Bill Summary – FastDemocracy

HOUSE BILL NO. 5138
     October 12, 2023, Introduced by Reps. Bollin, Lightner, Beeler, Posthumus, Hall, Borton, Steele,
       Cavitt, Alexander, Hoadley, Meerman, Kunse, Bruck and Jaime Greene and referred to the
       Committee on Appropriations.
           A bill to amend 1984 PA 270, entitled
    "Michigan strategic fund act,"
    by amending sections 88s and 88t (MCL 125.2088s and 125.2088t),
    section 88s as added by 2021 PA 136 and section 88t as added by
PA 134.
                      THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
        Sec. 88s. (1) The fund shall create and operate the critical
 industry program. The fund shall use money transferred from the
 strategic outreach and attraction reserve fund created in section 4
 of the Michigan trust fund act, 2000 PA 489, MCL 12.254, or money
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 appropriated to the program to make qualified investments to
 qualified businesses.
       (2) The fund shall expend money allocated to the Michigan
 critical industry program only to provide 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 or make capital
 investments, or both, as determined by the fund board. The program
 must provide for a detailed application, approval, and compliance
 process that is also published and available on the fund's website.
       (3) The fund shall consider and document at a minimum all of
 the following criteria to the extent reasonably applicable as
 reasonably determined by the fund board to the type of project
 proposed before entering into a written agreement for a qualified
 investment as provided under subsection (4):
       (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 and this
 state.
       (c) The amount of local community and financial support for
 the project.
       (d) The applicant's financial need for a qualified investment
 from the critical industry program.
       (e) The extent of reuse of vacant buildings, public or
 private, reuse of historic resources, and redevelopment of blighted
 property.
       (f) Creation or retention of qualified jobs as a result of a
 technological shift in product or production at the project
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 location and within this state.
       (g) The level of other public funds including, but not limited
 to, the appropriation of federal or state funds and any federal or
 state tax credits.
       (h) The level of any private funds, investments, or
 contributions into the project including, but not limited to, the
 qualified business's own investments in the project.
       (i) Whether and how the project is financially and
 economically sound.
       (j) Whether and how the project promotes sustainable
 development.
       (k) Whether and how the project involves the rehabilitation of
 a historic resource.
       (l) Whether and how the project addresses areawide
 redevelopment and the overall economic benefit to the existing
 supply chain.
       (m) The level and extent of environmental contamination.
       (n) Whether and how the project will compete with or affect
 existing Michigan businesses within the same industry.
       (o) Whether and how the project's proximity to rail and
 utility will impact performance of the project and maximize energy
 and logistics needs in the community in which it is located and in
 this state.
       (p) The risk of obsolescence of the project, products, and
 investments in the future.
       (q) The overall return on investment to this state.
       (r) Whether and how the project addresses food supply
 challenges.
       (s) Any other additional criteria approved by the board that
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 are specific to each individual project and are consistent with the
 purpose of this program.
       (4) If the fund determines, after making the considerations
 under subsection (3), to award a qualified investment to a
 qualified business under this program, the fund shall enter into a
 written agreement with the qualified business that includes in a
 clear and concise manner all of the terms and conditions relating
 to the qualified investment as determined and documented by the
 fund board, including, but not limited to, the following:
       (a) Specific time frames and benchmarks to be met before the
 qualified business receives a disbursement in installments under
 the critical industry program pursuant to the approved qualified
 investment.
       (b) Specific terms relating to the required creation or
 retention of qualified jobs as a result of a technological shift in
 product or production at the project location and within this
 state, including measurable outcomes, proration of payments for
 partial performance, clawback and specific repayment provisions for
 breach of the agreement, or for failure to meet measurable
 outcomes.
       (c) Specific penalties for noncompliance with the written
 agreement as determined by the fund.
       (d) A provision that all money that is subject to a clawback
 or required to be repaid under a specific repayment provision must
 be paid within 90 days of notification by the fund. Any amounts not
 paid within that 90-day period are subject to a penalty of 1% per
 month, prorated on a daily basis.
