SB-0412, As Passed House, June 22, 2005
April 21, 2005, Introduced by Senators PRUSI, SWITALSKI, SCOTT, SCHAUER, CHERRY, JACOBS, LELAND, OLSHOVE, BARCIA, BASHAM, CLARKE, CLARK-COLEMAN, BERNERO and THOMAS and referred to the Committee on Appropriations.
A bill to amend 1964 PA 183, entitled
"An act creating the state building authority with power to
acquire, construct, furnish, equip, own, improve, enlarge, operate,
mortgage, and maintain facilities for the use of the state or any
of its agencies; to act as a developer or co-owner of facilities as
a condominium project for the use of the state or any of its
agencies; to authorize the execution of leases pertaining to those
facilities by the building authority with the state or any of its
agencies; to authorize the payment of true rentals by the state; to
provide for the issuance of revenue obligations by the building
authority to be paid from the true rentals to be paid by the state
and other resources and security provided for and pledged by the
building authority; to authorize the creation of funds; to
authorize the conveyance of lands by the state or any of its
agencies for the purposes authorized in this act; to authorize the
appointment of a trustee for bondholders; to permit remedies for
the benefit of parties in interest; to provide for other powers and
duties of the authority; and to provide for other matters in
relation to the authority and its obligations,"
by amending sections 1, 1a, 3, and 7 (MCL 830.411, 830.411a,
830.413, and 830.417), sections 1 and 7 as amended by 1994 PA 252
and sections 1a and 3 as amended by 1988 PA 248.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. As used in this act:
(a) "Building authority" means the state building authority
created by this act.
(b) "State" means the legislative, executive, and judicial
branches of state government and includes institutions of higher
education.
(c) "Existing facilities" means all existing buildings and
other facilities, the sites for the buildings or facilities, and
furnishings or equipment for the buildings or facilities located on
real property acquired by the building authority under the terms of
this act.
(d) "Facilities" means furnishings or equipment, capital
maintenance improvements, existing facilities, and all new
buildings, parking structures and lots, and other facilities, the
sites for the buildings, structures, or facilities, and furnishings
or equipment for the buildings, structures, or facilities in any
way acquired or constructed by the building authority under this
act.
(e) "True rental" means the rental required to be paid by the
state to the building authority under a lease between the state and
the building authority entered into under this act. The true rental
shall be paid by the state to the building authority or its
assignee periodically as specified in the lease with the building
authority and shall be in periodic amounts that do not exceed the
economic or market value to the state of the leased facilities. The
economic or market value to the state of the leased facilities
shall be determined by the state administrative board before the
execution of a lease by the state under this act by an appraisal
made by or for the state using commonly employed procedures that
will fairly determine economic or market value. When using
procedures commonly employed by appraisers, an appraisal may set
forth a range for the true rental that reflects variations that may
occur in the components upon which the appraisal is based. If a
lease is only for furnishings or equipment, the state
administrative board may employ an appraiser to determine the
economic or market value to the state of the furnishings or
equipment, or the state administrative board may approve an
alternative method to determine the economic or market value to the
state of the furnishings or equipment. The alternative method may
include the determination of the economic or market value to the
state by a person who is in the business of leasing furnishings or
equipment.
(f) "Board" means the board of trustees of the building
authority.
(g) "Bond" or "obligation" means a bond, note, or other debt
obligation issued by the building authority under section 8.
(h) "Institution of higher education" means a college or
university listed in section 4 or 5 of article VIII of the state
constitution of 1963 or described in section 6 of article VIII of
the state constitution of 1963 or a community or junior college
established under section 7 of article VIII of the state
constitution of 1963.
(i) "Equipment" means machinery, hardware, or any other type
of equipment or a group of integrally related equipment, which
shall meet all of the following:
(i) The equipment or the predominant portion of the group of
integrally related equipment is located in or is physically
connected to a state occupied building or facility or is located on
state owned property.
(ii) The portion of the group of integrally related equipment
that is not described in subparagraph (i) is integral to the
functioning of the integrally related equipment described in
subparagraph (i).
(iii) The projected useful life of the equipment is 5 years or
more.
(j) "Party in interest" includes an owner of an obligation
issued under this act; a counterparty to an agreement relating to
security or management of payment, revenue, or interest rate
exposure, including, but not limited to, a bank, bond insurance
provider, or security firm, as its interest appears; and a trustee
or fiduciary duly designated by the building authority or otherwise
to act on behalf of 1 or more owners or counterparties.
