SB159: Bill Text

Analysis by the Legislative Reference Bureau

Under current law, the department of commerce administers a program to reimburse owners of certain petroleum product storage tanks for a portion of the costs of cleaning up discharges from those tanks. This program is commonly known as PECFA.

This bill authorizes the issuance of revenue obligations, to be paid from revenues deposited in the petroleum inspection fund, to fund the payment of claims under the PECFA program. Revenue obligations issued under this bill may not exceed $450,000,000 in principal amount. In addition to this limit on principal amount, the bill authorizes the issuance of revenue obligations to fund or refund these outstanding revenue obligations, to pay issuance or administrative expenses, to make deposits to reserve funds or to pay accrued or capitalized interest. The building commission may pledge any portion of revenues received from the proceeds of the obligations or the petroleum inspection fund to secure revenue obligations issued under this bill. The building commission may issue the revenue obligations when it reasonably appears to the building commission that the obligations can be fully paid on a timely basis from the petroleum inspection fund. The bill provides a so-called "moral obligation pledge" which applies if the legislature reduces the rate of the petroleum inspection fee. If the rate is reduced and there are insufficient funds in the petroleum inspection fund to pay the principal and interest on the revenue obligations, the legislature expresses its expectation and aspiration that it would make an appropriation from the general fund sufficient to pay the principal and interest on the obligations.

Under current law, the state may issue "revenue obligations" for certain specified purposes. In general, a revenue obligation is an obligation that is: 1) incurred to purchase, acquire, lease, construct, improve, operate or manage a revenue-producing enterprise; and 2) repayable solely from, and secured solely by, the property or income from the revenue-producing enterprise.

This bill broadens the definition of revenue obligation to allow revenue bonding in situations which would not meet the current law definition of revenue obligation. Under the bill, revenue obligations consist of two different types: enterprise obligations and special fund obligations. The first type of revenue obligation, called an enterprise obligation, includes all obligations authorized under current law; i.e., obligations that are incurred to purchase, acquire, lease, construct, improve, operate or manage a revenue-producing enterprise and are repayable solely from, and secured solely by, the property or income from that revenue-producing enterprise. The definition of enterprise obligation under the bill is broader than the current law definition of revenue obligation in that it eliminates the requirement that the bond be repayable solely from, and be solely secured by, property or income from the revenue-producing enterprise.

The second type of revenue obligation, a special fund obligation, is created by the bill. Special fund obligations are an undertaking by the state to repay a certain amount of borrowed money that is payable from a special fund consisting of fees, penalties or excise taxes. The bill uses this second type of revenue obligation to authorize the revenue obligation bonding for the PECFA program.

For further information see the state 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:

SB159, s. 1 Section 1. 13.485 (2) of the statutes is amended to read:

SB159,3,8 13.485 (2) The building commission may, under s. 18.56 18.561 (5) and (9) (j) or 18.562 (3) and (5) (e), deposit in a separate and distinct fund, outside the state treasury, in an account maintained by a trustee, fees and charges derived from the facilities or from agreements entered into under sub. (4). The fees and charges deposited are the trustee's moneys in accordance with the agreement between this state and the trustee or in accordance with the resolution pledging the fees and charges to the repayment of revenue obligations issued under this section.

SB159, s. 2 Section 2. 18.51 of the statutes is amended to read:

SB159,3,14 18.51 Provisions applicable. The following sections apply to this subchapter, except that all references to "public debt" or "debt" are deemed shall be read to refer to a "revenue obligation" and all references to "evidences of indebtedness" shall be read to refer to "evidences of revenue obligations": ss. 18.02, 18.03, 18.06 (8), 18.07, 18.10 (1), (2), (4) to (9) and (11) and 18.17.

SB159, s. 3 Section 3. 18.52 (2m) (intro.) of the statutes is created to read:

SB159,3,17 18.52 (2m) (intro.) "Enterprise obligation" means every undertaking by the state to repay a certain amount of borrowed money that is all of the following:

SB159, s. 4 Section 4. 18.52 (5) (intro.) of the statutes is renumbered 18.52 (5) and amended to read:

SB159,4,6 18.52 (5) "Revenue obligation" means every undertaking by the state to repay a certain amount of borrowed money which is: an enterprise obligation or a special fund obligation. A revenue obligation may be both an enterprise obligation and a special fund obligation.

