SB-0242, As Passed Senate, March 29, 2017

SUBSTITUTE FOR

SENATE BILL NO. 242

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending section 9 (MCL 125.2009), as amended by 2014 PA 503,

and by adding chapter 8D.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 9. (1) The fund shall transmit to each member of the

legislature, the governor, the clerk of the house of

representatives, the secretary of the senate, and the senate and

house fiscal agencies annually a report of its activities. The

report shall be transmitted not later than April 10 of each year

for activities in the immediately preceding state fiscal year. The

report shall not include information exempt from disclosure under

section 5. The report shall include, but is not limited to, all of

the following for each program operated under this act:

(a) A list of entities that received financial assistance.

(b) The type of project or product being financed.

(d) For each separate form of financial assistance, all of the

following:

(i) The number of new jobs committed or projected when the

financial assistance was applied for.

(ii) The number of retained jobs committed or projected when

the financial assistance was applied for.

(iii) The actual number of new jobs created that are not

temporary employees.

(iv) The actual number of retained jobs that are not temporary

employees.

(v) The average annual salary of the new jobs created that are

not temporary employees.

(vi) The average annual salary of the retained jobs that are

not temporary employees.

(e) The duration of the financial assistance.

(f) The amount of financial support other than state

resources.

(g) Money or other revenue or property returned to the fund,

including any repayments through a clawback provision in the

agreement.

(h) The status of all loans of the fund.

(i) A list of all entities that are in bankruptcy, that the

fund has received actual notice of, filed by a direct recipient of

an active single incentive of at least $500,000.00. In addition,

the fund shall, within 120 days after the fund receives notice,

provide a report of the notice of bankruptcy on its website and

shall forward the report to each of the following:

(i) The senate majority leader and the senate minority leader.

(ii) The speaker of the house and the house minority leader.

(iii) The members of the house commerce committee.

(iv) The members of the house appropriations subcommittee on

general government.

(v) The members of the senate economic development committee.

(vi) The members of the senate appropriations subcommittee on

general government.

(j) A summary of the approximate administrative costs used to

administer the programs and activities authorized under this act.

(k) Any other information as required in this section.

(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 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 report and audit available to

the public on the fund's website.

(4) The report described in subsection (1) shall also contain

all of the following that are related to a 21st century investment

made by the fund board under chapter 8A:

(a) The amount of qualified venture capital fund investments,

qualified mezzanine fund investments, and qualified private equity

fund investments under management in this state, including year-to-

year growth.

(b) The value of loan enhancement program investments,

qualified private equity fund investments, qualified mezzanine fund

investments, and qualified venture capital investments in qualified

businesses, including year-to-year growth.

fund established under the small business capital access program

required under chapter 8A.

(5) The report described in subsection (1) shall also include,

but is not limited to, all of the following for all actions under

section 88r:

(a) The total actual amount of qualified investment attracted

under section 88r as reported to the fund.

(b) The total actual number of new jobs created under section

88r as reported to the fund.

assistance made under section 88r separately for each qualified

business verified by the fund.

(d) 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.

(e) 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.

(6) The report described in subsection (1) shall also include,

but is not limited to, all of the following for all actions under

chapter 8B:

(a) For tourism promotion efforts, all of the following:

(i) An itemized list, by market, of how much was spent, types

of media purchased, and target of the tourism promotion campaign.

(ii) The return on investment analysis that utilizes existing

baseline data and compares results with prior outcome evaluations

funded by Travel Michigan.

(b) For business development efforts, all of the following:

(i) An itemized list, by market, of how much was spent, types

of media purchased, and target of the business promotion campaign.

(ii) A performance analysis that compares the program or

campaign objectives and outcome of the campaign or program.

(7) The report described in subsection (1) shall also include,

but is not limited to, all of the following for all actions under

section 90d:

(a) The total actual amount of private investment attracted

under section 90d as reported to the fund.

(b) The actual amount of the community revitalization

incentives made under chapter 8C separately for each project.

added for each project approved under section 90d as reported to

the fund. When reporting square footage, the person must report the

square footage by category, including, but not limited to,

commercial, residential, or retail.

