SB 533, As Passed Senate

SB-0533, As Passed Senate, June 9, 2005

SUBSTITUTE FOR

SENATE BILL NO. 533

(As amended, June 9, 2005)

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending the title and sections 3, 4, and 13 (MCL 125.2003, 125.2004,

and 125.2013), sections 4 and 13 as amended by 1987 PA 278, and by

adding sections 94 and 95 and chapter 8A.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

TITLE

An act relating to the economic development of this state; to

create the <<~~Michigan~~ ~~strategic fund~~ jobs for Michigan fund>> and to

prescribe its powers and

duties; to transfer and provide for the acquisition and succession

to the rights, properties, obligations, and duties of the job

development authority and the Michigan economic development

authority to the <<~~Michigan~~ ~~strategic fund~~ jobs for Michigan fund>>; to

provide for the

expenditure of proceeds in certain funds to which the <<~~Michigan~~

~~strategic fund~~ jobs for Michigan fund>> succeeds in ownership; to

provide for the issuance

Senate Bill No. 533 as amended June 9, 2005

of, and terms and conditions for, notes and bonds of the <<~~Michigan~~

~~strategic fund~~> jobs for Michigan fund>>; to authorize the issuance of

general obligation

bonds of this state and to pledge the full faith and credit of this

state for the payment of principal and interest on the bonds; to

implement section 15(2) of article IX of the state constitution of

1963; to create the strategic economic investment board and the

jobs for Michigan bond fund; to exempt the property, income, and

operation of the fund and its bonds and notes, and the interest

thereon, from certain taxes; to provide for the creation of certain

centers within and for the purposes of the <<~~Michigan~~ ~~strategic fund~~ jobs

for Michigan fund>>;

to provide for the creation and funding of certain accounts for

certain purposes; to impose certain powers and duties upon certain

officials, departments, and authorities of ~~the~~ this state; to

provide penalties; and to repeal ~~certain~~ acts and parts of acts.

<<Sec. 3. This act shall be known and may be cited as the "~~Michigan~~ ~~strategic fund act"~~ "Jobs for Michigan fund act".>>

Sec. 4. As used in this act:

(a) "Board" means the board of directors of the <<~~Michigan~~

~~strategic fund~~ jobs for Michigan fund>>, except as used in chapter 8A

or where the context

clearly requires a different definition.

(b) "Economic development project" means an endeavor related

to industrial, commercial, or agricultural enterprise. Economic

development project includes, but is not limited to, a theme or

recreation park; agricultural or forestry production, harvesting,

storage, or processing facilities or equipment; and the use of

equipment or facilities designed to produce energy from renewable

resources. Economic development project does not include 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

Senate Bill No. 533 as amended June 9, 2005

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 portion of an endeavor devoted to housing or a

program or activity authorized under chapter 8A.

fund>> created under

section 5, except where the context clearly requires a different

definition.

(d) "Municipality" means a county, city, village, township,

port district, development organization, institution of higher

education, community or junior college, or subdivision or

instrumentality of any of the legal entities listed in this

subdivision.

(e) "Person" means an individual, sole proprietorship,

partnership, limited liability company, joint venture, profit or

nonprofit corporation including a public or private college or

university, public utility, local industrial development

corporation, economic development corporation, or other association

of persons organized for agricultural, commercial, or industrial

purposes.

(f) "Project" means an economic development project and, in

addition, means the acquisition, construction, reconstruction,

conversion, or leasing of an industrial, commercial, retail,

agricultural, or forestry enterprise, or any part ~~thereof~~ 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, the following: research parks; office

facilities; engineering facilities; research and development

laboratories; warehousing facilities; parts distribution

facilities; depots or storage facilities; port facilities; railroad

facilities, including trackage, right of way, and appurtenances;

airports; water and air pollution control equipment or waste

disposal facilities; theme or recreational parks; equipment or

facilities designed to produce energy from renewable resources;

farms, ranches, forests, and other agricultural or forestry

commodity producers; agricultural harvesting, storage,

transportation, or processing facilities or equipment; grain

elevators; shipping heads and livestock pens; livestock;

warehouses; wharves and dock facilities; water, electricity, hydro

electric, coal, petroleum, or natural gas provision facilities;

dams and irrigation facilities; sewage, liquid, and solid waste

collection, disposal treatment, and drainage services and

facilities. Project does not include a program or activity

authorized under chapter 8A.

