SB-0271, As Passed House, December 18, 2014

HOUSE SUBSTITUTE FOR

SENATE BILL NO. 271

     A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending sections 88r, 90a, 90b, 90c, and 90d (MCL 125.2088r,

125.2090a, 125.2090b, 125.2090c, and 125.2090d), section 88r as

added by 2011 PA 250 and sections 90a, 90b, 90c, and 90d as amended

by 2012 PA 395.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     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.

     (c) In any fiscal year, a qualified business shall not receive

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.

     (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 as reported to 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 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.

(5) (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.

(6) (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.

(7) (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. A qualified business may include

more than 1 business as determined by the fund board.

     (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 Michigan income taxes are

withheld by an employer, or an employee leasing company or

professional employer organization on behalf of the employer, that

is in excess of the number of jobs maintained by the qualified

business maintained in this state prior to the expansion or

location, as determined and verified by the fund.

     Sec. 90a. As used in this chapter:

     (a) "Community revitalization grant" or "grant" means a grant

that is approved under section 90b and that is subject to

requirements in section 90c.

     (b) "Community revitalization incentive" means a community

revitalization grant, a community revitalization loan, or other

economic assistance.

     (c) "Community revitalization loan" or "loan" means a loan

that is approved under section 90b and that is subject to the

requirements in section 90d.

     (d) "Eligible investment" means 1 or more of the following,

subject to a written agreement under this section, including

investment which occurred prior to the approval of the application,

to the extent that the project has not been completely reimbursed

to or been paid for on behalf of the person requesting a community

revitalization incentive under this chapter:

     (i) Any demolition, construction, alteration, rehabilitation,

or improvement of buildings.

     (ii) Site improvements.

     (iii) The addition of machinery, equipment, or fixtures to the

approved project.

     (iv) Architectural, engineering, surveying, and similar

professional fees but not certain soft costs of the eligible

investment as determined by the board, including, but not limited

to, developer fees, appraisals, performance bonds, closing costs,

bank fees, loan fees, risk contingencies, financing costs,

permanent or construction period interest, legal expenses, leasing

or sales commissions, marketing costs, professional fees, shared

savings, taxes, title insurance, bank inspection fees, insurance,

and project management fees.

     (e) "Eligible property" means property that meets 1 or more of

the following conditions:

     (i) Is determined to be a facility. As used in this

subparagraph, "facility" means that term as defined in section 2 of

the brownfield redevelopment financing act, 1996 PA 381, MCL

125.2652.

     (ii) Is a historic resource. As used in this subparagraph,

"historic resource" means a publicly or privately owned historic

building, or structure located within structure, site, object,

feature, or open space either manmade or natural, individually

listed or located within and contributing to a historic district

designated by the national register of historic places, the state

register of historic sites, or a local unit acting under the local

historic districts act, 1970 PA 169, MCL 399.201 to 399.215.

     (iii) Is blighted property. As used in this subparagraph,

"blighted property" means property that meets any of the following

criteria:

     (A) Has been declared a public nuisance in accordance with a

local housing, building, plumbing, fire, or other related code or

ordinance.

     (B) Is an attractive nuisance to children because of physical

condition, use, or occupancy.

     (C) Is a fire hazard or is otherwise dangerous to the safety

of persons or property.

     (D) Has had the utilities, plumbing, heating, or sewerage

permanently disconnected, destroyed, removed, or rendered

ineffective so that the property is unfit for its intended use.

     (E) Is tax reverted property owned by a qualified local

governmental unit, by a county, or by this state.

     (F) Is property owned or under the control of a land bank fast

track authority under the land bank fast track act, 2003 PA 258,

MCL 124.751 to 124.774.

     (G) Has substantial subsurface demolition debris buried on

site so that the property is unfit for its intended use.

     (iv) Is functionally obsolete property. As used in this

subparagraph, "functionally obsolete" means that the property is

unable to be used to adequately perform the function for which it

was intended due to a substantial loss in value resulting from

factors such as overcapacity, changes in technology, deficiencies

or superadequacies in design, or other similar factors that affect

the property itself or the property's relationship with other

surrounding property as determined by a Michigan advanced assessing

officer or a Michigan master assessing officer.

     (v) Is a parcel that is adjacent or contiguous to property

described in subparagraphs (i) through (iv) if the development of the

adjacent or contiguous parcel is estimated to increase the taxable

value of the property described in subparagraphs (i) through (iv).

     (vi) Any other property as determined by the fund board if the

development of the property will promote community revitalization

consistent with the findings and declarations in section 90.

     (f) "Federal secretary of the interior's standards for

rehabilitation and guidelines for rehabilitating historic

buildings, 36 CFR 67" means the nationally recognized federal

standards that guide work undertaken on historic resources.

