November 10, 2011, Introduced by Reps. Barnett, Meadows, Jackson, Brown, Segal, Liss, Hovey-Wright, Slavens, Lindberg, Townsend, Cavanagh, Switalski, Irwin and Howze and referred to the Committee on Banking and Financial Services.
A bill to authorize the investment of certain endowment funds
and other state funds; to authorize certain investments and
programs; and to prescribe the powers and duties of certain state
officials.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"endowment funds investment act".
Sec. 2. As used in this act:
(a) "Endowment funds" means 1 or more of the following funds:
(i) The Michigan natural resources trust fund established in
section 35 of article IX of the state constitution of 1963.
(ii) The Michigan state parks endowment fund established in
section 35a of article IX of the state constitution of 1963.
(iii) The Michigan game and fish protection trust fund
established in section 41 of article IX of the state constitution
of 1963.
(b) "Financial institution" means a state or nationally
chartered bank, a state or federally chartered savings and loan
association, savings bank, or credit union, or an entity of the
federally chartered farm credit system.
(c) "Investment agreement" means an investment agreement
described in section 5.
(d) "Qualified financial institution" means a financial
institution that agrees to make qualified loans and enter into an
investment agreement under this act.
(e) "Qualified investment" means the purchase of stock in a
qualified financial institution.
(f) "Qualified loans" means loans made by a financial
institution to qualified small businesses.
(g) "Qualified small business" means a business located in
this state that is all the following:
(i) A stage 2 business.
(ii) Has recently been denied a loan from a financial
institution, as determined by the state treasurer.
(iii) Has received or is in the process of obtaining assistance
from the Michigan small business and technology development center.
(h) "Stage 2 business" means a business that meets all of the
following:
(i) Has more than 7 and fewer than 50 full-time employees, as
determined by the state treasurer.
(ii) Has more than $1,000,000.00 and less than $50,000,000.00
in annual sales.
Sec. 3. (1) The state treasurer shall direct the investment of
endowment funds. In addition to the investment authority described
in subsection (2), the state treasurer shall have the same
authority to invest assets of endowment funds as is granted to an
investment fiduciary under the public employee retirement system
investment act, 1965 PA 314, MCL 38.1132 to 38.1140m.
(2) The state treasurer may invest up to 3.5% of the assets of
an endowment fund in qualified investments.
Sec. 5. (1) The state treasurer shall endeavor to make
qualified investments under this act in qualified financial
institutions so that qualified loans to qualified small businesses
will be conveniently available in all geographic regions in this
state. The state treasurer may enter into an investment agreement
with a qualified financial institution to provide for the
investment under this subsection. The investment agreement shall
contain all of the following:
(a) The term of the qualified investment which shall be not
more than 15 years.
(b) A requirement that the qualified financial institution
shall provide good and ample security as the state treasurer
requires and shall identify the qualified loans to qualified small
businesses and the terms and conditions of those loans that are
made after the date of the qualified investment that are
attributable to that qualified investment together with other
information required by the state treasurer.
(c) A requirement that a qualified loan to a qualified small
business made by the qualified financial institution that is
attributable to the qualified investment shall be issued at a rate
or rates of interest that are established in the investment
agreement.
(d) A requirement that a qualified loan to a qualified small
business made by the qualified financial institution that is
attributable to the qualified investment shall be issued for a loan
repayment period of not more than 7 years.
(e) A requirement that the amount of qualified loans issued to
qualified small businesses made by a qualified financial
institution shall total not less than 8 times the state's
investment in that qualified financial institution.
(f) Other terms as prescribed by the state treasurer.
(2) A qualified investment made under this act is found and
declared to be for a valid public purpose.
(3) The attorney general shall approve documentation for a
qualified investment under this section as to legal form.
(4) The aggregate amount of qualified investments made under
this section shall not exceed 5% of the investable assets of the
endowment fund.
(5) Annually, each qualified financial institution in which
the state treasurer has made a qualified investment under this act
shall file an affidavit, signed by a senior executive officer of
the qualified financial institution, stating that the qualified
financial institution is in compliance with the terms of the
investment agreement.
(6) The state treasurer shall annually prepare and submit a
report to the legislature regarding the disposition of funds
invested for purposes of facilitating qualified loans to qualified
small businesses under this act. The report shall include all of
the following information:
(a) The total number of qualified small businesses that have
received a qualified loan under this act.
(b) By county, the total number and amounts of qualified loans
to qualified small businesses that were issued.
(c) The name of each qualified financial institution and the
amount invested in each qualified financial institution under this
act.