SENATE BILL NO. 951
June 26, 2024, Introduced by Senators LINDSEY, RUNESTAD, THEIS, BELLINO, DAMOOSE
and DALEY and referred to the Committee on Economic and Community Development.
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
2021 PA 134, and by adding section 7c.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 7c. (1) Notwithstanding anything to the contrary in this
2 act, the fund shall not provide a grant, loan, or other economic
3 assistance to a disqualified person or for the benefit of a
4 disqualified person.
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1 (2) The legislature finds that this section and sections
2 88s(11) and (12) and 88t(16) and (17) are reasonable and necessary
3 for the public good and the general welfare of the people of this
4 state.
5 (3) As used in this section:
6 (a) "Adversarial entity" means an entity on the entity list
7 published by the United States Department of Commerce's Bureau of
8 Industry and Security in Supplement No. 4 to 15 CFR part 744.
9 (b) "Country of concern" means any of the following:
10 (i) A country designated by the United States Department of
11 Defense as a country of special concern as part of the Trusted
12 Capital program.
13 (ii) A state sponsor of terror.
14 (iii) A military end-user country.
15 (c) "Disqualified person" means any of the following:
16 (i) A country of concern.
17 (ii) An entity incorporated, organized, or formed in a country
18 of concern.
19 (iii) An entity headquartered in a country of concern.
20 (iv) A resident of a country of concern.
21 (v) An adversarial entity.
22 (vi) A military end-user entity.
23 (vii) An entity in which a person described in subparagraph (i)
24 to (vi), or a combination of persons described in subparagraph (i) to
25 (vi), holds, directly or indirectly, a more than 10% voting or
26 ownership interest in the entity or has control over the day-to-day
27 operations of the entity by contract or law.
28 (d) "Military end-user country" means a country on the
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1 military end-user list published by the United States Department of
2 Commerce's Bureau of Industry and Security in Supplement No. 7 to
3 15 CFR part 744.
4 (e) "Military end-user entity" means an entity on the military
5 end-user list published by the United States Department of
6 Commerce's Bureau of Industry and Security in Supplement No. 7 to
7 15 CFR part 744.
8 (f) "State sponsor of terror" means a country determined by
9 the United States Secretary of State to have repeatedly provided
10 support for acts of international terrorism.
11 Sec. 88s. (1) The fund shall create and operate the critical
12 industry program. The fund shall use money transferred from the
13 strategic outreach and attraction reserve fund created in section 4
14 of the Michigan trust fund act, 2000 PA 489, MCL 12.254, or money
15 appropriated to the program to make qualified investments to
16 qualified businesses.
17 (2) The fund shall expend money allocated to the Michigan
18 critical industry program only to provide qualified investments to
19 qualified businesses for deal-closing, gap financing, or other
20 economic assistance to create or retain qualified jobs as a result
21 of a technological shift in product or production or make capital
22 investments, or both, as determined by the fund board. The program
23 must provide for a detailed application, approval, and compliance
24 process that is also published and available on the fund's website.
25 (3) The fund shall consider and document at a minimum all of
26 the following criteria to the extent reasonably applicable as
27 reasonably determined by the fund board to the type of project
28 proposed before entering into a written agreement for a qualified
29 investment as provided under subsection (4):
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1 (a) The importance of the project to the community in which it
2 is located.
3 (b) If the project will act as a catalyst for additional
4 revitalization of the community in which it is located and this
5 state.
6 (c) The amount of local community and financial support for
7 the project.
8 (d) The applicant's financial need for a qualified investment
9 from the critical industry program.
10 (e) The extent of reuse of vacant buildings, public or
11 private, reuse of historic resources, and redevelopment of blighted
12 property.
13 (f) Creation or retention of qualified jobs as a result of a
14 technological shift in product or production at the project
15 location and within this state.
16 (g) The level of other public funds including, but not limited
17 to, the appropriation of federal or state funds and any federal or
18 state tax credits.
19 (h) The level of any private funds, investments, or
20 contributions into the project including, but not limited to, the
21 qualified business's own investments in the project.
22 (i) Whether and how the project is financially and
23 economically sound.
24 (j) Whether and how the project promotes sustainable
25 development.
26 (k) Whether and how the project involves the rehabilitation of
27 a historic resource.
