Legislative Analysis
Phone: (517) 373-8080
MAKE IT IN MICHIGAN FUND AND TRANSFORMATIONAL
http://www.house.mi.gov/hfa
PROJECTS AUTHORITY
Analysis available at
Senate Bill 559 (H-5) as reported from House committee http://www.legislature.mi.gov
Sponsor: Sen. Mallory McMorrow
Senate Bill 562 (H-1) as reported
Sponsor: Sen. Mary Cavanagh
House Bill 5768 as reported
Sponsor: Rep. Jason Hoskins
House Bill 5769 (H-2) as reported House Bill 5770 as reported
Sponsor: Rep. Jason Morgan Sponsor: Rep. Mike McFall
House Committee: Economic Development and Small Business
Senate Committee (SBs 559 and 562): Economic and Community Development
Complete to 6-20-24
BRIEF SUMMARY: Senate Bills 559 and 562 would amend the Michigan Strategic Fund Act and
the Michigan Trust Fund Act, respectively, to replace the Strategic Outreach and Attraction
Reserve (SOAR) Fund with the “Make it in Michigan” Fund and make various changes to the
current SOAR programs.
House Bill 5769 would create a new act to establish a grant program for public transit
operations, to be funded by a proposed Michigan Mobility Trust Fund and administered by a
new authority created within the Department of Transportation. House Bill 5768 would amend
the Income Tax Act to replace the current SOAR Fund distribution with distributions to the
Michigan Mobility Trust Fund, the Make it in Michigan Fund, and the Michigan Housing and
Community Development Fund through the 2034-35 fiscal year. House Bill 5770 would amend
the Michigan Trust Fund Act to establish the Michigan Mobility Trust Fund.
The bills are tie-barred together, meaning that none of them can take effect unless all five bills
are enacted.
FISCAL IMPACT: Senate Bills 559 and 562 would increase costs for the Michigan Strategic Fund
(MSF) by an indeterminate amount, largely by expanding its responsibilities. House Bill 5768
would directly reduce general fund revenues by up to $550.0 annually beginning in FY 2025-
26 and ending in FY 2034-35. (See Fiscal Information, below, for more information.)
THE APPARENT PROBLEM:
The Strategic Outreach and Attraction Reserve Fund was created in 2021 to fund Michigan’s
economic development incentives through the Critical Industry Program and the Michigan
Strategic Site Readiness Program. The SOAR Fund has received over $2.0 billion in deposits
since its creation and has been credited with attracting major investments for electric vehicle
battery projects to the state. However, the program has also received criticism for not doing
House Fiscal Agency Page 1 of 23
 enough to create good-paying jobs, attract new residents, and ensure that companies receiving
the incentives follow through on the projects.
THE CONTENT OF THE BILLS:
Senate Bill 559 would amend the Michigan Strategic Fund Act to modify the Critical Industry
Program (CIP) and the Michigan Strategic Site Readiness Program (SSRP) and require the
programs to be funded through the Make it in Michigan Fund rather than the SOAR Fund. The
bill would not affect agreements for CIP or SSRP awards or related assistance that are in effect
before the bill takes effect.
Critical Industry Program 1
The MSF operates the CIP and uses money transferred from the SOAR Fund or other
appropriated money to make qualified investments to qualified businesses for deal-closing,
gap financing, or other economic assistance to create or retain qualified jobs as a result of a
technological shift in product or production 2 or make capital investments, or both, as
determined by the MSF board. 3
With respect to the Critical Industry Program, a qualified investment means a grant,
loan, or other economic assistance for a project subject to a written agreement with a
qualified business under the CIP. It includes grants, loans, and other economic
assistance for the creation or retention of qualified jobs as a result of a technological
shift in product or production, infrastructure improvements, other capital investments,
the purchase or acquisition of heavy machinery, or other assistance. 4 Senate Bill 559
would delete the italicized language and instead provide that a qualified investment
includes assistance for the creation or retention of qualified jobs that the MSF
determines are critical to the economic growth and development of the state.
Qualified business means a business located or operating in Michigan or a business
that will locate or operate in Michigan as determined by the MSF board. A qualified
business may include more than one business, as determined by the MSF board.
Qualified job means a job performed by a Michigan resident whose state income taxes
are withheld by an employer, by an employee leasing company or professional
employer organization on behalf of the employer, or by an individual who is not a
Michigan resident and is employed by a business at a project location that is in
Michigan, as determined and verified by the MSF.