SB159, s. 5 Section 5. 18.52 (5) (a) of the statutes is renumbered 18.52 (2m) (a) and amended to read:

SB159,4,11 18.52 (2m) (a) Created for the purpose of purchasing, acquiring, leasing, constructing, extending, expanding, adding to, improving, conducting, controlling, operating or managing a revenue-producing enterprise or program;.

SB159, s. 6 Section 6. 18.52 (5) (b) of the statutes is renumbered 18.52 (2m) (b) and amended to read:

SB159,4,15 18.52 (2m) (b) Payable solely from and secured solely by the property or income or both of the enterprise or program; and.

SB159, s. 7 Section 7. 18.52 (5) (c) of the statutes is renumbered 18.52 (2m) (c).

SB159, s. 8 Section 8. 18.52 (7) of the statutes is created to read:

SB159,4,19 18.52 (7) "Special fund obligation" means every undertaking by the state to repay a certain amount of borrowed money that is all of the following:

SB159,4,20 (a) Payable from a special fund consisting of fees, penalties or excise taxes.

SB159,4,21 (b) Not public debt under s. 18.01 (4).

SB159, s. 9 Section 9. 18.52 (8) of the statutes is created to read:

SB159,4,25 18.52 (8) "Special fund program" means a state program or purpose with respect to which the legislature has determined that financing with special fund obligations is appropriate and will serve a public purpose.

SB159, s. 10 Section 10. 18.53 (3) of the statutes is renumbered 18.53 (3) (intro.) and amended to read:

SB159,5,10 18.53 (3) (intro.) The commission shall authorize money to be borrowed and evidences of revenue obligation to be issued therefor up to the amounts specified by the legislature to purchase, acquire, lease, construct, extend, expand, add to, improve, conduct, control, operate or manage such revenue-producing enterprises or programs as are specified by the legislature as the funds are required. The requirements for funds shall be established by the state department or agency head carrying out program responsibilities for which the revenue obligations have been authorized by the legislature., but shall not exceed the following:

SB159, s. 11 Section 11. 18.53 (3) (a) and (b) of the statutes are created to read:

SB159,5,15 18.53 (3) (a) In the case of enterprise obligations, the amounts specified by the legislature to purchase, acquire, lease, construct, extend, expand, add to, improve, conduct, control, operate or manage such revenue-producing enterprises or programs as are specified by the legislature.

SB159,5,17 (b) In the case of special fund obligations, the amount specified by the legislature for such expenditures to be paid from special fund obligations.

SB159, s. 12 Section 12. 18.56 (1) of the statutes is renumbered 18.56 and amended to read:

SB159,6,5 18.56 Revenue bonds obligations. The commission may authorize, for any of the purposes described in s. 18.53 (3), the issuance of revenue-obligation bonds revenue obligations. The bonds revenue obligations shall mature at any time not exceeding 50 years from the date thereof as the commission shall determine. The bonds revenue obligations shall be payable only out of the redemption fund provided under sub. s. 18.561 (5) or 18.562 (3) and each bond revenue obligation shall contain on its face a statement to that effect. Any such bonds A revenue obligation may contain a provision authorizing redemption, in whole or in part, at stipulated prices, at the option of the commission and shall provide the method of redeeming the bonds. The state and a contracting party may provide in any contract for purchasing or acquiring a revenue-producing enterprise or program, that payment shall be made in such bonds revenue obligations.

