HOUSE BILL NO. 5243
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending sections 4, 5, and 7 (MCL 125.2004, 125.2005, and 125.2007), sections 4 and 7 as amended by 2020 PA 358 and section 5 as amended by 2023 PA 24, and by adding section 15; and to repeal acts and parts of acts.
the people of the state of michigan enact:
(a) "Board" means the board of directors of the Michigan strategic fund, except where the context clearly requires a different definition.
(b) "Economic development project" means, subject to both of the following provisions, an endeavor related to industrial, commercial, or agricultural enterprise: .
(i) Economic development project includes, but is not limited to, a all of the following:
(A) A theme or recreation park. ; agricultural
(B) Agricultural or forestry production, harvesting, storage, or processing facilities or equipment. ; port
(C) Port facilities. ; and the
(D) The use of equipment or facilities designed to produce energy from renewable resources.
(ii) Economic development project does not include that either of the following:
(A) That portion of an endeavor devoted to the sale of goods at retail, except that, as used in relation to the fund insuring a transaction entered into by a depository institution, and as used in relation to a loan by the fund to a minority owned business, an economic development project may include that portion of an endeavor devoted to the sale of goods at retail. Economic development project does not include that
(B) That portion of an endeavor devoted to housing or a program or activity authorized under chapter 8A.
(c) "Financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and that maintains a principal office or branch office in this state under the laws of this state or the United States.
(d) "Fund" means the Michigan strategic fund created under section 5, except where the context clearly requires a different definition.
(e) "FWC Qualified Settlement Fund" means the FWC Qualified Settlement Fund described in the settlement agreement approved by the court in In re Flint Water Cases, No. 5:16-cv-10444-JEL-MKM (ED Mich).
(f) "Green chemistry" means chemistry and chemical engineering to design chemical products or processes that reduce or eliminate the use or generation of hazardous substances, while producing high-quality products through safe and efficient manufacturing processes. Green chemistry is guided by the following 12 principles:
(i) Prevent waste: Design chemical syntheses to prevent waste, leaving no waste to treat or clean up.
(ii) Design safer chemicals and products: Design chemical products to be fully effective, yet have little or no toxicity.
(iii) Design less hazardous chemical syntheses: Design syntheses to use and generate substances with little or no toxicity to humans and the environment.
(iv) Use renewable feedstocks: Use raw materials and feedstocks that are renewable rather than depleting. Renewable feedstocks are often made from agricultural products or are the wastes of other processes. ; depleting Depleting feedstocks are made from fossil fuels, including petroleum, natural gas, or coal, or are mined.
(v) Use catalysts, not stoichiometric reagents: Minimize waste by using catalytic reactions. Catalysts are used in small amounts and can carry out a single reaction many times. They are preferable to stoichiometric reagents, which are used in excess and work only once.
(vi) Avoid chemical derivatives: Avoid using blocking or protecting groups or any temporary modifications if possible. Derivatives use additional reagents and generate waste.
(vii) Maximize atom economy: Design syntheses so that the final product contains the maximum proportion of the starting materials. There should be few, if any, wasted atoms.
(viii) Use safer solvents and reaction conditions: Avoid using solvents, separation agents, or other auxiliary chemicals. If these chemicals are necessary, use innocuous chemicals.
(ix) Increase energy efficiency: Run chemical reactions at ambient temperature and pressure whenever if possible.
(x) Design chemicals and products to degrade after use: Design chemical products to break down to innocuous substances after use so that they do not accumulate in the environment.
(xi) Analyze in real-time to prevent pollution: Include in-process real-time monitoring and control during syntheses to minimize or eliminate the formation of by-products.
(xii) Minimize the potential for accidents: Design chemicals and their forms, including solid, liquid, or gas, to minimize the potential for chemical accidents, including explosions, fires, and releases to the environment.
