SB-0272, As Passed Senate, June 13, 2013

SUBSTITUTE FOR

SENATE BILL NO. 272

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending sections 4, 5, and 23 (MCL 125.2004, 125.2005, and

125.2023), section 4 as amended by 2012 PA 145, section 5 as

amended by 2011 PA 251, and section 23 as amended by 2009 PA 85,

and by adding section 7b.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 4. As used in this act:

(a) "Board" means the board of directors of the Michigan

strategic fund, except where the context clearly requires a

different definition.

(b) "Economic development project" means an endeavor related

to industrial, commercial, or agricultural enterprise. Economic

development project includes, but is not limited to, a theme or

recreation park; agricultural or forestry production, harvesting,

storage, or processing facilities or equipment; port facilities;

and the use of equipment or facilities designed to produce energy

from renewable resources. Economic development project does not

include that portion of an endeavor devoted to the sale of goods at

retail, except that, as used in relation to the fund insuring a

transaction entered into by a depository institution, and as used

in relation to a loan by the fund to a minority owned business, an

economic development project may include that portion of an

endeavor devoted to the sale of goods at retail. Economic

development project does not include that portion of an endeavor

devoted to housing or a program or activity authorized under

chapter 8A.

chartered bank or a state or federally chartered savings and loan

association, savings bank, or credit union whose deposits are

insured by an agency of the United States government and that

maintains a principal office or branch office in this state under

the laws of this state or the United States.

(d) "Fund" means the Michigan strategic fund created under

section 5, except where the context clearly requires a different

definition.

(e) "Green chemistry" means chemistry and chemical engineering

to design chemical products or processes that reduce or eliminate

the use or generation of hazardous substances, while producing

high-quality products through safe and efficient manufacturing

processes. Green chemistry is guided by the following 12

principles:

(i) Prevent waste: Design chemical syntheses to prevent waste,

leaving no waste to treat or clean up.

(ii) Design safer chemicals and products: Design chemical

products to be fully effective, yet have little or no toxicity.

(iii) Design less hazardous chemical syntheses: Design syntheses

to use and generate substances with little or no toxicity to humans

and the environment.

(iv) Use renewable feedstocks: Use raw materials and feedstocks

that are renewable rather than depleting. Renewable feedstocks are

often made from agricultural products or are the wastes of other

processes; depleting feedstocks are made from fossil fuels,

including petroleum, natural gas, or coal, or are mined.

(v) Use catalysts, not stoichiometric reagents: Minimize waste

by using catalytic reactions. Catalysts are used in small amounts

and can carry out a single reaction many times. They are preferable

to stoichiometric reagents, which are used in excess and work only

once.

(vi) Avoid chemical derivatives: Avoid using blocking or

protecting groups or any temporary modifications if possible.

Derivatives use additional reagents and generate waste.

(vii) Maximize atom economy: Design syntheses so that the final

product contains the maximum proportion of the starting materials.

There should be few, if any, wasted atoms.

(viii) Use safer solvents and reaction conditions: Avoid using

solvents, separation agents, or other auxiliary chemicals. If these

chemicals are necessary, use innocuous chemicals.

(ix) Increase energy efficiency: Run chemical reactions at

ambient temperature and pressure whenever possible.

(x) Design chemicals and products to degrade after use: Design

chemical products to break down to innocuous substances after use

so that they do not accumulate in the environment.

(xi) Analyze in real-time to prevent pollution: Include in-

process real-time monitoring and control during syntheses to

minimize or eliminate the formation of by-products.

(xii) Minimize the potential for accidents: Design chemicals

and their forms, including solid, liquid, or gas, to minimize the

potential for chemical accidents, including explosions, fires, and

releases to the environment.

(f) "Michigan economic development corporation" or "MEDC"

means the Michigan economic development corporation, the public

body corporate created under section 28 of article VII of the state

constitution of 1963 and the urban cooperation act of 1967, 1967

(Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual interlocal

agreement effective April 5, 1999, and subsequently amended,

between local participating economic development corporations

formed under the economic development corporations act, 1974 PA

338, MCL 125.1601 to 125.1636, and the fund.

(g) "Municipality" means a county, city, village, township,

port district, development organization, institution of higher

education, community or junior college, or subdivision or

instrumentality of any of the legal entities listed in this

subdivision.

(h) "Person" means an individual, sole proprietorship,

partnership, limited partnership, limited liability partnership,

limited liability company, joint venture, profit or nonprofit

corporation including a public or private college or university,

public utility, municipality, local industrial development

corporation, economic development corporation, or other association

of persons organized for agricultural, commercial, or industrial

purposes, a lender, or any other entity approved by the board.