SB159, s. 13 Section 13. 18.56 (2) to (6) of the statutes are renumbered 18.561 (2) to (6) and amended to read:

SB159,7,15 18.561 (2) Security interests of owners of enterprise obligations. There shall be is a mortgage lien upon or security interest in the income and property of each revenue-producing enterprise or program to for the benefit of the holders owners of the related bonds and to the holders of the coupons of the bonds. The note or other instrument evidencing the security interest of a bondholder in a loan made or purchased with revenue obligation bonds shall constitute a statutory lien on the revenue enterprise obligations. No physical delivery, recordation or other action is required to perfect the security interest. The income and property of the revenue-producing enterprise or program shall remain subject to the lien until provision for payment in full of the principal and interest of the bonds enterprise obligations has been made, as provided in the authorizing resolution. Any holder owner of such bonds or attached coupons enterprise obligations may either at law or in equity protect and enforce the lien and compel performance of all duties required by this section. If there is any default in the payment of the principal or interest of any of such bonds enterprise obligations, any court having jurisdiction of the action may appoint a receiver to administer the revenue-producing enterprise or program on behalf of the state and the bondholders owners of the enterprise obligations, with power to charge and collect rates sufficient to provide for the payment of the operating expenses and also to pay any bonds or enterprise obligations outstanding against the revenue-producing enterprise or program, and to apply the income and revenues thereof in conformity with this subchapter and the authorizing resolution, or the court may declare the whole amount of the bonds enterprise obligations due and payable, if such relief is requested, and may order and direct the sale of the revenue-producing enterprise or program. Under any sale so ordered, the purchaser shall be vested with an indeterminate permit to maintain and operate the revenue-producing enterprise or program. The legislature may provide for additions, extensions and improvements to a revenue-producing enterprise or program to be financed by additional issues of bonds enterprise obligations as provided by this section. Such additional issues of bonds enterprise obligations shall be subordinate to all prior related issues of bonds enterprise obligations which may have been made under this section, unless the legislature, in the statute authorizing the initial issue of bonds enterprise obligations, permits the issue of additional bonds enterprise obligations on a parity therewith.

SB159,8,4 (3) Dedication of revenues. As accurately as possible in advance, the commission and the state department or agency carrying out program responsibilities for which bonds enterprise obligations are to be issued shall determine, and the commission shall fix in the authorizing resolution for such bonds enterprise obligations: the proportion of the revenues of the revenue-producing enterprise or program which shall be necessary for the reasonable and proper operation and maintenance thereof; the proportion of the revenues which shall be set aside as a proper and adequate replacement and reserve fund; and the proportion of the revenues which shall be set aside and applied to the payment of the principal and interest of the bonds enterprise obligations, and shall provide that the revenues be set aside in separate funds. At any time after one year's operation, the state department or agency and the commission may recompute the proportion of the revenues which shall be assignable under this subsection based upon the experience of operation or upon the basis of further financing.

SB159,8,16 (4) Replacement and reserve fund. The proportion set aside to the replacement and reserve fund shall be available and shall be used, whenever necessary, to restore any deficiency in the redemption fund for the payment of the principal and interest due on bonds enterprise obligations and for the creation and maintenance of any reserves established by the authorizing resolution to secure such payments. At any time when the redemption fund is sufficient for said purposes, moneys in the replacement and reserve fund may, subject to available appropriations, be expended either in the revenue-producing enterprise or program or in new acquisitions, constructions, extensions or, additions, expansions or improvements. Any accumulations of the replacement and reserve fund may be invested as provided in this subchapter, and if invested, the income from the investment shall be carried in the replacement and reserve fund.

SB159,9,4 (5) Redemption fund. The proportion which shall be set aside for the payment of the principal and interest of such bonds on the enterprise obligations shall from month to month as they accrue and are received, be set apart and paid into a separate fund in the treasury or in an account maintained by a trustee under sub. (9) (j) to be identified as "the ... redemption fund". Each redemption fund shall be expended, and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on the revenue enterprise obligations giving rise to it and premium, if any, due upon refunding redemption of any such obligations. Moneys in the redemption funds may be commingled only for the purpose of investment with other public funds, but they shall be invested only in investment instruments permitted in s. 25.17 (3) (dr). All such investments shall be the exclusive property of the fund and all earnings on or income from such investments shall be credited to the fund.

SB159,9,7 (6) Redemption fund surplus. If any surplus is accumulated in any of the redemption funds, subject to any contract rights vested in holders owners of revenue enterprise obligations secured thereby, it shall be paid over to the treasury.