(g) "Michigan economic development corporation" or "MEDC" means, except as otherwise provided in section 15, the Michigan economic development corporation, the public body corporate created under section 28 of article VII of the state constitution of 1963 and the urban cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to 124.512, by a contractual interlocal agreement effective April 5, 1999, and subsequently amended, between local participating economic development corporations formed under the economic development corporations act, 1974 PA 338, MCL 125.1601 to 125.1636, and the fund.
(h) "Municipality" means a any of the following:
(i) A county. ,
(ii) A city. ,
(iii) A village. ,
(iv) A township. ,
(v) A port district. ,
(vi) A development organization. ,
(vii) An institution of higher education. ,
(viii) A community or junior college. , or
(ix) A subdivision or instrumentality of any of the legal entities listed in this subdivision.subparagraphs (i) to (viii).
(i) "Person" means an any of the following:
(i) An individual. ,
(ii) A sole proprietorship. ,
(iii) A partnership, limited partnership, or limited liability partnership. ,
(iv) A limited liability company. ,
(v) A joint venture. ,
(vi) A profit or nonprofit corporation, including, but not limited to, a public or private college or university. ,
(vii) A public utility. ,
(viii) A municipality. ,
(ix) A local industrial development corporation. ,
(x) An economic development corporation. ,
(xi) Any other association of persons organized for agricultural, commercial, or industrial purposes. , a
(xii) A lender. , or any
(xiii) Any other entity approved by the board.
(j) "Port facilities" means seawall any of the following, except that port facilities do not include an international bridge or international tunnel:
(i) Seawall jetties. ; piers; wharves; docks; boat
(ii) Piers.
(iii) Wharves.
(iv) Docks.
(v) Boat landings. ; marinas; warehouses; storehouses; elevators; grain
(vi) Marinas.
(vii) Warehouses.
(viii) Storehouses.
(ix) Elevators.
(x) Grain bins. ; cold
(xi) Cold storage plants. ; bunkers; oil
(xii) Bunkers.
(xiii) Oil tanks. ; ferries; canals; locks; bridges; tunnels; seaways; conveyors; modern
(xiv) Ferries.
(xv) Canals.
(xvi) Locks.
(xvii) Bridges.
(xviii) Tunnels.
(xix) Seaways.
(xx) Conveyors.
(xxi) Modern appliances for the economical handling, storage, and transportation of freight and handling of passenger traffic. ; transfer
(xxii) Transfer and terminal facilities required for the efficient operation and development of ports and harbors. ; other
(xxiii) Other harbor improvements. ; or improvements,
(xxiv) Improvements, enlargements, remodeling, or extensions of any of these the buildings or structures described in subparagraphs (i) to (xxiii). Port facilities do not include an international bridge or international tunnel.
(k) "Project" means an economic development project and, in addition, means includes all of the following, except that project does not include a program or activity authorized under chapter 8A:
(i) The acquisition, construction, reconstruction, conversion, or leasing of an industrial, commercial, retail, agricultural, or forestry enterprise, or any part of these, to carry out the purposes and objectives of this act and of the fund, including, but not limited to, acquisition of land or interest in land, buildings, structures, or other planned or existing planned improvements to land including leasehold improvements, machinery, equipment, or furnishings, which include, but are not limited to, all of the following: research
(A) Research parks. ; office
(B) Office facilities. ; engineering
(C) Engineering facilities. ; research
(D) Research and development laboratories. ; warehousing
(E) Warehousing facilities. ; parts
(F) Parts distribution facilities. ; depots
(G) Depots or storage facilities. ; port
(H) Port facilities. ; railroad
(I) Railroad facilities, including trackage, right of way, and appurtenances. ; airports; bridges
(J) Airports.