(d) The aggregate increase in taxable value of all property

subject to a written agreement under chapter 8C when established

and recorded by the local units of government and as reported to

the fund.

(e) The total actual number of residential units revitalized

or added for each project approved under section 90d as reported to

the fund.

(f) Each project that received a community revitalization

incentive outside the fund program standards and guidelines and why

the variance was given.

(8) Beginning on and after January 1, 2012, on a monthly basis

the fund shall provide exact copies of all information regarding

all actions under chapter 8C that is provided to board members of

the fund for the purpose of monthly board meetings, subject to

confidentiality under section 5, to each of the following and post

that information on the fund's website:

(a) The chairperson and minority vice-chairperson of the house

commerce committee.

(b) The chairperson and minority vice-chairperson of the house

appropriations subcommittee on general government.

senate economic development committee.

(d) The chairperson and minority vice-chairperson of the

senate appropriations subcommittee on general government.

(9) The report described in subsection (1) shall also include

a summary of the approximate administrative costs used to

administer the programs and activities authorized in the following

sections:

(a) Section 88b.

(b) Section 88h.

(10) The report described in subsection (1) shall also

include, but is not limited to, all of the following for all

actions for business incubators approved by the fund after ~~the~~

~~effective date of the amendatory act that added this~~

~~subsection:~~January 14, 2015:

(a) The number of new jobs created and projected new job

growth by current clients of the business incubator.

(b) Amounts of other funds leveraged by current clients of the

business incubator.

incubator.

(11) The report described in subsection (1) shall also include

the actual repayments received by the fund for failure to comply

with clawback provisions of the written agreement under all of the

following:

(a) Section 78.

(b) Section 88d.

(d) Section 88q.

(e) Section 88r.

(f) Section 90b.

(12) Beginning on July 1, 2015, the fund shall post on the

fund's website a list of each contract, agreement, or other written

loan or grant documentation for financial assistance under sections

88r and 90b that the fund entered into or modified in the

immediately preceding fiscal year.

(13) Beginning on July 1, 2015, the fund shall post and update

periodically all of the following on its website for all loans made

under sections 88r and 90b:

(a) A description of the project for which the loan was made.

(b) The total amount of the loan.

delinquent.

(d) The interest rate of the loan.

(14) Beginning July 1, 2015, the report described in

subsection (1) shall also contain all of the following for each

program that provides financial assistance under this act that

requires a site visit:

(a) A copy of the site visit guidelines for that program.

(b) The number of site visits conducted under that program.

compliance with the site visit guidelines.

(15) The fund shall post on its website and update

periodically all of the information described in subsection (14).

(16) The report described in subsection (1) must also include,

but is not limited to, all of the following for all written

agreements related to the good jobs for Michigan program created

under chapter 8D:

(a) The name of the authorized business.

(b) The number of certified new jobs required to be

maintained.

revenues.

(17) ~~(16)~~ As used in this section, "financial assistance"

means grants, loans, other economic assistance, and any other

incentives or assistance under this act.

CHAPTER 8D

Sec. 90g. As used in this chapter:

(a) "Authorized business" means an eligible business that has

met the requirements of this chapter and with which the fund has

entered into a written agreement for withholding tax capture

revenues pursuant to this chapter and section 51f of the income tax

act of 1967, 1967 PA 281, MCL 206.51f.

(b) "Casino" means 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, or motel.

authorized business at a facility in this state that is in excess

of the number of full-time jobs that authorized business maintained

in this state prior to the expansion or location, as determined by

the fund.

(d) "Eligible business" means a business that proposes to

create a minimum of 500 certified new jobs in this state with an

average annual wage that is equal to or greater than the prosperity

region average wage or, if the business proposes to pay an average

annual wage that is equal to 125% or more of the prosperity region

average wage, 250 certified new jobs. An eligible business does not

include retail establishments, professional sports stadiums,

casinos, or that portion of an eligible business used exclusively

for retail sales.

(e) "Facility" means a site or sites within this state in

which an authorized business creates certified new jobs.

