SB442: Bill Text

LRB-4065/3

MS/JTK/RC/PK/JK/PG/rm:ch:ch

1999 - 2000 LEGISLATURE

1999 Senate BILL 442

March 7, 2000 - Introduced by Senator Risser, cosponsored by Representatives Underheim and Miller. Referred to Joint committee on Finance.

SB442,2,9 An Act to renumber 66.04 (1) and 66.066 (5); to amend 13.94 (4) (a) 1., 16.70 (14), 19.42 (13) (a), 25.50 (1) (d), 32.02 (11), 32.05 (intro.), 32.05 (1) (a), 32.07 (2), 40.02 (28), 40.02 (36), 66.04 (2) (a) (intro.), 66.066 (1) (a), 66.067, 66.30 (1) (a), 71.26 (1) (bm), 71.26 (1m) (g), 71.36 (1m), 71.45 (1t) (g), 111.02 (7), 111.70 (1) (j), 230.03 (3), 231.01 (4) (a), 231.01 (4) (b) 1., 231.01 (4) (b) 2., 231.01 (4) (c), 231.01 (7) (a) 1., 231.01 (7) (a) 2., 231.01 (7) (a) 4., 231.01 (7) (c), 231.02 (6) (b), 231.03 (5), 231.03 (7), 231.03 (8), 231.03 (11), 231.03 (13), 231.03 (14), 231.03 (15), 231.03 (16), 231.03 (17), 231.03 (18), 231.03 (19), 231.04, 231.05 (1), 231.06, 231.07 (1) (b), 231.07 (2) (a), 231.08 (5), 231.10 (1), 231.12, 231.13 (1) (intro.), 231.13 (2), 231.16 (1), 231.20 and 231.23; to repeal and recreate 40.02 (28); and to create 24.61 (2) (a) 8., 24.61 (2) (a) 9., 25.17 (3) (b) 11., 25.17 (3) (b) 12., 66.04 (1a), 66.04 (2) (a) 3r., 66.04 (2) (a) 3t., 66.066 (5) (c), 70.11 (40), 71.05 (1) (c) 6., 71.05 (1) (c) 7., 71.26 (1m) (h), 71.45 (1t) (h), 77.54 (9a) (h), 219.09 (1) (e), 219.09 (1) (f), subchapter V of chapter 229 [precedes 229.840], 231.01 (4g), 231.01 (4h), 231.01 (5t), 231.03 (6) (g) and 231.03 (6) (h) of the statutes; relating to: authorizing the creation of a local cultural arts district; granting a property tax exemption for the district's property; granting a sales tax and use tax exemption for tangible personal property and services purchased by the district; giving a local cultural arts district the authority to issue bonds and granting income tax exemptions for interest income on bonds issued by the district; authorizing certain local cultural arts districts to acquire property by condemnation; and authorizing the Wisconsin Health and Educational Facilities Authority to issue bonds to finance certain cultural arts facilities.

Analysis by the Legislative Reference Bureau

Creation and dissolution of a district

This bill authorizes the creation of a local cultural arts district by a sponsoring city, which is defined as a city with a population of more than 150,000 that creates such a district. To create a district, the mayor of the sponsoring city must issue a written proclamation declaring the need for establishing a district, and the sponsoring city's common council must adopt a resolution that approves of the proclamation and deliver a copy of the resolution to the governor. The resolution must also prescribe the scope of the district's eminent domain power, if any. 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 sponsoring city. Under the bill, a district's jurisdiction and powers remain fixed even if the population of the sponsoring city subsequently declines below the minimum described.

In connection with cultural arts facilities, the powers of a district include eminent domain authority; the construction, maintenance, management and acquisition of the facilities; the issuance of revenue bonds to finance the construction of the facilities; the authority to enter upon real property within its eminent domain jurisdiction to make surveys and examinations before locating or constructing cultural arts facilities, subject to certain limitations; the authority to enter into partnerships, joint ventures, common ownership or other arrangements with other persons to further the district's purposes; and the authority to acquire, lease or transfer property within or outside of the district's jurisdiction. A district may also set standards governing the use of, and the conduct within, the facilities, and may set and collect fees for the use of the facilities.

With regard to contracts for construction work and professional service contracts that are awarded by the district, it shall be a goal of the district that at least 5% of the aggregate dollar value of the contracts be awarded to minority-owned businesses and at least 5% of the aggregate dollar value of contracts be awarded to women-owned businesses.

The district is governed by a district board. If the sponsoring city is not a first class city (presently only Milwaukee is a first class city), the board consists of, in an ex-officio capacity, the governor, the mayor of the sponsoring city and the county executive of the county in which the greatest percentage of the territory of the sponsoring city is located or if there is no county executive, the board chairperson, or the designees of these persons. If the sponsoring city is a first class city, the common council shall determine the structure, qualifications and selection procedures for the members of the board.