(K) Bridges and bridge facilities. ; water
(L) Water and air pollution control equipment or waste disposal facilities. ; theme
(M) Theme or recreational parks. ; equipment
(N) Equipment or facilities designed to produce energy from renewable resources. ; farms,
(O) Farms, ranches, forests, and other agricultural or forestry commodity producers. ; agricultural
(P) Agricultural harvesting, storage, transportation, or processing facilities or equipment. ; grain
(Q) Grain elevators. ; shipping
(R) Shipping heads and livestock pens. ; livestock; warehouses; wharves
(S) Livestock.
(T) Warehouses.
(U) Wharves and dock facilities. ; dredging
(V) Dredging of recreational or commercial harbors. ; water,
(W) Water, electricity, hydro electric, hydroelectric, coal, petroleum, or natural gas provision facilities. ; dams
(X) Dams and irrigation facilities. ; sewage,
(Y) Sewage, liquid, and solid waste collection, disposal treatment, and drainage services and facilities. Project also includes the
(ii) The resolution and settlement of pending claims and assisting to alleviate health issues of Michigan citizens through a loan to the Special Purpose FWC Settlement Entity, which entity may use those loan proceeds only to pay the expenses, costs, and fees associated with the Special Purpose FWC Settlement Entity, to reimburse this state for its initial $5,000,000.00 payment to the FWC Qualified Settlement Fund, and to pay the FWC Qualified Settlement Fund. Project does not include a program or activity authorized under chapter 8A.
(l) "Private sector" means other than the fund, a state or federal source, or an agency of a state or the federal government.
(m) "Special Purpose FWC Settlement Entity" means the Special Purpose FWC Settlement Entity described in the settlement agreement approved by the court in In re Flint Water Cases, No. 5:16-cv-10444-JEL-MKM (ED Mich).
Sec. 5. (1) There is created by this act a public body corporate and politic to be known as the Michigan strategic fund. The fund is within the department of labor and economic opportunity and shall exercise its prescribed statutory powers, duties, and functions independently of the director of the department of labor and economic opportunity. The statutory authority, powers, duties, functions, records, personnel, property, unexpended balances of appropriations, allocations, and other funds of the fund, including the functions of budgeting, procurement, personnel, and management-related functions, are retained by the fund, and the fund is an autonomous entity within the department of labor and economic opportunity in the same manner as the Michigan employment security commission was designated an autonomous entity within the department of labor under section 379 of the executive organization act of 1965, 1965 PA 380, MCL 16.479.
(2) Except as otherwise provided in this act, the purposes, powers, and duties of the Michigan strategic fund are vested in and shall be exercised by a board of directors.
(3) Except as provided in subsection (4), the board shall consist of the following members:
(a) The director of the department of labor and economic opportunity or the director's designee from within the department of labor and economic opportunity.
(b) The state treasurer or the state treasurer's designee from within the department of treasury.
(c) The director of the state transportation department or the director's designee from within the state transportation department.
(d) The chief executive officer of the MEDC or the chief executive officer's designee.
(d) (e) Seven other members with knowledge, skill, and experience in the academic, business, or financial field, who shall be appointed by the governor with the advice and consent of the senate, subject to all of the following requirements:
(i) The 7 members appointed under this subdivision must be residents of this state and must not be employees of this state.
(ii) Not less than 6 members appointed under this subdivision must be members of the private sector.
(iii) One of the 7 members appointed under this subdivision must be appointed from a list of 3 or more nominees of the speaker of the house of representatives representing persons within the private sector with experience in private equity or venture capital investments, commercial lending, or commercialization of technology.
(iv) One of the 7 members appointed under this subdivision must be appointed from a list of 3 or more nominees of the senate majority leader representing persons within the private sector with experience in private equity or venture capital investments, commercial lending, or commercialization of technology.
(v) Members appointed under this subdivision must include minority, female, and small business representation.
(vi) Of the members appointed under this subdivision, at least 2 must have experience in private equity or venture capital investments, at least 1 must have experience in commercial lending, and at least 1 must have experience in commercialization of technology.