(f) "Full-time job" means a full-time job as determined by the

fund performed by an individual whose income and social security

taxes are withheld by 1 or more of the following:

(i) An authorized business.

(ii) An employee leasing company.

(iii) A professional employer organization on behalf of the

authorized business.

(g) "Good jobs for Michigan fund" means the good jobs for

Michigan fund created in section 90j.

(h) "Municipality" means that term as defined in section 4.

(i) "Prosperity region" means each of the 10 prosperity

regions identified by the department of technology, management, and

budget on the effective date of the amendatory act that added this

section.

(j) "Prosperity region average wage" means the average annual

wage for the prosperity region where the facility is located based

on the most recent data made available by the Michigan bureau of

labor market information and strategic initiatives.

(k) "Withholding tax capture revenues" means the amount of

income tax withheld under part 3 of the income tax act of 1967,

1967 PA 281, MCL 206.701 to 206.713, each calendar year that is

attributable to individuals employed within certified new jobs. The

state treasurer shall develop methods and processes that are

necessary for each authorized business to report the amount of

withholding under part 3 of the income tax act of 1967, 1967 PA

281, MCL 206.701 to 206.713, from individuals employed within

certified new jobs.

(l) "Written agreement" means a written agreement made between

the eligible business and the fund pursuant to this chapter.

Sec. 90h. (1) The fund shall create and operate the good jobs

for Michigan program to authorize the transfer of the dedicated

portion of withholding tax capture revenues to authorized

businesses that provide certified new jobs in this state. The fund

shall develop and use a detailed application, approval, and

compliance process published and available on the fund's website.

(2) An eligible business may apply to the fund to enter into a

written agreement which authorizes the payment of withholding tax

capture revenues under this chapter.

(3) The fund may request information, in addition to that

contained in an application, as may be needed to permit the fund to

discharge its responsibilities under this chapter.

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

an agreement with an eligible business for withholding tax capture

revenues under this chapter if the fund determines that all of the

following are met:

(a) The eligible business proposes to create and maintain a

minimum of 500 certified new jobs at a facility in this state with

an average annual wage that is equal to or greater than the

prosperity region average wage or, if the business proposes to pay

an average annual wage that is equal to 125% or more of the

prosperity region average wage, 250 certified new jobs.

(b) In addition to the jobs specified in subdivision (a), the

eligible business, if already located within this state, agrees to

maintain a number of full-time jobs equal to or greater than the

number of full-time jobs it maintained in this state prior to the

expansion, as determined by the fund.

sound.

(d) The expansion or location of the eligible business will

benefit the people of this state by increasing opportunities for

employment and by strengthening the economy of this state.

(e) The withholding tax capture revenues offered under this

chapter and paid from the good jobs for Michigan fund is an

incentive to expand or locate the eligible business in this state

and address the competitive disadvantages with sites outside this

state.

(f) An industry-recognized regional economic model cost-

benefit analysis reveals that the payment of withholding tax

capture revenues under this chapter to an eligible business will

result in an overall positive fiscal impact to the state.

(g) The eligible business will create the requisite number of

certified new jobs within not more than 5 years after entering into

the written agreement as determined by the fund.

(h) The eligible business will maintain the number of

certified new jobs throughout the duration of the period of time

that the authorized business receives withholding tax capture

revenues paid from the good jobs for Michigan fund. However, if the

authorized business fails to maintain the requisite number of

certified new jobs as provided in the written agreement, the

authorized business will forfeit the withholding tax capture

revenues for that calendar year.

(i) The eligible business has received a letter of support for

the expansion or new location from the chief executive official, or

his or her designee, of the municipality with jurisdiction over the

location of that facility. A regional development agency promoting

economic development in the region where the facility is located

may be appointed as the designee.