28 (l) Whether and how the project addresses areawide
29 redevelopment and the overall economic benefit to the existing
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1 supply chain.
2 (m) The level and extent of environmental contamination.
3 (n) Whether and how the project will compete with or affect
4 existing Michigan businesses within the same industry.
5 (o) Whether and how the project's proximity to rail and
6 utility will impact performance of the project and maximize energy
7 and logistics needs in the community in which it is located and in
8 this state.
9 (p) The risk of obsolescence of the project, products, and
10 investments in the future.
11 (q) The overall return on investment to this state.
12 (r) Whether and how the project addresses food supply
13 challenges.
14 (s) Any other additional criteria approved by the board that
15 are specific to each individual project and are consistent with the
16 purpose of this program.
17 (4) If the fund determines, after making the considerations
18 under subsection (3), to award a qualified investment to a
19 qualified business under this program, the fund shall enter into a
20 written agreement with the qualified business that includes in a
21 clear and concise manner all of the terms and conditions relating
22 to the qualified investment as determined and documented by the
23 fund board, including, but not limited to, the following:
24 (a) Specific time frames and benchmarks to be met before the
25 qualified business receives a disbursement in installments under
26 the critical industry program pursuant to the approved qualified
27 investment.
28 (b) Specific terms relating to the required creation or
29 retention of qualified jobs as a result of a technological shift in
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1 product or production at the project location and within this
2 state, including measurable outcomes, proration of payments for
3 partial performance, clawback and specific repayment provisions for
4 breach of the agreement, or for failure to meet measurable
5 outcomes.
6 (c) Specific penalties for noncompliance with the written
7 agreement as determined by the fund.
8 (d) A provision that all money that is subject to a clawback
9 or required to be repaid under a specific repayment provision must
10 be paid within 90 days of notification by the fund. Any amounts not
11 paid within that 90-day period are subject to a penalty of 1% per
12 month, prorated on a daily basis.
13 (e) A provision that this state shall have a security interest
14 as that term is defined in section 1201(2)(ii) 1201 of the uniform
15 commercial code, 1962 PA 174, MCL 440.1201, to the extent of the
16 qualified investment. This provision does not apply if it conflicts
17 with any contractual obligation of the qualified business or any
18 federal or state bankruptcy or insolvency laws.
19 (f) A provision that the qualified business will provide the
20 data described in the written agreement that are necessary for the
21 fund to report to the legislature as required under this program.
22 (g) A provision that the qualified business may enter into
23 direct agreements with workforce training providers, when
24 appropriate, as determined by the fund to meet the workforce
25 requirements of a qualified investment.
26 (5) If the fund receives a request to modify an existing
27 written agreement for a qualified investment under this program,
28 the fund must provide a copy of that requested modification to each
29 member of the legislature, the governor, the clerk of the house of
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1 representatives, the secretary of the senate, and the senate and
2 house fiscal agencies within 5 business days of after the receipt
3 of the modification request. In addition to the copy of the request
4 for modification, the notice provided under this subsection must
5 also include the specific provisions to be modified and the
6 rationale for considering the modification. Before the fund
7 modifies an existing written agreement for a qualified investment,
8 the fund must give notice of the proposed amendments and publish
9 them on the fund's internet website at least 1 business day prior
10 to before a public hearing on the proposed amendments. If the fund
11 approves and modifies an existing written agreement under this
12 subsection, the fund must provide a copy of that amended written
13 agreement to each member of the legislature, the governor, the
14 clerk of the house of representatives, the secretary of the senate,
15 and the senate and house fiscal agencies within 1 business day of
16 the modification.
17 (6) If the fund board seeks to make a determination as to In
18 determining whether a qualified investment approved under this
19 program represents a fair exchange of value for value, the fund may
20 consider the total value to this state of the qualified investment
21 and the best interests of this state, including, but not limited
22 to, any positive economic impact to this state likely to be
23 generated by the qualified business pursuant to the written
24 agreement for a qualified investment, especially economic impact
25 resulting in the location of a high-economic-impact business
26 facility in this state, increased capital investment in this state,
27 and the creation or retention of qualified jobs as a result of a
28 technological shift in product or production in this state.
