SENATE BILL No. 1100

September 21, 2016, Introduced by Senators HILDENBRAND, STAMAS, MACGREGOR, KNEZEK and MARLEAU and referred to the Committee on Veterans, Military Affairs and Homeland Security.

     A bill to create the Michigan veterans' facility authority; to

develop and operate certain veterans' facilities; to create funds

and accounts; to authorize the issuing of bonds and notes; to

prescribe the powers and duties of the authority and certain state

departments and other state officials and employees; and to make

appropriations and prescribe certain conditions for the

appropriations.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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

"Michigan veterans' facility authority act".

     Sec. 2. As used in this act:

     (a) "Authority" means the Michigan veterans' facility

authority created under section 3.

     (b) "Board" means the board of directors of the authority.

     (c) "Bond" means a bond, note, or other obligation issued by

the authority under this act.

     (d) "Department" means the department of military and veterans

affairs.

     (e) "Develop" means to plan, acquire, construct, improve,

enlarge, maintain, renew, renovate, repair, replace, lease, equip,

furnish, market, promote, manage, or operate.

     (f) "Veteran" means an individual who meets both of the

following:

     (i) Is a veteran as defined in section 1 of 1965 PA 190, MCL

35.61.

     (ii) Was honorably discharged.

     (g) "Veterans' facility" means a long-term care facility and

ancillary facilities for veterans and their dependents as

determined by the authority.

     Sec. 3. (1) The Michigan veterans' facility authority is

created as a public body corporate and politic within the

department. The exercise by the authority of the powers conferred

by this act is an essential governmental function of this state.

     (2) Notwithstanding the existence of common management, the

authority shall be treated and accounted for as a separate legal

entity with its separate corporate purposes as set forth in this

act. The assets, liabilities, and funds of the authority shall not

be consolidated or commingled with those of this state.

     Sec. 4. The authority shall exercise its duties independently

of the department. The staffing, budgeting, procurement, and

related administrative functions of the authority may be performed

under the direction and supervision of the director of the

department.

     Sec. 5. (1) The authority shall exercise its duties through

its board of directors.

     (2) The board shall be made up of 9 members as follows:

     (a) The director of the department.

     (b) Three members with professional knowledge, skill, or

experience in long-term care, health care licensure or finance, or

medicine who represent the interests of 1 or more congressionally

chartered veterans' organizations appointed by the governor with

the advice and consent of the senate.

     (c) Three members with professional knowledge, skill, or

experience in long-term care, health care licensure or finance, or

medicine appointed by the governor with the advice and consent of

the senate. One of the members appointed under this subdivision

shall be a resident of the Upper Peninsula of this state.

     (d) One member appointed by the governor from a list of 2 or

more individuals selected by the majority leader of the senate,

with professional knowledge, skill, or experience in long-term

care, health care licensure or finance, or medicine.

     (e) One member appointed by the governor from a list of 2 or

more individuals selected by the speaker of the house of

representatives, with professional knowledge, skill, or experience

in long-term care, health care licensure or finance, or medicine.

     (3) The appointed members shall serve for terms of 4 years. Of

the 5 members first appointed, 1 shall be appointed for an initial

term of 1 year, 2 shall be appointed for an initial term of 2

years, and 2 shall be appointed for an initial term of 3 years. The

appointed members shall serve until a successor is appointed. A

vacancy shall be filled for the balance of the unexpired term in

the same manner as the original appointment.

     (4) The director of a state department who is a designated

member of the board may appoint a representative to serve in his or

her absence.

     (5) Members of the board shall serve without compensation but

may receive reasonable reimbursement for necessary travel and

expenses incurred in the discharge of their duties.

     (6) The director of the department shall serve as chairperson

of the board.

     (7) A majority of the appointed and serving members of the

board shall constitute a quorum of the board for the transaction of

business. A member may participate in a meeting by the use of

amplified telephonic or video conferencing equipment. A member

participating by the use of video conferencing equipment shall be

considered to be present for purposes of a quorum and for purposes

of voting. Actions of the board shall be approved by a majority

vote of the members present at a meeting.

     (8) The authority may employ or contract for legal, financial,

and technical experts, and other officers, agents, and employees,

permanent and temporary, as the authority requires, and shall

determine their qualifications, duties, and compensation. The board

may delegate to 1 or more agents or employees those powers or

duties with the limitations as the board considers proper.

     (9) The members of the board and officers and employees of the

authority are subject to 1968 PA 317, MCL 15.321 to 15.330, or 1968

PA 318, MCL 15.301 to 15.310.