(g) "Private sector" means other than the fund, a state or

federal source, or an agency ~~thereof~~ of a state or the federal

government.

Sec. 13. The total debt owed to the fund, excluding rights and

royalties under a venture capital agreement or obligations to the

fund resulting from an industrial development revenue bond or note,

in relation to any 1 project shall at no time exceed 5% of the

total assets of the fund, except that upon approval by a 2/3 vote

of the board this amount may be increased to not to exceed 10% of

the assets of the fund. This section does not apply to a program or

activity authorized under chapter 8A.

CHAPTER 8A

Sec. 88. (1) This chapter shall implement the provisions of

section 15(2) of article IX of the state constitution of 1963.

(2) The legislature finds and declares that the activities

authorized under this chapter to encourage economic diversity by

the development of competitive edge technology with high

probability to create jobs in this state are a public purpose and

of paramount concern in the interest of the health, safety, and

general welfare of the citizens of this state. It is the intent of

the legislature that the economic benefits of the development of

competitive edge technology and the creation of jobs resulting from

the activities authorized under this chapter shall accrue within

this state.

(3) Activities authorized under this chapter shall not be

considered a project, economic development project, or a product

assisted by the Michigan strategic fund for purposes of chapter 1

or 2.

Sec. 88a. As used in this chapter:

(a) "Advanced automotive, manufacturing, and materials

technology" means any technology that involves 1 or more of the

following:

(i) Materials with engineered properties created through the

development of specialized process and synthesis technology.

(ii) Nanotechnology, including materials, devices, or systems

at the atomic, molecular, or macromolecular level, with a scale

measured in nanometers.

(iii) Microelectromechanical systems, including devices or

systems integrating microelectronics with mechanical parts and a

scale measured in micrometers.

(iv) Improvements to vehicle safety, vehicle performance,

vehicle production, or environmental impact, including, but not

limited to, vehicle equipment and component parts.

(v) Any technology that involves an alternative energy vehicle

or its components, as alternative energy vehicle is defined under

section 2 of the Michigan next energy authority act, 2002 PA 593,

MCL 207.822.

(vi) Advanced computing or electronic device technology related

to technology described under this subdivision.

(vii) Design, engineering, testing, or diagnostics related to

technology described under this subdivision.

(viii) Product research and development related to technology

described under this subdivision.

(b) "Advanced computing" means any technology used in the

design and development of 1 or more of the following:

(i) Computer hardware and software.

(ii) Data communications.

(iii) Information technologies.

commercialization of new or next generation technology in 1 or more

of the following:

(i) Alternative energy technology as that term is defined in

section 2 of the Michigan next energy authority act, 2002 PA 593,

MCL 207.822.

(ii) Devices or systems designed and used solely for the

purpose of generating energy from agricultural crops, residue and

waste generated from the production and processing of agricultural

products, animal wastes, or food processing wastes, not including a

conventional gasoline or diesel fuel engine or retrofitted

conventional gasoline or diesel fuel engine.

(iii) Advanced computing or electronic device technology related

to technology described under this subdivision.

(iv) Design, engineering, testing, or diagnostics related to

technology described under this subdivision.

(v) Product research and development related to a technology

described under this subdivision.

(d) "Applied research" means translational research conducted

with the objective of attaining a specific benefit or to solve a

practical problem, or other research activity that seeks to

utilize, synthesize, or apply existing knowledge, information, or

resources to the resolution of a specified problem, question, or

issue, with high probability of commercial application to create

jobs in this state.

(e) "Basic research" means any original investigation for the

advancement of scientific or technological knowledge that will

enhance the research capacity of this state in a way that increases

the ability to attract to or develop companies, jobs, researchers,

Senate Bill No. 533 as amended June 9, 2005

or students in this state.

(f) "Commercialization" means the transition from research to

the actions necessary to achieve market entry and general market

competitiveness of new innovative technologies, processes, and

products and the services that support<<, assist, finance, or

promote>> an entity with

that transition.