(5) If the fund determines that the eligible business

satisfies all of the requirements of subsection (4), subject to

subsection (6), the fund shall determine the amount and duration of

the withholding tax capture revenues to be authorized under this

chapter and shall enter into a written agreement as provided in

this section. The duration of the withholding tax capture revenues

must not exceed 5 or 10 years, whichever is applicable based on the

average annual wage of the certified new jobs, from the date the

authorized business creates the certified new jobs as provided in

the written agreement. Subject to subsection (6), in determining

the maximum amount and maximum duration of the withholding tax

capture revenues authorized, the fund shall consider the following

factors, if applicable:

(a) The number of certified new jobs to be created.

(b) The degree to which the average annual wage of the

certified new jobs exceeds the prosperity region average wage.

if it were to expand or locate in this state versus a site outside

this state.

(d) The potential impact of the expansion or location on the

economy of this state.

(e) The estimated cost of the reimbursement of withholding tax

capture revenues under this chapter, the staff, financial, or

economic assistance provided by the municipality, or local economic

development corporation or similar entity, and the value of

assistance otherwise provided by this state.

(f) Whether the expansion or location will occur in this state

without the payment of withholding tax capture revenues offered

under this chapter.

(6) The fund shall determine the duration and amount of the

withholding tax capture revenues. In determining the duration of

the withholding tax capture revenues, the fund shall provide a

duration of up to 5 years for eligible businesses that pay an

average annual wage that is equal to or more than the prosperity

region average wage and up to a duration of 10 years for eligible

businesses that pay an average annual wage that is equal to 125% or

more of the prosperity region average wage. In determining the

amount of the withholding tax capture revenue payments, the fund

may approve a payment of not more than 50% of the withholding tax

capture revenues for an eligible business that pays an average

annual wage that is equal to or more than the prosperity region

average wage and a payment of up to 100% of the withholding tax

capture revenues for an eligible business that pays an average

annual wage that is equal to 125% or more of the prosperity region

average wage. The amount of withholding tax capture revenues

certified to be paid to an authorized business shall be reduced by

5%, which shall be retained by the fund for additional

administrative expenses under this chapter as provided under

section 90i.

(7) A written agreement between an eligible business and the

fund must include, but need not be limited to, all of the

following:

(a) A description of the business expansion or location that

is the subject of the written agreement.

(b) Conditions upon which the authorized business designation

is made.

business would not have added certified new jobs without the

withholding tax capture revenue payments authorized under this

chapter.

(d) An estimate of the amount of withholding tax capture

revenues expected to be generated for each calendar year of the

duration of the written agreement.

(e) A statement by the eligible business that a violation of

the written agreement may result in the revocation of the

designation as an authorized business, the loss or reduction of

future withholding tax capture revenue payments under this chapter,

or a repayment of withholding tax capture revenues received

pursuant to this chapter.

(f) A statement by the eligible business that a

misrepresentation in the application may result in the revocation

of the designation as an authorized business and the repayment of

withholding tax capture revenues received under this chapter plus a

penalty equal to 10% of the withholding tax capture revenue

payments received pursuant to this chapter.

(g) A method for measuring and verifying full-time jobs before

and after an expansion or location of an authorized business in

this state.

(h) A provision that the authorized business that is certified

under section 90i(2) for a payment from the good jobs for Michigan

fund shall file the required returns and reports under this chapter

and part 3 of the income tax act of 1967, 1967 PA 281, MCL 206.701

to 206.713, with the department of treasury, and shall provide any

other information reasonably requested by the fund or the

department of treasury.

(i) A maximum amount of withholding tax capture revenues that

the authorized business may claim before reduction of the 5%

payment described in section 90i for administrative expenses.

(8) Upon execution of a written agreement as provided in this

chapter, an eligible business is an authorized business. The fund

shall provide a copy of each written agreement to the department of

treasury. Upon execution of the written agreement, the transfer and

payment of withholding tax capture revenues as specified in this

chapter and in the written agreement is binding on this state. The

state treasurer shall calculate, based on the written agreements

received pursuant to this subsection, the amount of withholding tax

capture revenues collected as a result of the certified new jobs

created pursuant to those written agreements for each calendar year

and the percentage of that amount that needs to be transferred from

the general fund and deposited, in accordance with section 51f of

the income tax act of 1967, 1967 PA 261, MCL 206.51f, into the good

jobs for Michigan fund, where the fund shall issue payments to the

authorized business in the manner provided in section 90i.

