June 30, 2011, Introduced by Senators PROOS, HANSEN, KOWALL, PAPPAGEORGE, NOFS and EMMONS and referred to the Committee on Economic Development.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending sections 5, 88b, and 88h (MCL 125.2005, 125.2088b, and
125.2088h), section 5 as amended by 2008 PA 224, section 88b as
amended by 2011 PA 3, and section 88h as added by 2005 PA 225, and
by adding section 88r.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 5. (1) There is created by this act a public body
corporate and politic to be known as the Michigan strategic fund.
The fund shall be within the department of treasury and shall
exercise its prescribed statutory powers, duties, and functions
independently of the state treasurer. The statutory authority,
powers, duties, functions, records, personnel, property, unexpended
balances of appropriations, allocations, and other funds of the
fund, including the functions of budgeting, procurement, personnel,
and management-related functions, shall be retained by the fund,
and the fund shall be an autonomous entity within the department of
treasury in the same manner as the Michigan employment security
commission was designated an autonomous entity within the Michigan
department of labor under section 379 of the executive organization
act of 1965, 1965 PA 380, MCL 16.479.
(2) Except as otherwise provided in this act, the purposes,
powers, and duties of the Michigan strategic fund are vested in and
shall be exercised by a board of directors.
(3) Except as provided in subsection (4), the board shall
consist
of the director of the department of labor and economic
growth
licensing and regulatory
affairs or his or her designee from
within
the department of labor and economic growth, licensing and
regulatory affairs, the state treasurer or his or her designee from
within the department of treasury, the chief executive officer of
the MEDC, and 6 other members with knowledge, skill, and experience
in the academic, business, or financial field, who shall be
appointed by the governor with the advice and consent of the
senate. None of the 6 members appointed under this section shall be
employees of this state. Not less than 5 members of the board
appointed under this subsection shall be members of the private
sector. Five of the 6 members appointed under this subsection shall
serve for fixed terms. Upon completion of each fixed term expiring
after December 30, 2005, a member shall be appointed for a term of
4 years. Of the private sector members appointed by the governor
for a fixed term, 1 shall be appointed from a list of 3 or more
nominees of the speaker of the house of representatives
representing persons within the private sector with experience in
private equity or venture capital investments, commercial lending,
or commercialization of technology and 1 shall be appointed from a
list of 3 or more nominees of the senate majority leader
representing persons within the private sector with experience in
private equity or venture capital investments, commercial lending,
or commercialization of technology. A member appointed under this
subsection or subsection (4) shall serve until a successor is
appointed, and a vacancy shall be filled for the balance of the
unexpired term in the same manner as the original appointment. The
member appointed under this subsection and serving without a fixed
term shall serve at the pleasure of the governor. Of the members
appointed under this subsection and subsection (4), there shall be
minority, female, and small business representation. After December
31, 2005, at least 2 of the members of the board shall have
experience in private equity or venture capital investments, at
least 1 of the members shall have experience in commercial lending,
and at least 1 of the members of the board shall have experience in
commercialization of technology.
(4) In addition to the 9 members of the board under subsection
(3), not later than December 15, 2005, the governor shall appoint,
with the advice and consent of the senate, 2 additional members to
the board for terms expiring December 31, 2007. After the initial
appointments under this subsection, members appointed under this
subsection shall be appointed for a term of 4 years. The members
appointed under this subsection shall be from the private sector
and shall have experience in private equity or venture capital
investments, commercial lending, or commercialization of
technology. From the date of the appointment of the members under
this subsection until December 31, 2015, the board shall have 11
members. After December 31, 2015, the board shall have 9 members
and no members shall be appointed under this subsection.
(5) The governor shall designate 1 member of the board to
serve as its chairperson. The governor shall designate 1 member of
the board to serve as president of the fund and may designate 1
member to serve as vice-president of the fund. The chairperson,
president, and vice-president, if a vice-president is designated,
shall serve as those officers at the pleasure of the governor.
(6) Members of the board shall serve without compensation for
their membership on the board, except that members of the board may
receive reasonable reimbursement for necessary travel and expenses.