     (10) A member of the board or officer, employee, or agent of

the authority shall discharge the duties of his or her position in

a nonpartisan manner, with good faith, and with that degree of

diligence, care, and skill that an ordinarily prudent person would

exercise under similar circumstances in a like position. In

discharging the duties, a member of the board or an officer,

employee, or agent, when acting in good faith, may rely 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 or officer, employee, or agent of the authority

to be correct by the president or the officer of the authority

having charge of its books or account, or stated in a written

report by a certified public accountant or firm of certified public

accountants fairly to reflect the financial condition of the

authority.

     (11) The board shall organize and make its own policies and

procedures. 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.

     (12) Upon request by a member of the legislature, the board

shall make nonprivileged information regarding the operations and

accounts of the authority and nonprivileged information regarding

the care provided to veterans at a veterans' facility available to

members of the legislature.

     Sec. 6. The authority shall have all of the following powers:

     (a) To solicit and accept gifts, grants, and loans from any

person.

     (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 procure insurance against any loss in connection with

the property, assets, or activities of the authority.

     (d) 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.

     (e) To make and amend bylaws.

     (f) To employ and contract with individuals necessary for the

operation of the authority and 1 or more veterans' facilities.

     (g) To make and execute contracts including without limitation

sale agreements, trust agreements, trust indentures, bond purchase

agreements, tax regulatory agreements, continuing disclosure

agreements, ancillary facilities, and all other instruments

necessary or convenient for the exercise of its powers and

functions, and commence any action to protect or enforce any right

conferred upon it by any law, contract or other agreement.

     (h) To engage the services of financial advisors and experts,

legal counsel, placement agents, underwriters, appraisers and other

advisors, consultants and fiduciaries as may be necessary to

effectuate the purposes of this act.

     (i) To pay its operating expenses and financing costs.

     (j) To pledge revenues or other assets as security for the

payment of the principal of and interest on any bonds.

     (k) To procure insurance, letters of credit, or other credit

enhancement with respect to any bonds for the payment of tenders of

bonds, or for the payment upon maturity of short-term bonds.

     (l) To develop or operate 1 or more veterans' facilities.

     (m) To solicit federal funds and other funding sources to

develop veterans' facilities.

     (n) To do any and all things necessary or convenient to carry

out its purposes and exercise the powers expressly given and

granted in this act.

     Sec. 7. (1) It is determined that the creation of the

authority and the carrying out of its authorized duties is in all

respects a public and governmental purpose for the benefit of the

people of this state and for the improvement of their health,

safety, welfare, comfort, and security, and that these purposes are

public purposes and that the authority will be performing an

essential governmental function in the exercise of the powers

conferred upon it by this act.

     (2) The property of the authority and its income and

operations shall be exempt from taxation by this state and any

political subdivision of this state.

     (3) In the case of any bonds, the interest on which is

intended to be exempt from federal income tax, the authority shall

prescribe restrictions on the use of the proceeds of those bonds

and related matters as are necessary to assure the exemption, and

the recipients of proceeds of those bonds shall be bound thereby to

the extent the restrictions shall be made applicable to them. Any

recipient of the proceeds of bonds bearing interest that is

intended to be exempt from federal income tax, including without

limitation this state or any political subdivision of this state,

is authorized to execute a tax regulatory agreement with the

authority and, as to any political subdivision that is a recipient

of the proceeds of bonds bearing interest that is intended to be

exempt from federal income, this state. The execution of a tax

regulatory agreement may be treated as a condition to receiving any

proceeds of a bond issued under this act.

     Sec. 8. (1) The authority shall have power and is hereby

authorized from time to time to issue bonds in the principal amount

or amounts and with the maturities as the authority shall determine

to be necessary to provide sufficient funds for achieving its

authorized purposes. The department of treasury shall provide

technical expertise as necessary for the authority to issue bonds

under this act.

     (2) The board of the authority shall authorize the issuance of

bonds by resolution. The authority may issue bonds, including

refunding bonds, without obtaining the consent of any department,

division, commission, board, bureau, or agency of this state and

without any other proceedings or the occurrence of any other

conditions other than those proceedings, conditions, or things that

are specifically required by this act. Every issue of bonds shall

be special revenue obligations payable from and secured by a pledge

of revenues and other assets, including without limitation the

proceeds of the bonds deposited in a reserve fund for the benefit

of the owners of the bonds, earnings on funds of the authority and

other funds as may become available, upon the terms and conditions

as specified by the authority in the authority resolution under

which the bonds are issued or in a related trust agreement or trust

indenture.

     (3) The authority may issue bonds to refund any bonds by the

issuance of new bonds, whenever it considers the refunding

expedient, whether the bonds to be refunded have or have not

matured, and to issue bonds partly to refund bonds then outstanding

and partly for restructuring or any of its other authorized

purposes.

