasurer shall grant the applicant 1 point. If the architect's or

engineer’s certificate discloses that the facility lacks sufficient

technological accessories for students, the state treasurer shall

grant the applicant 1 point. If the architect's or engineer’s

certificate discloses that the facility lacks sufficient security

systems, the state treasurer shall grant the applicant 10 points. If

the architect's or engineer’s certificate discloses that the facility

lacks an adequate public address system, the state treasurer shall

grant the school district 1 point.

(7) If the school electors of a school district do not approve

prequalified jobs today bonds, the state treasurer may assign the

prequalification to another school district based on the same factors

described in subsection (6).

(8) If the school electors of a school district approve the jobs

today bonds, the district shall notify the state treasurer, and the

state treasurer shall issue a letter qualifying the jobs today bonds

as provided in this act, and shall enter into a loan agreement with

the school district. The provisions of section 8 do not apply to

qualified jobs today bonds.

(9) For revolving fund secured bonds, upon receipt of a

certificate that the school district published the required notice of

referendum and the referendum period has passed, the state treasurer

shall issue a letter approving the revolving fund secured bonds in

accordance with this act, and shall enter into a loan agreement with

the school district.

(10) The loan agreement between the school district and the state

treasurer shall provide for all of the following:

(a) The school district shall deliver a note, executed by the

duly authorized officers of the school district.

(b) The school district may borrow from the revolving loan fund

the following amounts to pay debt service on qualified jobs today

bonds, subject to the following terms and conditions:

(i) A school district may borrow the entire debt service on its

qualified jobs today bonds for the first 5 years following the

issuance of the qualified jobs today bonds, regardless of the number

of debt mills being levied by the school district for any other voted

bonds, qualified or not.

(ii) If the school district’s qualified jobs today bonds mature

less than 20 years from the date of issuance, the school district

shall levy the lesser of 2 mills or sufficient additional mills in

each bond year following the term of the qualified jobs today bonds to

assure the school district will repay this state within 5 years after

the term of the qualified jobs today bonds, and shall continue to levy

that number of mills until the school district has paid the qualified

jobs today bonds in full and has repaid any loans from the revolving

loan fund.

(iii) For qualified jobs today bonds maturing 20 years or more from

the date of issuance, beginning with the first levy date immediately

preceding the sixth bond year following the issuance of the qualified

jobs today bonds, a school district that levied debt mills at the time

of the application for prequalification of the qualified jobs today

bonds shall levy at least the number of debt mills levied on the date

of the application, and shall continue to levy that number of mills

until the school district has paid the qualified jobs today bonds in

full and has repaid any loans from the revolving loan fund.

(iv) For qualified jobs today bonds maturing 20 years or more from

the date of issuance, beginning with the first levy date immediately

preceding the sixth bond year following the issuance of the jobs today

bonds, a school district that did not levy debt mills at the time of

the application for prequalification of the qualified jobs today bonds

shall levy the lesser of 2 mills or the number of mills necessary to

pay debt service on the qualified jobs today bonds coming due in the

sixth bond year following the issuance of the qualified jobs today

bonds, and shall continue to levy that number of mills until the

school district has paid the qualified jobs today bonds in full and

has repaid any loans from the revolving loan fund.

(v) For qualified jobs today bonds maturing more than 20 years

after the date of issuance, from and after the sixth bond year

following the issuance of the qualified jobs today bonds, the school

district may borrow from the revolving loan fund an amount equal to

the difference between the proceeds of the debt levy required under

subparagraph (iii) or (iv), as applicable, and the amount of debt

service.

(vi) When the proceeds of the debt levy required under

subparagraph (iii) or (iv) are sufficient to pay debt service on the

qualified jobs today bonds and to begin repaying the revolving loan

fund, the school district shall pay the revolving loan fund the

difference between each debt levy and the amount of debt service on

the qualified jobs today bonds on the dates provided in the note

delivered by the school district to the revolving loan fund.

(vii) Qualified loans shall bear no interest.

the following amounts to pay debt service on revolving fund secured

bonds, subject to the following:

(i) Any school district may borrow the entire debt service on its

revolving fund secured bonds for the first 5 years following the

issuance of the revolving fund secured bonds.

(ii) If the school district’s revolving fund secured bonds mature

less than 20 years from the date of issuance, the school district

shall repay the state each year 1/5 of the principal amount borrowed

beginning the bond year immediately after the term of the revolving

fund secured bonds to assure the school district will repay the state

within 5 years after the term of the revolving fund secured bonds.

(iii) For revolving fund secured bonds maturing 20 years or more

from the date of issuance, beginning with the first bond payment date

in the sixth bond year following the issuance of the revolving fund

secured bonds and continuing through the tenth bond year following the

issuance of the revolving fund secured bonds, the school district

shall pay debt service on its revolving fund secured bonds.

