Under the General Law Village Act – Villages may borrow up to 10% of their taxable value. Any issuance of bonds in excess of that must obtain a Qualifying Statement.
69.25 Loans; issuance and execution of bonds; validation of prior bonds or indebtedness.
A loan may not be made by the council or by its authority in any year, exceeding the amounts prescribed in this act. For a loan lawfully made, the bonds of the village may be issued subject to the revised municipal finance act, 2001 PA 34, MCL 141.2101 to 141.2821. The bonds shall be executed in the manner directed by the council.
A municipality shall not borrow money and issue municipal securities except in accordance with this act. However, there are some borrowings that are not subject to the Revised Municipal Finance Act. See MCL 141.2105 below for specific examples, including contracts for the purchase of real or personal property. A municipality must have specific legal authority to enter into any debt obligation, either statutory authority or authority from a municipality’s charter. In general, the statute that allows a municipality to borrow is called the “authorizing statute.” Generally, a municipality may qualify to issue municipal securities without further Treasury approval, by submitting a Municipal Finance Qualifying Statement to the Michigan Department of Treasury. Municipalities that do not qualify under the provisions of the act must obtain prior approval from Treasury before issuing any municipal securities.