SB-0929, As Passed Senate, February 23, 2012

SUBSTITUTE FOR

SENATE BILL NO. 929

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending sections 4, 9, 88b, 88c, 88h, 88k, and 90b (MCL

125.2004, 125.2009, 125.2088b, 125.2088c, 125.2088h, 125.2088k, and

125.2090b), section 4 as amended by 2010 PA 271, section 9 as

amended by 2011 PA 291, section 88b as amended by 2011 PA 250,

sections 88c and 88h as amended by 2011 PA 251, section 88k as

added by 2005 PA 215, and section 90b as added by 2011 PA 252.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 4. As used in this act:

(a) "Board" means the board of directors of the Michigan

strategic fund, except where the context clearly requires a

different definition.

(b) "Economic development project" means an endeavor related

to industrial, commercial, or agricultural enterprise. Economic

development project includes, but is not limited to, a theme or

recreation park; agricultural or forestry production, harvesting,

storage, or processing facilities or equipment; and the use of

equipment or facilities designed to produce energy from renewable

resources. Economic development project does not include that

portion of an endeavor devoted to the sale of goods at retail,

except that, as used in relation to the fund insuring a transaction

entered into by a depository institution, and as used in relation

to a loan by the fund to a minority owned business, an economic

development project may include that portion of an endeavor devoted

to the sale of goods at retail. Economic development project does

not include that portion of an endeavor devoted to housing or a

program or activity authorized under chapter 8A.

chartered bank or a state or federally chartered savings and loan

association, savings bank, or credit union whose deposits are

insured by an agency of the United States government and that

maintains a principal office or branch office in this state under

the laws of this state or the United States.

(d) "Fund" means the Michigan strategic fund created under

section 5, except where the context clearly requires a different

definition.

(e) "Green chemistry" means chemistry and chemical engineering

to design chemical products or processes that reduce or eliminate

the use or generation of hazardous substances, while producing

high-quality products through safe and efficient manufacturing

processes. Green chemistry is guided by the following 12

principles:

(i) Prevent waste: Design chemical syntheses to prevent waste,

leaving no waste to treat or clean up.

(ii) Design safer chemicals and products: Design chemical

products to be fully effective, yet have little or no toxicity.

(iii) Design less hazardous chemical syntheses: Design syntheses

to use and generate substances with little or no toxicity to humans

and the environment.

(iv) Use renewable feedstocks: Use raw materials and feedstocks

that are renewable rather than depleting. Renewable feedstocks are

often made from agricultural products or are the wastes of other

processes; depleting feedstocks are made from fossil fuels,

including petroleum, natural gas, or coal, or are mined.

(v) Use catalysts, not stoichiometric reagents: Minimize waste

by using catalytic reactions. Catalysts are used in small amounts

and can carry out a single reaction many times. They are preferable

to stoichiometric reagents, which are used in excess and work only

once.

(vi) Avoid chemical derivatives: Avoid using blocking or

protecting groups or any temporary modifications if possible.

Derivatives use additional reagents and generate waste.

(vii) Maximize atom economy: Design syntheses so that the final

product contains the maximum proportion of the starting materials.

There should be few, if any, wasted atoms.

(viii) Use safer solvents and reaction conditions: Avoid using

solvents, separation agents, or other auxiliary chemicals. If these

chemicals are necessary, use innocuous chemicals.

(ix) Increase energy efficiency: Run chemical reactions at

ambient temperature and pressure whenever possible.

(x) Design chemicals and products to degrade after use: Design

chemical products to break down to innocuous substances after use

so that they do not accumulate in the environment.

(xi) Analyze in real-time to prevent pollution: Include in-

process real-time monitoring and control during syntheses to

minimize or eliminate the formation of by-products.

(xii) Minimize the potential for accidents: Design chemicals

and their forms, including solid, liquid, or gas, to minimize the

potential for chemical accidents, including explosions, fires, and

releases to the environment.

(f) "Michigan economic development corporation" or "MEDC"

means the Michigan economic development corporation, the public

body corporate created under section 28 of article VII of the state

constitution of 1963 and the urban cooperation act of 1967, 1967

(Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual interlocal

agreement effective April 5, 1999, and subsequently amended,

between local participating economic development corporations

formed under the economic development corporations act, 1974 PA

338, MCL 125.1601 to 125.1636, and the fund.

(g) "Municipality" means a county, city, village, township,

port district, development organization, institution of higher

education, community or junior college, or subdivision or

instrumentality of any of the legal entities listed in this

subdivision.