1
For an overview of the Critical Industry Program, see: https://www.michiganbusiness.org/services/incentives-and-
taxes/cip/.
2
The bill would delete requirements that an eligible job must be created or retained as a result of a technological shift
in product or production. Instead, the MSF would determine whether a job is critical to the economic growth and
development of the state.
3
Senate Bill 559 would specify that the program is operated and administered by the authorized employees, officers,
and agents of the MSF, which could include employees of the MEDC.
4
The term also includes a grant, loan, or other economic assistance for job training opportunities or workforce
development and education.
House Fiscal Agency SBs 559 and 562 and HBs 5768 to 5770 as reported Page 2 of 23
 CIP criteria
The MSF would have to consider and document the following before entering into a written
agreement for a qualified investment under the CIP: 5
• The potential economic impact of the project for the community and in Michigan.
• The degree to which the project will catalyze economic growth in Michigan and the
community in which it is located.
• The amount of local community and financial support for the project.
• The applicant’s financial need for the qualified investment, including whether the
amount of the investment is necessary and does not exceed the amount required to
make the project feasible or secure the project in Michigan.
• The anticipated creation or retention of qualified jobs at or as a result of the project.
• Whether and to what extent the federal government is supporting the project through
grants, loans, loan guarantees, appropriations, tax credits, or other expenditures.
• The level of private money, investments, or contributions to the project, with the size
of the project not disadvantaging a project that otherwise satisfies the MSF’s criteria.
• The state’s overall return on investment, accounting for all forms of direct state
assistance and the overall economic impact to the state.
• Whether the qualified jobs associated with the project are at or above the median wage
of the prosperity region in which the project is or will be located, with priority given
to projects anticipated to provide higher wages and more robust employee benefits. 6
• Whether the project is in a low-income community 7 or a qualified opportunity zone. 8
• Whether the project furthers one or more of the following strategic goals:
o Securing long-term commitments to the state from incumbent, strategically
critical industries undergoing transformation due to changing technology or
market forces.
o Promoting the diversification of the state into high-wage, high-growth
economic sectors.
o Providing opportunities for the expansion of in-state businesses, if the
expansion otherwise advances the described criteria and strategic goals.
o Creating a balanced portfolio of projects relating to the assisted industry,
location of projects, and size of projects.
Written agreements
If the MSF decides to award a qualified investment to a qualified business, it currently must
enter a written agreement with the business that includes the following, in addition to any other
terms and conditions related to the investment:
• Specific dates and benchmarks for the business to receive the investment, including
any conditions for the disbursement of money in installments.
5
The current criteria can be found here: https://www.michiganbusiness.org/48f6cb/globalassets/documents/reports/f
act-sheets/critical-industry-program-guidelines.pdf.
6
See https://www.michigan.gov/mshda/developers/opportunity-zones/opportunity-zone-prosperity-region-maps.
7
Low-income community would mean, as defined by federal law, a population census tract for which the poverty rate
is at least 20%, a census tract not within a metropolitan area for which the median family income does not exceed
80% of the state average, or a census tract within a metropolitan area for which the median family income does not
exceed 80% of either the statewide median or metropolitan area median.
See: https://www.govinfo.gov/content/pkg/USCODE-2022-title26/pdf/USCODE-2022-title26-subtitleA-chap1-
subchapA-partIV-subpartD-sec45D.pdf#page=2.
8
See https://michigan.maps.arcgis.com/apps/webappviewer/index.html?id=8b1413d59b8d420faaf5217a5ab52851.
House Fiscal Agency SBs 559 and 562 and HBs 5768 to 5770 as reported Page 3 of 23
 • Specific terms relating to the required qualified job creation or the retention of qualified
jobs, including measurable outcomes, prorated payments for partial performance, and
clawback or specific repayment provisions for noncompliance.
• Specific penalties for noncompliance, as determined by the MSF.
• A provision that all money subject to a clawback or that is required to be repaid under
a specific repayment provision must be paid within 90 days after notification from the
MSF, and any amounts not paid within that period will be subject to a 1% monthly
penalty, prorated daily.
• A provision that the state may have a security interest to the extent of the investment,
as determined by the MSF board, unless doing so conflicts with any contractual
obligation of the qualified business or with any applicable bankruptcy or insolvency
laws.