(g) (f) "Other economic assistance" means any other form of

assistance allowed under this act that is not a community

revitalization loan or community revitalization grant.

     Sec. 90b. (1) The fund shall create and operate the Michigan

community revitalization program to provide community

revitalization incentives for eligible investments on eligible

property in this state. The fund shall develop and use a detailed

application, approval, and compliance process adopted by a

resolution of the board and published and available on the fund's

website. Program standards, guidelines, templates, or any other

forms used by the fund to implement the Michigan community

revitalization program shall be approved by the board.

     (2) A person or 2 or more persons may apply to the fund for

approval of community revitalization incentives associated with a

project under this section. Community revitalization incentives

shall not be approved for any property that is not eligible

property.

     (3) Funds appropriated for programs under this chapter shall

be placed in the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260.

     (4) Subject to section 88c, the fund shall review all

applications for community revitalization incentives. As part of

the application, the applicant shall include documentation

establishing that the project is located on eligible property and a

project description that includes a project pro-forma. The fund

shall consider the following criteria to the extent reasonably

applicable as reasonably determined by the fund board or its

designee to the type of project proposed when approving a community

revitalization inventive:

     (a) The importance of the project to the community in which it

is located.

     (b) If the project will act as a catalyst for additional

revitalization of the community in which it is located.

     (c) The amount of local community and financial support for

the project.

     (d) The applicant's financial need for a community

revitalization incentive.

     (e) The extent of reuse of vacant buildings, reuse of

historical buildings, historic resources, and redevelopment of

blighted property.

     (f) Creation of jobs.

     (g) The level of private sector and other contributions,

including, but not limited to, federal funds and federal tax

credits.

     (h) Whether the project is financially and economically sound.

     (i) Whether the project increases the density of the area.

     (j) Whether the project promotes mixed-use development and

walkable communities.

     (k) Whether the project converts abandoned public buildings to

private use.

     (l) Whether the project promotes sustainable development.

     (m) Whether the project involves the rehabilitation of a

historic resource.

     (n) Whether the project addresses areawide redevelopment.

     (o) Whether the project addresses underserved markets of

commerce.

     (p) The level and extent of environmental contamination.

     (q) If the rehabilitation of the historic resource will meet

the federal secretary of the interior's standards for

rehabilitation and guidelines for rehabilitating historic

buildings, 36 CFR 67, when applied after engaging in discussions

with the state historic preservation office.

     (r) Whether the project will compete with or effect affect

existing Michigan businesses within the same industry.

     (s) Any other additional criteria approved by the board that

are specific to each individual project and are consistent with the

findings and intent of this chapter.

     (5) An application shall be approved or denied not more than

90 days after receipt of the application that is considered

administratively complete by the board or its designee. If the

application is neither approved nor denied within 90 days after

being considered administratively complete, it shall be considered

by the fund board, or its president if delegated, for action at, or

by, the next regularly scheduled board meeting. If an application

is approved, the fund shall determine the amount of community

revitalization incentives for the project based on the fund's

review of the application and the criteria specified in subsection

(4).

     (6) The Except as otherwise provided in this subsection, the

amount of community revitalization incentives that the board may

approve for a single project shall not exceed 25% of a project's

eligible investment up to $10,000,000.00. A community

revitalization loan shall not exceed $10,000,000.00, and a

community revitalization grant shall not exceed $1,000,000.00.

$1,500,000.00. However, a combination of loans, grants, and other

economic assistance under this chapter shall not exceed

$10,000,000.00 per project. The board may not approve

$10,000,000.00 per project in community revitalization incentives

to more than 3 projects per fiscal year. The board shall approve

not less than 5 projects of $1,000,000.00 or less per project per

fiscal year. If, after reviewing all applications in a fiscal year,

the fund determines that less than 5 projects warranted an award of

$1,000,000.00 or less, this subsection shall not apply.

Notwithstanding any other limitation in this subsection, each year,

of the community revitalization projects approved by the board, the

board may approve up to 3 single projects that shall not exceed 50%

of a project's eligible investment up to $10,000,000.00 for

community revitalization loans and grants for the specific purpose

of historic preservation.

     (7) When the board approves an application and determines the

amount of community revitalization incentives, the board shall

enter into a written agreement with the applicant. The written

agreement shall provide in a clear and concise manner all of the

conditions imposed, including specific time frames, on the

applicant to receive the community revitalization incentive under

this chapter. The written agreement shall provide for the secured

status of any loan, repayment, and penalties if the applicant fails

to comply with the provisions of the written agreement as

determined by the board. The applicant shall agree to provide the

data described in the written agreement that is necessary for the

fund to report to the legislature under this chapter.