(h) "Person" means an individual, sole proprietorship,

partnership, limited partnership, limited liability partnership,

limited liability company, joint venture, profit or nonprofit

corporation including a public or private college or university,

public utility, municipality, local industrial development

corporation, economic development corporation, or other association

of persons organized for agricultural, commercial, or industrial

purposes.

(i) "Project" means an economic development project and, in

addition, means the acquisition, construction, reconstruction,

conversion, or leasing of an industrial, commercial, retail,

agricultural, or forestry enterprise, or any part of these, to

carry out the purposes and objectives of this act and of the fund,

including, but not limited to, acquisition of land or interest in

land, buildings, structures, or other planned or existing planned

improvements to land including leasehold improvements, machinery,

equipment, or furnishings which include, but are not limited to,

the following: research parks; office facilities; engineering

facilities; research and development laboratories; warehousing

facilities; parts distribution facilities; depots or storage

facilities; port facilities; railroad facilities, including

trackage, right of way, and appurtenances; airports; water and air

pollution control equipment or waste disposal facilities; theme or

recreational parks; equipment or facilities designed to produce

energy from renewable resources; farms, ranches, forests, and other

agricultural or forestry commodity producers; agricultural

harvesting, storage, transportation, or processing facilities or

equipment; grain elevators; shipping heads and livestock pens;

livestock; warehouses; wharves and dock facilities; water,

electricity, hydro electric, coal, petroleum, or natural gas

provision facilities; dams and irrigation facilities; sewage,

liquid, and solid waste collection, disposal treatment, and

drainage services and facilities. Project does not include a

program or activity authorized under chapter 8A.

(j) "Private sector" means other than the fund, a state or

federal source, or an agency of a state or the federal government.

Sec. 9. (1) The fund shall transmit to the legislature ~~each~~

~~quarter~~ annually a status report of its activities. The report

shall include, but not be limited to, information on name and

location of all applicants, amount and type of financial assistance

being requested, type of project or product being financed, number

of net jobs created or retained, duration of financial assistance,

amount of financial support other than state resources, and the

status of any loans of the fund, excluding industrial development

revenue loans, which are in default. The report shall not include

information exempt from disclosure under section 5.

(2) The auditor general or a certified public accountant

appointed by the auditor general annually shall conduct and remit

to the legislature an audit of the fund and, in the conduct of the

audit, shall have access to all records of the fund at any time,

whether or not confidential. Each audit required by this section

shall include a determination of whether the fund is likely to be

able to continue to meet its obligations, including a report on the

status of outstanding loans and agreements made by the fund.

(3) The fund shall also transmit the status report described

in subsection (1) and audit described in subsection (2) to the

chairperson and minority vice-chairperson of the senate

appropriations subcommittee on general government and the house of

representatives appropriations subcommittee on general government.

The fund shall make the status report and audit available to the

public on the fund's website.

Sec. 88b. (1) The fund shall create and operate programs

authorized under this chapter. The fund board shall determine the

annual allocation of money for programs authorized under this

chapter and make authorized expenditures or investments from the

investment fund of the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, as

authorized under this chapter for programs and activities

authorized under this chapter.

(2) Money transferred or appropriated by law to the fund for

the purposes of carrying out this chapter or chapter 8C shall be

expended or invested by the fund as authorized by law for the

following purposes:

(a) 21st century investments.

(b) Grants and loans approved by the commercialization board

under section 88k.

chapter.

(d) For promotion of tourism in this state. For fiscal year

2010-2011 only, $20,000,000.00 for the promotion of tourism in this

state from funds appropriated in the jobs for Michigan investment

program - 21st century jobs fund line in section 109 of 2010 PA 191

with not less than $1,500,000.00 to be used for the 2010-2011

winter advertisement buy. For all funds used for promotion of

tourism in this state under this subdivision, the fund shall report

to the legislature at the same time and in the same manner as

provided in section 89d.

(e) Grants, loans, or other economic assistance under section

88r and community revitalization incentives under chapter 8C.

(3) Not more than 4% of the annual appropriation as provided

by law from the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, may be

used for the purposes of administering the programs and activities

authorized under this chapter. However, the fund and the fund board

shall not use more than 3% of the annual appropriation for

administering the programs and activities authorized under this

chapter unless the fund board by a 2/3 vote authorizes the

additional 1% for administration. The MEDC may charge actual and

reasonable fees for costs associated with loans, grants, or other

economic assistance under this chapter. These fees are in addition

to an amount of the appropriation used for administering the

programs and activities authorized under this chapter.