(iv) For revolving fund secured bonds maturing more than 20 years

from the date of issuance, beginning with the first bond payment date

in the eleventh bond year following the issuance of the revolving fund

secured bonds and each following bond year, the school district shall

pay debt service on its revolving fund secured bonds plus an amount

equal to 1/10 of the principal amount of the qualified loans

outstanding.

(v) Revolving fund secured loans shall bear no interest.

(vi) Upon payment of its qualified jobs today bonds in whole, the

school district shall repay the remaining principal amount of the

qualified loans outstanding in 5 equal annual payments.

Sec. 7. For bonds other than qualified jobs today bonds, the

state treasurer may prequalify bonds of a school district if the state

treasurer determines all of the following:

(a) The issuance of additional qualified bonds will not prevent

the school district from repaying its outstanding qualified loans on

the earlier of the dates described in section 10.

(b) The form of the ballot conforms with the requirements of this

act.

Sec. 8. (1) The state treasurer may qualify bonds of a school

district if the state treasurer determines all of the following:

(a) A majority of the school district electors have approved the

bonds.

(b) The terms of the bond issue comply with applicable provisions

of the revised school code, 1976 PA 451, MCL 380.1 to 380.1852.

municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821.

(d) The weighted average maturity of the qualified bond issue

does not exceed 120% of the average reasonably expected useful life of

the facilities, excluding land and site improvements, being financed

or refinanced with the proceeds of the bonds, determined as of the

later of the date on which the qualified bonds will be issued or the

date on which each facility is expected to be placed in service.

(e) The school district has filed any information necessary to

update the contents of the original application to reflect changes in

any of the information approved in the preliminary qualification

process.

(f) The school district has paid a qualification fee of not less

than $3,000.00 or the amount determined by the state treasurer, which

shall be approximately equal to the amount required to pay the

estimated administrative expenses incurred under this act for the

fiscal year in which the state treasurer imposes the fee.

(2) An order qualifying bonds shall specify the principal and

interest payment dates for all the bonds, the maximum principal amount

of and maximum interest rate on the bonds, the computed millage, if

any, the final repayment date for any loans made with respect to those

bonds, and other matters as the state treasurer shall determine or as

are required by this act.

(3) If the application for prequalification demonstrates that the

school district will borrow from this state in accordance with this

act, the state treasurer and the school district shall enter into a

loan agreement setting forth the terms and conditions of any qualified

loans to be made to the school district under this act.

(4) If a school district does not issue its qualified bonds

within 180 days after the date of the order qualifying bonds, the

school district may reapply for qualification by filing an

application, an additional application fee determined by the state

treasurer of not less than $500.00, and information necessary to

update the contents of the original application for prequalification

or qualification.

(5) The state treasurer may qualify refunding bonds issued to

refund qualified bonds if the state treasurer finds that the refunding

bonds comply with the provisions of the revised municipal finance act,

2001 PA 34, MCL 141.2101 to 141.2821.

Sec. 9. A ballot submitted to the school electors of a school

district requesting authorization to issue unlimited tax general

obligations that will be guaranteed by this state in accordance with

section 16 of article IX of the state constitution of 1963, shall

inform the electors that if the school district borrows from this

state to pay debt service on the bonds, the school district may be

required to continue to levy mills beyond the term of the bonds to

repay this state.

Sec. 10. (1) Except as otherwise provided in this act, a school

district may borrow from the state an amount not greater than the

difference between the proceeds of the school district’s computed

millage and the amount necessary to pay principal and interest on its

qualified bonds, including any necessary allowances for estimated tax

delinquencies.

(2) For school districts having qualified loans outstanding as of

the effective date of this act, the state treasurer shall review

information relating to each school district regarding the taxable

value of the school district and the actual debt service of

outstanding qualified bonds as of the effective date of this act and

shall issue an order establishing the payment date for all those

outstanding qualified loans and any additional qualified loans

expected to be incurred by those school districts related to qualified

bonds issued before the effective date of this act. The payment date

shall be the earlier of the date projected based on the information

described in this subsection or 60 months after the date on which the

qualified bonds most recently issued by the school district are due

and payable.

(3) For qualified loans related to qualified bonds issued after

the effective date of this act, the qualified loans shall be due on

the earlier of the date specified in the order qualifying the bonds or

60 months after the date on which the qualified bonds for which the

school borrowed from this state are due and payable.

