SB-0220, As Passed Senate, November 13, 2014

SUBSTITUTE FOR

SENATE BILL NO. 220

     A bill to amend 1951 PA 51, entitled

"An act to provide for the classification of all public roads,

streets, and highways in this state, and for the revision of that

classification and for additions to and deletions from each

classification; to set up and establish the Michigan transportation

fund; to provide for the deposits in the Michigan transportation

fund of specific taxes on motor vehicles and motor vehicle fuels;

to provide for the allocation of funds from the Michigan

transportation fund and the use and administration of the fund for

transportation purposes; to promote safe and efficient travel for

motor vehicle drivers, bicyclists, pedestrians, and other legal

users of roads, streets, and highways; to set up and establish the

truck safety fund; to provide for the allocation of funds from the

truck safety fund and administration of the fund for truck safety

purposes; to set up and establish the Michigan truck safety

commission; to establish certain standards for road contracts for

certain businesses; to provide for the continuing review of

transportation needs within the state; to authorize the state

transportation commission, counties, cities, and villages to borrow

money, issue bonds, and make pledges of funds for transportation

purposes; to authorize counties to advance funds for the payment of

deficiencies necessary for the payment of bonds issued under this

act; to provide for the limitations, payment, retirement, and

security of the bonds and pledges; to provide for appropriations

and tax levies by counties and townships for county roads; to

authorize contributions by townships for county roads; to provide

for the establishment and administration of the state trunk line

fund, local bridge fund, comprehensive transportation fund, and

certain other funds; to provide for the deposits in the state trunk

line fund, critical bridge fund, comprehensive transportation fund,

and certain other funds of money raised by specific taxes and fees;

to provide for definitions of public transportation functions and

criteria; to define the purposes for which Michigan transportation

funds may be allocated; to provide for Michigan transportation fund

grants; to provide for review and approval of transportation

programs; to provide for submission of annual legislative requests

and reports; to provide for the establishment and functions of

certain advisory entities; to provide for conditions for grants; to

provide for the issuance of bonds and notes for transportation

purposes; to provide for the powers and duties of certain state and

local agencies and officials; to provide for the making of loans

for transportation purposes by the state transportation department

and for the receipt and repayment by local units and agencies of

those loans from certain specified sources; and to repeal acts and

parts of acts,"

by amending sections 11 and 11c (MCL 247.661 and 247.661c), section

11 as amended by 2002 PA 639 and section 11c as amended by 2002 PA

498.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 11. (1) A fund to be known as the state trunk line fund

is established and shall be set up and maintained in the state

treasury as a separate fund. The money deposited in the state trunk

line fund is appropriated to the state transportation department

for the following purposes in the following order of priority:

     (a) For the payment, but only from money restricted as to use

by section 9 of article IX of the state constitution of 1963, of

bonds, notes, or other obligations in the following order of

priority:

     (i) For the payment of contributions pledged before July 18,

1979 and required to be made by the state highway commission or the

state transportation commission under contracts entered into before

July 18, 1979, under 1941 PA 205, MCL 252.51 to 252.64, which

contributions have been pledged before July 18, 1979, for the

payment of the principal and interest on bonds issued under 1941 PA

205, MCL 252.51 to 252.64, for the payment of which a sufficient

sum is irrevocably appropriated.

     (ii) For the payment of the principal and interest upon bonds

designated "State of Michigan, State Highway Commissioner, Highway

Construction Bonds, Series I", dated September 1, 1956, in the

aggregate principal amount of $25,000,000.00, issued pursuant to

former 1955 PA 87 and the resolution of the state administrative

board adopted August 6, 1956, for the payment of which a sufficient

sum is irrevocably appropriated.

     (iii) For the payment of the principal and interest on bonds

issued under section 18b for transportation purposes other than

comprehensive transportation purposes as defined by law and the

payment of contributions of pledged to the payment of principal and

interest on bonds issued under section 18d and contracts entered

into under section 18d by the state highway commission or state

transportation commission to be made pursuant to contracts entered

into under section 18d. , which contributions are pledged to the

payment of principal and interest on bonds issued under the

authorization of section 18d and contracts executed pursuant to

that section. A sufficient portion of the fund is irrevocably

appropriated to pay, when due, the principal and interest on bonds

or notes issued under section 18b for purposes other than

comprehensive transportation purposes as defined by law, and to pay

the annual contributions of the state highway commission and the

state transportation commission as are pledged for the payment of

bonds issued pursuant to under contracts authorized by section 18d.