(4) Not more than 5% of the annual appropriation as provided

by law from the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, may be

used for business development and business marketing costs. Not

less than 80% of the funds committed for business development and

business marketing costs shall be targeted to persons or entities

outside of this state. No funds may be used for any business

development and business marketing effort that includes a reference

to or the image or voice of an elected state officer or a candidate

for elective state office and that is targeted to a media market in

Michigan. ~~The fund board shall select all vendors for all marketing~~

~~expenditures under this chapter by issuing a request for proposal.~~

~~At a minimum, the request for proposal shall require the responding~~

~~entities to disclose any conflict of interest, disclose any~~

~~criminal convictions, disclose any investigations by the internal~~

~~revenue service or any other federal or state taxing body or court,~~

~~disclose any pertinent litigation regarding the conduct of the~~

~~entity, and maintain records and evidence pertaining to work~~

~~performed. The fund board shall establish a standard process to~~

~~evaluate proposals submitted as a result of a request for proposal~~

~~and appoint a committee to review the proposals. The fund or the~~

~~fund board shall not appoint or designate any person paid or unpaid~~

~~to a committee to review proposals if that person has a conflict of~~

~~interest with any potential vendors as determined by the office of~~

~~the chief compliance officer established in section 88i.~~

(5) The fund shall not use any money appropriated or

transferred for purposes authorized under this chapter to acquire

interests in or improve real property. The restriction under this

subsection does not prohibit the fund from taking a security

interest in real property. The restriction under this subsection

applies only to the fund and not to recipients of expenditures or

investments under this chapter.

(6) The fund board may select all vendors for all expenditures

and for program awards under this chapter by issuing a request for

proposal or an alternative competitive process as determined by the

fund board. At a minimum, the request for proposal shall require

the responding entities to disclose any conflict of interest,

disclose any criminal convictions, disclose any investigations by

the internal revenue service or any other federal or state taxing

body or court, disclose any litigation involving the entity, and

maintain records and evidence pertaining to work performed. The

fund board shall establish a standard process to evaluate proposals

submitted as a result of a request for proposal and appoint a

committee to review the proposals. The fund or the fund board shall

not appoint or designate any person paid or unpaid to a committee

to review proposals if that person has a conflict of interest with

any potential vendors as determined by the office of the chief

compliance officer established in section 88i.

(7) Application fees received for programs and activities

authorized under this chapter or chapter 8C may be used by the fund

for administering the programs and activities authorized under this

chapter or chapter 8C. The restrictions on expenditures under

subsection (3) do not apply to expenditure of application fee

revenue under this subsection.

Sec. 88c. (1) The fund board shall exercise the duties of a

fiduciary with respect to 21st century investments consistent with

the purposes of this chapter. The prudent investor rule shall be

applied by the fund board and any agent of the fund board in the

management of 21st century investments. The prudent investor rule

as applied to 21st century investments means that in making 21st

century investments, the fund board shall exercise the judgment and

care under the circumstances then prevailing that an institutional

investor of ordinary prudence, discretion, and intelligence would

exercise in similar circumstances in a like position. The fund

board shall maintain a reasonable diversification among 21st

century investments consistent with the requirements of this

chapter.

(2) The fund board shall select qualified private equity

funds, qualified venture capital funds, and qualified mezzanine

funds by issuing a request for proposal. At a minimum, the request

for proposal shall require a responding entity to disclose any

conflict of interest, disclose any criminal convictions, disclose

any investigations by the internal revenue service, the securities

and exchange commission, or any other federal or state taxing or

securities regulatory body, or court, or pertinent litigation

regarding the conduct of the person or entity. The fund board shall

establish a standard process to evaluate proposals submitted as a

result of a request for proposal and appoint a committee to review

the proposals.

(3) The fund board shall ensure that a recipient of money

under sections 88d, 88e, 88f, 88g, 88q, and 88r and chapter 8C

agrees as a condition of receiving the money not to use the money

for any of the following:

(a) The development of a stadium or arena for use by a

professional sports team.

(b) The development of a casino regulated by this state under

the Michigan gaming control and revenue act, 1996 IL 1, MCL 432.201

to 432.226, a casino at which gaming is conducted under the Indian

gaming regulatory act, Public Law 100-497, 102 Stat. 2467, or

property associated or affiliated with the operation of either type

of casino described in this subdivision, including, but not limited

to, a parking lot, hotel, motel, or retail store.

(4) The fund board shall establish requirements to ensure that

money expended under sections 88d, 88e, 88f, 88g, 88q, and 88r and

chapter 8C shall not be used for any of the following:

(a) Provision of money to a person who has been convicted of a

criminal offense incident to the application for or performance of

a state contract or subcontract. As used in this subdivision, if a

person is a business entity, person includes affiliates,

subsidiaries, officers, directors, managerial employees as

determined by the board, and any person who, directly or

indirectly, holds a pecuniary interest in that business entity of

20% or more.