(g) "Competitive edge technology" means 1 or more of the

following:

(i) Life sciences technology.

(ii) Advanced automotive, manufacturing, and materials

technology.

(iii) Homeland security and defense technology.

(iv) Alternative energy technology.

(h) "Electronic device technology" means any technology that

involves microelectronics, semiconductors, electronic equipment,

and instrumentation, radio frequency, microwave, and millimeter

electronics; optical and optic-electrical devices; or data and

digital communications and imaging devices.

(i) "Homeland security and defense technology" means

technology that assists in the assessment of threats or damage to

the general population and critical infrastructure, protection of,

defense against, or mitigation of the effects of foreign or

domestic threats, disasters, or attacks, or support for crisis or

response management, including, but not limited to, 1 or more of

the following:

(i) Sensors, systems, processes, or equipment for

communications, identification and authentication, screening,

surveillance, tracking, and data analysis.

(ii) Advanced computing or electronic device technology related

to technology described under this subdivision.

(iii) Aviation technology, including, but not limited to,

avionics, airframe design, sensors, early warning systems, and

services related to technology described under this subdivision.

(iv) Design, engineering, testing, or diagnostics related to

technology described under this subdivision.

(v) Product research and development related to technology

described under this subdivision.

(j) "Independent peer review expert" means a person or persons

approved by the board with appropriate expertise to conduct an

independent, unbiased, objective, and competitive evaluation of

activities funded under this chapter. The person or persons shall

demonstrate the capability and experience, as appropriate or

necessary for the particular activity funded, to do all of the

following:

(i) Conduct a highly competitive and intensive, independent,

multiphased, peer-review-based evaluation process.

(ii) Employ personnel with appropriate business, scientific,

technical, commercial, or other specialized expertise to carry out

each aspect of the evaluation process.

(iii) Provide recommendations to or assist the board in

identifying high-quality activities for funding that are likely to

result in the development and commercialization of competitive edge

technology and job creation in this state. The recommendations

shall include all materials used by the independent peer review

expert in making the recommendation.

(iv) Assure that any peer review process developed maintains a

high level of integrity.

(k) "Institution of higher education" means an institution of

higher education or a community or junior college described in

section 4, 5, 6, or 7 of article VIII of the state constitution of

1963.

(l) "Jobs for Michigan bond fund" or "bond fund" means the jobs

for Michigan bond fund created under section 88f.

(m) "Jobs for Michigan bond repayment subaccount" or

"repayment subaccount" means the jobs for Michigan bond repayment

subaccount created in section 88f.

(n) "Life sciences" means science for the examination or

understanding of life or life processes, including, but not limited

to, all of the following:

(i) Bioengineering.

(ii) Biomedical engineering.

(iii) Genomics.

(iv) Proteomics.

(v) Molecular and chemical ecology.

(vi) Biotechnology, including any technology that uses living

organisms, cells, macromolecules, microorganisms, or substances

from living organisms to make or modify a product for useful

purposes. Biotechnology or life sciences does not include any of

the following:

(A) Activities prohibited under section 2685 of the public

health code, 1978 PA 368, MCL 333.2685.

(B) Activities prohibited under section 2688 of the public

health code, 1978 PA 368, MCL 333.2688.

health code, 1978 PA 368, MCL 333.2690.

(D) Activities prohibited under section 16274 of the public

health code, 1978 PA 368, MCL 333.16274.

(E) Stem cell research with human embryonic tissue.

(o) "Life sciences technology" means any technology derived

from life sciences intended to improve human health or the overall

quality of human life, including, but not limited to, systems,

processes, or equipment for drug or gene therapies, biosensors,

testing, medical devices or instrumentation with a therapeutic or

diagnostic value, a pharmaceutical or other product that requires

United States food and drug administration approval or registration

prior to its introduction in the marketplace and is a drug or

medical device as defined by the federal food, drug, and cosmetic

act, 21 USC 301 to 399, or 1 or more of the following:

(i) Advanced computing or electronic device technology related

to technology described under this subdivision.