     (b) For the transfer of funds money appropriated pursuant to

under section 10(1)(g) 10(1)(h) to the transportation economic

development fund, but the transfer shall be reduced each fiscal

year by the amount of debt service to be paid in that year from the

state trunk line fund for bonds, notes, or other obligations issued

to fund projects of the transportation economic development fund,

which amount shall be certified by the department.

     (c) For the transfer of funds money appropriated pursuant to

under section 10(1)(a) to the railroad rail grade crossing account

in the state trunk line fund for expenditure for rail grade

crossing improvement purposes at rail grade crossings on public

roads and streets under the jurisdiction of the this state,

counties, cities, or villages. Projects The department shall be

selected select projects for funding in accordance with the

following:

     (i) Not more than 50% or less than 30% of these funds this

money and matched federal funds money shall be expended for state

trunk line projects.

     (ii) In prioritizing projects for these funds, this money, in

whole or in part, the department shall consider train and vehicular

traffic volumes, accident history, traffic control device

improvement needs, and the availability of funding.

     (iii) Consistent with the other requirements for these funds,

this money, the first priority for funds money deposited pursuant

to under this subdivision for rail grade crossing improvements and

retirement shall be to match federal funds money from the railroad-

highway grade crossing improvement program or other comparable

federal programs if a match is required under federal law.

     (iv) If the department and the a road authority with

jurisdiction over the crossing formally agree that the grade

crossing should be eliminated by permanent closing of the public

road or street, the physical removal of the crossing, roadway

within railroad rights of way and street termination treatment will

shall be negotiated between the road authority and railroad

company. The funds money provided to the road authority as a result

of the crossing closure will shall be credited to its account

representing the same road or street system on which the crossing

is located and shall be used for any transportation purpose within

that road authority's jurisdiction.

     (d) For the total operating expenses of the state trunk line

fund for each fiscal year as appropriated by the legislature.

     (e) For the preservation of state trunk line highways and

bridges.

     (f) For the opening, widening, improving, construction, and

reconstruction of state trunk line highways and bridges, including

the acquisition of necessary rights of way and the work incidental

to that opening, widening, improving, construction, or

reconstruction. Those sums in the state trunk line fund not

otherwise appropriated, distributed, determined, or set aside by

law shall be used for the construction or reconstruction of the

national system of interstate and defense highways, referred to in

this act as "the interstate highway system" to the extent necessary

to match federal aid funds money as the federal aid funds become

money becomes available for that purpose; and, for the construction

and reconstruction of the state trunk line system.

     (g) The state transportation department may enter into

agreements with county road commissions and with cities and

villages a local road agency or a private sector company to perform

work on a highway, road, or street. The agreements may provide for

the performance by any of the contracting parties of any of the

work contemplated by the contract including maintenance,

engineering services, and the acquisition of rights of way in

connection with the work, by purchase or condemnation by any of the

contracting parties in its own name, and for joint participation in

the costs, but only to the extent that the contracting parties are

otherwise authorized by law to expend money on the highways, roads,

or streets. The state transportation department also may contract

with a county local road commission, city, and village agency to

advance money to a county local road commission, city, and village

agency to pay their the costs of improving railroad grade crossings

on the terms and conditions agreed to in the contract. A contract

may be executed before or after the state transportation commission

borrows money for the purpose of advancing money to a county local

road commission, city, or village, agency, but the contract shall

be executed before the advancement of any money to a county local

road commission, city, or village agency by the state

transportation commission, and shall provide for the full

reimbursement of any advancement by a county local road commission,

city, or village agency to the state transportation department,

with interest, within 15 years after advancement, from any

available revenue sources of the county local road commission,

city, or village agency or, if provided in the contract, by

deduction from the periodic disbursements of any money returned by

the state to the county local road commission, city, or

village.agency. When entering into a contract under this

subdivision or under section 11c, the department shall solicit bids

from a local road agency for work to be performed on a state trunk

line highway within that local road agency's jurisdiction.

