March 15, 2017, Introduced by Senators STAMAS, SCHMIDT, HORN, HANSEN, KOWALL, KNEZEK, HILDENBRAND and MEEKHOF and referred to the Committee on Economic Development and International Investment.
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.
(c) The amount and type of financial assistance.
(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.
(c) A statement of the amount of money in each loan reserve
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.
(c) The actual amount of the grant, loan, or other economic
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.
(c) The total actual amount of square footage revitalized or
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.
(c) The chairperson and minority vice-chairperson of the
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.
(c) Section 90b.
(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.
(c) Increases in revenue for current clients of the business
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.
(c) Section 88k.
(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.
(c) Whether payments on the loan balance are current or
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.
(c) The chief compliance officer shall review and evaluate
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.
(c) The amount and duration of the withholding tax capture
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.
(c) "Certified new job" means a full-time job created by an
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) "Initial withholding tax value" 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, from individuals employed by the
authorized business for the calendar year in which the written
agreement was entered.
(i) "Municipality" means that term as defined in section 4.
(j) "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.
(k) "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.
(l) "Withholding tax capture revenues" means the amount for
each calendar year by which the income tax withheld 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 exceeds the
initial withholding tax value. To calculate withholding tax capture
revenues for a calendar year under this chapter, 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.
(m) "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.
(c) The plans for the expansion or location are economically
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.
(c) Whether there is a disadvantage to the eligible business
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.
(c) A statement from the eligible business that the eligible
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.
(c) The authorized business's federal employer identification
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.