Authorizing two or more cities, villages, towns, or counties, or a combination of such political subdivisions, to create a commission to issue conduit revenue bonds and exercise eminent domain authority and exempting from taxation interest on such bonds

Under this arrangement, the borrower is solely responsible to repay the bonds and interest on the bonds from revenue generated by the project financed by the bond sale. Security for the bonds is supported by collateral or revenues of the borrower who receives the proceeds from the bond sale. Collateral for the bonds may be a building, equipment, or a revenue stream generated by the borrower's construction or remodeling of a project. The borrower, not the unit of government that issues the bonds, is responsible for all debt service payments to the bondholders. And the borrower, not the unit of government that issues the bonds, is liable to the bondholders if the bonds are not paid off.

A commission created as authorized under the bill is a unit of government and a body corporate and politic that is completely separate from the creating political subdivisions and from the state. The bill defines political subdivision to mean any city, village, town, or county in this state or any city, village, town, county, district, authority, agency, commission, or similar governmental entity in another state. A political subdivision that is a party to an agreement is considered to be a member of a commission. Before an agreement may take effect, it must be approved by the attorney general.

A commission is governed, under the bill, by a board and the board members are appointed under the terms of the agreement creating the commission. The agreement may also provide for an additional political subdivision to become a member of a commission, or for a member to withdraw from a commission. At all times, however, at least one member of a commission must be a political subdivision that is located in this state.

Under the bill, a commission is granted all of the powers that are necessary or convenient to carry out the purposes described in the bill. Primarily, a commission is authorized to issue bonds or refunding bonds to finance or refinance a project, including funding a reserve fund or capitalized interest, payment of costs of issuance and other costs related to the financing or refinancing, and to enter into agreements related to the issuance of bonds, including liquidity and credit facilities, remarketing agreements, currency exchange agreements, commodity swap agreements, and other hedge agreements. The bill defines a project as any capital improvement, investment or program of investment, purchase of receivables, property, assets, commodities, bonds or other revenue streams or related assets, working capital program, or liability or other insurance program, located within or outside of this state.

Other powers of a commission include the authority to employ or appoint agents, employees, finance professionals, and special advisors; the authority to establish and collect fees, plus administrative expenses, from a participant who benefits from the commission's services, or services provided by an outside entity;

and, at the request of a participant, the authority to combine and pledge revenues of multiple projects for repayment of one or more series of bonds. The bill defines a participant as any public or private entity, including federally recognized Indian tribe or band, that contracts with a commission for the purpose of financing or refinancing a project that is owned, sponsored, or controlled by the entity.

Unless the bond resolution states otherwise, bonds issued by a commission are the obligation of the commission, to be paid solely out of amounts received by the commission from revenues derived from the project that is financed or refinanced, or by another agreement entered into or investment made that relates to, and is pledged to, the bonds. The state, and the political subdivisions who are parties to the agreement creating the commission, are not liable on the bonds or other contracts entered into by a commission, nor are any of the commission's board members personally liable on the bonds unless the personal liability or accountability is the result of willful misconduct.

The commission is required to annually prepare a budget, and maintain an accounting system in accordance with generally accepted accounting principals. The bill also requires the commission to have its financial statements and debt covenants audited annually by an independent certified public accountant, except that the commission may decide, by unanimous vote of its board, to have an audit performed every two years. The commission must send a copy of its budget and audit to the governing body of each political subdivision which is a party to the agreement which created the commission.

The bill authorizes a commission to be dissolved, according to the terms of the agreement under which it was created, if the commission provides for the payment of its bonds, including interest, and the performance of its other contractual obligations. The attorney general must approve the dissolution of a commission. The bill also contains a state pledge under which the state agrees and pledges that it will not limit, impair, or alter the rights and powers of a commission before the commission has met and discharged the bonds, including interest, and has fulfilled its contractual obligations.

Any interest that is generated by the bonds is exempt from taxation. The method of issuing bonds and entering into of contracts related to those bonds that is created in the bill is a complete alternative method to all other methods under current law which authorize the issuance of bonds by a unit of government.

Because this bill relates to an exemption from state or local taxes, it may be referred to the Joint Survey Committee on Tax Exemptions for a report to be printed as an appendix to the bill.