March 19, 2013, Introduced by Senators EMMONS and KOWALL and referred to the Committee on Economic Development.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending sections 88a, 88b, and 89c (MCL 125.2088a, 125.2088b,
and 125.2089c), section 88a as amended by 2011 PA 22, section 88b
as amended by 2012 PA 145, and section 89c as added by 2008 PA 98.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 88a. As used in this chapter:
(a) "Advanced automotive, manufacturing, materials,
information, and agricultural processing technology" means any
technology that involves 1 or more of the following:
(i) Materials with engineered properties created through the
development of specialized process and synthesis technology.
(ii) Nanotechnology, including materials, devices, or systems
at the atomic, molecular, or macromolecular level, with a scale
measured in nanometers.
(iii) Microelectromechanical systems, including devices or
systems integrating microelectronics with mechanical parts and a
scale measured in micrometers.
(iv) Improvements to vehicle safety, vehicle performance,
vehicle production, or environmental impact, including, but not
limited to, vehicle equipment and component parts.
(v) A new technology, device, or system that enhances or
improves the manufacturing process of wood, timber, or
agricultural-based products.
(vi) Any technology that involves an alternative energy vehicle
or its components, as alternative energy vehicle is defined under
section 2 of the Michigan next energy authority act, 2002 PA 593,
MCL 207.822.
(vii) Advanced computing or electronic device technology
related to technology described under this subdivision.
(viii) Design, engineering, testing, or diagnostics related to
technology described under this subdivision.
(ix) Product research and development related to technology
described under this subdivision.
(b) "Advanced computing" means any technology used in the
design and development of 1 or more of the following:
(i) Computer hardware and software.
(ii) Data communications.
(iii) Information technologies.
(c) "Alternative energy technology" means applied research or
commercialization of new or next generation technology in 1 or more
of the following:
(i) Alternative energy technology as that term is defined in
section 2 of the Michigan next energy authority act, 2002 PA 593,
MCL 207.822.
(ii) Devices or systems designed and used solely for the
purpose of generating energy from agricultural crops, residue and
waste generated from the production and processing of agricultural
products, animal wastes, or food processing wastes, not including a
conventional gasoline or diesel fuel engine or retrofitted
conventional gasoline or diesel fuel engine.
(iii) A new technology, product, or system that permits the
utilization of biomass for the production of specialty, commodity,
or foundational chemicals or of novel or economical commodity
materials through the application of biotechnology that minimizes,
complements, or replaces reliance on petroleum for the production.
Alternative energy technology also includes a new technology,
product, or system that utilizes wind energy.
(iv) Advanced computing or electronic device technology related
to technology described under this subdivision.
(v) Design, engineering, testing, or diagnostics related to
technology described under this subdivision.
(vi) Product research and development related to a technology
described under this subdivision.
(d) "Applied research" means translational research conducted
with the objective of attaining a specific benefit or to solve a
practical problem, or other research activity that seeks to
utilize, synthesize, or apply existing knowledge, information, or
resources to the resolution of a specified problem, question, or
issue, with high potential for commercial application to create
jobs in this state.
(e) "Basic research" means any original investigation for the
advancement of scientific or technological knowledge that will
enhance the research capacity of this state in a way that increases
the ability to attract to or develop companies, jobs, researchers,
or students in this state.
(f) "Commercialization" means the transition from research to
the actions necessary to achieve market entry and general market
competitiveness of new innovative technologies, processes, and
products and the services that support, assist, equip, finance, or
promote a person or an entity with that transition.
(g) "Competitive edge technology" means 1 or more of the
following:
(i) Life sciences technology.
(ii) Advanced automotive, manufacturing, materials,
information, and agricultural processing technology.
(iii) Homeland security and defense technology.
(iv) Alternative energy technology.
(v) Any other innovative technology as determined by the fund
board.
(h) "Electronic device technology" means any technology that
involves microelectronics, semiconductors, electronic equipment,
and instrumentation, radio frequency, microwave, and millimeter
electronics; optical and optic-electrical devices; or data and
digital communications and imaging devices.
(i) "Fund board" means the board of the Michigan strategic
fund described in section 5.
(j) "Homeland security and defense technology" means
technology that assists in the assessment of threats or damage to
the general population and critical infrastructure, protection of,
defense against, or mitigation of the effects of foreign or
domestic threats, disasters, or attacks, or support for crisis or
response management, including, but not limited to, 1 or more of
the following:
(i) Sensors, systems, processes, or equipment for
communications, identification and authentication, screening,
surveillance, tracking, and data analysis.
(ii) Advanced computing or electronic device technology related
to technology described under this subdivision.
(iii) Aviation technology, including, but not limited to,
avionics, airframe design, sensors, early warning systems, and
services related to technology described under this subdivision.
(iv) Design, engineering, testing, or diagnostics related to
technology described under this subdivision.