(7) The board may delegate to its president, vice-president,
staff, or others those functions and authority that the board deems
necessary or appropriate, which may include the oversight and
supervision of employees of the fund. However, responsibilities
specifically vested in the board under chapter 8A shall be
performed by the board and shall not be transferred to the MEDC,
except that grants, loans, or other economic assistance under
section 88r of $1,000,000.00 or less can be authorized by the
president of the fund.
(8) A majority of the members of the board appointed and
serving constitutes a quorum for the transaction of business at a
meeting, or the exercise of a power or function of the fund,
notwithstanding the existence of 1 or more vacancies. The board may
act only by resolution approved by a majority of board members
appointed and serving. Voting upon action taken by the board shall
be conducted by majority vote of the members appointed and serving.
Members of the board may be present in person at a meeting of the
board or, if authorized by the bylaws of the board, by use of
telecommunications or other electronic equipment. The fund shall
meet at the call of the chair and as may be provided in the bylaws
of the fund. Meetings of the fund may be held anywhere within the
state of Michigan.
(9) The business of the board shall be conducted at a public
meeting of the board held in compliance with the open meetings act,
1976 PA 267, MCL 15.261 to 15.275. Public notice of the time, date,
and place of the meeting shall be given in the manner required by
the open meetings act, 1976 PA 267, MCL 15.261 to 15.275, and shall
also be provided on an internet website operated by the fund. A
record or portion of a record, material, or other data received,
prepared, used, or retained by the fund or any of its centers in
connection with an application to or with a project or product
assisted by the fund or any of its centers or with an award, grant,
loan, or investment under chapter 8A that relates to financial or
proprietary information submitted by the applicant that is
considered by the applicant and acknowledged by the board as
confidential shall not be subject to the disclosure requirements of
the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246.
The disclosure of a record concerning investment information
described in section 88c under the freedom of information act, 1976
PA 442, MCL 15.231 to 15.246, is subject to the limitations
provided in section 88c. The board may also meet in closed session
pursuant to the open meetings act, 1976 PA 267, MCL 15.261 to
15.275, to make a determination of whether it acknowledges as
confidential any financial or proprietary information submitted by
the applicant and considered by the applicant as confidential.
Unless considered proprietary information, the board shall not
acknowledge routine financial information as confidential. If the
board determines that information submitted to the fund is
financial or proprietary information and is confidential, the board
shall release a written statement, subject to disclosure under the
freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, that
states all of the following:
(a) The name and business location of the person requesting
that the information submitted be confidential as financial or
proprietary information.
(b) That the information submitted was determined by the board
to be confidential as financial or proprietary information.
(c) A broad nonspecific overview of the financial or
proprietary information determined to be confidential.
(10) The fund shall not disclose financial or proprietary
information not subject to disclosure pursuant to subsection (9)
without consent of the applicant submitting the information.
(11) Any document to which the fund is a party evidencing a
loan, insurance, mortgage, lease, venture, or other type of
agreement the fund is authorized to enter into shall not be
considered financial or proprietary information that may be exempt
from disclosure under subsection (9).
(12) For purposes of subsections (9), (10), and (11),
"financial or proprietary information" means information that has
not been publicly disseminated or which is unavailable from other
sources, the release of which might cause the applicant significant
competitive harm.
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 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.
(c) Other programs or activities authorized under this
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.
(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.
(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 applies only to the fund and not to recipients of
expenditures or investments under this chapter.
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) Diversifying the economy.
(b) Retaining or creating jobs.
(c) Increasing capital investment activity.
(d) Increasing commercial lending activity.
(e) Encouraging the development and commercialization of
competitive edge technologies.
(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 12.256.12.260.
(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.
(c) Assets, property, money, earnings, royalties, return on
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.
(f) Any other funds appropriated for programs under this
chapter.
(6) The net income of the investment fund may be expended by
the fund only for purposes authorized under this chapter 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.
(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, and 88g 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.
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.
(c) In any fiscal year, a qualified business shall not receive
more than 10% of the amount appropriated in that fiscal year 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.
(c) The qualified business agrees to provide the data
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 verified by the fund.
(c) The total committed number of new jobs created under this
section.
(d) The total actual number of new jobs created under this
section verified by 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.
(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.
(c) "Qualified investment" means investment in this state
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 income and taxes are withheld
by an employer that is in excess of the number of full-time jobs
maintained by the qualified business maintained in this state prior
to the expansion or location, as determined and verified by the
fund.