(ii) Design, engineering, testing, or diagnostics related to

technology described under this subdivision.

(iii) Product research and development related to technology

described under this subdivision.

(p) "Michigan economic development corporation" or "MEDC"

means 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.

(q) "Qualified business" means a Michigan business entity that

researches, develops, markets, or commercializes competitive edge

technology products or services.

(r) "State administrative board" means the body created under

1921 PA 2, MCL 17.1 to 17.3, that exercises general supervisory

control over the functions and activities of all administrative

departments, boards, commissioners, and officers of this state and

of all state institutions.

(s) "Strategic economic investment board" or "board" means the

strategic economic investment board created in section 88j.

(t) "University technology transfer" means innovative methods

to accelerate the creation of start-up companies affiliated with

institutions of higher education or the transfer of competitive

edge technology research from an institution of higher education to

a qualified business in Michigan.

Sec. 88b. Notwithstanding section 23, this state shall borrow

a sum not to exceed $1,000,000,000.00 and issue the general

obligation bonds of this state, pledging the full faith and credit

of this state for the payment of principal and interest on those

bonds. Proceeds of the bonds shall finance the activities and

programs authorized under this chapter.

Sec. 88c. (1) Bonds authorized under this chapter shall be

issued in 1 or more series, each series to be in a principal

amount, to be dated, to have the maturities that may be either

serial, term, or both, to bear interest at a rate or rates, to be

subject or not subject to prior redemption, and if subject to prior

redemption with or without call premiums, to be payable at a place

or places, to have or not have provisions for registration as to

principal only or as to both principal and interest, to be in a

form and to be executed in a manner as shall be determined by

resolution to be adopted by the state administrative board and

subject to covenants, directions, restrictions, or rights specified

by resolution to be adopted by the state administrative board as

necessary to ensure the marketability, insurability, or tax-exempt

status of the bonds. The state administrative board shall rotate

the services of legal counsel when issuing bonds.

(2) The state administrative board may refund bonds issued

under this chapter by the issuance of new bonds, whether or not the

bonds to be refunded have matured or are subject to prior

redemption. The state administrative board may issue bonds partly

to refund bonds issued under this chapter and partly for any other

purpose provided by this chapter. The principal amount of any

refunding bonds issued under this section shall not be counted

against the limitation on principal amount provided under section

88b.

(3) The state administrative board may authorize and approve

insurance contracts, agreements for lines of credit, letters of

credit, commitments to purchase bonds, and any other transactions

to provide security to assure timely payment or purchase of any

bond issued under this chapter. The state administrative board,

upon recommendation of the state treasurer, may authorize and

approve an interest rate exchange or swap, hedge, or similar

agreement in connection with the issuance of bonds under this

chapter, payable from the same source as the bonds.

(4) The state administrative board may authorize the state

treasurer, but only within limitations contained in the authorizing

resolution of the state administrative board, to do 1 or more of

the following:

(a) Sell and deliver and receive payment for the bonds.

(b) Deliver bonds partly to refund bonds and partly for other

authorized purposes.

by the new issue of bonds.

(d) Buy issued bonds.

(e) Approve interest rates or methods for fixing interest

rates, including fixed or variable rates, prices, discounts,

maturities, principal amounts, purchase prices, purchase dates,

remarketing dates, denominations, dates of issuance, interest

payment dates, redemption rights at the option of this state or the

owner, the place and time of delivery and payment, and other

matters and procedures necessary to complete the authorized

transactions.

(f) Execute, deliver, and pay the cost of remarketing

agreements, insurance contracts, agreements for lines of credit,

letters of credit, commitments to purchase bonds or notes, and any

other transaction to provide security to assure timely payments or

purchase of any bond issued under this chapter.

(g) Determine the details of, execute, deliver, and pay the

cost of any interest rate exchange or swap, hedge, or similar

agreement.

(5) Bonds issued under this chapter are not subject to the

revised municipal finance act, 2001 PA 34, MCL 141.2101 to

141.2821. Bonds issued under this chapter are subject to the agency

financing reporting act, 2002 PA 470, MCL 129.171 to 129.177.