• A requirement that the business provide all data necessary for the MSF’s annual
legislative reports.
• A provision authorizing the business to enter into direct agreements with workforce
training providers to meet the qualified investment’s workforce requirements, as the
MSF determines appropriate. 9
Security interest would mean, as defined in the Uniform Commercial Code, an interest
in personal property or fixtures that secures payment or performance of an obligation.
Senate Bill 559 would additionally require the written agreement to include an audit provision
requiring the MSF to verify that the benchmarks required for the project have been satisfied.
In establishing measurable commitments for job creation or retention, the MSF would have to
determine a baseline of the business’s existing or anticipated employment in Michigan and
measure the net creation or retention of qualified jobs in comparison to that baseline.
An agreement would also have to include the following:
• Specific terms relating to the proration of future disbursements if a qualified business
fails to meet its commitments.
• A provision requiring the business to disclose whether, to its knowledge, there are any
pending legal proceedings that could have a materially adverse effect on the project,
the qualified business, or the performance of its obligations under the agreement.
• A provision requiring the business to undertake commercially responsible efforts to do
all of the following, with specific accountability measures for noncompliance:
o Engage with the community in which the project will be located regarding the
project’s details and impact, including opportunities for community members
to benefit from the project through employment, contracting opportunities, or
enhanced business opportunities.
o Work with local skilled workforce agencies to maximize workforce
development opportunities related to the project’s construction and ongoing
operations.
o Use best practices related to sustainable development and environmental
mitigation to minimize the project’s ecological and environmental impacts on
the surrounding community.
9
Senate Bill 559 would remove this requirement.
House Fiscal Agency SBs 559 and 562 and HBs 5768 to 5770 as reported Page 4 of 23
 o Engage with local chambers of commerce, supplier development councils,
local economic development organizations, or other similar organizations to
participate in the construction of the project or business supply chain.
Before entering into an agreement, the MSF would have to provide a copy of the available
negotiated terms of the agreement and the MSF’s written analysis of the criteria considered to
the Senate majority leader, the speaker of the House, the Senate and House minority leaders,
and the chairs of the Senate and House appropriations committees. After entering into an
agreement, the MSF would have to post a copy of its written analysis on the MSF website or
the Michigan Economic Development Corporation (MEDC) website.
Clawbacks
Currently, all money paid to the MSF pursuant to a clawback or repayment provision for a
project receiving money from the CIP is deposited in the SOAR Fund, and all money allocated
to the program that remains unexpended, unallocated, or unobligated at the end of a fiscal year
would revert back to the SOAR Fund. Senate Bill 559 would instead provide that any money
paid pursuant to a clawback or repayment provision would be deposited in the general fund,
and any money appropriated, transferred, or allocated to the program that is not awarded,
committed, allocated, or obligated by the MSF would revert to the Make it in Michigan Fund.
The bill would also remove provisions that currently prohibit the MSF from using money
allocated to the CIP for administrative expenses.
A qualified business that is required to repay money under a clawback or other specific
repayment provision of a written agreement but has failed to do so and has not timely cured
the failure would be ineligible to receive future investments or other economic assistance
through the CIP or SSRP.
Administrative fee
Senate Bill 559 would allow the MSF to retain 3.5% of the amount of a qualified investment
awarded to a qualified business for any additional administrative expenses of the CIP. The
money would be used to employ at least one full-time permit coordinator, who would be
responsible for providing qualified businesses and other recipients of economic assistance
under Chapter 8A of the Michigan Strategic Fund Act with assistance in expeditiously
obtaining permits or approvals from applicable state departments.
Modification requests
Currently, if the MSF receives a request to modify an existing written agreement for an
investment under the CIP, it must provide a copy of the request to each member of the
legislature, the governor, the clerk of the House, the secretary of the Senate, and the Senate and
House Fiscal Agencies within five business days of receiving the request. Senate Bill 559
would instead require the MSF to provide a copy of the request to the Senate majority leader,
the speaker of the House, and the chairs of the Senate and House appropriations committees,
rather than all members of the legislature, and would specify that the copy of the modification
would have to be provided before the MSF amends the written agreement. (If the MSF
approves a modified agreement, a copy of the new agreement must be provided to the officers
and entities listed above within one business day. Senate Bill 559 would provide that the only
legislators required to receive a copy of the modification would be those listed above.)
House Fiscal Agency