AB892: Bill Text Engrossed

LRB-4828/1

MS/JTK/RC/JK/GM:kmg&cmh:ch&hmh

1999 - 2000 LEGISLATURE

Engrossed 1999 Assembly BILL 892

March 24, 2000 - Printed by direction of Assembly Chief Clerk.

AB892-engrossed,2,14 An Act to renumber 66.066 (5) and 77.707; to renumber and amend 70.11 (36); to amend 13.94 (4) (a) 1., 13.94 (10), 16.70 (14), 18.03 (5s), 19.42 (13) (a), 19.59 (1) (a), 19.59 (1) (g) 1. a., 20.566 (1) (hp), 25.50 (1) (d), 32.02 (1), 66.04 (2) (a) (intro.), 66.066 (1) (a), 66.066 (1) (c), 66.067, 66.30 (1) (a), 71.26 (1) (bm), 71.26 (1m) (g), 71.36 (1m), 71.45 (1t) (g), 77.705 (title), 77.71, 77.76 (3m), 77.76 (4), 103.49 (3) (ar), 109.09 (1), 111.322 (2m) (c), 227.01 (13) (t), 779.14 (1m) (d) 2. b., 779.14 (1m) (d) 3. and 946.15; and to create 20.395 (1) (gv), 20.566 (1) (ge), 20.835 (4) (ge), 20.867 (5), 24.61 (2) (a) 8., 25.17 (3) (b) 11., 66.04 (2) (a) 3q., 66.066 (5) (b), 70.11 (36) (b), 71.05 (1) (c) 5., 71.10 (5e), 77.54 (45), 77.706, 77.707 (2), 77.76 (3p), 85.62, 219.09 (1) (d), subchapter IV of chapter 229 [precedes 229.820] and 779.14 (4) of the statutes; relating to: creating a local professional football stadium district; giving a local professional football stadium district the authority to issue bonds and granting income tax exemptions for interest income on bonds issued by the district; creating goals for the participation of minority and women's businesses in contracts related to the construction or renovation of football stadium facilities; creating an individual income tax checkoff for debt service payments for bonds related to a local professional football stadium district; making a state moral obligation pledge with respect to bonds issued by a local professional football stadium district; giving a local professional football stadium district the authority to impose a sales tax and a use tax; creating an income and franchise tax exemption for a local professional football stadium district; the property tax exemption for a professional football stadium; state aid for transportation facilities associated with a professional football team's home stadium; requiring a professional football team or a related party that enters into a contract with a local professional football stadium district that requires the team or related party to acquire and construct football stadium facilities to comply with the prevailing wage law; and making appropriations.

Analysis by the Legislative Reference Bureau

The text of Engrossed Assembly Bill 829 consists of the following documents adopted by the Assembly on March 24, 2000: The bill as affected by Assembly Substitute Amendment 4, as affected by Assembly Amendment 4, Assembly Amendment 6, Assembly Amendment 7 (as affected by Assembly Amendment 1 thereto), Assembly Amendment 8 (as affected by Assembly Amendments 1 and 2 thereto), Assembly Amendment 11, Assembly Amendment 16, Assembly Amendment 18, Assembly Amendment 20, Assembly Amendment 21, Assembly Amendment 22 and Assembly Amendment 23. In engrossing, the changes made by Assembly Amendment 4 were relocated to page 52 to reflect the new location of the initial applicability section.

Creation and dissolution of a district

This bill creates a professional football stadium district, which is a special purpose district, in each county with a population of more than 150,000 that includes the principal site of an existing or to be constructed league-approved home stadium for a professional football team that is a member of a league of teams that have home stadiums in at least ten states and a collective average attendance for all league members of at least 40,000 per game over the five years immediately preceding the year in which a district 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 and the political subdivisions within its jurisdiction. Under the bill, a district's jurisdiction remains fixed even if population or attendance figures subsequently decline below the minimums described. A district does not have jurisdiction over any relocated stadium, whether or not the stadium is approved by the league.

In connection with football stadium facilities, the powers of a district include the construction, maintenance, management and acquisition of the football stadium and facilities; the issuance of bonds and imposition of a sales tax and a use tax to finance the stadium 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. Before the taxes imposed by a district may take effect, however, the district's action must be approved in a referendum. A district may also set standards governing the use of, and the conduct within, the stadium and facilities, and may set and collect fees for the use of the facilities or for the right to purchase admission to events at the stadium. Unless it is not feasible to do so, the bill requires a district to enter into a contract with a professional football team, or a subsidiary or affiliate of the team, that requires the team or its subsidiary or affiliate to acquire and construct football stadium facilities that are part of any facilities that the district leases to the team or its subsidiary, whether or not the football stadium facilities are financed by a district.