(6) Bonds issued under this chapter or any series of bonds

issued under this chapter may be sold at public or private sale or

may be issued and delivered to any person in which bond proceeds

may be invested or deposited under this chapter as determined by or

pursuant to a resolution of the state administrative board.

(7) Bonds issued under this chapter shall be issued in a

manner that provides that debt payments do not begin before October

1, 2006.

Sec. 88d. (1) Bonds issued under this chapter shall be fully

negotiable under the uniform commercial code, 1962 PA 174, MCL

440.1101 to 440.11102.

(2) Bonds and the interest on the bonds issued under this

chapter are exempt from all taxation by this state or any political

subdivision of this state.

Sec. 88e. Bonds issued under this chapter are securities in

which banks, savings and loan associations, state authorities,

investment companies, credit unions, and other persons carrying on

a banking business; all insurance companies, insurance

associations, and other persons carrying on an insurance business;

Senate Bill No. 533 as amended June 9, 2005

and all administrators, executors, guardians, trustees, and other

fiduciaries may properly and legally invest funds, including

capital, belonging to them or within their control.

Sec. 88f. (1) The jobs for Michigan bond fund is created in

the state treasury.

(2) The bond fund shall consist of all of the following:

(a) The proceeds of the sale of any series of the bonds

authorized under this chapter.

(b) Any premium and accrued interest received on the delivery

of the bonds.

described in subdivision (a).

(d) Any other funds required to be deposited in the bond fund

or a subaccount of the bond fund under this chapter.

(3) The department of treasury shall establish within the bond

fund a jobs for Michigan bond repayment subaccount. Money in the

repayment subaccount shall be used to repay principal or interest

on bonds issued under this chapter and any redemption premiums on

bonds issued under this chapter. The repayment subaccount shall

consist of all of the following, which shall be deposited by the

<<fund>> or the MEDC in the repayment subaccount:

(a) Royalties, return on investments, return of principal,

payments made, or other money received by or payable to the board

or the MEDC under agreements related to grants or loans by the

<<fund>> under this chapter.

(b) Royalties, return on investments, return of principal,

payments made, or other money received by or payable to the <<fund>>

or the MEDC under agreements related to grants, loans, or other

payments funded by appropriations from the state general fund or

tobacco settlement revenue under 1 or more of the following:

(i) Section 418 of 1999 PA 120, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(ii) Section 410 of 2000 PA 292, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(iii) Section 410 of 2001 PA 80, commonly known as the health

and aging research and development initiative or the Michigan life

sciences corridor initiative, or any successor program.

(iv) Section 410 of 2002 PA 517, commonly known as the Michigan

life sciences corridor initiative, or any successor program.

(v) Section 410 of 2003 PA 169, commonly known as the Michigan

life sciences and technology tri-corridor initiative, or any

successor program.

(vi) Section 510 of 2004 PA 354, commonly known as the Michigan

technology tri-corridor and life sciences initiative, or any

successor program.

(vii) Section 801 of 2005 PA 11, commonly known as the

technology tri-corridor and life sciences initiative, or any

successor program.

(viii) Section 381(1)(c) of 2003 PA 173, providing for payments

to the life sciences commercial development fund.

(4) In addition to the repayment subaccount created under

subsection (3), the department of treasury may establish other

restricted subaccounts within the bond fund as necessary to

administer the bond fund.

(5) Money in the bond fund shall be disbursed only for the

purposes for which the bonds issued under this chapter have been

authorized, including, but not limited to, the expense of issuing

the bonds, the proceeds of sale of any series of the bonds, any

premium and accrued interest received on the delivery of the bonds,

and any interest earned on the proceeds of the bonds.

Sec. 88g. (1) The state treasurer shall direct the investment

of the bond fund.

(2) Any remaining balance in the bond fund, the repayment

subaccount, or a subaccount of the bond fund at the close of a

fiscal year shall remain in the bond fund and shall not lapse or

revert to the general fund.

Sec. 88h. (1) After the issuance of the bonds authorized by

this chapter, there shall be expended from the repayment subaccount

of the bond fund created under section 88f a sufficient amount to

pay promptly, when due, the principal of and interest on all

outstanding bonds authorized by this chapter and the costs

incidental to the payment of the bonds.