If the sponsoring city is not a first class city, the board consists of, other than the ex-officio members listed above, three persons appointed by the governor, one of whom shall be selected from a list of three to five names that is submitted by the Board of Regents of the University of Wisconsin System; six persons appointed by the mayor of the sponsoring city, all of whom may need to be appointed according to procedures that may be required by the common council and one of whom must be selected from a list of three to five names that is submitted by the principal school board of the sponsoring city; and one person appointed by the county executive or, if there is no county executive, the board chairperson of the county in which the greatest percentage of the territory of the sponsoring city is located. Of the persons appointed by the mayor, no more than three may be elective city officials.

In addition, the sponsoring city's common council may increase the size of the board to include the mayor, village president or town board chair, or such person's designee, of a city, village or town having territory that is located within 25 miles of the sponsoring city's city hall and that provides substantial support to the district. The common council may reduce the size of the board to exclude that member if the common council subsequently determines that such a city, village or town no longer provides substantial support to the district.

A district may be dissolved, subject to retirement of the district's bonds and fulfillment of its other contractual obligations in one of the following ways: 1) By a law enacted by this state; 2) If the sponsoring city is not a first class city, by the unanimous action of the district board; 3) If the sponsoring city is a first class city, by any means described in the initial resolution under which the first class city created the district.

If a district is dissolved, its property may be transferred to the sponsoring city, any state, any possession of the United States, any political subdivision of a state or of the United States, the District of Columbia or to one of a number of tax-exempt religious, educational, scientific or charitable entities that are described in the Internal Revenue Code, except that in the case of a district created by a first class city, the common council's resolution that created the district must specify the specific entity to which the district's property will be transferred upon dissolution.

Under the bill, a sponsoring city may make grants, gifts or loans of any kind of property, or provide any other form of assistance, to a district; expend public funds to subsidize a district; borrow money to fund grants, loans or subsidies to a district; fix and collect a sum to be paid in lieu of taxes by the district; or audit the financial records of a district.

Bonding

The 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 cultural arts district. Under the bill, the bonds issued by the district may be secured by district property and income placed in a special fund. The bill specifically provides that neither the state nor the sponsoring municipality is liable on bonds issued by the district and that the issuance of bonds by the district does not obligate the state or the sponsoring city to levy taxes for the retirement of the bonds. Under the bill, the state pledges to the holders of bonds issued by the district that the state will not alter the rights vested in the district by law until such bonds are fully retired, unless adequate provision is made by law for protection of the bondholders' rights. Finally, with respect to bonds issued by the district, 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 with respect to the issuance of bonds.

Under current law, the Wisconsin Health and Educational Facilities Authority (WHEFA) may issue bonds to finance certain projects of health institutions, educational institutions and, until May 1, 2000, child care centers, and to refinance outstanding debt of health institutions, educational institutions and, until May 1, 2000, child care centers. Projects that may be financed include, among others, the acquisition of a hospital, the construction or operation of an ambulatory surgery center or home health agency, the construction, remodeling, furnishing or equipping of a health or educational facility or related structure and, until May 1, 2000, the construction, remodeling, furnishing or equipping of a building that is used exclusively to provide child care services and that is not operated for profit. The bill authorizes WHEFA to also issue bonds to finance a project undertaken by a local cultural arts district for a cultural arts facility, or to refinance outstanding debt of a local cultural arts district.

Condemnation

A district's eminent domain power may be used only within the area of the sponsoring city specified in the resolution creating the district. The sponsoring city may expand or contract that area by ordinance or resolution but may not contract the area beyond that specified in the initial resolution. If the sponsoring city is a first class city, the district does not have the power of eminent domain but may request the city's redevelopment authority to exercise its power of eminent domain on behalf of the district. A redevelopment authority's power to condemn property on behalf of a district created by a first class city is not subject to the above limitations.

collective bargaining

The bill specifically exempts the local cultural arts district from coverage under the Municipal Employment Relations Act (MERA). Under MERA, which covers employment relations in municipalities, employes in collective bargaining units for which a representative is recognized or certified may bargain with an employer over wages, hours and conditions of employment to the point of impasse, at which point the parties may be required to submit to interest arbitration. Under MERA, however, employes do not have the right to strike. Instead, the bill provides that a district is covered under the Employment Peace Act. The Employment Peace Act generally covers all employers not covered under the National Labor Relations Act other than the state and its political subdivisions. Under the Employment Peace Act, employes in collective bargaining units for which a representative is recognized or certified may bargain with an employer over wages, hours and conditions of employment. Under the Employment Peace Act, there is no interest arbitration; however, employes are granted the right to strike.

taxation

The bill creates a property tax exemption for the property of a local cultural arts district. The property tax exemption, however, does not apply to the property of a local cultural arts district that is not a part of the physical structure of a cultural arts facility, if that property is used for a retail business or a restaurant, unless the retail business or restaurant is operated by the local cultural arts district or by a nonprofit corporation, organization or association. The exemption also does not apply to parking lots or parking structures that are not used to support the operation of a local cultural arts district.