(v) Product research and development related to technology
described under this subdivision.
(k) "Independent peer review expert" means a person or persons
selected by the commercialization board with appropriate expertise
to conduct an independent, unbiased, objective, and competitive
evaluation of activities funded under section 88k. The person or
persons shall demonstrate the capability and experience, as
appropriate or necessary for the particular activity funded, to do
all of the following:
(i) Conduct a highly competitive and intensive, independent,
multiphased, peer-review-based evaluation process.
(ii) Employ personnel with appropriate business, scientific,
technical, commercial, or other specialized expertise to carry out
each aspect of the evaluation process.
(iii) Provide recommendations to or assist the commercialization
board in identifying high-quality activities for funding that are
likely to result in the development and commercialization of
competitive edge technology and job creation in this state. The
recommendations shall include all materials used by the independent
peer review expert in making the recommendation.
(iv) Assure that any peer review process developed maintains a
high level of integrity.
(l) "Institution of higher education" means an institution of
higher education or a community or junior college described in
section 4, 5, 6, or 7 of article VIII of the state constitution of
1963 or an independent nonprofit degree-granting institution of
postsecondary education in this state that is approved by the state
board of education.
(m) "Jobs for Michigan investment fund" or "investment fund"
means the jobs for Michigan investment fund created in section 88h.
(n) "Life sciences" means science for the examination or
understanding of life or life processes, including, but not limited
to, all of the following:
(i) Bioengineering.
(ii) Biomedical engineering.
(iii) Genomics.
(iv) Proteomics.
(v) Molecular and chemical ecology.
(vi) Biotechnology, including any technology that uses living
organisms, cells, macromolecules, microorganisms, umbilical cord
blood, or substances from living organisms to make or modify a
product for useful purposes. Biotechnology or life sciences does
not include any of the following:
(A) Activities prohibited under section 2685 of the public
health code, 1978 PA 368, MCL 333.2685.
(B) Activities prohibited under section 2688 of the public
health code, 1978 PA 368, MCL 333.2688.
(C) Activities prohibited under section 2690 of the public
health code, 1978 PA 368, MCL 333.2690.
(D) Activities prohibited under section 16274 of the public
health code, 1978 PA 368, MCL 333.16274.
(E) Stem cell research with human embryonic tissue.
(o) "Life sciences technology" means any technology derived
from life sciences intended to improve human health or the overall
quality of human life, including, but not limited to, systems,
processes, or equipment for drug or gene therapies, biosensors,
testing, medical devices or instrumentation with a therapeutic or
diagnostic value, a pharmaceutical or other product that requires
United States food and drug administration approval or registration
prior to its introduction in the marketplace and is a drug or
medical device as defined by the federal food, drug, and cosmetic
act, 21 USC 301 to 399a, or 1 or more of the following:
(i) Advanced computing or electronic device technology related
to technology described under this subdivision.
(ii) Design, engineering, testing, or diagnostics related to
technology or the commercial manufacturing of technology described
under this subdivision.
(iii) Product research and development related to technology
described under this subdivision.
(p) "Qualified business" means a business entity located in
this state.
(q) "Qualified mezzanine fund" means a person or entity
primarily engaged in making loans or investments ranging in size
from $250,000.00 to $6,000,000.00 that is managed by 2 or more
individuals with no less than 5 years' direct experience in
mezzanine lending or capital investments and that holds investment
capital or has commitments from investors other than the fund and
at least 2 financial institutions.
(r) "Qualified private equity fund" means a firm principally
or primarily engaged in investing in or acquiring businesses that
is managed by 2 or more individuals with no less than 5 years of
direct experience in private equity investments, and that holds
investment capital from investors other than the fund.
(s) "Qualified venture capital fund" means a firm principally
or primarily engaged in investing in or acquiring early stage
businesses with growth potential that have not yet demonstrated
consistent profitability or a proven business model, that is
managed by 2 or more individuals with not less than 5 years of
direct experience in venture capital, and that holds capital from
investors other than the fund.
(t) "Small business" means a business entity formed or doing
business in this state, including the affiliates of the business
concern, which business entity is independently owned and operated
and employs fewer than 250 full-time employees or has gross annual
sales of less than $6,000,000.00.
(u) "21st century investments" means investments in 1 or more
of the following:
(i) Commercial loan guarantees under a loan enhancement program
operated by the fund.
(ii) Private equity investments under a private equity
investment program operated by the fund.
(iii) Venture capital investments under a venture capital
investment program operated by the fund.
(iv) Mezzanine investments under a mezzanine investment program
operated by the fund.
(v) "Strategic economic investment and commercialization
board" or "commercialization board" means, except as otherwise
provided in this subdivision, the strategic economic investment and
commercialization board created in section 88k. Beginning October
18, 2010, the strategic economic investment and commercialization
board or the commercialization board means the fund board.
