August 9, 2022

Volume XII, Number 221

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August 08, 2022

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Michigan Emergency Services Authorities Authorized to Incur Debt for Capital Projects and Equipment

On June 15, 2022, Michigan Governor Gretchen Whitmer signed legislation amending Act 57, Public Acts of Michigan, 1988 (“Act 57"), to authorize an emergency services authority, established under Act 57 by municipalities to provide emergency services, to incur debt for the purposes of purchasing real or personal property or financing the costs of buildings and facilities. The legislation cures an omission that had limited Act 57 authorities from efficiently financing needed emergency response capital assets.

Specifically, Act 102, Public Acts of Michigan, 2022 (“Act 102”), authorizes an authority to enter into a contract or agreement for the purchase of real or personal property to be financed over a period not-to-exceed 15 years. This installment purchase method of financing is similar to that authorized for cities, townships and villages under Act 99, Public Acts of Michigan, 1933, as amended, although Act 102 authorizes the emergency services authority to pledge the real or personal property acquired as collateral in support of the contract.

In addition, Act 102 authorizes an emergency services authority to issue its bonds or notes to finance the costs of acquiring, constructing, furnishing and equipping buildings and facilities, including the acquisition of property.

Bonds issued by an emergency services authority may be limited tax bonds or unlimited tax bonds. Limited tax bonds are bonds that are payable from existing revenues of the authority and may be issued without a vote of electors. Unlimited tax bonds must be submitted to a vote of the electors of the authority. If approved by the electors, unlimited tax bonds are then payable from a special debt millage levied annually by the authority for the duration of the bond issue. 

Bonds or notes issued by an authority are a debt of the authority only, and do not constitute debt of any of the incorporating municipalities. However, if an incorporating municipality withdraws from an authority, the municipality shall be liable for its proportion of the debts and liabilities of an authority incurred while the municipality was part of an authority. Taxes levied or imposed for the payment of unlimited tax bonds approved by electors before adoption of the resolution to withdraw must continue to be levied within the municipality as if the municipality did not withdraw from the authority until such bonds are paid in full.

An authority is limited to borrowing money or issuing its bonds or notes in a sum that, together with the total outstanding bonded indebtedness of the authority, does not exceed 5% of the state equalized value of all of the taxable property within the jurisdictional limits of the authority.

© 2022 Miller, Canfield, Paddock and Stone PLC National Law Review, Volume XII, Number 179
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About this Author

Steven D. Mann Finance Attorney Miller, Canfield, Paddock and Stone Detroit, MI
Principal

Steven D. Mann specializes in the area of municipal finance, representing public agencies as bond counsel.

His practice covers all facets of tax increment financing, special assessments, and economic development. He has also authored several amicus curiae briefs for both the Michigan Court of Appeals and the Michigan Supreme Court, arguing on behalf public bodies and municipal associations in cases involving complex issues related to the Freedom of Information Act and the Open Meetings Act.

313-496-7509
Ronald Liscombe Finance Lawyer Miller Canfield Law Firm
Principal

Ronald C. Liscombe assists public sector clients with a range of issues, including public finance and governance matters. 

Ron has deep knowledge of state and local government, having worked in a variety of policy and program management roles prior to joining the firm. He is able to counsel and provide direction to public entities to develop innovative and effective strategies in response to challenging policy issues.

His experience includes advising and counseling two start-up public entities in all general legal matters, including the development of policies and procedures...

313.496.7906
Jeffrey S. Aronoff Public Finance Attorney Miller, Canfield, Paddock and Stone Detroit, MI
Principal

Jeffrey S. Aronoff specializes in all types of public finance and securities, including municipal infrastructure finance, economic development finance and school finance, both as bond counsel and underwriter/purchaser's counsel. He also regularly advises governmental clients on general matters including economic development initiatives, fiscal distress issues and public-private collaboration.

In addition to his broad-based work with municipalities and bond purchasers, Jeff has special expertise in airport finance and conduit financing for tax-exempt organizations and small...

313-496-7678
Thomas Colis Principal Detroit Finance Lawyer Miller Canfield
Principal

Thomas Colis represents cities, counties, townships, villages, schools, libraries and authorities on a broad range of financings and associated legal matters.

He has extensive experience providing guidance to his clients on the various available legal structures and preparing the necessary documentation to authorize the issuance and sale of bonds to finance buildings, water and sewer infrastructure, road and street improvements and other capital needs. He also has vast experience in tax-exempt financing for private activity bonds (solid waste...

313-496-7677
Patrick F. McGow Public Finanace Attorney Miller, Canfield, Paddock and Stone Detroit, MI
Principal

Patrick McGow advises cities, counties, townships, villages and authorities on a broad range of infrastructure financing and related legal matters.

As bond counsel, his role is to help his clients understand their legal options and prepares the necessary documentation to authorize the issuance and sale of bonds to finance water and sewer projects, brownfield redevelopment, street and road improvements, drainage projects and economic development initiatives, among others. He also has extensive experience in tax-exempt financing for private activity bonds (solid waste and...

313-496-7684
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