(b) Provision of money to a person who has been convicted of a

criminal offense, or held liable in a civil proceeding, that

negatively reflects on the person's business integrity, based on a

finding of embezzlement, theft, forgery, bribery, falsification or

destruction of records, receiving stolen property, or violation of

state or federal antitrust statutes. As used in this subdivision,

if a person is a business entity, person includes affiliates,

subsidiaries, officers, directors, managerial employees, and any

person who, directly or indirectly, holds a pecuniary interest in

that business entity of 20% or more.

qualified businesses or small businesses to leave this state.

(d) Provision of money that would contribute to the violation

of internationally recognized workers rights, as defined in section

507(4) of the trade act of 1974, 19 USC 2467(4), of workers in a

country other than the United States, including any designated zone

or area in that country.

(e) Provision of money to a corporation or an affiliate of the

corporation who is incorporated in a tax haven country after

September 11, 2001, while maintaining the United States as the

principal market for the public trading of the corporation's stock.

As used in this section, "tax haven country" includes a country

with tax laws that facilitate avoidance by a corporation or an

affiliate of the corporation of United States tax obligations,

including Barbados, Bermuda, British Virgin Islands, Cayman

Islands, Commonwealth of the Bahamas, Cyprus, Gibraltar, Isle of

Man, the principality of Liechtenstein, the principality of Monaco,

and the Republic of the Seychelles.

(5) Before adopting a resolution that establishes or

substantially changes a 21st century investment program, including

any fees, charges, or penalties attached to that program, the fund

board shall give notice of the proposed resolution to the governor,

to the clerk of the house of representatives, to the secretary of

the senate, to members of the senate and house of representatives

appropriation committees, and to each person who requested from the

fund in writing or electronically to be notified regarding proposed

resolutions. The notice and proposed resolution and all attachments

shall be published on the fund's internet website at least 10 days

prior to the date that the proposed resolution is considered by the

fund board. The fund board shall hold a public hearing ~~not sooner~~

~~than 14 days and not longer than 30 days from the date notice of a~~

~~proposed resolution is given~~ and offer a person an opportunity to

present data, views, questions, and arguments. Members of the fund

board or 1 or more persons designated by the fund board who have

knowledge of the subject matter of the proposed resolution shall be

present at the public hearing and shall participate in the

discussion of the proposed resolution. The fund board may act on

the proposed resolution ~~no sooner than 14 days after~~ on the day of

the public hearing. The fund board shall produce a final decision

document that describes the basis for its decision. The final

resolution and all attachments and the decision document shall be

provided to the governor, to the clerk of the house of

representatives, to the secretary of the senate, and to members of

the senate and house of representatives appropriation committees

and shall be published on the fund's internet website.

(6) The notice described in subsection (5) shall include all

of the following:

(a) A copy of the proposed resolution and all attachments.

(b) A statement that the addressee may express any data,

views, or arguments regarding the proposed resolution.

date by which comments must be mailed or electronically

transmitted, which date shall not be before the date of the public

hearing.

(d) The date, time, and place of the public hearing.

(7) The fund board shall employ or contract with a fund

manager or other persons it considers necessary to implement this

section. The person employed or contracted under this subsection

shall have not less than 10 years' experience in commercial

lending, private equity, mezzanine funding, or venture capital. The

person employed or contracted under this section shall exercise the

duties of a fiduciary toward investments from the investment fund

under this section. Management fees payable by the fund and other

investors in a qualified private equity fund, a qualified mezzanine

fund, or a qualified venture capital fund shall be considered an

investment expense and not an administrative cost incurred by the

fund.

(8) Subject to subsection (9), a record received, prepared,

used, or retained by an investment fiduciary in connection with an

investment or potential investment of the investment fund that

relates to investment information pertaining to a portfolio company

in which the investment fiduciary has invested or has considered an

investment that is considered by the portfolio company and

acknowledged by the investment fiduciary as confidential, or that

relates to investment information whether prepared by or for the

investment fiduciary regarding loans and assets directly owned by

the investment fiduciary and acknowledged by the investment

fiduciary as confidential, is exempt from the disclosure

requirements of the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246, if at least annually the fund provides to the

fund board, and makes available to the public, a report of fund

investments during the prior state fiscal year that includes all of

the following:

(a) The name of each portfolio company in which the investment

fund invested during the reporting period.

(b) The aggregate amount of money invested by the investment

fund in portfolio companies during the reporting period.

the investments of the investment fund in portfolio companies.

(d) The source of any public funds invested by the investment

fund in portfolio companies during the reporting period.

