Governor Snyder recently signed into law five bills that amend existing laws and will have the effect of expanding financing methods for energy conservation projects in Michigan. In particular, they will allow local government units to use tax-exempt lease purchase agreements (“TELP”), which are a form of financing that is both tax-exempt and is not considered long term debt. The bills, which amend MCL 117.4f, MCL 68.36, MCL 78.24b, MCL 41.75b, and MCL 46.11c (collectively, the “Acts”), were approved on May 19, 2016 and went into effect on August 17, 2016.
The original Acts allow local government units to utilize different methods to finance energy conservation improvements to their facilities. The amended Acts permit the use of TELP agreements, increase the payback length period, make minor changes related to what information must be reported to the Michigan Public Service Commission, and add additional potential energy conservation projects, although the list is still non-exhaustive. The amended Acts will still apply to the same governmental entities, which include: legislative bodies of a city, councils of a village, governing body of a village, township board, or county board of commissioners.
In addition, the Acts allow local governmental units to fund energy conservation improvements for not only facilities, but infrastructures as well, and extend the period of time for all agreements from 10 to 20 years from the shorter of the date of final completion or the useful life of the improvements. TELP agreements are not subject to the revised municipal finance act, and are not a municipal security or debt.