29 (7) The fund board shall not disburse funds allocated to the
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1 program for a qualified investment to a qualified business if that
2 qualified business has not fully repaid all money subject to
3 clawback or required to be repaid under a specific repayment
4 provision as provided in any written agreement under this act or if
5 that qualified business is in default on any grant, loan,
6 investment, or other economic assistance made or guaranteed by this
7 state. All money paid to the fund pursuant to a clawback or
8 specific repayment provision for a qualified investment under this
9 program shall must be deposited in the strategic outreach and
10 attraction reserve fund created in section 4 of the Michigan trust
11 fund act, 2000 PA 489, MCL 12.254. The fund shall not use money
12 allocated to the program for administrative purposes. Any money
13 that is allocated to the program that remains unexpended,
14 unallocated, or unobligated at the end of a fiscal year shall
15 revert reverts back to the strategic outreach and attraction
16 reserve fund created in section 4 of the Michigan trust fund act,
17 2000 PA 489, MCL 12.254.
18 (8) Not later than March 15 of each year, the fund shall
19 transmit to each member of the legislature, the governor, the clerk
20 of the house of representatives, the secretary of the senate, and
21 the senate and house fiscal agencies a report on the activities of
22 the critical industry program. The report must include all of the
23 following:
24 (a) A list of qualified businesses that received a qualified
25 investment.
26 (b) The type of project or product approved for a qualified
27 investment.
28 (c) The amount and type of qualified investment.
29 (d) For each separate form of qualified investment, all of the
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1 following:
2 (i) The number of qualified jobs committed or projected to be
3 created or retained as a result of a technological shift in product
4 or production when the qualified investment was applied for.
5 (ii) The actual number of qualified jobs created or retained as
6 a result of a technological shift in product or production that are
7 not temporary employees.
8 (iii) The average annual salary of the qualified jobs created or
9 retained as a result of a technological shift in product or
10 production that are not temporary employees.
11 (e) The duration of the qualified investment.
12 (f) The amount of other financial assistance other than state
13 resources.
14 (g) Money or other revenue or property returned to the
15 strategic outreach and attraction reserve fund, created in section
16 4 of the Michigan trust fund act, 2000 PA 489, MCL 12.254,
17 including any clawbacks and repayments due to a breach of the
18 written agreement.
19 (9) If the fund fails to transmit the report as required in
20 subsection (8) on or before March 15, the fund board shall not
21 disburse funds for a qualified investment under this program until
22 it transmits the report as required under subsection (8).
23 (10) The legislature finds and declares that funding provided
24 under this program is for a public purpose and serves the health,
25 safety, and general welfare of the residents of this state.
26 (11) The fund shall not enter into a written agreement with a
27 disqualified person on or after the effective date of the
28 amendatory act that added section 7c. This subsection applies
29 regardless of whether money has been allocated to the program for a
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1 qualified investment to that disqualified person or whether a term
2 sheet has been issued for the qualified investment to the
3 disqualified person.
4 (12) If the fund entered into a written agreement with a
5 disqualified person before the effective date of the amendatory act
6 that added section 7c, both of the following apply:
7 (a) The written agreement is against public policy and is void
8 and unenforceable.
9 (b) The fund board shall not disburse funds allocated to the
10 program for the qualified investment to the disqualified person.
11 (13) (11) As used in this section:
12 (a) "Critical industry program" or "program" means the
13 critical industry program created in under subsection (1).
14 (b) "Disqualified person" means that term as defined in
15 section 7c.
16 (c) (b) "Qualified business" means a business that is located
17 in or operates in this state or will locate or will operate in this
18 state as determined by the fund board. A qualified business may
19 include more than 1 business as determined by the fund board.
20 (d) (c) "Qualified investment" means a grant, loan, or other
21 economic assistance for a project subject to a written agreement
22 with a qualified business under this program. Qualified investment
23 includes a grant, loan, or other economic assistance for creation
24 or retention of qualified jobs as a result of a technological shift
25 in product or production, infrastructure improvements, other
26 capital investments, the purchase or acquisition of heavy
27 machinery, or other assistance, including, but not limited to, an
28 agreement providing for assistance via the transportation economic
29 development fund created under section 2 of 1987 PA 231, MCL
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1 247.902. Qualified investment also includes a grant, loan, or other
2 economic assistance for job training opportunities or workforce
3 development and education, or both.
4 (e) (d) "Qualified job" means a job performed by an individual
5 who is a