SB159, s. 14 Section 14. 18.56 (7) and (8) of the statutes are renumbered 18.561 (7) and (8).

SB159, s. 15 Section 15. 18.56 (9) (intro.) of the statutes is renumbered 18.561 (9) (intro.) and amended to read:

SB159,9,19 18.561 (9) Authorizing resolution. (intro.) The commission may provide in the authorizing resolution for bonds enterprise obligations or by subsequent action all things necessary to carry into effect this section. Any authorizing resolution shall constitute a contract with the holder owners of any bonds enterprise obligations issued pursuant to such the resolution. Any authorizing resolution may contain such provisions or covenants, without limiting the generality of the power to adopt the resolution, as is are deemed necessary or desirable for the security of bondholders the owners of enterprise obligations or the marketability of the bonds enterprise obligations, including but not limited to provisions as to:

SB159, s. 16 Section 16. 18.56 (9) (a) to (j) of the statutes are renumbered 18.561 (9) (a) to (j), and 18.561 (9) (i) and (j), as renumbered, are amended to read:

SB159,9,22 18.561 (9) (i) Issuance of additional bonds enterprise obligations.

SB159,9,25 (j) Deposit of the proceeds of the sale of the bonds enterprise obligations or revenues of the revenue-producing enterprise or program in trust, including the appointment of depositories or trustees.

SB159, s. 17 Section 17. 18.56 (10) of the statutes is renumbered 18.561 (10) and amended to read:

SB159,11,3 18.561 (10) Sinking fund. The authorizing resolution may set apart bonds enterprise obligations the par value of which are equal to the principal amount of any secured obligation or charge subject to which a revenue-producing enterprise or program is to be purchased or acquired, and shall set aside in a sinking fund from the income of the revenue-producing enterprise or program, a sum sufficient to comply with the requirements of the instrument creating the security , or if interest. If the instrument does not make any provision therefor for a sinking fund, the resolution shall fix and determine the amount which that shall be set aside into such the sinking fund from month to month for interest on the secured obligation or charge, and a fixed amount or proportion not exceeding a stated sum, which shall be not less than one percent of the principal, to be set aside into the fund to pay the principal of the secured obligation or charge. Any balance in the fund after satisfying the secured obligations or charge, shall be transferred to the redemption fund. Bonds Enterprise obligations set aside for the secured obligation or charge may, from time to time, be issued to an amount sufficient with the amount then in the sinking fund, to pay and retire the secured obligation or charge or any portion thereof. The bonds enterprise obligation may be issued in exchange for or satisfaction of the secured obligation or charge, or may be sold in the manner provided in this subchapter, and the proceeds applied in payment of the same at maturity or before maturity by agreement with the holder owner of the secured obligation or charge. The commission and the owners of any revenue-producing enterprise or program acquired or purchased may, upon such terms and conditions as are satisfactory, contract that bonds enterprise obligations to provide for the discharge of the secured obligation or charge, or for the whole purchase price shall be deposited with a trustee or depository and released from the deposit from time to time on such terms and conditions as are necessary to secure the payment of the secured obligation or charge.

SB159, s. 18 Section 18. 18.561 (title) of the statutes is created to read:

SB159,11,5 18.561 (title) Enterprise obligations.

SB159, s. 19 Section 19. 18.561 (1) of the statutes is created to read:

SB159,11,9 18.561 (1) Payment with revenue obligations. The state and a contracting party may provide, in any contract for purchasing or acquiring a revenue-producing enterprise or program, that payment shall be made in revenue obligations.

SB159, s. 20 Section 20. 18.561 (7) (title) of the statutes is created to read:

SB159,11,11 18.561 (7) (title) Payment for services.

SB159, s. 21 Section 21. 18.561 (8) (title) of the statutes is created to read:

SB159,11,13 18.561 (8) (title) Rates for services.

SB159, s. 22 Section 22. 18.561 (9) (k) of the statutes is created to read:

SB159,11,15 18.561 (9) (k) Defeasance of the obligations.

