Building authorities may be created by action of a legislative body of any county, city, village, township, school district or combinations thereof. The purpose of the building authority is to provide financing for the construction of building, parking lots, recreational facilities and stadiums and to acquire the necessary sites to go with such facilities.
Financing is provided through the issuance of bonds by the building authority.
Bonds may be backed by a full faith and credit noncancellable lease between the building authority and the unit or units of government that created the building authority or such lease may be supported only by a pledge of revenues of the facility. As a practical matter almost all issues in Michigan have a full faith and credit pledge supporting the lease. Title to a facility constructed by a building authority vests initially in the building authority. The statement defines two differing concepts of leases from an accounting standpoint for lessees. One concept is referred to as an operating lease while the other concept is referred to as a capital lease.