(9) The fund shall not execute more than 15 new written

agreements each calendar year for authorized businesses. The fund

shall not commit, and the department of treasury shall not

disburse, more than $250,000,000.00 in total withholding tax

capture revenues under this chapter, which includes the 5% payment

for administrative expenses as provided in section 90i. If the fund

approves fewer than 15 written agreements in a calendar year or if

an authorized business forfeits any portion of the withholding tax

capture revenues under section 90i(4) and the amount committed or

disbursed under this chapter is less than $250,000,000.00, then the

unused approval authority shall carry forward into future calendar

years. For purposes of this subsection, "total withholding tax

capture revenues" means the aggregate amount of withholding tax

capture revenues that may be distributed to authorized businesses

under all written agreements.

Sec. 90i. (1) Subject to the limitations under section 90h(9),

an authorized business is eligible to receive withholding tax

capture revenue payments as provided in this chapter.

(2) Except as otherwise provided under subsection (3), the

fund shall issue a withholdings certificate each calendar year to

an authorized business that states the following:

(a) That the eligible business is an authorized business.

(b) The amount of withholding tax capture revenues to be paid

from the good jobs for Michigan fund for the designated calendar

year.

number or the Michigan treasury number assigned to the authorized

business.

(3) The fund shall provide the department of treasury with a

copy of each withholdings certificate issued under this section.

Upon receipt of a withholdings certificate, an authorized business

may request a payment from the good jobs for Michigan fund by

filing a copy of the withholdings certificate with the fund. The

fund shall issue the withholding tax capture revenue payment from

the good jobs for Michigan fund within 90 days of receipt of the

request for payment from the authorized business.

(4) If the authorized business subsequently fails to satisfy

and maintain the minimum number of certified new jobs as required

under this chapter or any other conditions included in the written

agreement, the authorized business forfeits its withholding tax

capture revenue payment for the calendar year that the authorized

business fails to comply with this chapter or the written

agreement. The forfeiture of a withholding tax capture revenue

payment under this subsection does not extend the duration of the

original written agreement. Accordingly, if the duration of the

written agreement has not expired, an authorized business that

satisfies all of the terms of the written agreement after a

forfeiture under this subsection is entitled to certification for

withholding tax capture revenue payments for those subsequent

calendar years.

(5) In the event of a proposed reorganization, merger, or

other change of ownership of the authorized business for which

reimbursement will continue pursuant to a written agreement, the

approval of the fund is required prior to the assignment or

transfer of the written agreement.

(6) The fund shall retain an amount equal to 5% of the

withholding tax capture revenue payments authorized for that year

for the fund. The board shall use the amount described in this

subsection to pay for the additional administration expenses under

this chapter.

(7) As a condition of being an authorized business, an

authorized business authorizes the fund to identify the authorized

business and disclose the amount and duration of the withholding

tax capture revenue payments. The fund shall publish the

information described in this subsection on the fund's website and

include this information in the report required under section 9.

Sec. 90j. (1) The good jobs for Michigan fund is created

within the state treasury. The state treasurer may receive money or

other assets from any source for deposit into the fund. The state

treasurer shall direct the investment of the fund. The state

treasurer shall credit all amounts deposited pursuant to section

51f of the income tax act of 1967, 1967 PA 281, MCL 206.51f, to the

fund and shall credit to the fund any interest and earnings from

fund investments. Money in the fund at the close of the fiscal year

shall remain in the fund and shall not lapse to the general fund.

(2) The good jobs for Michigan fund may be used only for 1 or

more of the following purposes:

(a) To make withholding tax capture revenue payments in

accordance with a written agreement to an authorized business

within 90 days after receipt of a request for payment and a copy of

the withholding certificate issued under section 90i.

(b) To distribute an amount equal to 5% of the withholding tax

capture revenue payments certified under section 90i to the

Michigan strategic fund to pay for administration expenses.

Enacting section 1. This amendatory act takes effect 180 days

after the date it is enacted into law.