(i) "Port facilities" means seawall jetties; piers; wharves;

docks; boat landings; marinas; warehouses; storehouses; elevators;

grain bins; cold storage plants; bunkers; oil tanks; ferries;

canals; locks; bridges; tunnels; seaways; conveyors; modern

appliances for the economical handling, storage, and transportation

of freight and handling of passenger traffic; transfer and terminal

facilities required for the efficient operation and development of

ports and harbors; other harbor improvements; or improvements,

enlargements, remodeling, or extensions of any of these buildings

or structures. Port facilities do not include an international

bridge or international tunnel.

(j) ~~(i)~~ "Project" means an economic development project and,

in addition, means the acquisition, construction, reconstruction,

conversion, or leasing of an industrial, commercial, retail,

agricultural, or forestry enterprise, or any part of these, to

carry out the purposes and objectives of this act and of the fund,

including, but not limited to, acquisition of land or interest in

land, buildings, structures, or other planned or existing planned

improvements to land including leasehold improvements, machinery,

equipment, or furnishings which include, but are not limited to,

the following: research parks; office facilities; engineering

facilities; research and development laboratories; warehousing

facilities; parts distribution facilities; depots or storage

facilities; port facilities; railroad facilities, including

trackage, right of way, and appurtenances; airports; water and air

pollution control equipment or waste disposal facilities; theme or

recreational parks; equipment or facilities designed to produce

energy from renewable resources; farms, ranches, forests, and other

agricultural or forestry commodity producers; agricultural

harvesting, storage, transportation, or processing facilities or

equipment; grain elevators; shipping heads and livestock pens;

livestock; warehouses; wharves and dock facilities; dredging of

recreational or commercial harbors; water, electricity, hydro

electric, coal, petroleum, or natural gas provision facilities;

dams and irrigation facilities; sewage, liquid, and solid waste

collection, disposal treatment, and drainage services and

facilities. Project does not include a program or activity

authorized under chapter 8A.

(k) ~~(j)~~ "Private sector" means other than the fund, a state or

federal source, or an agency of a state or the federal government.

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 licensing and

regulatory affairs or his or her designee from within the

department of 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 or his or her designee, 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, including the MEDC, 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 Michigan business development program incentives

under section 88r, and community revitalization incentives under

chapter 8C, 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 that relates to financial or proprietary

information submitted by the applicant that is considered by the

applicant and acknowledged by the board or a designee of 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.

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. 7b. (1) The board shall establish an advisory committee

to make recommendations to the board regarding projects relating to

port facilities.

(2) The advisory board described in subsection (1) shall

contain 9 members appointed by the board as follows:

(a) Five members representing the interests of the following

geographical areas of this state as determined by the board:

(i) The Upper Peninsula of this state.

(ii) The southwest area of this state.

(iii) The northern Lower Peninsula of this state.

(iv) The southeast area of this state.

(v) The thumb area or midstate area of this state.

(b) One member representing the interests of the agricultural

business supply and handling industry.

supply community.

(d) One member appointed from 2 or more nominees of the

majority leader of the senate.

(e) One member appointed from 2 or more nominees of the

speaker of the house of representatives.

(3) All of the individuals appointed to the advisory board

described under subsection (2) shall be knowledgable about port

facilities or economic development as determined by the board.

Sec. 23. (1) The fund may borrow money and issue bonds or

notes for the following purposes:

(a) To provide sufficient funds for achieving the fund's

purposes and objectives including, but not limited to, amounts

necessary to pay the costs of acquiring a project or part of a

project; to make loans for the costs of a project or part of a

project; to make loans pursuant to section 7(r) for an export

related transaction; for making grants; for providing money to

guarantee or insure loans, leases, bonds, notes, or other

indebtedness; for making working capital loans; for all other

expenditures of the fund incident to and necessary or convenient to

carry out the fund's purposes, objectives, and powers; and for any

combination of the foregoing. The cost of a project may include

administrative costs including, but not limited to, engineering,

architectural, legal, and accounting fees that are necessary for

the project.