(9) If a record described in subsection (8) is an agreement or

instrument to which an investment fiduciary is a party, only those

parts of the record that contain investment information are exempt

from the disclosure requirements of the freedom of information act,

1976 PA 442, MCL 15.231 to 15.246.

(10) As used in subsections (8) and (9):

(a) "Investment fiduciary" means a person who exercises any

discretionary authority or control over an investment of the

investment fund or renders investment advice for the fund for a fee

or other direct or indirect compensation.

(b) "Investment information" means information that has not

been publicly disseminated or that is unavailable from other

sources, the release of which might cause a portfolio company or an

investment fiduciary significant competitive harm. Investment

information includes, but is not limited to, financial performance

data and projections, financial statements, list of coinvestors and

their level of investment, product and market data, rent rolls, and

leases.

fiduciary has made or considered an investment on behalf of the

investment fund.

(d) "Record" means all or part of a writing, as that term is

defined in section 2 of the freedom of information act, 1976 PA

442, MCL 15.232.

Sec. 88h. (1) The jobs for Michigan investment fund is created

within the fund as a permanent fund authorized by section 19 of

article IX of the state constitution of 1963. Money in the

investment fund at the close of the fiscal year shall remain in the

investment fund and shall not lapse to the general fund. Money in

the investment fund shall not be transferred to another

governmental entity or a separate legal entity and public body

corporate established under the urban cooperation act of 1967, 1967

(Ex Sess) PA 7, MCL 124.501 to 124.512, except as authorized in

this chapter.

(2) Money or other assets deposited in the investment fund

shall be held as permanent funds as provided under section 19 of

article IX of the state constitution of 1963 and invested only as

authorized under this chapter, including, but not limited to,

investments in the stock of a company, association, or corporation.

(3) The investment fund shall be invested as authorized under

this chapter for the benefit of the people of the state of Michigan

and for the purpose of creating incentives for the following in

this state:

(a) Retaining or creating jobs.

(b) Increasing capital investment activity.

(d) Encouraging the development and commercialization of

competitive edge technologies.

(e) Revitalizing Michigan communities.

(4) Funds or other assets of the investment fund also may be

invested in debt instruments or debt obligations for loans or

guarantees authorized under this chapter.

(5) The investment fund shall consist of all of the following:

(a) Any funds appropriated to, transferred to, or deposited in

the investment fund from the 21st century jobs trust fund under the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260.

(b) Earnings, royalties, return on investments, return of

principal, payments made, or other money received by or payable to

the fund under agreements related to grants, loans, investments, or

expenditures by the fund under this chapter or chapter 8C.

investments, return of principal, payments made, or other money

owed, received by, or payable to the fund or the Michigan economic

development corporation under agreements related to grants, loans,

investments, or other payments funded by appropriations from the

state general fund or tobacco settlement revenue under 1 or more of

the following:

(i) Section 418 of 1999 PA 120, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(ii) Section 410 of 2000 PA 292, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(iii) Section 410 of 2001 PA 80, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(iv) Section 410 of 2002 PA 517, commonly known as the Michigan

life sciences corridor initiative, or any successor program.

(v) Section 410 of 2003 PA 169, commonly known as the Michigan

life sciences and technology tri-corridor initiative, or any

successor program.

(vi) Section 510 of 2004 PA 354, commonly known as the Michigan

technology tri-corridor and life sciences initiative, or any

successor program.

(vii) Section 801 of 2005 PA 11, commonly known as the

technology tri-corridor and life sciences initiative, or any

successor program.

(viii) Section 381(1)(c) of 2003 PA 173, providing for payments

to the life sciences commercial development fund.

(d) Money or assets received by the state treasurer or the

fund from any source for deposit in the investment fund.

(e) Interest and earnings on any funds or other assets

deposited in the investment fund or other net income of the

investment fund.

(6) The net income of the investment fund may be expended by

the fund only for purposes authorized under this chapter or chapter

8C pursuant to an appropriation authorized by law. As used in this

section, the net income of the investment fund shall be computed

annually as of the last day of the state fiscal year in accordance

with generally accepted accounting principles, excluding any

unrealized gains or losses.

(7) The fund board shall be the trustees of the investment

fund and shall direct the investment and reinvestment of the funds

and assets of the investment fund as ~~provided under, and~~ consistent

with the objectives of , this chapter or chapter 8C.

(8) The fund board may establish restricted subaccounts within

the investment fund as necessary to administer the investment fund.