Under the bill, the income of a local cultural arts district is exempt from the income tax and the franchise tax, and the income and interest from the district's obligations are exempt from the income tax. In addition, the income and interest from bonds that are issued by WHEFA with respect to a local cultural arts district are exempt from the income tax.

Under the bill, goods and services purchased by a local cultural arts district are exempt from the sales tax and the use tax.

Finance

The bill permits the legislative audit bureau to audit the records of a district. Under the bill, the joint legislative audit committee may review a district's performance.

ethics

Members of a district board are subject to the statutory code of ethics for local public officials. Like other local public officials, district board members are not subject to periodic reporting requirements.

applicability of other laws

Numerous laws that currently apply to special purpose districts and local units of government apply to a local cultural arts district, including, among others:

1. The district is subject to laws requiring, with certain exceptions, public notice of and access to meetings of the district board and public access to the district's records.

2. The district is subject to worker's compensation, unemployment insurance, state minimum wage and hour and family and medical leave laws.

3. The district is subject to the law requiring the payment of prevailing wages on local government public works projects.

4. The district is governed by laws regulating municipal administrative procedures and rights.

5. The district is subject to laws restricting employers from testing employes and prospective employes for human immunodeficiency virus (HIV) or an antibody to HIV.

6. The district is subject to the tort and antitrust liability limitation that currently applies to actions brought against local governmental units of $50,000 per occurrence, and persons attempting to sue the district are subject to a requirement to file notice of their claims within 120 days of their occurrence.

7. The district is subject to laws regulating buildings and safety.

8. The property of the district is subject to special assessment levies.

Under the bill, the district may participate in the local government property insurance fund.

The bill provides that the district is not subject to:

1. Laws regulating generally the ways in which funds of local governments may be invested.

2. The state public employe retirement plan and state-administered plans for deferred compensation, health care benefits and disability and survivor benefits.

The bill provides also that the district may:

1. Contract with municipalities and federally recognized Indian tribes and bands in this state for the receipt or furnishing of services or the joint exercise of powers or duties.

2. Participate in the state-operated local government pooled-investment fund.

Under the bill, the assets and liabilities of a district are not assets or liabilities of the sponsoring city.

employment

Under the bill, any ordinance of a sponsoring city that regulates employment relations or practices of all private employers generally applies to employes of the district, unless the sponsoring city's common council excludes the application of such an ordinance to the district's employes.

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:

SB442, s. 1 Section 1. 13.94 (4) (a) 1. of the statutes, as affected by 1999 Wisconsin Act 9, is amended to read:

SB442,7,13 13.94 (4) (a) 1. Every state department, board, examining board, affiliated credentialing board, commission, independent agency, council or office in the executive branch of state government; all bodies created by the legislature in the legislative or judicial branch of state government; any public body corporate and politic created by the legislature including specifically a professional baseball park district, a local cultural arts district and a family care district under s. 46.2895; every Wisconsin works agency under subch. III of ch. 49; every provider of medical assistance under subch. IV of ch. 49; technical college district boards; development zones designated under s. 560.71; every county department under s. 51.42 or 51.437; every nonprofit corporation or cooperative to which moneys are specifically appropriated by state law; and every corporation, institution, association or other organization which receives more than 50% of its annual budget from appropriations made by state law, including subgrantee or subcontractor recipients of such funds.

SB442, s. 2 Section 2. 16.70 (14) of the statutes is amended to read:

SB442,7,16 16.70 (14) "State" does not include a district created under subch. II or, III or V of ch. 229.

SB442, s. 3 Section 3. 19.42 (13) (a) of the statutes is amended to read:

SB442,7,23 19.42 (13) (a) All positions to which individuals are regularly appointed by the governor, except the position of trustee of any private higher educational institution receiving state appropriations and the position of member of the district board of a local professional baseball park district created under subch. III of ch. 229 and the position of member of the district board of a local cultural arts district created under subch. V of ch. 229.

SB442, s. 4 Section 4. 24.61 (2) (a) 8. of the statutes is created to read:

SB442,8,2 24.61 (2) (a) 8. Bonds issued under ch. 231 with respect to a local cultural arts district created under subch. V of ch. 229.