(vii) Except as otherwise provided in this subparagraph, members appointed under this subdivision must be appointed for a term of 4 years. Members described in this subdivision that were appointed under Executive Reorganization Order No. 2019-3, MCL 125.1998, shall serve the terms provided in Executive Reorganization Order No. 2019-3, MCL 125.1998.
(4) In addition to the 11 members of the board under subsection (3), not later than December 31, 2023, the governor shall appoint, with the advice and consent of the senate, 2 additional members to the board for terms expiring December 31, 2027. After the initial appointments under this subsection, members appointed under this subsection must be appointed for a term of 4 years. The members appointed under this subsection shall must be from the private sector and shall must have experience in private equity or venture capital investments, commercial lending, or commercialization of technology. One of the members appointed under this subsection must be appointed from a list of 3 or more nominees of the senate minority leader, and the other member appointed under this subsection must be appointed from a list of 3 or more nominees of the house minority leader.
(5) A member appointed under subsection (3) or (4) shall serve until a successor is appointed, and a vacancy must be filled for the balance of the unexpired term in the same manner as the original appointment.
(6) The governor shall designate 1 member of the board, other than the director of the department of labor and economic opportunity, to serve as president of the fund and may designate 1 member to serve as vice-president of the fund. The president and vice-president, if a vice-president is designated, shall serve as those officers at the pleasure of the governor. The member of the board who is designated to serve as president of the fund is the chairperson of the board. The members of the board may elect a vice-chairperson from among their members.
(7) Members of the board shall serve without compensation for their membership on the board, except that members of the board may receive reasonable reimbursement for necessary travel and expenses.
(8) The board may delegate to its president, vice-president, staff, or others , including the MEDC, those functions and authority that the board considers necessary or appropriate, which may include the oversight and supervision of employees of the fund. However, responsibilities specifically vested in the board under chapter 8A shall be performed by the board and shall not be transferred to the MEDC, except that Michigan business development program incentives under section 88r, and community revitalization incentives under chapter 8C, of $1,000,000.00 or less may be authorized by the president of the fund.
(9) A majority of the members of the board appointed and serving constitutes a quorum for the transaction of business at a meeting, or the exercise of a power or function of the fund, notwithstanding the existence of 1 or more vacancies. The board may act only by resolution approved by a majority of board members appointed and serving. Voting on action taken by the board must be conducted by majority vote of the members appointed and serving. Members of the board may be present in person at a meeting of the board or, if authorized by the bylaws of the board, by use of telecommunications or other electronic equipment. The fund shall meet at the call of the chair and as may be provided in the bylaws of the fund. Meetings of the fund may be held anywhere within this state.
(10) The business of the board must be conducted at a public meeting of the board held in compliance with the open meetings act, 1976 PA 267, MCL 15.261 to 15.275. Public notice of the time, date, and place of the meeting must be given in the manner required by the open meetings act, 1976 PA 267, MCL 15.261 to 15.275, and must also be provided on an internet website operated by the fund. A record or portion of a record, material, or other data received, prepared, used, or retained by the fund or any of its centers in connection with an application to or with a project or product assisted by the fund or any of its centers or with an award, grant, loan, or investment that relates to financial or proprietary information submitted by the applicant that is considered by the applicant and acknowledged by the board or a designee of the board as confidential is not subject to the disclosure requirements of the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246. The disclosure of a record concerning investment information described in section 88c under the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, is subject to the limitations provided in section 88c. The board may also meet in closed session pursuant to the open meetings act, 1976 PA 267, MCL 15.261 to 15.275, to determine whether it acknowledges as confidential any financial or proprietary information submitted by the applicant and considered by the applicant as confidential. Unless considered proprietary information, the board shall not acknowledge routine financial information as confidential. If the board determines that information submitted to the fund is financial or proprietary information and is confidential, the board shall release a written statement, subject to disclosure under the freedom of information act, 1976 PA 442, MCL 15.231 to 15.246, that states all of the following:
(a) The name and business location of the person requesting that the information submitted be confidential as financial or proprietary information.