(w) "University technology transfer" means innovative methods
to accelerate the creation of start-up companies affiliated with
institutions of higher education or the transfer of competitive
edge technology research from an institution of higher education to
a qualified business in Michigan.
Sec. 88b. (1) The fund shall create and operate programs
authorized
under this chapter. act. The fund board shall determine
the annual allocation of money for programs authorized under this
chapter
act and make authorized expenditures or investments from
the investment fund of the 21st century jobs trust fund created in
the Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, as
authorized
under this chapter act for programs and activities
authorized
under this chapter.act.
(2) Money transferred or appropriated by law to the fund for
the purposes of carrying out this chapter or chapter 8C shall be
expended or invested by the fund as authorized by law for the
following purposes:
(a) 21st century investments.
(b) Grants and loans approved by the commercialization board
under section 88k.
(c) Other programs or activities authorized under this
chapter, any other chapter of this act, or as provided in an
appropriation act.
(d) For promotion of tourism in this state. For fiscal year
2010-2011 only, $20,000,000.00 for the promotion of tourism in this
state from funds appropriated in the jobs for Michigan investment
program - 21st century jobs fund line in section 109 of 2010 PA 191
with not less than $1,500,000.00 to be used for the 2010-2011
winter advertisement buy. For all funds used for promotion of
tourism in this state under this subdivision, the fund shall report
to the legislature at the same time and in the same manner as
provided in section 89d.
(e) Grants, loans, or other economic assistance under section
88r and community revitalization incentives under chapter 8C.
(3) Not more than 4% of the annual appropriation as provided
by law from the 21st century jobs trust fund created 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 loans, grants, or other
economic assistance 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.
(4)
Not more than 5% $7,250,000.00
of the annual appropriation
as provided by law from the 21st century jobs trust fund created in
the Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.260, may
be
used for business development and business marketing costs. Not
less
than 80% of the funds committed for business development and
business
marketing costs shall be targeted to persons or entities
outside
of this state. No funds may be used
for any business
development and business marketing effort that includes a reference
to or the image or voice of an elected state officer or a candidate
for elective state office and that is targeted to a media market in
Michigan.
(5) The fund shall not use any money appropriated or
transferred for purposes authorized under this chapter to acquire
interests in or improve real property. The restriction under this
subsection does not prohibit the fund from taking a security
interest in real property. The restriction under this subsection
applies only to the fund and not to recipients of expenditures or
investments under this chapter.
(6) The fund board may select all vendors for all expenditures
and for program awards under this chapter by issuing a request for
proposal or an alternative competitive process as determined by the
fund board. At a minimum, the request for proposal shall require
the responding entities to disclose any conflict of interest,
disclose any criminal convictions, disclose any investigations by
the internal revenue service or any other federal or state taxing
body or court, disclose any litigation involving the entity, and
maintain records and evidence pertaining to work performed. The
fund board shall establish a standard process to evaluate proposals
submitted as a result of a request for proposal and appoint a
committee to review the proposals. The fund or the fund board shall
not appoint or designate any person paid or unpaid to a committee
to review proposals if that person has a conflict of interest with
any potential vendors as determined by the office of the chief
compliance officer established in section 88i.
(7) Application fees received for programs and activities
authorized under this chapter or chapter 8C may be used by the fund
for administering the programs and activities authorized under this
chapter or chapter 8C. The restrictions on expenditures under
subsection (3) do not apply to expenditure of application fee
revenue under this subsection.
(8) Funds appropriated by law to the fund board or the fund
may be expended by the fund board or fund without further
appropriation regardless of the source of those funds.
Sec. 89c. (1) The fund board shall select vendors for Michigan
promotion program expenditures under this chapter exceeding
$250,000.00 by issuing a request for proposal. At a minimum, the
request for proposal shall require the responding entities to
disclose any conflict of interest, disclose any criminal
convictions, disclose any investigations by the internal revenue
service or any other federal or state taxing body or court,
disclose any pertinent litigation regarding the conduct of the
entity, and maintain records and evidence pertaining to work
performed for at least 5 years. The fund board shall establish a
standard process to evaluate proposals submitted as a result of a
request for proposal and appoint a committee to review the
proposals. Members of any committee or individuals working on
behalf of the Michigan strategic fund, paid or unpaid, shall have
no conflict of interest as determined by the office of the chief
compliance officer established in section 88i. This subsection does
not apply to a contract that was in existence on March 25, 2008 or
to the extension of a contract in which the right to extend was in
existence on or before March 25, 2008.
(2)
Not less than 75% of the funds appropriated under this
chapter
shall be targeted to persons or entities outside of this
state.
No funds may be used for any
Michigan promotion program
effort that includes a reference to or the image or voice of an
elected official, appointed state employee, state employee governed
by a senior executive service limited term employment agreement, or
a candidate for elective office, and that is targeted to a media
market in this state.