(4) Except with regard to qualified loans described in subsection

(2), each loan made or considered made to a school district under this

act shall be for debt service on only a specific qualified bond issue

or revolving fund secured bond issue. The state treasurer shall

maintain separate accounts for each school district on the books and

accounts of this state noting the qualified bond or revolving fund

secured bonds, the related qualified loans, the final payment date of

the bonds, the final payment date of the qualified loans, and the

interest rate accrued on the loans.

(5) For qualified loans relating to qualified bonds issued after

the effective date of this act, a school district shall continue to

levy the computed mills until it has completely repaid all principal

and interest on its qualified loans.

(6) For qualified loans relating to qualified bonds issued before

the effective date of this act, a school district shall continue to

comply with the levy and repayment requirements imposed before the

effective date of this act. Not less than 90 days after the effective

date of this act, the state treasurer and the school district shall

enter into amended and restated repayment agreements to incorporate

the levy and repayment requirements applicable to qualified loans

issued before the effective date of this act.

(7) Upon the request of a school district made before June 1 of

any year, the state treasurer annually may waive all or a portion of

the millage required to be levied by a school district to pay

principal and interest on its qualified bonds or qualified loans under

this section if the state treasurer finds all of the following:

(a) The school board of the school district has applied to the

state treasurer for permission to levy less than the millage required

to be levied to pay the principal and interest on its qualified bonds

or qualified loans under subsection (1).

(b) The application specifies the number of mills the school

district requests permission to levy.

school district, or both.

(d) The waiver will not reduce the millage levied by the school

district to pay principal and interest on qualified bonds or qualified

loans under this act to less than 7 mills or for jobs today qualified

bonds, the amount specified in this act.

(e) The board of the school district, by resolution, has agreed

to comply with all conditions that the state treasurer considers

necessary.

(8) Except as otherwise provided in this act, loans shall bear

interest at the greater of 3% or the average annual cost of funds

computed annually on the basis of all state general obligations issued

under section 16 of article IX of the state constitution of 1963 and

revolving fund secured bonds outstanding plus 0.0125%.

Sec. 11. The state treasurer shall keep all certificates of

qualification or approval in a permanent file and shall deliver copies

of the certificates to the school district.

Sec. 12. The state treasurer shall promulgate rules to implement

this act pursuant to the administrative procedures act of 1969, 1969

PA 306, MCL 24.201 to 24.328.

Sec. 13. If a school district does not apply for qualification or

approval of a bond issue before the issuance of those bonds, the state

treasurer shall not approve or qualify those bonds as qualified bonds

under this act.

Sec. 14. (1) If a school district owes a balance due to the

revolving loan fund or has been identified as a potential borrower,

the school district shall file an annual loan activity application

with the state treasurer no less than 60 days before certifying its

annual tax levy. The annual loan activity application shall be

submitted in a format prescribed by the state treasurer and shall

provide the taxable value, debt service, and any other information

necessary to determine the proper required millage levy required under

this act. The application shall contain a resolution passed by the

local school board authorizing a designated school district official

to complete all necessary documents to obtain a loan from the

revolving loan fund or for making repayment to the revolving loan fund

for the year.

(2) If a school district is eligible to borrow for debt service

on qualified bonds or revolving fund secured bonds under this act, the

school district shall file a draw request with the state treasurer not

less than 30 days before each date on which the school district owes

the debt service. The draw request shall include all of the following:

(a) A statement of the debt service owed in the next 6 months.

(b) A copy of the most recent bank statement showing the amount

on hand in the debt service accounts for all qualified bonds or

revolving fund secured bonds.

service since the date of the bank statement.

(d) A statement of any withdrawals made from the debt service

account since the date of the bank statement.

(3) Not more than 7 days before the date established by the

state treasurer for making qualified loans, the school district shall

confirm in writing the final qualified loan amount to be drawn on a

certificate in the form prescribed by the state treasurer.

(4) Upon receipt of a qualified loan confirmation described in

subsection (3), the state treasurer shall determine the amount of the

draw, which shall be the difference between the funds on hand in all

debt service accounts and the amount of the debt service, and shall

make a qualified loan in that amount to the school district no later

than 6 days before the date the debt service is due.

(5) When a school district’s computed millage is sufficient to

pay principal and interest on its qualified bonds, a school district

shall file a loan activity statement with the state treasurer no later

than 30 days before the date set for payment of the qualified bonds

setting forth all of the following:

(a) A statement of the debt service owed in the next 6 months.

(b) A copy of the most recent bank statement showing the amount

on hand in the debt service account for the qualified bonds or

revolving fund secured bonds.

service since the date of the bank statement.

(d) A statement of any withdrawals made from the debt service

account since the date of the bank statement.