     (h) For providing inventories of supplies and materials

required for the activities of the state transportation department.

The state transportation department may purchase supplies and

materials for these purposes, with payment to be made out of the

state trunk line fund to be charged on the basis of issues from

inventory in accordance with the accounting and purchasing laws of

this state.

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

department shall annually expend at least 90% of state revenue

appropriated annually to the state trunk line fund less the amounts

described in subdivisions (a) to (i) shall be expended annually by

the state transportation department for the preservation of

highways, roads, streets, and bridges and for the payment of debt

service on bonds, notes, or other obligations described in

subsection (1)(a) issued after July 1, 1983, for the purpose of

providing funds money for the preservation of highways, roads,

streets, and bridges. Of the amounts appropriated for state trunk

line projects, the department shall, where possible, secure

pavement warranties of not less than 5-year for full replacement or

appropriate repair guarantee for contracted construction work on

pavement projects whose cost exceeds $1,000,000.00 and projects for

new construction or reconstruction undertaken after the effective

date of the 2014 amendatory act that amended this subsection. The

department shall compile and make available to the public an annual

report of all warranties that were secured under this subsection

and all pavement projects whose costs exceed $1,000,000.00 where a

warranty was not secured as provided in subsection (14). If an

appropriate certificate is filed under section 18e but only to the

extent necessary, this subsection shall does not prohibit the use

of any amount of money restricted as to use by section 9 of article

IX of the state constitution of 1963 and deposited in the state

trunk line fund for the payment of debt service on bonds, notes, or

other obligations pledging for the payment thereof money restricted

as to use by section 9 of article IX of the state constitution of

1963 and deposited in the state trunk line fund, whenever issued,

as specified under subsection (1)(a). The amounts which that are

deducted from the state trunk line fund for the purpose of the

calculation required by this subsection are as follows:

     (a) Amounts expended for the purposes described in subsection

(1)(a) for the payment of debt service on bonds, notes, or other

obligations issued before July 2, 1983.

     (b) Amounts expended to provide the state matching requirement

for projects on the national highway system and for the payment of

debt service on bonds, notes, or other obligations issued after

July 1, 1983, for the purpose of providing funds money for the

state matching requirements for projects on the national highway

system.

     (c) Amounts expended for the construction of a highway,

street, road, or bridge to 1 or more of the following or for the

payment of debt service on bonds, notes, or other obligations

issued after July 1, 1983, for the purpose of providing funds money

for the construction of a highway, street, road, or bridge to 1 or

more of the following:

     (i) A location for which a building permit has been obtained

for the construction of a manufacturing or industrial facility.

     (ii) A location for which a building permit has been obtained

for the renovation of, or addition to, a manufacturing or

industrial facility.

     (d) Amounts expended for capital outlay other than for

highways, roads, streets, and bridges or to pay debt service on

bonds, notes, or other obligations issued after July 1, 1983, for

the purpose of providing funds money for capital outlay other than

for highways, roads, streets, and bridges.

     (e) Amounts expended for the operating expenses of the state

transportation department other than the units of the department

performing the functions assigned on January 1, 1983 to the bureau

of highways.

     (f) Amounts expended pursuant to contracts entered into before

January 1, 1983.

     (g) Amounts expended for the purposes described in subsection

(5).

     (h) Amounts appropriated for deposit in the transportation

economic development fund and the rail grade crossing account

pursuant to section 10(1)(g) and 10(1)(a) and (h).

     (i) Upon the affirmative recommendation of the director of the

state transportation department and the approval by resolution of

the state transportation commission, those amounts expended for

projects vital to the economy of this state, a region, or local

area or the safety of the public. The resolution shall state the

cost of the project exempted from this subsection.

     (3) Notwithstanding any other provision of this act, the state

transportation department shall expend annually at least 90% of the

federal revenue distributed to the credit of the state trunk line

fund in that year, except for federal revenue expended for the

purposes described in subsection (2)(b), (c), (f), and (i) and for

the payment of notes issued under section 18b(9) on the

preservation of highways, roads, streets, and bridges. The

requirement of this subsection shall be is waived if compliance

would cause this state to be ineligible according to federal law

for federal revenue, but only to the extent necessary to make this

state eligible according to federal law for that revenue.

