Opinion ID: 1597762
Heading Depth: 1
Heading Rank: 3

Heading: borrowing by the state housing authority.

Text: Before passing to a discussion of public purpose, we must resolve the question of whether Act No 346 does in fact involve an unconstitutional grant of the credit of the State of Michigan to the authority contrary to article 9, § 18, of the 1963 Constitution. As has been often held by our Court, revenue bonds and self-liquidating bonds do not constitute the obligations of the State of Michigan. A reading of Act No 346 indicates that great care has been taken in the drafting of the act to bring it within this general scheme. Section 25, subd (3) of the act provides: Except as may otherwise be expressly provided by the authority, every issue of its notes or bonds shall be general obligations of the authority payable out of any revenues or moneys of the authority. Section 31 of the act specifically provides: The state shall not be liable on notes or bonds of the authority and such notes and bonds shall not be a debt of the state. The notes and bonds shall contain on the fact thereof a statement to such effect. While section 32, subd (4) of the act provides that the authority shall certify to the governor the amount necessary to restore the capital reserve fund of the authority to an amount equal to the maximum amount of principal and interest maturing and becoming due in any succeeding calendar year on bonds then outstanding, the appropriations contemplated thereby are permissive only. The State does not assume any obligation to appropriate moneys necessary to pay the bonds. Further, section 41 of the act provides that the authority from time to time at its discretion may recommend to the legislature an issuance of faith and credit bonds for a vote of the people. This section of the act conforms to section 15 of article 9 of the Constitution of 1963, and indicates a legislative intent that the full faith and credit of the State of Michigan will be used in assistance of the State housing development authority only when this constitutional provision [7] has been complied with. The act does not obligate the State of Michigan, either directly or indirectly, to repay moneys borrowed by the State housing development authority. Its bonds would be self-liquidating revenue bonds within the meaning of that concept as it has been developed in our statutes and case law. No constitutional impediment to the authority exists on this basis.