The district is governed by a board that consists of two persons appointed by the governor, two persons appointed by the chief elected official of the most populous city within the district's jurisdiction, two persons appointed by the chief elected official of the county in which the football stadium is located and, if such a situation exists, one person appointed by the chief elected official of each city, village or town (municipality) within the district's jurisdiction, other than the most populous city within the district's jurisdiction, that has a boundary at the time of the district's creation that is contiguous to a boundary of the site of the football stadium.

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 municipalities and county in the district's jurisdiction in proportions determined by the secretary of administration, based on the contributions of each municipality and county to the development or improvement of the football stadium facilities. If a district submits a question relating to imposition of a sales tax and a use tax (see below) and the question is not approved by the electors at a referendum, the district is dissolved.

Under the bill, a municipality or county within the district's jurisdiction may make grants or loans, or lease or transfer property, to a district; expend public funds to subsidize a district; or borrow money to fund grants, loans or subsidies to a district. With the consent of a district, such a municipality or county may also establish and collect fees or other charges applicable only to a football stadium for the right to purchase admission to events at the stadium.

taxation

Under the bill, a local professional football stadium district may adopt a resolution to impose a sales tax and a use tax at a rate of no more than 0.5% on the sale or use of tangible personal property or services in the district subject to approval by the electors of a district at a referendum. The referendum must be held at the first spring primary or September primary that follows adoption of the resolution by at least 45 days.

The county board of the county in which the district is located may also submit a second question that asks whether available revenues from the sales and use taxes will be permitted to be used for property and sales tax relief in the county. Unless that question is approved by the electors, the district tax revenue may be used only for purposes related to football stadium facilities. Under the bill, generally, the sales tax and use tax imposed by the district may not be collected after the district has retired its bonds related to the football stadium facilities and after reserve funds are adequately funded.

Under current law, the property of a professional sports home stadium is exempt from local general property taxes. The exemption for this type of property applies to parking lots, garages, restaurants and other property that is functionally related to the professional sports home stadium and includes such property as it is being built.

Under the bill, the property of a professional football stadium, and related facilities and structures, including those facilities and structures while they are being built, are exempt from local general property taxes. The exemption applies, however, only to facilities and structures that share common structural supports with, or are physically attached to, the professional football stadium and the land on which the stadium and the facilities and structures are located.

The bill creates a sales tax and a use tax exemption for a onetime license or other right to purchase admission to professional football games at a professional football stadium, if the license or right is purchased before January 1, 2004.

This bill creates an individual income tax checkoff for amounts to be deposited into the special fund to be used for debt service payments. Under the bill, an individual who has a tax liability or is entitled to a tax refund may designate any amount of additional payment, or any amount of a refund due that individual as a football donation, to be used for debt service on bonds issued by a district for football stadium purposes. The income tax checkoff first applies to taxable years beginning on January 1, 2001.

Special fund

The bill requires that the district board maintain a special fund into which are deposited all revenues received from the department of revenue that are derived from the district's sales and use taxes and from donations from individuals' income tax returns. Moneys in this fund must first be used to pay current debt service on all bonds issued by the district for purposes related to football stadium facilities and the excess revenues must be used for the following purposes in the following order:

1. Certain payments to the county located in the district's jurisdiction, but only if the second referendum question is submitted and approved by the electors.

2. District board administration expenses.

3. Operating and maintenance costs of the football stadium facilities.

4. If the second referendum question is submitted and approved by the electors, additional payments to the county located in the district's jurisdiction for the purpose of reducing the county's property tax levy or to retire the bonds issued by the district for purposes related to football stadium facilities and to fund reserves for district administrative expenses and operating and maintenance costs of the football stadium facilities. The county will decide what amounts of the excess revenues will be devoted to reducing the county property tax levy and the retirement of the bonds.

5. If the second referendum question is not submitted and approved by the electors, additional payments to retire the bonds issued by the district for purposes related to football stadium facilities and to fund reserves for district administrative expenses and operating and maintenance costs of the football stadium facilities.

bonding

This bill grants a district the power to issue revenue bonds for purchasing, acquiring, leasing, constructing, extending, adding to, improving, conducting, controlling, operating or managing a local professional football stadium district. Under the bill, the bonds issued by the district may be secured by the district's interest in any football stadium facilities, by income from these facilities, by proceeds of bonds issued by the district and by other amounts placed in a special fund and investment earnings on such amounts, including any taxes that the district is authorized to impose.

The bill provides that the principal amount of bonds, other than refunding bonds, that are issued by a district may not exceed $160,000,000. (This limitation, however, does not include the principal amount of any bonds that are used to pay issuance costs of the bonds, any original issue discount or the costs of credit enhancement or to make a deposit into a special debt service reserve fund.) Also, the bill requires that all bonds, other than refunding bonds, that are issued by a district must be issued no later than December 31, 2004.