       (e) A provision that this state shall have a security interest
 as that term is defined in section 1201(2)(ii) 1201 of the uniform
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 commercial code, 1962 PA 174, MCL 440.1201, to the extent of the
 qualified investment. This provision does not apply if it conflicts
 with any contractual obligation of the qualified business or any
 federal or state bankruptcy or insolvency laws.
       (f) A provision that the qualified business will provide the
 data described in the written agreement that are necessary for the
 fund to report to the legislature as required under this program.
       (g) A provision that the qualified business may enter into
 direct agreements with workforce training providers, when
 appropriate, as determined by the fund to meet the workforce
 requirements of a qualified investment.
       (h) A provision that, if the project is canceled or placed on
 definite hold or indefinite hold, the qualified business must
 notify the fund in writing of the cancellation, definite hold, or
 indefinite hold and, if the project is placed on definite hold, the
 specific date for resuming the project, not later than 1 business
 day after the project is canceled or placed on definite hold or
 indefinite hold. If a specific date for resuming the project is not
 provided, the fund shall consider the hold an indefinite hold.
       (i) A provision that the requirements of subsection (8) apply
 to a cancellation, definite hold, or indefinite hold of the
 project. The fund shall not include any provision in a written
 agreement that would allow a project to be canceled or placed on
 definite hold or indefinite hold without being subject to the
 requirements of subsection (8).
       (j) A provision that the requirements of subsections (8) and
 (9) apply if the project is not commenced by the applicable date.
 The fund shall not include any provision in a written agreement
 that would allow a project to commence after the applicable date
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 without being subject to the requirements of subsections (8) and
 (9).
        (5) If the fund receives a request to modify an existing
 written agreement for a qualified investment under this program,
 the fund must provide a copy of that requested modification to each
 member of the legislature, the governor, the clerk of the house of
 representatives, the secretary of the senate, and the senate and
 house fiscal agencies within 5 business days of the receipt of the
 modification request. In addition to the copy of the request for
 modification, the notice provided under this subsection must also
 include the specific provisions to be modified and the rationale
 for considering the modification. Before the fund modifies an
 existing written agreement for a qualified investment, the fund
 must give notice of the proposed amendments and publish them on the
 fund's internet website at least 1 business day prior to a public
 hearing on the proposed amendments. If the fund approves and
 modifies an existing written agreement under this subsection, the
 fund must provide a copy of that amended written agreement to each
 member of the legislature, the governor, the clerk of the house of
 representatives, the secretary of the senate, and the senate and
 house fiscal agencies within 1 business day of the modification.
 The fund may not modify an existing written agreement to extend the
 date by which a project must commence or to extend any other time
 frame under the existing written agreement.
        (6) If the fund board seeks to make a determination as to
 whether a qualified investment approved under this program
 represents a fair exchange of value for value, the fund may
 consider the total value to this state of the qualified investment
 and the best interests of this state, including, but not limited
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 to, any positive economic impact to this state likely to be
 generated by the qualified business pursuant to the written
 agreement for a qualified investment, especially economic impact
 resulting in the location of a high-economic-impact business
 facility in this state, increased capital investment in this state,
 and the creation or retention of qualified jobs as a result of a
 technological shift in product or production in this state.
       (7) The fund board shall not disburse funds allocated to the
 program for a qualified investment to a qualified business if that
 qualified business has not fully repaid all money subject to
 clawback or required to be repaid under a specific repayment
 provision as provided in any written agreement under this act or if
 that qualified business is in default on any grant, loan,
 investment, or other economic assistance made or guaranteed by this
 state. All money paid to the fund pursuant to a clawback or
 specific repayment provision for a qualified investment under this
 program shall be deposited in the strategic outreach and attraction
 reserve fund created in section 4 of the Michigan trust fund act,
 2000 PA 489, MCL 12.254. general fund of this state. The fund shall
 not use money allocated to the program for administrative purposes.
 Any Except as otherwise provided in subsection (8), any money that
 is allocated to the program that remains unexpended, unallocated,
 or unobligated at the end of a fiscal year shall revert back to the
 strategic outreach and attraction reserve fund created in section 4
 of the Michigan trust fund act, 2000 PA 489, MCL 12.254.general
 fund of this state.