     (4) Notwithstanding any other provision of this section, the

state transportation department may loan money to county a local

road commissions, cities, and villages agency for paying capital

costs of transportation purposes described in the second paragraph

of section 9 of article IX of the state constitution of 1963 from

the proceeds of bonds or notes issued pursuant to section 18b or

from the state trunk line fund. Loans made directly from the state

trunk line fund shall be made only after provision of funds money

for the purposes specified in subsection (1)(a) to (f). Loans

described in this subsection are not subject to the revised

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

     (5) County A local road commissions, cities, and villages

agency may borrow money from the proceeds of bonds or notes issued

under section 18b or the state trunk line fund for the purposes set

forth in subsection (4) that shall be repayable, with interest,

from 1 or more of the following:

     (a) The money to be received by the county local road

commission, city, or village agency from the Michigan

transportation fund, except to the extent the money has been or may

in the future be pledged by contract in accordance with 1941 PA

205, MCL 252.51 to 252.64, or has been or may in the future be

pledged for the payment of the principal and interest upon notes

issued pursuant to under 1943 PA 143, MCL 141.251 to 141.254, or

has been or may in the future be pledged for the payment of

principal and interest upon bonds issued under section 18c or 18d,

or has been or may in the future be pledged for the payment of the

principal and interest upon bonds issued pursuant to under 1952 PA

175, MCL 247.701 to 247.707.

     (b) Any other legally available funds money of the city,

village, or county local road commission, agency, other than the

general funds of the county.

     (6) Loans If required by the department, loans made pursuant

to under subsection (4) if required by the state transportation

department may be are payable by deduction by the state treasurer,

upon direction of the state transportation department, from the

periodic disbursements of any money returned by the this state

under this act to the county local road commission, city, or

village, agency, but only after sufficient money has been returned

to the county local road commission, city, or village agency to

provide for the payment of contractual obligations incurred or to

be incurred and principal and interest on notes and bonds issued or

to be issued under 1941 PA 205, MCL 252.51 to 252.64, 1943 PA 143,

MCL 141.251 to 141.254, 1952 PA 175, MCL 247.701 to 247.707, or

section 18c or 18d. The interest rates and payment schedules of any

loans made from the proceeds of bonds or notes issued pursuant to

section 18b shall be established by the state transportation

department to conform as closely as practicable to the interest

rate and repayment schedules on the bonds or notes issued to make

the loans. However, the state transportation department may allow

for the deferral of the first payment of interest or principal on

the loans for a period of not to exceed 1 year after the respective

first payment of interest or principal on the bonds or notes issued

to make the loans.

     (7) The amount borrowed by a county local road commission,

city, or village pursuant to agency under subsection (5) shall not

be included in, or charged against, any constitutional, statutory,

or charter debt limitation of the county, city, or village and

shall not be included in the determination of the maximum annual

principal and interest requirements of, or the limitations upon,

the maximum annual principal and interest incurred under 1941 PA

205, MCL 252.51 to 252.64, 1943 PA 143, MCL 141.251 to 141.254,

1952 PA 175, MCL 247.701 to 247.707, or section 18c or 18d.

     (8) The county local road commission, city, or village agency

is not required to seek or obtain the approval of the electors, the

municipal finance commission or its successor agency, or, except as

provided in this subsection, the department of treasury to borrow

money pursuant to under subsection (5). The borrowing is not

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

141.2101 to 141.2821, or to section 5(g) of the home rule city act,

1909 PA 279, MCL 117.5. The state transportation department shall

give at least 10 days' notice to the state treasurer of its

intention to make a loan under subsection (4). If the state

treasurer gives notice to the director of the state transportation

department within 10 days of receiving the notice from the state

transportation department, that, based upon the then existing

financial or credit situation of the county local road commission,

city, or village, agency, it would not be in the best interests of

the this state to make a loan under subsection (4) to the county

local road commission, city, or village, agency, the loan shall not

be made unless the state treasurer, after a hearing, if requested

by the affected county local road commission, city, or village,

agency, subsequently gives notice to the director of the state

transportation department that the loan may be made on the

conditions that the state treasurer specifies.