The bill authorizes a district to establish a special debt service reserve fund, (which is a different fund from the special fund) subject to certain findings of the secretary of administration. The special debt service reserve fund is significant, because if there are insufficient moneys in the special debt service reserve fund to meet the special debt service reserve fund requirement established in the bill, the legislature expresses its expectation and aspiration that, if certain conditions are met, the legislature would appropriate state moneys to the district in the amount necessary to restore the moneys in the 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". The special debt service requirement is determined in the bond resolution authorizing the issuance of bonds.

In order to create a special debt service reserve fund backed up by the state moral obligation pledge, however, the secretary of administration must find that the bond proceeds will be used for purposes related to the football stadium facilities; 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; that the principal amount of all bonds, other than refunding bonds, that would be secured by all special debt service reserve funds of the district will not exceed the amount of bonds that the district is authorized to issue; and that the bonds, other than refunding bonds, will be issued no later than December 31, 2004.

In addition to creating a state moral obligation pledge to 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, the bill provides that 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.

Finally, the bill contains provisions authorizing certain state and local government funds and certain regulated financial institutions to invest in bonds issued by the district; 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; and limits the personal liability of members of a district's board of directors with respect to the issuance of bonds.

minority and women's business contracting goals

Under the bill, a district is required to ensure that, for construction or renovation work, and professional services, that relate to football stadium facilities that are financed by debt as provided under the bill, a person who is awarded a contract for such construction or renovation work by the district or by a contractor with whom the district has contracted must agree that his or her goal must be to ensure that at least 15% of the employes hired because of the contract will be minority group members and that at least 5% of the employes hired because of the contract will be women. It must also be a goal of the district that at least 15% of the aggregate dollar value of such contracts must be awarded to minority businesses and at least 5% of the aggregate dollar value of such contracts must be awarded to women's businesses.

The district must also ensure that if a person who is awarded a contract by the district or by a contractor for construction or renovation work, or professional services, cannot meet its dollar value goals for contracts or if the person who is awarded a contract for such construction or renovation work is unable to meet the minority and women hiring goals, the person must make good faith efforts to contract with the technical college district in which the contracts are to be performed to develop training programs designed to increase the pool of minority group members and women who are qualified to perform such contracts. The district is also required to hire an independent person to monitor, and a project coordinator to satisfy the district's and the contractor's compliance with, the minority contracting goals. The independent person is required to assess whether the district or contractor made a good faith effort to meet the goals.

The minority and women contracting goals under the bill also apply to the following:

1. Any insurance-funded repair work on football stadium facilities.

2. Any post-construction contract related to such facilities, for professional services and for development services, except that this provision does not apply to a contract for general maintenance that is provided by a political subdivision.

limitations on district, state actions

Under the bill, the district may not levy any taxes until the professional football team, the county board and the governing body of the municipality in which the football stadium facilities are located agree on how to fund maintenance of the facilities and agree on how to distribute the proceeds from the sale of naming rights related to the facilities. Also under the bill, the name of a football stadium may not be changed without the written consent of the municipality and the team.

The district is also prohibited from issuing bonds and the department of transportation (DOT) may not make any payments to a district (see below) unless a number of conditions are met, including the following:

1. The district and the team enter into a 30-year lease.

2. The district and the team agree that, if the team is sold or if its assets are liquidated before the bonds are paid off, the terms of the sale or transfer of the team must require that all outstanding bonds are immediately retired.

prevailing wage and hours of labor

Current law requires certain laborers, workers, mechanics and truck drivers employed on a state or local project of public works to be paid at the rate paid for a majority of the hours worked in the person's trade or occupation in the county in which the project is located and to be paid at a rate that is one and one-half times the person's hourly basic rate of pay (overtime pay) for all hours worked in excess of ten hours per day and 40 hours per week and for all hours worked on Saturdays, Sundays and certain holidays (prevailing wage and hours of labor law).

This bill prohibits a district from entering into a contract with a professional football team or a subsidiary or affiliate of the team (related party) for the acquisition and construction of football stadium facilities that are part of any facilities that are leased by the district to the team or to the related party unless the team or related party agrees not to permit any employe working for the football stadium facilities, who would be covered under the prevailing wage and hours of labor law if the football stadium facilities were a project of public works, to be paid less than the prevailing wage rate or to be required or permitted to work more than the prevailing hours of labor, unless the employe is paid overtime pay for all hours worked in excess of the prevailing hours of labor. The bill also requires the professional football team or related party to agree to require any contractor, subcontractor or agent thereof performing work on the football stadium facilities to keep and permit inspection of records, and otherwise to comply with the prevailing wage and hours of labor law, in the same manner as a contractor, subcontractor or agent thereof performing work on a project of public works is required to keep and permit inspection of records under, and otherwise comply with, the prevailing wage and hours of labor law. In addition, the bill requires the professional football team or related party to agree to otherwise comply with the prevailing wage and hours of labor law in the same manner as a local governmental unit contracting for the construction of a project of public works is required to comply with the prevailing wage and hours of labor law.

Provision of financial services