     (4) For each issue of bonds, the authority shall determine all

of the following:

     (a) The date of issuance.

     (b) Whether the bonds shall bear no interest, appreciate as to

principal amount, bear interest at fixed or variable rates, or any

combination of these.

     (c) Whether the bonds shall be payable at or prior to

maturity.

     (d) When the bonds shall mature.

     (e) Whether the authority may redeem the bonds prior to

maturity, at what price, and under what conditions.

     (f) The method of payment of principal of and interest on the

bonds.

     (g) The form, denominations, and places of payment of

principal of and interest on the bonds.

     (h) If any officer whose signature or the facsimile of whose

signature appears on any bond shall cease to be that officer before

the delivery of the bond, that signature or facsimile shall

nevertheless be valid and sufficient for all purposes as if he or

she had remained in office until delivery of the bond.

     (i) Any other terms and conditions necessary to issue the

bonds in fully marketable form.

     (5) The authority may sell the bonds in the manner determined

by the authority board, at public or private sale, and on either a

competitive or negotiated basis.

     (6) This act shall govern the creation, perfection, priority,

and enforcement of any pledge of revenues or other security made by

the authority. Each pledge made by the authority shall be valid and

binding at the time the pledge is made. The encumbered revenues,

reserves, or earnings pledged or earnings on the investment of the

encumbered revenues, reserves, or earnings pledged shall

immediately be subject to the lien of the pledge without any

physical delivery or further act and the lien on that pledge shall

be valid and binding as against all parties having claims of any

kind in tort, contract or otherwise against the authority,

irrespective of whether the parties have notice of the lien or

pledge, and without filing or recording the pledge. The resolution

or other instrument by which a pledge is created does not have to

be recorded.

     (7) This act shall also govern the negotiability of bonds

issued under this act. Any bonds issued under this act shall be

fully negotiable within the meaning and for all purposes of the

uniform commercial code. By accepting the bond or obligation, each

owner of a bond or other obligation of the authority shall be

conclusively considered to have agreed that the bond is and shall

be fully negotiable within the meaning and for all purposes of the

uniform commercial code.

     (8) In the discretion of the authority, any bonds may be

secured by a trust agreement or trust indenture by and between the

authority and a trustee, which may be any trust company or bank

having the powers of a trust company, whether located within or

without this state. A trust agreement or trust indenture authorized

under this subsection, or an authority resolution providing for the

issuance of bonds may provide for the creation and maintenance of

reserves as the authority shall determine to be proper and may

include covenants setting forth the duties of the authority in

relation to the bonds, the income to the authority, and the sale

agreement. A trust agreement or trust indenture authorized under

this subsection or an authority resolution may contain provisions

respecting the custody, safeguarding, and application of all money

and bonds and may contain provisions for protecting and enforcing

the rights and remedies under the sale agreement of the owners of

the bonds and benefited parties as may be reasonable and proper and

not in violation of law. It shall be lawful for any bank or trust

company incorporated under the laws of this state that may act as

depository of the proceeds of bonds or of any other funds or

obligations received on behalf of the authority to furnish

indemnifying bonds or to pledge obligations as may be required by

the authority. Any trust agreement or trust indenture authorized

under this subsection or an authority resolution may contain other

provisions as the authority may consider reasonable and proper for

priorities and subordination among the owners of bonds and

benefited parties.

     (9) A member of the board or an officer, appointee, or

employee of the authority shall not be subject to personal

liability when acting in good faith within the scope of his or her

authority or on account of liability of the authority. The board

may defend and indemnify a member of the board or an officer,

appointee, or employee of the authority against liability arising

out of the discharge of his or her official duties. The authority

may indemnify and procure insurance indemnifying members of the

board and other officers and employees of the authority from

personal loss or accountability for liability asserted by a person

with regard to bonds or other obligations of the authority, or from

any personal liability or accountability by reason of the issuance

of the bonds or other obligations or by reason of any other action

taken or the failure to act by the authority. The authority may

also purchase and maintain insurance on behalf of any person

against the liability asserted against the person and incurred by

the person in any capacity or arising out of the status of the

person as a member of the board or an officer or employee of the

authority, whether or not the authority would have the power to

indemnify the person against that liability under this subsection.

     (10) A member, officer, employee or agent of the authority

shall not have an interest, either directly or indirectly, in any

business organization engaged in any business, contract or

transaction with the authority or in any contract of any other

person engaged in any business with the authority, or in the

purchase, sale, lease or transfer of any property to or from the

authority.

     (11) Bonds issued under this act are not subject to the

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

141.2821.

     (12) The issuance of bonds under this act is subject to the

agency financing reporting act, 2002 PA 470, MCL 129.171 to

129.177.

