SB-0556, As Passed House, November 30, 2011

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 556

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending section 88b (MCL 125.2088b), as amended by 2011 PA 3,

and by adding section 88r.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

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) Except for the appropriations described in section 88j(3)~~

~~and as otherwise provided in section 88q, for fiscal years other~~

~~than the 2008-2009 and 2009-2010 fiscal years the fund board shall~~

~~not expend more than the following amounts each year from the 21st~~

~~century jobs trust fund created in the Michigan trust fund act,~~

~~2000 PA 489, MCL 12.251 to 12.260, for the following purposes:~~

~~(a) 25% for the loan enhancement program.~~

~~(b) 40% for the private equity investment program, the venture~~

~~capital investment program, and the mezzanine investment program~~

~~combined.~~

~~(c) 70% for competitive edge technology grants and loans under~~

~~section 88k. The commercialization board shall not authorize the~~

~~expenditure of more than $100,000,000.00 of the amount described in~~

~~this subdivision for basic research over the life of the program.~~

(3) ~~(4)~~ 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 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) ~~(5)~~ 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) ~~(6)~~ 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.

Sec. 88r. (1) The fund shall create and operate the Michigan

business development program to provide grants, loans, and other

economic assistance to qualified businesses that make qualified

investments in this state or provide qualified new jobs in this

state.

(2) The Michigan business development program shall provide

for all of the following:

(a) Grants, loans, and other economic assistance to assist

qualified businesses in making qualified investments and providing

new jobs in this state, with preference given to qualified

businesses that need additional assistance for deal-closing and for

second stage company gap financing.

(b) A detailed application, approval, and compliance process

published and available on the fund's website. The detailed

application, approval, and compliance process shall, at a minimum,

contain the following:

(i) A qualified business may apply for a grant, loan, or other

economic assistance in a form and manner determined by the fund.

(ii) After receipt of an application, the fund may enter into a

written agreement with the qualified business if the qualified

business agrees to make certain qualified investments or create a

certain number of new jobs in this state.

(iii) The written agreement shall provide in a clear and concise

manner all of the conditions imposed, including specific time

frames, on the qualified business to receive a grant, loan, or

other economic assistance under this section.

(iv) The written agreement shall provide for a repayment

provision of any grants, loans, or other economic assistance if the

qualified business fails to comply with the provisions of the

written agreement.

(v) The written agreement shall provide for an audit provision

that requires the fund to verify that established milestones for

the project have been met.

more than $10,000,000.00 for a project funded under this section.

(3) The fund shall not enter into a written agreement with a

qualified business unless all of the following are met:

(a) The municipality makes a staff, financial, or economic

commitment to the project as determined by the fund.

(b) The qualified business provides a business plan or

demonstrates the need for the grant, loan, or other economic

assistance.

described in the written agreement necessary for the fund to report

to the legislature under this act.

(4) The fund shall post on its website or post on the website

of the Michigan economic development corporation the name and

location of each qualified business that received a grant, loan, or

other economic assistance awarded under this section and the amount

of the grant, loan, or other economic assistance.

(5) The fund, with assistance from the Michigan economic

development corporation and the office of the chief compliance

officer, shall establish policies and procedures to conduct

background checks on each qualified business applying for a grant,

loan, or other economic assistance under this section.

(6) Beginning November 1, 2012 and each year thereafter, the

fund shall report to each house of the legislature on the

activities of the fund under this section that occurred in the

previous fiscal year. The report shall be made available in an

electronic format. The report shall include, but is not limited to,

all of the following:

(a) The total proposed amount of qualified investment

attracted under this section.

(b) The total actual amount of qualified investment attracted

under this section as reported to the fund.

section.

(d) The total actual number of new jobs created under this

section as reported to the fund.

(e) The total number of new written agreements.

(f) The amount of the grant, loan, or other economic

assistance awarded under this section separately for each qualified

business.

(g) The actual amount of the grant, loan, or other economic

assistance made under this section separately for each qualified

business verified by the fund.

(h) For each qualified business, whether it is a new business,

whether it is an expansion of an existing business, or whether it

relocated from outside of this state.

(i) An evaluation of the aggregate return on investment that

this state realizes on the actual qualified new jobs and actual

qualified investment made by qualified businesses.

(j) A report on the individuals hired by the qualified

business that includes the number of individuals hired by the

qualified business, their educational attainment, including, but

not limited to, high school diploma or equivalent, higher education

certificate or degree, or advanced degree or training, and the

number of individuals hired by the qualified business who relocated

to this state as reported to the fund.

(7) Beginning February 1, 2012 and not less than every 3

months thereafter, the fund shall post on its internet website the

name and location of a qualified business that received approval of

a grant, loan, or other economic assistance under this section in

the immediately preceding 3-month period.

(8) The legislature finds and declares that funding authorized

under this section to encourage diversification of the economy, to

encourage capital investment in this state, and to promote the

creation of qualified new jobs in this state is a public purpose

and of paramount concern in the interest of the health, safety, and

general welfare of the citizens of this state.

(9) As used in this section:

(a) "Other economic assistance" means any other form of

assistance allowed under this act that is not a grant or a loan.

(b) "Qualified business" means a business that is located in

or operates in this state or will locate or will operate in this

state as determined by the fund.

related to a project subject to a written agreement under this

section.

(d) "Qualified new job" means a job performed by an individual

who is a resident of this state whose Michigan income taxes are