     (8) Not more than 4% of the annual appropriation as provided

by law from the 21st century jobs trust fund established 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 the community

revitalization incentive authorized 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.

     (9) The legislature finds and declares that funding authorized

under this section is intended to encourage diversification of the

economy, to encourage capital investment in this state, to promote

the creation of qualified new jobs in this state, and to promote

the investment in brownfield and historic preservation projects

that reclaim previously used property that is less likely to be

revitalized without the investment.

     Sec. 90c. Upon satisfying a milestone established in a written

agreement for which the board has approved a community

revitalization grant under section 90b, the applicant may apply to

the fund for a grant disbursement as specified in the written

agreement. All or a portion of the rights or obligations of the

applicant under the written grant agreement may be assigned by the

applicant to 1 or more assignees with prior written approval of,

and on terms and conditions acceptable to, the fund. The board, or

its designee, shall develop and implement the use of an application

form and assignment form to be used under this section. Within 90

days of receipt of an application for disbursement, the fund or its

designee shall then determine whether the project has complied is

in compliance with the terms of the written agreement and, if

applicable, after engaging in discussions with the state historic

preservation officer, is in compliance, or when completed will be

in compliance, with the federal secretary of the interior's

standards for rehabilitation and guidelines for rehabilitating

historic buildings, 36 CFR 67. If the fund or its designee

determines that the project has complied is in compliance with the

written agreement and, if applicable, after engaging in discussions

with the state historic preservation officer, is in compliance, or

when completed will be in compliance, with the federal secretary of

the interior's standards for rehabilitation and guidelines for

rehabilitating historic buildings, 36 CFR 67, the fund shall issue

the grant proceeds to the applicant or, if the grant has been

assigned, to the assignee.

     Sec. 90d. (1) Upon satisfying a milestone established in a

written agreement for which the board has approved a community

revitalization loan under section 90b, the applicant may apply to

the fund for a loan disbursement as specified in the written

agreement. All or a portion of the rights or obligations of the

applicant under the written loan agreement may be assigned by the

applicant to 1 or more assignees with prior written approval of,

and on terms and conditions acceptable to, the fund. The board, or

its designee, shall develop and implement the use of an application

for disbursement form and assignment form to be used under this

subsection. Within 90 days of receipt or disbursement of an

application for disbursement, the fund or its designee shall

determine whether the project has complied is in compliance with

the written agreement and, if applicable, after engaging in

discussions with the state historic preservation officer, is in

compliance, or when completed will be in compliance, with the

federal secretary of the interior's standards for rehabilitation

and guidelines for rehabilitating historic buildings, 36 CFR 67. If

the fund or its designee determines that the project has complied

is in compliance with the written agreement and, if applicable,

after engaging in discussions with the state historic preservation

officer, is in compliance, or when completed will be in compliance,

with the federal secretary of the interior's standards for

rehabilitation and guidelines for rehabilitating historic

buildings, 36 CFR 67, the fund shall distribute the loan proceeds

to the applicant or, if the loan proceeds have been assigned, to

the assignee.

     (2) The board shall develop criteria for repayment of the Each

written agreement for a community revitalization loan shall contain

a repayment provision.

     (3) The proceeds from repayment of community revitalization

loans under subsection (2) shall be paid into the investment fund

described in section 88h and expended exclusively for community

revitalization incentives under this chapter.

     (4) 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 chapter that occurred in the

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

electronic format. Except as otherwise provided in this subsection

or in this act, the fund shall not divulge sensitive or private

financial information associated with a community revitalization

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

the following:

     (a) The total proposed amount of private investment attracted

under this section.

     (b) The total actual amount of private investment attracted

under this section as reported to the fund.

     (c) The total number of new written agreements.

     (d) The amount of the community revitalization incentives

awarded under this chapter separately for each project.

     (e) The actual amount of the community revitalization

incentives made under this chapter separately for each project.

     (f) The total actual amount of square footage revitalized or

added for each project approved under this section 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.

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

subject to a written agreement under this chapter when established

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

the fund.

     (h) A summary of all written agreements for community

revitalization loans.

     (i) The total actual number of residential units revitalized

or added for each project approved under this section as reported

to the fund.

     (j) The identity of persons who received a community

revitalization incentive outside the program standards and

guidelines and why the variance was given.

     (k) The amount of administrative costs used to administer the

programs and activities authorized under this chapter.

     (l) A summary of the projected and actual aggregated taxpayer

return on investment for each eligible investment that received a

distribution in the reporting period.

(4) (5) 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 person who received approval of community

revitalization investment under this chapter in the immediately

preceding 3-month period.

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

the fund shall provide exact copies of all information 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:

     (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.