(b) That the information submitted was determined by the board to be confidential as financial or proprietary information.
(c) A broad nonspecific overview of the financial or proprietary information determined to be confidential.
(11) The fund shall not disclose financial or proprietary information not subject to disclosure pursuant to subsection (10) without consent of the applicant submitting the information.
(12) Any document to which the fund is a party evidencing a loan, insurance, mortgage, lease, venture, or other type of agreement the fund is authorized to enter into is not considered financial or proprietary information that may be exempt from disclosure under subsection (10).
(13) For purposes of subsections (10), (11), and (12), "financial or proprietary information" means information that has not been publicly disseminated or that is unavailable from other sources, the release of which might cause the applicant significant competitive harm.
Sec. 7. The fund shall have the powers and duties provided in this act, and the powers delegated by other laws or executive orders, including, but not limited to, the power to do 1 or more of the following:
(a) Sue and be sued; to have a seal and alter the seal at pleasure; to have perpetual succession; to make, execute, and deliver contracts, conveyances, and other instruments necessary or convenient to the exercise of its powers; and to make and amend bylaws.
(b) Solicit and accept gifts, grants, loans, and other aids from any person or the federal, state, or a local government or any agency of the federal, state, or a local government, or to participate in any other way in any federal, state, or local government program.
(c) Make grants, loans, and investments; to guarantee and insure loans, leases, bonds, notes, or other indebtedness, whether public or private; and to issue letters of credit.
(d) Construct; acquire by gift, purchase, installment purchase, or lease; and reconstruct, improve, repair, or equip a project or any part of a project.
(e) Borrow money and issue bonds and notes to finance part or all of the project costs of a project, including the Special Purpose FWC Settlement Entity, or of a loan under subdivision (r) for an export transaction, and to secure those bonds and notes by mortgage, assignment, or pledge of any of its money, revenues, income, and properties. The authority provided by this subdivision includes, but is not limited to, issuing bonds and notes to acquire and install machinery, equipment, furnishings, and other personal property, notwithstanding that the fund does not own or propose to own or finance the building or land in or near to which the machinery, equipment, furnishings, and other personal property is or is to be located.
(f) Acquire or contract to acquire from any person, municipality, the federal or state government, or any agency of the foregoing, or otherwise, leaseholds, real or personal property or any interest in real or personal property; to and own, hold, clear, improve, and rehabilitate and to sell, assign, exchange, transfer, convey, lease, mortgage, or otherwise dispose of or encumber leaseholds, real or personal property or any interest in real or personal property, as is convenient for the accomplishment of the purposes of this act and of the fund.
(g) Procure insurance against any loss in connection with the fund's property, assets, or activities.
(h) Invest any money of the fund at the fund's discretion, in any obligations determined proper by the fund, and name and use depositories for its money.
(i) Engage personnel as is necessary and engage the services of private consultants, managers, counsel, auditors, engineers, and scientists for rendering professional management and technical assistance and advice, payable out of any money of the fund legally available for this purpose.
(j) Charge, impose, and collect fees and charges in connection with any transaction and provide for reasonable penalties for delinquent payment of fees or charges.
(k) Indemnify and procure insurance indemnifying any members of the board from personal loss or accountability from liability asserted by a person on the bonds or notes of the fund or from any personal liability or accountability by reason of any of the following:
(i) The issuance of the bonds, notes, insurance, or guarantees. ; by reason of
(ii) The acquisition, construction, ownership, or operation of a project. ; or by reason of any
(iii) Any other action taken or the failure to act by the fund.
(l) Enter into a lease for the use or sale of a project. The lease may provide for options to purchase or renew.
(m) Mortgage or create security interests in a project or any part of a project, or in a lease or loan, or in the rents, revenues, or sums to be paid thereunder, under any of these items, in favor of the holders of the bonds or notes issued by the fund.