(b) To refund bonds or notes of the fund issued under this

act, of the job development authority issued under former 1975 PA

301, of the Michigan economic development authority issued under

former 1982 PA 70, of an economic development corporation issued

under the economic development corporations act, 1974 PA 338, MCL

125.1601 to 125.1636, or of a municipality issued under the

industrial development revenue bond act of 1963, 1963 PA 62, MCL

125.1251 to 125.1267, by the issuance of new bonds, whether or not

the bonds or notes to be refunded have matured or are subject to

prior redemption or are to be paid, redeemed, or surrendered at the

time of the issuance of the refunding bonds or notes; and to issue

bonds or notes partly to refund the bonds or notes and partly for

any other purpose provided for by this section.

act; to pay interest on bonds or notes becoming payable prior to

the receipt of the first revenues available for payment of that

interest as determined by the board; and to establish, in full or

in part, a reserve for the payment of the principal and interest on

the bonds or notes in the amount determined by the board.

(2) The bonds and notes, including, but not limited to,

commercial paper, shall be authorized by resolution adopted by the

board, shall bear the date or dates, and shall mature at the time

or times not exceeding 50 years from the date of issuance, as the

resolution may provide. The bonds and notes shall bear interest at

the rate or rates as may be set, reset, or calculated from time to

time, or may bear no interest, as provided in the resolution. The

bonds and notes shall be in the denominations, be in the form,

either coupon or registered, carry the registration privileges, be

transferable, be executed in the manner, be payable in the medium

of payment, at the place or places, and be subject to the terms of

prior redemption at the option of the fund or the holders of the

bonds and notes as the resolution or resolutions may provide. The

bonds and notes of the fund may be sold at public or private sale

at the price or prices determined by the fund. For purposes of 1966

PA 326, MCL 438.31 to 438.33, this act and other acts applicable to

the fund shall regulate the rate of interest payable or charged by

the fund, and 1966 PA 326, MCL 438.31 to 438.33, does not apply.

Bonds and notes may be sold at a discount.

(3) Bonds or notes may be 1 or more of the following:

(a) Made the subject of a put or agreement to repurchase by

the fund or others.

(b) Secured by a letter of credit or by any other collateral

that the resolution may authorize.

to any put or repurchase agreement.

(4) The fund may authorize by resolution any member of the

board to do 1 or more of the following:

(a) Sell and deliver, and receive payment for notes or bonds.

(b) Refund notes or bonds by the delivery of new notes or

bonds whether or not the notes or bonds to be refunded have

matured, are subject to prior redemption, or are to be paid,

redeemed, or surrendered at the time of the issuance of refunding

bonds or notes.

and partly for any other authorized purposes.

(d) Buy notes or bonds so issued at not more than the face

value of the notes or bonds.

(e) Approve interest rates or methods for fixing interest

rates, prices, discounts, maturities, principal amounts,

denominations, dates of issuance, interest payment dates,

redemption rights at the option of the fund or the holder, the

place of delivery and payment, and other matters and procedures

necessary to complete the transactions authorized.

(5) Except as may otherwise be expressly provided by the fund,

every issue of its notes or bonds shall be general obligations of

the fund payable out of revenues, properties, or money of the fund,

subject only to agreements with the holders of particular notes or

bonds pledging particular receipts, revenues, properties, or money

as security for the notes or bonds.

(6) The notes or bonds of the fund are negotiable instruments

within the meaning of and for all the purposes of the uniform

commercial code, 1962 PA 174, MCL 440.1101 to 440.11102, subject

only to the provisions of the notes or bonds for registration.

(7) Bonds or notes issued by the fund are not subject to the

terms of the revised municipal finance act, 2001 PA 34, MCL

141.2101 to 141.2821. The bonds or notes issued by the fund are not

required to be registered. A filing of a bond or note of the fund

is not required under ~~the uniform securities act, 1964 PA 265, MCL~~

~~451.501 to 451.818, or~~ the uniform securities act (2002), 2008 PA

551, MCL 451.2101 to 451.2703.

(8) A resolution authorizing notes or bonds may contain any or

all of the following covenants, which shall be a part of the

contract with the holders of the notes or bonds:

(a) A pledge of all or a part of the fees, charges, and

revenues made or received by the fund, or all or a part of the

money received in payment of lease rentals, or loans and interest

on the loans, and other money received or to be received to secure

the payment of the notes or bonds or of an issue of the notes or

bonds, subject to agreements with bondholders or noteholders as may

then exist.

(b) A pledge of all or a part of the assets of the fund,

including leases, or notes or mortgages and obligations securing

the same to secure the payment of the notes or bonds or of an issue

of notes or bonds, subject to agreements with noteholders or

bondholders as may then exist.

federal, state, or local government, or source in aid of a project

as provided for in this act.

(d) A pledge of money directly derived from payments from the

heritage trust fund created by the heritage trust fund act of 1982,

former 1982 PA 327.

(e) The use and disposition of the revenues and income from

leases, or from loans, notes, and mortgages owned by the fund.