SB159, s. 23 Section 23. 18.562 of the statutes is created to read:

SB159,12,2 18.562 Special fund obligations. (1) Security interest in special fund. There is a security interest, for the benefit of the owners of the special fund obligations, in the amounts that arise after the creation of the special fund program in the special fund related to the special fund obligations. For this purpose, amounts in the special fund shall be accounted for on a first-in, first-out basis. No physical delivery, recordation or other action is required to perfect the security interest. The special fund shall remain subject to the security interest until provision for payment in full of the principal and interest of the special fund obligations has been made, as provided in the authorizing resolution. An owner of special fund obligations may either at law or in equity protect and enforce the security interest and compel performance of all duties required by this section.

SB159,12,8 (2) Use of special fund moneys. The commission and the state agency carrying out the special fund program responsibilities shall jointly determine, and the commission shall fix in the authorizing resolution for the obligations, the conditions under which money in the special fund shall be set aside and applied to the payment of the principal and interest of the obligations, deposited in funds established under the authorizing resolution or made available for other purposes.

SB159,12,20 (3) Redemption fund. The special fund revenues that are to be set aside for the payment of the principal and interest of the special fund obligations shall be paid into a separate fund in the treasury or in an account maintained by a trustee under sub. (5) (e) to be identified as "the ... redemption fund". Each redemption fund shall be expended, and all moneys from time to time on hand therein are irrevocably appropriated, in sums sufficient, only for the payment of principal and interest on the special fund obligations giving rise to it and premium, if any, due upon redemption of any such obligations. Moneys in the redemption funds may be commingled only for the purpose of investment with other public funds, but they shall be invested only in investment instruments permitted in s. 25.17 (3) (dr). All such investments shall be the exclusive property of the fund and all earnings on or income from such investments shall be credited to the fund.

SB159,12,23 (4) Surplus. If any surplus is accumulated in any of the redemption funds, subject to contract rights vested in the owners of special fund obligations secured thereby, it shall be paid over to the treasury.

SB159,13,6 (5) Authorizing resolution. The commission may provide in the authorizing resolution for special fund obligations or by subsequent action all things necessary to carry into effect this section. Any authorizing resolution shall constitute a contract with the owners of any special fund obligations issued pursuant to the resolution. An authorizing resolution may contain such provisions or covenants, without limiting the generality of the power to adopt the resolution, as are deemed necessary or desirable for the security of owners of the obligations or the marketability of the obligations, including provisions as to:

SB159,13,7 (a) Employment of consultants.

SB159,13,8 (b) Records and accounts.

SB159,13,9 (c) Establishment of reserve or other funds.

SB159,13,10 (d) Issuance of additional obligations.

SB159,13,12 (e) Deposit of the proceeds of the sale of the obligations or revenues of the special fund in trust, including the appointment of depositories or trustees.

SB159,13,13 (f) Defeasance of the obligations.

SB159, s. 24 Section 24. 18.57 (title) of the statutes is repealed and recreated to read:

SB159,13,15 18.57 (title) Funds established for revenue obligations.

SB159, s. 25 Section 25. 18.57 (1) of the statutes is amended to read:

SB159,14,3 18.57 (1) A separate and distinct fund shall be established in the state treasury or in an account maintained by a trustee under s. 18.56 18.561 (9) (j) with respect to each revenue-producing enterprise or program the income from which is to be applied to the payment of any revenue enterprise obligation. A separate and distinct fund shall be established in the state treasury or in an account maintained by a trustee under s. 18.562 (5) (e) with respect to any special fund that is created by the imposition of fees, penalties or excise taxes and is applied to the payment of special fund obligations. All moneys resulting from the issuance of evidences of revenue obligation shall be credited to the appropriate fund or applied for refunding or note renewal purposes, except that moneys which represent premium or accrued interest received on the issuance of evidences shall be credited to the appropriate redemption fund.