(k) "Capital maintenance improvements" means an expenditure to
provide capital maintenance that is an asset depreciable under the
internal revenue code that is used by this state or an institution
of higher education.
Sec. 1a. The legislature finds all of the following:
(a) That there is a present need for the state, its agencies,
and departments, in order to carry out necessary governmental
functions and enterprises and to provide necessary services to the
people of the state as mandated or permitted by constitution and
law, to do both of the following:
(i) Rent, lease, or otherwise acquire additional buildings,
together with necessary parking structures and lots, facilities,
furnishings, equipment, and sites.
(ii) Renovate or restore properties owned or used by the
this
state.
(b)
That the this
state now rents and leases from private
owners at a substantial cost space and furnishings or equipment in
many
communities in order to provide services, and as the this
state continues to grow it will be necessary to rent or lease
substantial additional space and furnishings or equipment from
private owners at substantial additional cost to provide services.
(c) That the state building authority is created by this act
with the powers granted in this act to do both of the following:
(i) Provide additional space and furnishings or equipment in
the best locations and in the most economical and efficient manner.
(ii) Improve existing facilities through capital maintenance
improvements or the restoration or renovation of those facilities.
Sec. 3. The building authority may do any of the following:
(a) Adopt bylaws for the regulation of its affairs and the
conduct of its business.
(b) Adopt an official seal.
(c) Maintain a principal office at a place within this state.
(d) Sue and be sued in its own name and plead and be
impleaded.
(e) Acquire, construct, furnish, equip, improve, restore,
renovate, enlarge, own, operate, and maintain facilities that are
approved by concurrent resolution of the legislature for the use of
the
this state or an agency of the this state.
(f) Acquire in the name of the building authority, hold, and
dispose of real and personal property, or an interest in real and
personal property, in the exercise of its powers and the
performance of its duties.
(g) Act as a developer or co-owner of a facility that is a
condominium
project under the condominium act,
Act No. 59 of the
Public
Acts of 1978, as amended, being sections 559.101 to 559.275
of
the Michigan Compiled Laws 1978 PA 59, MCL 559.101 to 559.276,
in the exercise of its powers and the performance of its duties.
(h) Borrow money for a corporate purpose as prescribed in this
act, issue negotiable revenue bonds payable solely from the true
rental except to the extent paid from the proceeds of sale of
revenue obligations and any additional security provided for and
pledged by the building authority in the resolution authorizing
revenue obligations under section 8, and provide for the payment of
the bonds and the rights of the holders of the bonds and mortgage
facilities in favor of the holders of bonds issued under this act.
(i) Make and enter into contracts, leases, and other
instruments necessary or incident to the performance of its duties
and the execution of its powers. A lease may include provisions for
construction, improvement, restoration, renovation, capital
maintenance improvements, operation, use, and disposition of the
facilities on payment of the bonds. If the cost of a contract for
construction, materials, or services, other than compensation for
personal or professional services, involves an expenditure of more
than $5,000.00, the building authority shall make a written
contract with the lowest qualified bidder, after advertisement for
not less than 2 consecutive weeks in a newspaper of general
circulation in this state, and in other publications as determined
by the building authority.
(j) Employ and fix the compensation of consulting engineers,
architects, superintendents, managers, and other construction,
accounting, appraisal, and financial experts, attorneys, and other
employees and agents as the authority determines are necessary to
perform its duties and functions under this act.
(k) Receive and accept from a federal agency grants for or in
aid of the construction of facilities and receive and accept aid or
contributions from any source of either money, property, labor, or
other things of value, to be held, used, and applied only for the
purposes for which the grants and contributions were made.
(l) Require fidelity bonds from employees handling money of the
building authority. The bonds shall be in sums and subject to the
terms and conditions that the board considers satisfactory.
(m) Do all acts necessary or, in the opinion of the building
authority, convenient to carry out the powers expressly granted.
(n) Require that final actions of the board are entered in the
journal of the board. A writing prepared, owned, used, in the
possession of, or retained by the board in the performance of an
official function shall be made available to the public in
compliance
with the freedom of information act,
Act No. 442 of the
Public
Acts of 1976, as amended, being sections 15.231 to 15.246 of
the
Michigan Compiled Laws 1976
PA 442, MCL 15.231 to 15.246.