     (9) The state transportation commission may borrow money and

issue bonds and notes under , and pursuant to the requirements of,

section 18b to make loans to county a local road commissions,

cities, and villages agency for the purposes described in the

second paragraph of section 9 of article IX of the state

constitution of 1963, as provided in subsection (4). A single issue

of bonds or notes may be issued for the purposes specified in

subsection (4) and for the other purposes specified in section 18b.

The house and senate transportation appropriations subcommittees

shall be notified by the department if there are extras and

overruns sufficient to require approval of either the state

administrative board or the commission, or both, on any contract

between the department and a local road agency or a private

business.

     (10) The director of the state transportation department,

after consultation with representatives of the interests of county

local road commissions, cities, and villages, agencies, shall

establish, by intergovernmental communication, procedures for the

implementation and administration of the loan program established

under subsections (4) to (9).

     (11) Not more than 10% per year of all of the funds money

received by and returned to the state transportation department

from any source for the purposes of this section may be expended

for administrative expenses. The department shall be subject to

section 14(5) if more than 10% per year is expended for

administrative expenses. As used in this subsection,

"administrative expenses" means those expenses that are not

assigned including, but not limited to, specific road construction

or preservation projects and are often referred to as general or

supportive services. Administrative expenses shall do not include

net equipment expense, net capital outlay, debt service principal

and interest, and payments to other state or local offices which

that are assigned, but not limited to, specific road construction

projects or preservation activities.

     (12) Any performance audits of the department shall be

conducted according to government auditing standards issued by the

United States general accounting office.

     (13) Contracts entered into to advance money to a county local

road commission, city, or village agency under subsection (1)(g)

are not subject to the revised municipal finance act, 2001 PA 34,

MCL 141.2101 to 141.2821.

     (14) The department shall prepare on an annual basis a report

listing all warranties that were secured under subsection (2) and

indicate whether any of those warranties were redeemed and all

pavement projects whose costs exceed $1,000,000.00 for which a

warranty was not secured as described in subsection (2). The

department shall make the report required by this subsection

available to the public upon request and shall also post the report

on its website, which shall include, but is not limited to, all of

the following information:

     (a) The type of project.

     (b) The cost or estimated cost of the project.

     (c) The expected lifespan of the project.

(15) (14) As used in this section: , "rail grade crossing

improvement purposes"

     (a) "Local road agency" means that term as defined in section

9a.

     (b) "Rail grade crossing improvement purposes" means 1 or more

of the following:

(i) (a) The installation and modernization of active and

passive warning devices at railroad grade crossings.

(ii) (b) The installation or improvement of grade crossing

surfaces.

(iii) (c) Modification, relocation, or modernization of railroad

grade crossing active and passive warning devices necessitated by

roadway improvement projects.

(iv) (d) Test installations of innovative warning devices or

other innovative applications.

(v) (e) Construction of new grade separations.

(vi) (f) A cash incentive payment made pursuant to subsection

(1)(c)(iv) for any public road or street crossing, in an amount no

greater than the cost of installing flashing light signals and half

roadway gates at the crossing.

(vii) (g) Any other work that would be eligible for funding

under the federal railroad-highway grade crossing improvement

program or other comparable programs.

     Sec. 11c. All Subject to section 11(1)(g), all federal aid

construction projects, and all other projects of the department

concerning highways, streets, roads, and bridges, whose cost

exceeds $100,000.00 for construction or preservation as defined in

section 10c, shall be performed by contract awarded by competitive

bidding unless the department shall affirmatively find finds that

under the circumstances relating to those projects, some other

method is in the public interest. All of those The department shall

report its findings shall be reported to the state transportation

commission 90 days before work is commenced and promptly in writing

to the appropriations committees of the senate and house of

representatives. However, in a case in which the department

determines emergency action is required, the reports need not be

filed before work is commenced but shall be promptly filed. Local

road agencies that make a decision not to perform construction or

preservation projects exceeding $100,000.00 shall contract for this

work through competitive bidding.