The fund board may contract with the state treasurer to assist the

fund board in administering the investment fund. The fund board may

authorize money in the investment fund not invested as authorized

under sections 88d, 88e, 88f, 88g, 88q, and 88r and chapter 8C to

be managed by the state treasurer as part of the common cash fund

of this state under 1967 PA 55, MCL 12.51 to 12.53. Money managed

by the state treasurer under this subsection shall be separately

accounted for by the state treasurer. When authorized under this

subsection, the state treasurer may invest the funds or assets of

the investment fund in any investment authorized under 1855 PA 105,

MCL 21.141 to 21.147, for surplus funds of this state, in

obligations issued by any state or political subdivision or

instrumentality of the United States, or in any obligation issued,

assumed, or guaranteed by a solvent entity created or existing

under the laws of the United States or of any state, district, or

territory of the United States, which are not in default as to

principal or interest.

(9) A member of the fund board or officer of the fund shall

not gain from any investment of funds or assets of the investment

fund. A member of the fund board or officer of the fund shall not

have any direct or indirect interest in an investment of funds or

assets of the investment fund. A member of the fund board or person

connected with the investment fund directly or indirectly, for

himself or herself, or as an agent or partner of others, shall not

borrow any of the funds or assets of the investment fund or in any

manner use funds or assets of the investment fund except as

authorized under this chapter. A member of the fund board or

officer of the fund shall not become an endorser or surety or

become in any manner an obligor for money loaned by or borrowed

from the investment fund. Failure to comply with this subsection

constitutes misconduct in office subject to removal under section

94. In addition to any other sanction, a person who violates this

subsection is guilty of a misdemeanor punishable by imprisonment

for not more than 90 days or a fine of not more than $500.00, or

both.

Sec. 88k. (1) The strategic economic investment and

commercialization board is created within the fund. The

commercialization board shall exercise its powers, duties, and

decision-making authority under this chapter independently of the

fund, the fund board, and the department of treasury.

(2) The commercialization board shall award grants and loans

from the 21st century jobs trust fund created in the Michigan trust

fund act, 2000 PA 489, MCL 12.251 to 12.256, and the investment

fund only for basic research, applied research, university

technology transfer, and commercialization of products, processes,

and services to encourage the development of competitive edge

technologies to create jobs in this state.

(3) Subject to subsection (2), the fund as determined by the

commercialization board shall ~~do all of the following:~~

~~(a) Establish~~ establish a competitive process to award grants

and make loans for competitive edge technologies. The competitive

process shall include, but is not limited to, the following:

(a) (i) A provision that the applications must be ~~peer-reviewed~~

~~by independent peer review experts based on the scientific and~~

~~technical merit, personnel expertise, commercial merit, and the~~

~~ability to leverage additional funding of the application~~ reviewed

by a joint-evaluation committee. Scientific and technical merit,

personnel expertise, commercial merit, and the ability to leverage

additional funding ~~shall~~ may be given equal weight in the review

and scoring process as determined by the fund board.

(b) (ii) A preference for proposals that can contribute to the

development of economic diversification or the creation of

employment opportunities in this state.

significant existing or proposed business presence in this state.

(d) (iv) A provision that the program will utilize contracts

with measurable milestones, clear objectives, provisions to revoke

awards for breach of contract, and repayment provisions for loans

given to qualified businesses that leave Michigan within 3 years of

the execution of the contract or otherwise breach the terms of the

contract.

(e) (v) A provision that the applicant leverage other

resources as a condition of the grant or loan. If an applicant is

seeking a grant or a loan under this chapter to match federal funds

for small business innovation research or small business technology

transfer programs, the grant or loan under this chapter shall not

exceed 25% of the federal funds and must leverage third-party

commercialization funding at both the phase I and phase II levels.

(f) (vi) Limit overhead rates, ~~for recipients of grants and~~

~~loans to reflect actual overhead but not greater than 15% of the~~

~~grant or loan.~~administrative fees, and management fees for

recipients of awards to not more than 25% of the award.

(g) (~~vii~~) Except as provided in ~~subparagraph (~~v), subdivision

(e), a provision that grants can only be awarded to Michigan

institutions of higher education, Michigan nonprofit research

institutions, and Michigan nonprofit corporations.

(h) (~~viii~~) A preference for collaborations between institutions

of higher education, Michigan nonprofit research institutions,

Michigan nonprofit corporations, and qualified businesses.

(i) (ix) A provision authorizing the award of grants to

institutions of higher education to serve as match to promote or

secure the award and receipt of competitively awarded federal

research grants related to competitive edge technologies. A

matching grant shall not exceed 10% of the amount of the

competitively awarded federal research grants received.

(j) (x) A provision encouraging the redevelopment of existing

scientific wet lab space for the commercialization of life science

technology.

(k) (xi) A preference for proposals that meet 1 or more of the

following:

(i) ~~(A)~~ Forecast revenues within 2 years.

(ii) ~~(B)~~ Have outside investments from investors with

experience and management teams with experience in the industry

targeted by the proposal.