       (8) If the project for which the qualified investment is made
 is canceled or placed on definite hold or indefinite hold, all of
 the following apply:
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       (a) If the project is canceled, the fund board shall not
 disburse funds allocated to the program for the qualified
 investment to the qualified business or any related project funds.
       (b) If the project is placed on definite hold, all of the
 following apply:
       (i) If the specific date for resuming the project provided to
 the fund under subsection (4)(h) violates the written agreement,
 the fund board shall place an immediate hold on the disbursement of
 funds allocated to the program for the qualified investment to the
 qualified business and any related project funds.
       (ii) If subparagraph (i) applies and the project is resumed by
 the specific date for resuming the project provided to the fund
 under subsection (4)(h), the fund board may resume the disbursement
 of funds allocated to the program for the qualified investment to
 the qualified business and any related project funds.
       (iii) Regardless of whether subparagraph (i) applies, if the
 project is not resumed by the specific date for resuming the
 project provided to the fund under subsection (4)(h), the fund
 board shall not disburse funds allocated to the program for the
 qualified investment to the qualified business or any related
 project funds.
       (c) If the project is placed on indefinite hold, all of the
 following apply:
       (i) The fund board shall place an immediate hold on the
 disbursement of funds allocated to the program for the qualified
 investment to the qualified business and any related project funds.
       (ii) If the project is resumed within 1 year after being placed
 on indefinite hold, the fund board may resume the disbursement of
 funds allocated to the program for the qualified investment to the
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 qualified business and any related project funds.
       (iii) If the project is not resumed within 1 year after being
 placed indefinite hold, the fund board shall not disburse funds
 allocated to the program for the qualified investment to the
 qualified business or any related project funds.
       (d) Any money that is not disbursed under subdivision (a),
 (b)(iii), or (c)(iii) reverts to and must be deposited in the general
 fund of this state.
       (e) The application of this subsection does not extend any
 time frames under the written agreement.
       (9) Unless a different date is provided in the written
 agreement, a project must commence not later than 1 year after the
 written agreement is executed or money is appropriated for
 qualified investment, whichever date is earlier. A project that is
 not commenced by the applicable date is considered canceled for
 purposes of subsection (8).
       (10) (8) Not later than March 15 of each year, the fund shall
 transmit to each member of the legislature, the governor, the clerk
 of the house of representatives, the secretary of the senate, and
 the senate and house fiscal agencies a report on the activities of
 the critical industry program. The report must include all of the
 following:
       (a) A list of qualified businesses that received a qualified
 investment.
       (b) The type of project or product approved for a qualified
 investment.
       (c) The amount and type of qualified investment.
       (d) For each separate form of qualified investment, all of the
 following:
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       (i) The number of qualified jobs committed or projected to be
 created or retained as a result of a technological shift in product
 or production when the qualified investment was applied for.
       (ii) The actual number of qualified jobs created or retained as
 a result of a technological shift in product or production that are
 not temporary employees.
       (iii) The average annual salary of the qualified jobs created or
 retained as a result of a technological shift in product or
 production that are not temporary employees.
       (e) The duration of the qualified investment.
       (f) The amount of other financial assistance other than state
 resources.
       (g) Money or other revenue or property returned to the
 strategic outreach and attraction reserve fund, created in section
 4 of the Michigan trust fund act, 2000 PA 489, MCL 12.254, general
 fund of this state, including any clawbacks and repayments due to a
 breach of the written agreement and any money returned under
 subsection (8).
       (11) (9) If the fund fails to transmit the report as required
 in subsection (8) (10) on or before March 15, the fund board shall
 not disburse funds for a qualified investment under this program
 until it transmits the report as required under subsection
 (8).(10).
       (12) (10) The legislature finds and declares that funding
 provided under this program is for a public purpose and serves the
 health, safety, and general welfare of the residents of this state.
       (13) (11) As used in this section:
       (a) "Critical industry program" or "program" means the
 critical industry program created in under subsection (1).
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