SB159, s. 26 Section 26. 18.57 (4) of the statutes is renumbered 18.57 (4) (intro.) and amended to read:

SB159,14,8 18.57 (4) (intro.) If, after all outstanding related revenue obligations have been paid or payment provided for, moneys remain in any such a fund, they created under sub. (1), all of the following shall occur:

SB159,14,11 (a) If the fund created under sub. (1) is in an account maintained by a trustee under s. 18.561 (9) (j) or 18.562 (5) (e), the moneys shall be paid over to the treasury and the.

SB159,14,12 (b) The fund created under sub. (1) shall be closed.

SB159, s. 27 Section 27. 18.58 (1) of the statutes is amended to read:

SB159,15,2 18.58 (1) Management of funds and records. All funds established under this subchapter which are deposited in the state treasury shall be managed as provided by law for other state funds, subject to any contract rights vested in holders owners of evidences of revenue obligation secured by such fund. The department of administration shall maintain full and correct records of each fund. The legislative audit bureau shall audit each fund as of January 1 of each year reconciling all transactions and showing the fair market value of all property on hand. All records and audits shall be public documents. All funds established under this subchapter which are deposited with a trustee under s. 18.56 18.561 (9) (j) or 18.562 (5) (e) shall be managed in accordance with resolutions authorizing the issuance of revenue obligations, agreements between the commission and the trustee and any contract rights vested in holders of evidence owners of revenue obligations secured by such fund.

SB159, s. 28 Section 28. 18.60 (1) of the statutes is amended to read:

SB159,15,20 18.60 (1) The commission may authorize, for any one or more of the purposes described in s. 18.53 (1), the issuance of revenue-obligation refunding bonds. Refunding bonds may be issued, subject to any contract rights vested in holders owners of bonds or notes being refinanced, to refinance more than one issue of bonds or notes notwithstanding that the bonds or notes may have been issued at different times for different purposes and may be secured by the property or income of more than one enterprise or program or may be public debt or building-corporation indebtedness. The principal amount of refunding bonds shall not exceed the sum of: the principal amount of the bonds or notes being refinanced; applicable redemption premiums; unpaid interest on the bonds or notes to the date of delivery or exchange of the refunding bonds; in the event the proceeds are to be deposited in trust as provided in sub. (3), interest to accrue on the bonds or notes from the date of delivery to the date of maturity or to the redemption date selected by the commission, whichever is earlier; and the expenses incurred in the issuance of the refunding bonds and the payment of the bonds or notes. A determination by the commission that a refinancing is advantageous or that any of the amounts provided in the preceding sentence should be included in the refinancing shall be conclusive.

SB159, s. 29 Section 29. 18.60 (2) of the statutes is amended to read:

SB159,16,12 18.60 (2) If the commission determines to exchange refunding bonds, they may be exchanged privately for and in payment and discharge of any of the outstanding bonds or notes being refinanced. Refunding bonds may be exchanged for a like or greater principal amount of the bonds or notes being exchanged therefor except that the principal amount of the refunding bonds may exceed the principal amount of the bonds or notes being exchanged therefor only to the extent determined by the commission to be necessary or advisable to pay redemption premiums and unpaid interest to the date of exchange not otherwise provided for. The holders owners of the bonds or notes being refunded who elect to exchange need not pay accrued interest on the refunding bonds if and to the extent that interest is accrued and unpaid on the bonds or notes being refunded and to be surrendered. If any of the bonds or notes to be refinanced are to be called for redemption, the commission shall determine which redemption dates shall be used, if more than one date is applicable and shall, prior to the issuance of the refunding bonds, provide for notice of redemption to be given in the manner and at the times required by the proceedings authorizing the outstanding bonds or notes.

SB159, s. 30 Section 30. 18.60 (5) of the statutes is renumbered 18.60 (5) (intro.) and amended to read:

SB159,16,18 18.60 (5) (intro.) All of the following provisions of s. 18.56 that are not inconsistent with the express provisions of this section shall apply to refunding bonds, except that the maximum permissible term shall be 50 years from the date of original issue of the oldest note or bond issue being refunded.:

SB159, s. 31 Section 31. 18.60 (5) (a) to (c) of the statutes are created to read: