SE5 AB1: Bill Text

LRB-4360/2

MS/SH/JS/JK:kmg:ks

September 1995 Special Session

1995 - 1996 LEGISLATURE

assembly BILL 1

September 5, 1995 - Introduced by Committee on Assembly Organization, by request of Governor Tommy G. Thompson. Referred to Joint survey committee on Tax Exemptions.

AB1,2,9 An Act to repeal 16.40 (15m), 20.505 (1) (fm), 71.05 (1) (d) (title) and 71.05 (1) (e) (title); to renumber and amend 71.05 (1) (c), 71.05 (1) (d) and 71.05 (1) (e); to amend 13.48 (14) (d) 4., 16.70 (14), 19.42 (13) (a), 20.505 (1) (ka), 20.505 (1) (kc), 20.835 (4) (g), 25.50 (1) (d), 66.066 (1) (a), 66.066 (1) (c), 66.067, 66.30 (1) (a), 66.75 (1m) (a), 66.75 (2) (intro.), (a), (c) and (d), 66.75 (3), 71.26 (1) (bm), 71.36 (1m), chapter 77 (title), subchapter V (title) of chapter 77 [precedes 77.70], 77.71 (intro.) and (1), 77.71 (2), 77.71 (3) and (4), 77.73, 77.75, 77.76 (1), 77.76 (2), 77.77, 77.78, 234.65 (1) (c) and 234.65 (6) (b); to repeal and recreate 20.005 (3) (schedule); and to create 13.48 (14) (d) 5., 16.40 (15m), 16.82 (6), 16.82 (7), 16.854, 18.03 (5s), 20.505 (1) (fm), 20.566 (1) (gd), 20.835 (4) (gb), 20.907 (1e), 24.61 (2) (a) 7., 25.17 (3) (b) 10., 66.04 (2) (a) 3p., 66.066 (5), 66.75 (1) (bm), 66.75 (1m) (em), 66.75 (1m) (fm), 71.05 (1) (c) 4., 71.26 (1m) (g), 71.45 (1t) (g), 77.705, 77.76 (3m), 219.09 (1) (c), subchapter III of chapter 229 [precedes 229.64] and 704.31 (3) of the statutes; relating to: creating a local professional baseball park district in certain jurisdictions; giving a local professional baseball park district the authority to issue bonds and granting income tax exemptions for interest income on bonds issued by the district; making a state moral obligation pledge with respect to bonds issued by a local professional baseball park district; giving a local professional baseball park district the authority to impose a room tax, a sales tax and a use tax; creating an income and franchise tax exemption for a local professional baseball park district; creating an exception for a local professional baseball park district from certain landlord-tenant provisions; authorizing state expenditures for state highway rehabilitation; increasing a limitation on certain economic development bonding by the Wisconsin Housing and Economic Development Authority; making appropriations; and providing a penalty.

Analysis by the Legislative Reference Bureau

Creation and dissolution of a district

This bill creates a professional baseball park district, which is a special purpose district, in each county with a population of at least 500,000 (presently only Milwaukee County) and the most populous county that is contiguous to that county (in relation to Milwaukee County, presently Waukesha County) unless that county is already included in a district, in which case a single-county jurisdiction is created. A district is a local unit of government that is a body corporate and politic and that is separate and distinct from, and independent of, the state.

In connection with baseball park facilities, the powers of a district include the construction, maintenance, management and promotion of the baseball park and facilities; the issuance of bonds and imposition of taxes to finance the park and facilities; and the authority to enter into partnerships, joint ventures, common ownership or other arrangements with other persons to further the district's purposes. A district may also set standards governing the use of, and the conduct within, the park and facilities, and may set and collect fees for the use of the facilities.

The district is governed by a board that consists of 4 persons appointed by the governor, one person appointed by the chief executive officer of the more populous county within the district's jurisdiction, one person appointed by the chief executive officer of the less populous county in the jurisdiction and one person appointed by the mayor of the most populous city within the jurisdiction. In single-county districts, both county appointments are made by the chief executive officer of that single county.

Once a county in included within the jurisdiction of a district, the county remains in the district until the district is dissolved. A district may dissolve by action of the district board, subject to payment of the district's bonds and fulfillment of its other contractual obligations. If a district is dissolved, its property must be transferred to the counties in the district's jurisdiction, based on the tax revenues derived from each county.

Bonding

This bill grants a district the power to issue bonds for purchasing, acquiring, leasing, constructing, extending, adding to, improving, conducting, controlling, operating or managing a public utility, which is defined to include a local professional baseball park. The district is generally subject to the provisions which govern revenue bonding of municipalities for public utilities. Under the bill, bonds issued by the district must be secured only by the district's interest in any baseball park facilities, including any interest in a lease with the department of administration, by income from these facilities, and by certain specified taxes that the district is authorized to levy. The district may not pledge its full faith and credit on the bonds and the bonds are not a liability of the district.

A district may designate one or more accounts as special debt service reserve funds, if, prior to each issuance of bonds to be secured by the special debt service reserve fund, the secretary of administration makes certain determinations. In order to create a special debt service reserve fund, the secretary must find that the bond proceeds must be used in connection with a baseball park facility that is used primarily to support the activities of a baseball park. The secretary must also find that there is a reasonable likelihood that the bonds will be repaid without the necessity of drawing on funds in the special debt service reserve fund and that the amount of all bonds that would be secured by all special debt service reserve funds of the district does not exceed $160,000,000. This limit does not include refunding bonds or bonds whose proceeds are used to make a deposit into a special debt service reserve fund or to pay issuance costs or capitalized interest costs. The secretary must also find that the bonds, other than refunding bonds, will be issued no later than December 31, 2000.

The bill establishes a formula for calculating the special debt service reserve fund requirement for a special debt service reserve fund. If the special debt service reserve fund requirement for a special debt service reserve fund is not met, the bill expresses the legislature's expectation and aspiration that, if certain conditions are met, the legislature would appropriate to the district the funds necessary to restore the special debt service reserve fund to an amount equal to its special debt service reserve fund requirement. This expression of legislative expectation and aspiration has been referred to as a state moral obligation pledge. In addition to the state moral obligation pledge, under the bill the state pledges that it will not limit or alter the rights vested in a district under the bill before the district has fully performed its contracts and has fully met and discharged its bonds.

In addition to provisions regarding bond issuance and security, the bill contains a number of other provisions relating to bonds issued by a district. The bill also contains provisions authorizing certain state funds and certain regulated financial institutions to invest in bonds issued by the district. The bill provides that all moneys received by a district, including proceeds from the sale of bonds, are trust funds to be held and applied solely for the purposes provided in the bill, but limits the personal liability of members of a district's board of directors with respect to the issuance of bonds.

Under current law, the Wisconsin Housing and Economic Development Authority (WHEDA) may issue bonds and notes for certain economic development projects involving sports and entertainment home stadiums in an amount not to exceed $35,000,000 plus such additional amounts as WHEDA considers necessary or appropriate to fund a deposit into the capital reserve fund. The bill increases this amount to $50,000,000 and also allows WHEDA to add, along with the capital reserve fund deposits, the costs of issuing the bonds or notes and capitalized interest.

Under current law, these economic development projects are included in determining compliance with an overall $200,000,000 cap on WHEDA economic development loans. This bill amends this overall cap to exclude bonds issued for these economic development projects involving sports and entertainment home stadiums.

Taxation authority

The bill permits a district to impose a room tax on hotel and motel rooms within its jurisdiction in an amount not to exceed 1% of total room charges. The room tax may only be used for the district's debt service on its bond obligations. In general, the room tax may no longer be collected after the bonds, to which the proceeds of the tax are dedicated, are retired.

The bill also authorizes a district to impose a sales tax and a use tax at a rate of no more than 0.1%.

The bill exempts the income of a district from the income tax and the franchise tax, and it exempts the interest on a district's bonds from the income tax.

Provision of services

The bill permits DOA to provide any services to a district, including engineering, design and building construction services, upon request of the district, for compensation agreed upon between DOA and the district, if the district has entered into an agreement with DOA for the lease of land or other property granted to the state, especially dedicated by the grant to use for a professional baseball park. Other state agencies may provide assistance to the district, if a lease with DOA has been entered into.

Contracting

The bill provides that a local professional baseball park district may enter into contracts without limitation or restriction and, if the district has entered into an agreement with DOA for the lease of land or other property granted to the state, especially dedicated by the grant to use for a professional baseball park, the district may utilize the services of DOA to let contracts for engineering, architectural or construction work. Whether the district contracts independently or through DOA, the district is not subject to any state requirements for public notice of proposed contracts, competitive bidding, contractual service procurement procedures, preference for procurements from Wisconsin firms, preferences for purchases of American-made or recycled or recovered materials or preferences for purchases from the department of corrections or from handicapped work centers or nondiscrimination in contracting. A district and DOA are, however, directed to attempt to ensure that at least 15% of the total dollar amount of any contracts let by the district in each state fiscal year for the initial construction of baseball park facilities is awarded to minority-owned businesses.

Finances

The bill appropriates $300,000 in state general purpose revenue for DOA to provide a loan to a local professional baseball park district in the 1995-97 state fiscal biennium for initial operating costs of the district, upon such terms and conditions as the secretary of administration specifies. Any such loan must be repaid no later than June 30, 1997.

Under the bill, a local professional baseball park district is permitted to invest its moneys in the local government pooled-investment fund, which is managed by the state investment board.

Highway improvements

The bill authorizes the state to expend $211,103,700 in fiscal year 1995-96 and $220,103,700 in fiscal year 1996-97 for highway improvements, of which not more than $3,000,000 in fiscal year 1995-96 and not more than $12,000,000 in fiscal year 1996-97 may be expended for state highway rehabilitation associated with the construction of a new baseball stadium to be used by the Milwaukee Brewers.

Sales of surplus state land and grants to the state

Currently, any sale of surplus state land having a fair market value of at least $20,000 is subject to approval of the joint committee on finance. Unless otherwise provided, a grant of land or other property made to the state is valid only upon approval of the joint committee on finance. The bill provides that the building commission may sell or transfer surplus state land to a local professional baseball park district and DOA may accept a grant of land or other property to the state for purposes of use for a professional baseball park without approval of the joint committee on finance.

Open meetings and records, audits, ethics

Laws requiring, with certain exceptions, open meetings of governmental bodies and public access to public records apply to a district. The legislative audit bureau is permitted to audit the records of a district. Members of the board of directors of a district are subject to the statutory code of ethics for local public officials.

Other

Current law provides that, if a tenant who is required to construct improvements exceeding $50,000 at the tenant's own expense on land leased to the tenant under a lease with a term of 30 years or more defaults or breaches a condition of the lease, the landlord may commence an action to recover the property after a one-year redemption period free from all liens, claims or demands of the tenant in the same manner as a mortgage foreclosure except without a sale of the property. The bill creates an exception under that statute for leases to which a district is a party.

This bill will be referred to the joint survey committee on tax exemptions for a detailed analysis, which will be printed as an appendix to this bill.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1, s. 1 Section 1. 13.48 (14) (d) 4. of the statutes is amended to read:

AB1,6,12 13.48 (14) (d) 4. If Except as provided in subd. 5., if the commission proposes to sell or transfer a parcel of surplus land having a fair market value of at least $20,000, the commission shall notify the joint committee on finance in writing of its proposed action. If the cochairpersons of the committee do not notify the commission that the committee has scheduled a meeting for the purpose of reviewing the proposed sale or transfer within 14 working days after the date of the commission's notification, the parcel may be sold or transferred by the commission. If, within 14 working days after the date of the commission's notification, the cochairpersons of the committee notify the commission that the committee has scheduled a meeting for the purpose of reviewing the proposed sale or transfer, the parcel may be sold or transferred under this subdivision only upon approval of the committee.

AB1, s. 2 Section 2. 13.48 (14) (d) 5. of the statutes is created to read:

AB1,6,16 13.48 (14) (d) 5. The commission may sell or transfer a parcel of surplus land to a local professional baseball park district created under subch. III of ch. 229 without notification or approval under subd. 4.

AB1, s. 3 Section 3. 16.40 (15m) of the statutes is created to read:

AB1,7,4 16.40 (15m) Loan to local professional baseball park district. From the appropriation under s. 20.505 (1) (fm), provide a loan to any local professional baseball park district created under subch. III of ch. 229, upon request of the district, for initial operating costs of the district. Any loan made under this subsection shall be made upon the terms and conditions that the secretary specifies, except that the secretary shall require any loan made under this subsection to be repaid no later than June 30, 1997.

AB1, s. 4 Section 4. 16.40 (15m) of the statutes, as created by 1995 Wisconsin Act .... (this act), is repealed.