(2) If the amount available in the repayment subaccount for a

fiscal year is not a sufficient amount under subsection (1), or a

sufficient expenditure under subsection (1) is not authorized, the

remaining amount necessary to pay promptly, when due, the principal

of and interest on all outstanding bonds authorized by this chapter

and the costs incidental to the payment of the bonds shall be paid

as provided by law.

Senate Bill No. 533 as amended June 9, 2005

(3) The governor shall include the expenditures provided for

in subsection (2), if necessary, in his or her annual executive

budget recommendations to the legislature.

Sec. 88i. (1) The proceeds of bonds issued under this chapter

shall be deposited into the bond fund and appropriated as provided

by law for purposes authorized under this chapter. The proceeds of

the bonds issued under this chapter shall be expended by the <<fund only

as determined by the>> board

to encourage the development of competitive edge technology with

high probability to create jobs in this state.

(2) The board shall not <<authorize the fund to>> expend more than

10% of the total

proceeds of bonds authorized under this chapter in any calendar

year. The limits on expenditures established under this subsection

are cumulative and may carry forward to a future calendar year if

the funds are not previously expended.

(3) The total proceeds of bonds authorized under this chapter

shall be expended as follows:

(a) Not less than $60,000,000.00 shall be used to capitalize

the forest finance authority forest development fund as described

in part 505 of the natural resources and environmental protection

act, 1994 PA 451, MCL 324.50501 to 324.50522.

(b) After deducting the amount described in subdivision (a),

not less than 50% for life sciences technology.

materials technology, alternative energy technology, and homeland

security and defense technology.

(4) Not more than 10% of the expenditure described in

subsection (3)(b) and not more than 10% of the expenditure

Senate Bill No. 533 as amended June 9, 2005

described in subsection (3)(c) may be expended by the <<fund as

determined by the>> board to

support basic research in competitive edge technologies.

(5) Bond proceeds deposited into the bond fund may be used by

the department of treasury to pay for the cost of issuing bonds

under this chapter, including, but not limited to, costs incurred

under section 88c(3).

(6) Not more than 3% of the total amount of the bonds

authorized under this chapter shall be available for appropriation

to the <<fund to pay the costs of the MEDC and the board>> directly

associated with the administration of this chapter including, but

not limited to, peer review costs. The 3% limitation under this

subsection does not apply to costs under subsection (5).

(7) Not more than 2.5% of the total expenditures authorized

under this chapter can go to any 1 qualified business, including

its affiliates and subsidiaries.

<<(8) The fund shall provide all staffing, support, and administrative services necessary to implement this section and sufficient to allow the board to perform its duties under this chapter. The powers and duties granted to the fund under this chapter shall be considered transferred to and vested in the MEDC and shall be performed by the MEDC as a joint exercise of power authorized under the urban cooperation act of 1967, 1967(Ex Sess) PA 7, MCL 124.501 to 124.512.>>

Sec. 88j. (1) The strategic economic investment board is

created << >> within the fund. The board shall

exercise its powers, duties, and decision-making authority as an

autonomous entity independent of the fund and the department of

labor and economic growth. <<

(2) Money in the bond fund that is available for expenditure

<< >> under section 88i shall be expended annually by the

<<fund as determined by the>>

Senate Bill No. 533 as amended June 9, 2005

board only for basic research, applied research, university

technology transfer, and commercialization of products, processes,

and services to encourage the development of competitive edge

technologies with high probability to create jobs in this state.

(3) Subject to subsection (2), the <<fund as determined by the>>

board shall do all of the

following:

(a) Establish a competitive process to award grants and make

loans for competitive edge technologies. The competitive process

shall include, but is not limited to, the following:

(i) A provision that the applications must be peer-reviewed by

independent peer review experts based on the scientific, technical,

and commercial merit of the application. Scientific, technical, and

commercial merit shall be given equal weight in the review and

scoring process.

(ii) A preference for Michigan-based applicants.

(iii) A provision that out-of-state business must have a

significant existing or proposed business activity in this state.

(iv) A preference for proposals that can contribute directly to

the development of employment opportunities in this state.