(f) The establishment and setting aside of reserves or sinking

funds and the regulation and disposition of reserves or sinking

funds subject to this act.

(g) Limitations on the purpose to which the proceeds of sale

of the notes or bonds may be applied and limitations on pledging

those proceeds to secure the payment of other bonds or notes.

(h) Authority for and limitations on the issuance of

additional notes or bonds for the purposes provided for in the

resolution and the terms upon which additional notes or bonds may

be issued and secured. Additional bonds pledging money derived from

the heritage trust fund as provided in subdivision (d) may only be

issued if the issuance meets the requirements of section 204 of the

resolution adopted by the Michigan economic development authority

authorizing issuance of its bonds dated December 1, 1982, and any

requirement of former 1982 PA 70, provided that these requirements

do not apply if those bonds have been defeased.

(i) The procedure, if any, by which the terms of a contract

with noteholders or bondholders may be amended or abrogated, the

number of noteholders or bondholders who are required to consent to

an amendment or abrogation, and the manner in which the consent may

be given.

(j) Vest in a trustee or a secured party the property, income,

revenues, receipts, rights, remedies, powers, and duties in trust

or otherwise as the fund may determine necessary or appropriate to

adequately secure and protect noteholders and bondholders or to

limit or abrogate the rights of the noteholders and bondholders. A

trust agreement may be executed by the fund with any trustee who

may be located inside or outside this state to accomplish any of

the foregoing.

(k) Pay maintenance and repair costs of a project.

(l) The insurance to be carried on a project and the use and

disposition of insurance money and condemnation awards.

(m) The terms, conditions, and agreements upon which the

holder of the bonds, or a portion of the bonds, is entitled to the

appointment of a receiver by the circuit court. A receiver who is

appointed may enter and take possession of the project and maintain

it or lease or sell the project for cash or on an installment sales

contract and prescribe rentals and payments therefor and collect,

receive, and apply all income and revenues thereafter arising in

the same manner and to the same extent as the fund.

(n) Any other matters, of like or different character, which

in any way affect the security or protection of the notes or bonds.

(9) A pledge made by the fund is valid and binding from the

time the pledge is made. The money or property so pledged and

thereafter received by the fund is immediately subject to the lien

of the pledge without a physical delivery or further act. The lien

of a pledge is valid and binding as against parties having claims

of any kind in tort, contract, or otherwise against the fund and is

valid and binding as against the transfer of the money or property

pledged, irrespective of whether the parties have notice. Neither

the resolution, the trust agreement, nor any other instrument by

which a pledge is created need be recorded.

(10) A member of the board or a person executing the notes or

bonds is not liable personally on the notes or bonds and is not

subject to personal liability of accountability by reason of the

issuance of the notes or bonds.

(11) This state is not liable on notes or bonds of the fund,

and the notes or bonds shall not be considered a debt of this

state. The notes and bonds shall contain on their face a statement

indicating this fact.

(12) The notes and bonds of the fund are securities in which

the public officers and bodies of this state; municipalities and

municipal subdivisions; insurance companies, associations, and

other persons carrying on an insurance business; banks, trust

companies, savings banks, savings associations, and savings and

loan associations; investment companies; administrators, guardians,

executors, trustees, and other fiduciaries; and all other persons

who are authorized to invest in bonds or other obligations of this

state may properly and legally invest funds.

(13) The property of the fund and its income and operation is

exempt from all taxation by this state or any of its political

subdivisions, and all bonds and notes of the fund, the interest on

the bonds and notes, and their transfer are exempt from all

taxation by this state or any of its political subdivisions, except

for estate, gift, and inheritance taxes. The state covenants with

the purchasers and all subsequent holders and transferees of notes

and bonds issued by the fund under this act, in consideration of

the acceptance of and payment for the notes and bonds, that the

notes and bonds of the fund, issued pursuant to this act, the

interest on the notes and bonds, the transfer of the notes and

bonds, and all its fees, charges, gifts, grants, revenues,

receipts, and other money received or to be received and pledged to

pay or secure the payment of the notes or bonds shall at all times

be free and exempt from all state or local taxation provided by the

laws of this state, except for estate, gift, and inheritance taxes.

(14) The issuance of bonds and notes under this act is subject

to the agency financing reporting act, 2002 PA 470, MCL 129.171 to

129.177.

(15) For the purpose of more effectively managing its debt

service, the fund may enter into an interest rate exchange or swap,

hedge, or similar agreement with respect to its bonds or notes on

the terms and payable from the sources and with the security, if