Bill Summary – FastDemocracy

HOUSE BILL NO. 5679
     April 25, 2024, Introduced by Reps. Tisdel, Kuhn, Schuette, Hall, Outman, BeGole, Borton,
       Wozniak, Kunse, DeBoyer, Harris, Markkanen, DeBoer, Zorn, Neyer, Slagh, Alexander,
       Bezotte, Bierlein, Bruck, VanderWall, Aragona, Meerman, Fox and Martin and referred to the
       Committee on Government Operations.
          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 the program money transferred
 from the strategic outreach and attraction reserve fund created in
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 section 4 of the Michigan trust fund act, 2000 PA 489, MCL 12.254,
 or money 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.
 The detailed application, approval, and compliance process must, at
 a minimum, provide for both of the following:
       (a) Money allocated to the program for a fiscal year must be
 apportioned as follows:
       (i) Not less than 1/3 must be reserved for qualified
 investments to small businesses.
       (ii) Not less than 1/3 must be reserved for qualified
 investments to medium businesses.
       (iii) Except as otherwise provided in subparagraph (iv), not more
 than 1/3 may be used for qualified investments to large businesses.
       (iv) Money reserved under subparagraph (i) or (ii) that is not
 obligated on July 1 of the fiscal year may be used for qualified
 investments to small businesses, medium businesses, or large
 businesses. As used in this subdivision:
       (A) "Large business" means a qualified business with 250 or
 more employees.
       (B) "Medium business" means a qualified business with more
 than 49 employees but fewer than 250 employees.
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       (C) "Small business" means a qualified business with fewer
 than 50 employees.
       (b) The fund shall not award more than 50% of the money
 allocated to the program during a 2-year period to qualified
 businesses in the same critical industry.
       (c) The fund shall not award more than 40% of the money
 allocated to the program for a fiscal year to qualified businesses
 that do not have a physical presence in this state.
       (3) The fund shall not approve an application under this
 section unless all of the following requirements are met:
       (a) The fund determines the number of jobs provided by the
 qualified business in this state at the time of application,
 excluding qualified jobs to be retained or created under the
 program.
       (b) In addition to any qualified jobs to be retained or
 created under the program, the qualified business agrees to
 maintain a number of jobs that is not less than the number of
 baseline jobs determined under subdivision (a).
       (c) The fund determines that land use, utility, environmental,
 energy, and zoning requirements applicable to the project under
 state and local law have been met or will be met not later than 1
 year after the date the written agreement is executed.
       (d) The fund determines that the project does not qualify for
 any other economic assistance programs that would meet the
 project's needs and the project will not be able to move forward
 without funding under the program.
       (4) (3) The In addition to the requirements under subsection
 (3), the fund shall consider and document at a minimum all of the
 following criteria to the extent reasonably applicable as
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 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):(5):
       (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
 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
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 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
 are specific to each individual project and are consistent with the
 purpose of this program.
       (5) (4) If the fund determines, after making the
 determinations and considerations under subsection subsections (3)
 and (4), 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
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 the critical industry program pursuant to the approved qualified
 investment.
       (b) Specific terms relating to the required maintenance of
 baseline jobs and 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.The specific
 terms must include, but are not limited to, all of the following:
       (i) The number of baseline jobs that must be maintained.
       (ii) The number of qualified jobs that must be retained.
       (iii) The number of qualified jobs that must be created.
       (iv) The dates by which the qualified jobs described in
 subparagraph (iii) must be created.
       (v) Proration of payment, clawback, and specific repayment
 provisions that comply with subsection (10).
       (vi) An audit provision that permits the fund to determine the
 total number of jobs actually provided by the qualified business in
 accordance with subsection (10).
       (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 not later than 90 days of after 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 the qualified investment.
       (h) A provision that the qualified business may not
 participate in the high-wage incentive for regional employment in
 (H.I.R.E.) Michigan program created under chapter 8D.
       (i) A provision that the qualified business must meet land
 use, utility, environmental, energy, and zoning requirements
 applicable to the project under state and local law not later than
 1 year after the date the written agreement is executed, including,
 but not limited to, obtaining all required permits and conducting
 any required environmental testing.
       (6) (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 not later than 5 business days of
 after 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
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 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 before a public hearing on the proposed amendments.
 The fund shall not modify a written agreement to reduce the number
 of required baseline jobs. The fund shall not modify an existing
 written agreement to reduce the number of required qualified jobs
 unless the qualified investment is also reduced in an amount equal
 to the original job cost under the existing written agreement
 multiplied by the number of qualified jobs to be eliminated as a
 result of the modification multiplied by the penalty factor. 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 not later than 1
 business day of after the modification.
       (7) (6) If the fund board seeks to make a determination as to
 In determining 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
 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
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 technological shift in product or production in this state.
       (8) (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 must 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. The fund shall not use money
 allocated to the program for administrative purposes. Any money
 that is allocated to the program that remains unexpended,
 unallocated, or unobligated at the end of a fiscal year shall
 revert reverts 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.
       (9) The fund shall not award a qualified investment to a
 qualified business that previously received an award under the
 critical industry program or the Michigan strategic site readiness
 program created under section 88t if either of the following
 applies:
       (a) Money received under the previous award was subject to a
 clawback or required to be repaid under a specific repayment
 provision.
       (b) The qualified business was subject to a penalty under the
 written agreement executed in connection with the previous award.
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       (10) At the end of each year during the term of a written
 agreement and on expiration of the written agreement, the fund
 shall determine the total number of jobs actually provided by the
 qualified business. If that number is less than the adjusted
 required jobs number, all of the following apply:
       (a) The qualified business owes the fund the negative jobs
 penalty amount.
       (b) The fund shall reduce future disbursements of the
 qualified investment as necessary to recover the negative jobs
 penalty amount.
       (c) If reduction of future disbursements under subdivision (b)
 is insufficient to fully recover the negative jobs penalty amount,
 the qualified business shall pay the negative jobs penalty amount
 to the fund.
       (11) The fund shall not award a qualified investment under the
 program after December 31, 2030.
       (12) (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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