(n) Convey or release a project or any part of a project to a lessee, purchaser, or borrower under any agreement after provision has been made for the retirement in full of the bonds or notes issued for that project under terms and conditions provided in the agreement or as may be agreed with the holders of the bonds or notes, at any time where if the obligation of the lessee, purchaser, or borrower to make the payments prescribed shall will remain fixed as provided in the agreement notwithstanding the conveyance or release, or as may otherwise be agreed with the holders of the bonds or notes.
(o) Make loans, participate in the making of loans, undertake commitments to make loans and mortgages, buy and sell loans and mortgages at public or private sale, rewrite loans and mortgages, discharge loans and mortgages, foreclose on a mortgage, commence an action to protect or enforce a right conferred upon the fund by a law, mortgage, loan, contract, or other agreement, bid for and purchase property which was the subject of the mortgage at a foreclosure or other sale, acquire or take possession of the property and in that event complete, administer, pay the principal and interest on obligations incurred in connection with that property, and dispose of and otherwise deal with the property, in a manner as may be necessary or desirable to protect the interests of the fund.
(p) Certify, for the purpose of determining eligible investments for the basis of a single business tax credit, minority venture capital companies, as defined by law.
(q) Except as otherwise provided in this subdivision, to create and operate centers, accounts, and funds as required or permitted by law for the use and disbursement of assets of the fund. The powers granted under this subdivision do not apply to chapter 8A.
(r) Make loans to a financial institution to facilitate financing of all or part of an export related transaction including, but not limited to, pre-export working capital financing and postexport receivable financing.
(s) Procure goods and services, purchase and sell real and personal property, and lease property independent of any other department or state agency.
(t) Appoint any individuals, including strategic fund employees, and MEDC employees, to boards to represent the interests of the fund.
(u) Establish and operate a job training fund that will support the training of workers for Michigan businesses as determined by the fund.
(v) Establish and operate a brownfield historic investment program that provides capital for projects as determined by the fund.
(w) Take necessary and reasonable steps to pursue repayment of funds disbursed for any grant or loan for failing to comply with provisions of a written agreement as required under section 88r(2)(b)(iv) and section 90b(7).
(x) Borrow money and issue bonds or notes for financing a Special Purpose FWC Settlement Entity, which entity may use the financed proceeds only to pay the expenses, costs, and fees associated with the Special Purpose FWC Settlement Entity, to reimburse this state for its initial $5,000,000.00 payment to the FWC Qualified Settlement Fund, and to pay the FWC Qualified Settlement Fund, and which shall be secured by a pledge of repayment from anticipated state appropriations and from any other sources.
(y) Do all other things necessary or convenient to achieve the objectives and purposes of the fund, this act, or other laws that relate to the purposes and responsibilities of the fund.
Sec. 15. Notwithstanding any other provision of law to the contrary, all of the following apply:
(a) The fund shall not delegate any powers, authority, duties, or functions to, provide funding for, or otherwise employ, utilize, or assist the Michigan economic development corporation.
(b) The fund shall not finance or otherwise support a project or endeavor, or provide a loan, grant, or other assistance to any person, if the project, endeavor, or person receives any funding or support from the Michigan economic development corporation.
(c) Not later than 30 days after the effective date of the amendatory act that added this section, the fund shall withdraw as a party from the interlocal agreement that created the Michigan economic development corporation.
(d) All of the powers, duties, and functions vested by law in the Michigan economic development corporation are transferred to and vested in the fund. All records, files, papers, money, and other property of the Michigan economic development corporation that belong to this state shall be delivered and transferred to the fund.
(e) A reference to the Michigan economic development corporation in any other section of this act or in any other act means the fund.
(f) A reference to the chief executive officer or another officer of the Michigan economic development corporation in any other act means the president of the fund.
Enacting section 1. Section 29e of the Michigan strategic fund act, 1984 PA 270, MCL 125.2029e, is repealed.