(v) A provision that the program will utilize contracts with

measurable milestones, clear objectives, provisions to revoke

awards for breach of contract, and repayment provisions for loans

given to qualified businesses that leave Michigan within 7 years of

the execution of the contract or otherwise breach the terms of the

contract.

(vi) A provision that the applicant leverage other resources as

a condition of the grant or loan. If the applicant receives new

Senate Bill No. 533 as amended June 9, 2005

competitively awarded federal funds for a program, the board <<shall not

authorize and the fund>> shall

not make a grant or loan in an amount that exceeds 10% of the

amount of federal funds. If an applicant is seeking a grant or a

loan under this chapter to match federal funds for small business

innovation research or small business technology transfer programs,

the grant or loan under this chapter shall not exceed 25% of the

federal funds and must leverage third party commercialization

funding at both the phase I and phase II levels.

(vii) Overhead rates for grants and loans that reflect actual

overhead but not greater than 15% of total direct costs.

(viii) <<Except as provided in subparagraph (vi),>> A provision that

grants can only be awarded to Michigan

institutions of higher education and Michigan nonprofit research

institutions.

(ix) A preference for collaborations between institutions of

higher education, Michigan nonprofit research institutions, and

qualified businesses.

(b) The <<fund>> shall contract with independent peer review

experts <<selected by the board>> to assist the board with its

responsibilities under this

chapter.

(4) The board shall establish standards to ensure that money

expended under this chapter will result in economic benefit to this

state and ensure that a major share of the business activity

resulting from the expenditures occurs in this state.

(5) The board shall establish standards or procedures

requiring a recipient of money allocated under this chapter to

agree as a condition of receiving the money not to use the money

for 1 or more of the following:

(a) The development of a stadium or arena for use by a

professional sports team.

(b) The development of a casino regulated by this state under

the Michigan gaming control and revenue act, the Initiated Law of

1996, MCL 432.201 to 432.226, a casino at which gaming is conducted

under the Indian gaming regulatory act, Public Law 100-497, 102

Stat. 2467, or property associated or affiliated with the operation

of either type of casino described in this subdivision, including,

but not limited to, a parking lot, hotel, motel, or retail store.

(6) The board shall establish standards to prevent money

expended under this section from being used for 1 or more of the

following:

(a) Grants or loans to a person who has been convicted of a

criminal offense incident to the application for or performance of

a state contract or subcontract. As used in this subdivision, if a

person is a business entity, then person includes affiliates,

subsidiaries, officers, directors, managerial employees, and any

person who, directly or indirectly, holds a pecuniary interest in

that business entity of 20% or more.

(b) Grants or loans to a person who has been convicted of a

criminal offense, or held liable in a civil proceeding, that

negatively reflects on the person's business integrity, based on a

finding of embezzlement, theft, forgery, bribery, falsification or

destruction of records, receiving stolen property, or violation of

state or federal antitrust statutes. As used in this subdivision,

if a person is a business entity, then person includes affiliates,

subsidiaries, officers, directors, managerial employees, and any

person who, directly or indirectly, holds a pecuniary interest in

that business entity of 20% or more.

in the United States for the purpose of inducing the enterprise to

relocate outside the United States if the incentive or inducement

is likely to reduce the number of employees of the business

enterprise in the United States because United States production is

being replaced by the enterprise outside the United States.

(d) Grants or loans to a business enterprise currently located

in this state for the purpose of inducing the enterprise to

relocate outside this state if the incentive or inducement is

likely to reduce the number of employees of the business enterprise

in this state because production in this state is being replaced by

the enterprise outside this state.

(e) Grants or loans that would contribute to the violation of

internationally recognized workers rights, as defined in section

507(4) of the trade act of 1974, 19 USC 2467(4), of workers in a

country other than the United States, including any designated zone

or area in that country.