     (13) A resolution of the authority authorizing bonds, or the

provisions of a trust agreement or trust indenture authorized by

resolution of the authority, may delegate to an officer or other

employee of the authority, or an agent designated by the authority,

for the period of time as the authority determines, the power to

cause the issue, sale, and delivery of the bonds within limits on

those bonds established by the authority as to any of the

following:

     (a) The form.

     (b) The maximum interest rate or rates.

     (c) The maturity date or dates.

     (d) The purchase price.

     (e) The denominations.

     (f) The redemption premiums.

     (g) The nature of the security.

     (h) The selection of an applicable interest rate index.

     (i) Other terms and conditions with respect to the issuance of

the bonds as the authority shall prescribe.

     Sec. 9. Notwithstanding any restriction contained in any other

law, rule, regulation, or order to the contrary, this state and all

political subdivisions of this state, their officers, boards,

commissioners, departments or other agencies, governmental pension

funds, all banks, trust companies, savings banks and institutions,

building and loan associations, savings and loan associations,

investment companies and other persons carrying on a banking or

investment business, and all executors, administrators, guardians,

trustees and other fiduciaries, and all other persons whatsoever

who now are or may hereafter be authorized to invest in bonds or

other obligations of the state, may properly and legally invest any

sinking funds, money or other funds, including capital, belonging

to them or within their control, in any bond. Bonds issued by the

authority under this act are hereby made bonds that may properly

and legally be deposited with, and received by, any state municipal

officers or agency of this state, for any purpose for which the

deposit of bonds or other obligations of this state is now, or may

be, authorized by law.

     Sec. 10. The authority may be dissolved by act of the

legislature on condition that the authority has no debts or

obligations outstanding or that provision has been made for the

payment or retirement of all debts or obligations. Upon any such

dissolution of the authority, all property, funds, and assets of

the authority shall be vested in this state.

     Sec. 11. This act and all powers granted hereby shall be

liberally construed to effectuate its intent and their purposes,

without implied limitations on the powers of the authority, the

state budget director, and the state treasurer. This act shall

constitute full, complete, and additional authority for all things

that are contemplated in this act to be done. All rights and powers

granted in this act shall be cumulative with those derived from

other sources and shall not, except as expressly stated in this

act, be construed in limitation of those rights and powers. Insofar

as the provisions of this act are inconsistent with the provisions

of any other act, general or special, the provisions of this act

shall be controlling. If any clause, paragraph, section, or part of

this act is adjudged by any court of competent jurisdiction to be

invalid, that judgment shall not affect, impair, or invalidate the

remainder of the clause, paragraph, section, or part but shall be

applied in its operation to the clause, sentence, paragraph,

section, or part directly involved in the controversy in which the

judgment shall have been rendered.

     Sec. 12. (1) The authority shall annually file a written

report on its activities of the immediately preceding year with the

governor, each house of the legislature, and the chairperson of the

appropriations subcommittee of each house of the legislature that

has jurisdiction over military and veterans' affairs. This report

shall be submitted not later than 90 days following the end of the

fiscal year. This report shall specify all of the following:

     (a) The status of development of each veterans' facility.

     (b) A statement whether a veterans' facility will likely be

opening in the next fiscal year.

     (c) The census of each veterans' facility.

     (d) Accounting of all revenues received and expended.

     (e) Statistics on veterans who resided in each veterans'

facility.

     (f) Recommendations for improvements at each veterans'

facility.

     (g) Salaries and benefits costs of all staff positions within

the authority and at all veterans' facilities.

     (h) Any other matters the board considers pertinent.

     (2) If the authority indicates that a veterans' facility will

likely be opening in the next fiscal year under subsection (1)(a),

then the authority shall file a supplemental report on its

activities every 90 days until the veterans' facility is open and

operational. The supplemental report shall be filed with the

governor, each house of the legislature, and the chairperson of the

appropriations subcommittee of each house of the legislature that

has jurisdiction over military and veterans' affairs not later than

60 days following the 90-day period covered in the supplemental

report. The supplemental report shall specify all the items

described in subsection (1)(a) to (g).

     (3) The accounts of the authority shall be subject to annual

audits by the state auditor general or a certified public

accountant appointed by the auditor general. However, for the first

4 years of the authority's existence, the auditor general shall

conduct a financial audit for the first year and biennially

thereafter and shall conduct a performance audit for the second

year and biennially thereafter. After the initial 4-year period of

the authority's existence, the auditor general shall perform a

performance audit if a veterans' facility receives a Centers for

Medicare and Medicaid Services survey finding that indicates a

substandard quality of care as defined in 42 CFR 488.301, upon

request by either house of the legislature, or as otherwise

determined by the auditor general. Records shall be maintained

according to generally accepted auditing principles.