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HB 5965

Local government: bonds; certain loans; exempt from definition of municipal security under the revised municipal finance act. Amends sec. 105 of 2001 PA 34 (MCL 141.2105).

2025-2026 Regular Session Introduced by Mike Mueller

The bill narrows what counts as a municipal security by excluding contracts, leases, certain loans, mortgages, inter-municipal revenue agreements, and related instruments from the

bill electronically reproduced 05/13/2026
#localgovernment:bonds #localgovernment:financing
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Bill Summary · HB 5965

Summary of HB 5965 (Michigan; 2025-2026)

Purpose and intent

  • The bill amends the Revised Municipal Finance Act (2001 PA 34), specifically section 105, to clarify what counts as a “municipal security” and to exclude certain types of financing from that definition.
  • The underlying aim is to narrow or refine the list of instruments that are considered municipal securities for purposes of statute and regulation, potentially affecting how these instruments are issued, reported, or regulated.

Key provisions and changes

  • The bill adds to the list of items that do not constitute a municipal security. Specifically, a municipal security would not include:
    • (a) A contract for the purchase of real or personal property.
    • (b) A contract for the lease of real or personal property with or without an option to purchase.
    • (c) A contract, lease, note, or other security connected with a contract described in (a) or (b).
    • (d) A security evidencing an emergency loan under the emergency loan law (as described in historical acts) or qualified agricultural loans.
    • (e) A mortgage secured by real property and its corresponding security to the extent secured by the mortgage.
    • (f) A contract between one or more municipalities under terms where one or more pledge their revenues or full faith and credit to secure payment of a proposed municipal security issued by one of the municipalities.
    • (g) A loan from the State Infrastructure Bank (as described in the state statute).
    • (h) A loan from the Safeguarding Tomorrow revolving loan fund (as described in the emergency management act).
  • Enacting section note: The act’s effectiveness is contingent on the enactment of a companion bill in the 103rd Legislature (referenced as Senate Bill No. ____ or House Bill No. ____ of 2026). This means the changes take effect only if those related bills are enacted into law.

Affected parties and instruments

  • Local governments and municipal entities that issue bonds or other financing instruments may be affected in terms of whether certain financing arrangements are treated as municipal securities.
  • Federal/state-registered or regulated activities related to municipal securities could be influenced by the clarified exclusions.
  • Financial institutions, municipal finance professionals, and auditors may see changes in reporting or regulatory treatment for the excluded instruments.
  • Specific exclusions cover property purchase contracts, leases (with or without options to purchase), and security interests connected to those contracts; certain types of loans (emergency, agricultural), mortgages, inter-municipal revenue agreements, and specific state or revolving loan funds.

Procedural and timeline aspects

  • Introduction and referral: Introduced in May 2026 by Representative Mike Mueller (co-sponsor).
  • Committee action: Referred to the House Appropriations Committee.
  • Effectiveness: The act’s provisions will not take effect unless and until a companion bill (House or Senate) from the 103rd Legislature concerning this matter is enacted into law.
  • The bill’s timeline is contingent; if the companion bill does not pass, the amendments do not take effect.

Practical considerations

  • By excluding certain contracts and loans from the definition of municipal securities, counties, cities, and other local governments may have more flexibility in using those instruments without triggering municipal securities regulatory or disclosure requirements that apply to securities.
  • The list of exclusions is relatively specific, which helps preserve existing regulatory frameworks for traditional municipal securities while carving out alternative financing arrangements.

If you’d like, I can provide a side-by-side comparison of current law versus the bill’s proposed changes, or tailor a shorter one-page briefing for stakeholders.

Compiled from official sources — confirm details with the bill’s official record.

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