(o) Require that the books and records of account of the
building authority are audited annually by the auditor general, or
if the auditor general is unable to act, by an independent
certified public accountant appointed by the auditor general.
(p) Make and enter into contracts for insurance, letters of
credit, and commitments to purchase its revenue obligations, or
enter into other transactions to provide separate security to
assure the timely payment of any revenue obligations of the
building authority. A contract of the building authority permitted
by this section shall not be a general obligation of the state or
building authority.
Sec. 7. (1) The state may lease facilities from the building
authority for public purposes within the concepts provided in this
act, upon terms and conditions agreed upon and subject to the
limitations and provisions provided in section 6. Before execution,
a lease shall be approved by the state administrative board and,
except
as provided in subsection subsections (3) and (4),
by
concurrent resolution of the legislature concurred in by a majority
of the members elected to and serving in each house. The votes and
names of the members voting shall be entered in the journal. The
lease as approved by the building authority and the administrative
board, and if required, the legislature or an institution of higher
education, may provide for a determinable true rental as a range as
permitted under section 1(e).
(2) If a lease is approved containing a true rental stated as
a range, then actual rental to be paid under the lease shall be
fixed at an amount certified by the appraiser and, after the
certification, shall be approved by the state administrative board
and the building authority. The appraiser shall not certify, and
the board and authority shall not approve, a true rental amount
unless the amount is fixed within or below the stated range. A
lease shall not be executed more than 3 years after its approval by
the legislature. The state shall pay to the building authority or
its assignee the true rental at the times, in the manner, and at
the place specified in the lease. The governor and the budget
director shall include in the annual budget of the state for each
year an amount fully sufficient to pay the true rental required to
be paid by the state to the building authority or its assignee
required by any lease under this act. If the lease is for an
institution of higher education, then in addition, the lease shall
be authorized by the institution of higher education and signed by
its authorized officers.
(3) The state, except institutions of higher education, may
lease from the building authority property that is comprised only
of furnishings or equipment if all of the following requirements
are met:
(a) Before a lease that is only for furnishings or equipment
is executed, the general form of the lease shall be approved by
concurrent resolution of the legislature concurred in by a majority
of the members elected to and serving in each house. The form of
the lease approved by the legislature need not contain a
description of the property to be leased or the rental or a rental
range. However, before the state executes the lease, the
description of the property to be leased and the rental shall be
approved by the state administrative board as provided in
subsection (2). The concurrent resolution of the legislature
approving the form of lease shall also approve a maximum amount of
furnishings and equipment that may be leased during the 2 years
following the approval of the lease pursuant to the form of lease
approved.
(b) A lease that is only for furnishings or equipment shall be
executed only if the furnishings or equipment are for use by a
state
agency as determined under the management and budget act,
Act
No. 431 of the Public Acts of 1984, being sections 18.1101 to
18.1594
of the Michigan Compiled Laws 1984
PA 431, MCL 18.1101 to
18.1594.
(4) Through September 30, 2007, an institution of higher
education, this state, and the building authority may enter into a
lease for capital maintenance improvements if, before a lease that
is only for capital maintenance improvements is executed, the
general form of the lease is approved by concurrent resolution of
the legislature concurred in by a majority of the members elected
to and serving in each house. The form of the lease approved by the
legislature need not contain a description of the capital
maintenance improvements to be leased or the rental or a rental
range. However, before this state executes the lease, the
description of the capital maintenance improvements to be leased
and the rental shall be approved by the state administrative board.
(5) The building authority shall retain title to capital
maintenance improvements during the term of a lease approved under
subsection (4). The building authority shall not be required to
have any ownership interest in the structure to which a capital
maintenance improvement is made. Title to the capital maintenance
improvement shall be evidenced by a bill of sale.
(6) The actual rental to be paid under a lease approved under
subsection (4) for a capital maintenance improvement shall be
determined by an appraiser or by an alternate method and, after the
determination, shall be approved by the state administrative board
and the building authority. The state administrative board shall
approve any alternate method for determining actual rental, and an
alternate method may include a determination by a person or
business that is in the business of providing capital maintenance
improvements to institutions of higher education.
(7) The state shall pay to the building authority or its
assignee the true rental at the times, in the manner, and at the
place specified in the lease approved under subsection (4). The
governor and the budget director shall include in the annual budget
of the state for each year an amount fully sufficient to pay the
true rental required to be paid by this state to the building
authority or its assignee required by any lease under this act.