(iii) ~~(C)~~ Have outside directors with expertise in the industry

targeted by the proposal.

~~(b) The fund shall contract with independent peer review~~

~~experts selected by the commercialization board to assist the~~

~~commercialization board with its responsibilities under this~~

~~chapter.~~

(4) The commercialization board shall establish standards to

ensure that money expended under this chapter will result in

economic benefit to this state and ensure that a major share of the

business activity resulting from the expenditures occurs in this

state.

(5) The commercialization board shall ensure that a recipient

of money expended under this chapter agrees as a condition of

receiving the money not to use the money for any of the following:

(a) The development of a stadium or arena for use by a

professional sports team.

(b) The development of a casino regulated by this state under

the Michigan gaming control and revenue act, ~~the Initiated Law of~~

1996 IL 1, MCL 432.201 to 432.226, a casino at which gaming is

conducted under the Indian gaming regulatory act, Public Law 100-

497, 102 Stat. 2467, or property associated or affiliated with the

operation of either type of casino described in this subdivision,

including, but not limited to, a parking lot, hotel, motel, or

retail store.

(6) The commercialization board shall establish requirements

to ensure that money expended under this section shall not be used

for any of the following:

(a) Grants or loans to a person who has been convicted of a

criminal offense incident to the application for or performance of

a state contract or subcontract. As used in this subdivision, if a

person is a business entity, then person includes affiliates,

subsidiaries, officers, directors, managerial employees as

determined by the fund board, and any person who, directly or

indirectly, holds a pecuniary interest in that business entity of

20% or more.

(b) Grants or loans to a person who has been convicted of a

criminal offense, or held liable in a civil proceeding, that

negatively reflects on the person's business integrity, based on a

finding of embezzlement, theft, forgery, bribery, falsification or

destruction of records, receiving stolen property, or violation of

state or federal antitrust statutes. As used in this subdivision,

if a person is a business entity, then person includes affiliates,

subsidiaries, officers, directors, managerial employees as

determined by the fund board, and any person who, directly or

indirectly, holds a pecuniary interest in that business entity of

20% or more.

business to leave this state.

(d) Grants or loans that would contribute to the violation of

internationally recognized workers rights, as defined in section

507(4) of the trade act of 1974, 19 USC 2467(4), of workers in a

country other than the United States, including any designated zone

or area in that country.

(e) Grants or loans to a corporation or an affiliate of the

corporation incorporated in a tax haven country after September 11,

2001, but with the United States as the principal market for the

public trading of the corporation's stock. As used in this section,

"tax haven country" includes a country with tax laws that

facilitate avoidance by a corporation or an affiliate of the

corporation of United States tax obligations, including Barbados,

Bermuda, British Virgin Islands, Cayman Islands, Commonwealth of

the Bahamas, Cyprus, Gibraltar, Isle of Man, the Principality of

Liechtenstein, the Principality of Monaco, and the Republic of the

Seychelles.

(7) When the commercialization board approves a grant or a

loan under this chapter, the commercialization board shall state

the specific objective reasons the applicant was selected over

other applicants for a grant or loan under this chapter.

(8) After March 31, 2006, before adopting a resolution that

establishes or substantially changes a program operated by the

commercialization board, including any fees, charges, or penalties

attached to that program, the commercialization board shall give

notice of the proposed resolution to the governor, to the secretary

of the senate, to the clerk of the house of representatives, to

members of the senate and house of representatives standing

committees on appropriations, and to each person who requested from

the fund in writing or electronically to be notified regarding

proposed resolutions. The notice and proposed resolution and all

attachments shall be published on the fund's internet website at

least 10 days prior to the date that the proposed resolution is

considered by the commercialization board. The commercialization

board shall hold a public hearing not sooner than 14 days and not

longer than 30 days from the date notice of a proposed resolution

is given and offer a person an opportunity to present data, views,

questions, and arguments. Commercialization board members or 1 or

more persons designated by the commercialization board who have

knowledge of the subject matter of the proposed resolution shall be

present at the public hearing and shall participate in the

discussion of the proposed resolution. The commercialization board

may act on the proposed resolution ~~no sooner than 14 days after~~ on

the day of the public hearing. The commercialization board shall

produce a final decision document that describes the basis for its

decision. The final resolution and all attachments and the decision

document shall be provided to the governor, to the secretary of the

senate, to the clerk of the house of representatives, and to

members of the senate and house of representatives standing

committees on appropriations and shall be published on the fund's

internet website.

(9) The notice described in subsection (8) shall include all

of the following:

(a) A copy of the proposed resolution and all attachments.