(6) Within 30 days after receipt of the loan activity statement

under subsection (5), the state treasurer shall send an invoice to the

school district for the amount of repayment the school district owes

on its outstanding qualified loans, which shall be the difference

between the debt service payable or paid to bondholders and the funds

on hand at the school district, less a reasonable amount of funds on

hand, as determined by the state treasurer, to cover minimum balance

requirements or potential tax disputes. The school district shall

remit the amount specified in the invoice within 30 days after the

dated date of the invoice.

Sec. 15. (1) If any paying agent for a school district’s

qualified bonds notifies the state treasurer that the school district

has failed to deposit sufficient funds to pay principal and interest

due on the qualified bonds when due, or if a bondholder notifies the

state treasurer that the school district has failed to pay principal

or interest on qualified bonds when due, whether or not the school

district has filed a draw request with the state treasurer, the state

treasurer shall promptly pay the principal or interest on the

qualified bond when due.

(2) If any paying agent for a school district's revolving fund

secured bond notifies the state treasurer that the school district has

failed to deposit sufficient funds to pay principal and interest on

the revolving fund secured bonds when due, whether or not the school

district has filed a draw request with the state treasurer, the state

treasurer shall promptly direct the Michigan municipal bond authority

to pay the principal or interest on the revolving fund secured bond

when due.

(3) If the state treasurer pays any amount described in this

section, the state treasurer shall bill the school district for the

amount paid and the school district shall immediately remit the amount

to the state treasurer. If the school district would have been

eligible to borrow the debt service in accordance with the terms of

this act, the school district shall enter into a loan agreement

establishing the terms of the qualified loan as provided in this act.

If the state treasurer directs the Michigan municipal bond authority

to pay any amount described in this section, the state treasurer shall

cause the Michigan municipal bond authority to bill the school

district for the amount paid and the school district shall immediately

remit the amount to the Michigan municipal bond authority.

Sec. 16. (1) If a school district that owes this state loan

repayments relating to qualified bonds fails to levy at least the

computed millage upon its taxable value for debt retirement purposes

for qualified bonds and for repayment of a qualified loan made under

this act while any part of the qualified loan is unpaid or defaults in

its agreement to repay a qualified loan or any installment of a

qualified loan, the school district shall increase its debt levy in

the next succeeding year to obtain the amount necessary to repay this

state the amount of the default plus a late charge of 3% and shall pay

that amount to this state together with any other amounts owed during

the next tax year. The school district may use other funds to repay

this state including a transfer of general funds of the school

district, if approved by the state treasurer. The state treasurer

shall not disburse state school aid to the school district until the

school district has made satisfactory arrangements with the state

treasurer for the payment of the amount in default.

(2) If a school district fails to process any report,

application, confirmation, or repayment as required under this act,

the school district shall pay to the state treasurer a special

handling fee of $500.00 for the first occurrence and $1,000.00 for

each subsequent occurrence within 30 days after the date the state

treasurer notifies the school district of the amount due. The school

district may not use debt levy to pay any special handling fee. If a

school district fails to pay a special handling fee required under

this section, the state treasurer may deduct the amount of the unpaid

special handling fee from subsequent state school aid payments to the

school district.

Sec. 17. The state treasurer shall deposit all fees collected

under this act into a separate fund established within the state

treasury, and shall use the proceeds of the fees solely for the

purpose of administering and enforcing this act. The unexpended and

unobligated balance of this fund at the end of each state fiscal year

shall be carried forward over to the succeeding state fiscal year and

shall not lapse to the general fund but shall be available for

reappropriation for the next state fiscal year.

Sec. 18. A person who knowingly makes a false statement or

conceals a material information for the purpose of obtaining

qualification of a bond issue under this act or for the purpose of

obtaining a qualified loan under this act, or who knowingly uses all

or part of the proceeds of a qualified loan obtained under this act

for any purpose not authorized by this act, is guilty of a felony

punishable by imprisonment for not more than 4 years or a fine of not

more than $2,000.00, or both.

Sec. 19. If a school district has completed the projects approved

by the school electors of the school district to be funded from

proceeds of qualified bonds, a school district may use any remaining

proceeds of the qualified bonds as follows:

(a) To pay for enhancements to the projects approved by the

school electors as described in the ballot proposing the qualified

bonds.

(b) To pay debt service on the qualified bonds.

Sec. 20. The state treasurer may designate in writing a person or

persons to take any actions required to be taken by the state

treasurer under this act. The signature of any designee shall have

the same force and effect as the signature of the state treasurer for

all purposes of this act.

Enacting section 1. 1961 PA 108, MCL 388.951 to 388.963, is

repealed.

Enacting section 2. This act does not take effect unless all of

the following bills of the 93rd Legislature are enacted into law:

(a) Senate Bill No. 407.

(b) Senate Bill No. 409.

(d) Senate Bill No. 411.

(e) Senate Bill No. 408.