(b) A statement that the addressee may express any data,

views, or arguments regarding the proposed resolution.

date by which comments must be mailed or electronically

transmitted, which date shall not be before the date of the public

hearing.

(d) The date, time, and place of the public hearing.

Sec. 90b. (1) The fund shall create and operate the Michigan

community revitalization program to provide community

revitalization incentives for eligible investments on eligible

property in this state. The fund shall develop and use a detailed

application, approval, and compliance process adopted by a

resolution of the board and published and available on the fund's

website. Program standards, guidelines, templates, or any other

forms used by the fund to implement the Michigan community

revitalization program shall be approved by the board.

(2) A person may apply to the fund for approval of community

revitalization incentives associated with a project under this

section. Community revitalization incentives shall not be approved

for any property that is not eligible property.

(3) Funds appropriated for programs under this chapter shall

be placed in the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260.

(4) Subject to section 88c, the fund shall review all

applications for community revitalization incentives. As part of

the application, the applicant shall include documentation

establishing that the project is located on eligible property and a

project description that includes a project pro-forma. The fund

shall consider the following criteria to the extent reasonably

applicable to the type of project proposed when approving a

community revitalization inventive:

(a) The importance of the project to the community in which it

is located.

(b) If the project will act as a catalyst for additional

revitalization of the community in which it is located.

the project.

(d) The applicant's financial need for a community

revitalization incentive.

(e) The extent of reuse of vacant buildings, reuse of

historical buildings, and redevelopment of blighted property.

(f) Creation of jobs.

(g) The level of private sector and other contributions,

including, but not limited to, federal funds and federal tax

credits.

(h) Whether the project is financially and economically sound.

(i) Whether the project increases the density of the area.

(j) Whether the project promotes mixed-use development and

walkable communities.

(k) Whether the project converts abandoned public buildings to

private use.

(l) Whether the project promotes sustainable development.

(m) Whether the project involves the rehabilitation of a

historic resource.

(n) Whether the project addresses areawide redevelopment.

(o) Whether the project addresses underserved markets of

commerce.

(p) The level and extent of environmental contamination.

(q) If the rehabilitation of the historic resource will meet

the federal secretary of the interior's standards for

rehabilitation and guidelines for rehabilitating historic

buildings, 36 CFR 67.

(r) Whether the project will compete with or effect existing

Michigan businesses within the same industry.

(s) Any other additional criteria approved by the board that

are specific to each individual project and are consistent with the

findings and intent of this chapter.

(5) An application shall be approved or denied not more than

90 days after receipt of the application that is considered

administratively complete by the board or its designee. If the

application is neither approved nor denied within 90 days after

being considered administratively complete, it shall be considered

by the fund board, or its president if delegated, for action at, or

by, the next regularly scheduled board meeting. If an application

is approved, the fund shall determine the amount of community

revitalization incentives for the project based on the fund's

review of the application and the criteria specified in subsection

(4).

(6) The amount of community revitalization incentives that the

board may approve for a single project shall not exceed 25% of a

project's eligible investment up to $10,000,000.00. A community

revitalization loan shall not exceed $10,000,000.00 and a community

revitalization grant shall not exceed $1,000,000.00. However, a

combination of loans, grants, and other economic assistance under

this chapter shall not exceed $10,000,000.00 per project. The board

may not approve $10,000,000.00 per project in community

revitalization incentives to more than 3 projects per fiscal year.

The board shall approve not less than 5 projects of $1,000,000.00

or less per project per fiscal year. If, after reviewing all

applications in a fiscal year, the fund determines that less than 5

projects warranted an award of $1,000,000.00 or less, this

subsection shall not apply.

(7) When the board approves an application and determines the

amount of community revitalization incentives, the board shall

enter into a written agreement with the applicant. The written

agreement shall provide in a clear and concise manner all of the

conditions imposed, including specific time frames, on the

applicant to receive the community revitalization incentive under

this chapter. The written agreement shall provide for repayment and

penalties if the applicant fails to comply with the provisions of

the written agreement as determined by the board. The applicant

shall agree to provide the data described in the written agreement

that is necessary for the fund to report to the legislature under

this chapter.

(8) Not more than 4% of the annual appropriation as provided

by law from the 21st century jobs trust fund established in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, may be

used for the purposes of administering the programs and activities

authorized under this chapter. However, the fund and the fund board

shall not use more than 3% of the annual appropriation for

administering the programs and activities authorized under this

chapter unless the fund board by a 2/3 vote authorizes the

additional 1% for administration. The MEDC may charge actual and

reasonable fees for costs associated with the community

revitalization ~~loan.~~ incentive authorized under this chapter. These

fees are in addition to an amount of the appropriation used for

administering the programs and activities authorized under this

chapter.