(f) Grants or loans in a corporation or an affiliate of the

corporation incorporated in a tax haven country after September 11,

2001, but with the United States as the principal market for the

public trading of the corporation's stock, as determined by the

board. As used in this section, "tax haven country" includes a

country with tax laws that facilitate avoidance by a corporation or

an affiliate of the corporation of United States tax obligations,

including Barbados, Bermuda, British Virgin Islands, Cayman

Senate Bill No. 533 as amended June 9, 2005

Islands, Commonwealth of the Bahamas, Cyprus, Gibraltar, Isle of

Man, the Principality of Liechtenstein, the Principality of Monaco,

and the Republic of the Seychelles.

(7) In addition to any audit requirements under section 9, not

later than May 15, 2007 and each subsequent May 15, the auditor

general shall conduct a performance post audit of the board and the

bond fund and a post audit of financial transactions and accounts

of the board and the bond fund, which audits shall be funded with

the proceeds of the bonds authorized under this chapter. The

results of the performance post audit and the post audit of

financial transactions and accounts shall be published on the

internet and disseminated by other means in a manner determined by

the board to advise the citizens of this state of the result of the

audits. Copies of the audits shall be provided to the governor, the

clerk of the house of representatives, and the secretary of the

senate.

(8) In addition to any reporting requirements under section 9,

not later than December 31 of each year, the board <<and the fund>> shall

report to

the governor, the clerk of the house of representatives, and the

secretary of the senate. The report shall contain all of the

following for the immediately preceding fiscal year that are

related to a grant or loan made by the <<fund as determined by the>>

board:

(a) A list of entities that received funding, the amount

received, and the type of funding.

(b) The number of new patents, copyrights, or trademarks

applied for and issued.

Senate Bill No. 533 as amended June 9, 2005

(d) The number of new jobs and projected new job growth.

(e) Amounts of other funds leveraged.

(f) Money or other revenue or property returned to the bond

fund.

(g) The total number of new licensing agreements by

institution and the number of new licensing agreements entered into

with Michigan based firms.

(h) Products commercialized.

(9) The <<fund>> shall publish the standards described in this

section on the internet and disseminate them by any other means

determined by the board.

<<(10)>> The board shall not make a loan or a grant <<an

applicant who has

made a contribution or expenditure, as defined under the Michigan

campaign finance act, 1976 PA 388, MCL 169.201 to 169.282, to any

ballot question committee established for the passage or defeat of

Senate Joint Resolution C of the 93rd Legislature <<in the immediately

preceding 2-year period>>.

<<(11) When the board approves a grant or a loan under this

chapter, the board shall state the specific objective reasons the

applicant was selected over other applicants for a grant or loan under

this chapter.

(12) The board and independent peer review experts shall not

consider if an applicant for a grant or loan made a contribution or

expenditure, as defined under the Michigan campaign finance act, 1976 PA

388, MCL 169.201 to 169.282, or did not make a contribution or

expenditure, to any ballot question committee established for the passage

or defeat of Senate Joint Resolution C of the 93rd Legislature.>>

Sec. 88k. (1) The board shall consist of 19 members, as

provided under subsections (2) and (3).

Senate Bill No. 533 as amended June 9, 2005

(2) The board shall include each of the 2 following voting ex

officio members:

(a) The director of the department of labor and economic

growth or his or her designee from within the department of labor

and economic growth.

(b) The state treasurer or his or her designee from within the

department of treasury.

(3) The board shall include the following 17 members appointed

by the governor with, except for the individuals described in

subdivisions (c) and (d), the advice and consent of the senate:

<<(A) Eight members representing business with expertise,

knowledge, sKill, or experience in venture capital investments, business

finance, bringing competitive edge technology products to market, or

representing a qualified business.

(B) A member representing the Van Andel institute or a successor organization.>>

selected by the majority leader of the senate representing

qualified businesses or persons with business, technological, or

financial experience related to competitive edge technology.

(d) One member appointed from a list of 2 or more individuals

selected by the speaker of the house of representatives

representing qualified businesses or persons with business,

technological, or financial experience related to competitive edge

technology.

<<(E) ~~(f)~~>> A member representing Michigan state university.

Senate Bill No. 533 as amended June 9, 2005

<<(F) ~~(G)~~>> A member representing the university of Michigan.

<<(G) ~~(H)~~>> A member representing Wayne state university.

<<(H) ~~(I)~~>> A member representing western Michigan university.

<<(I) ~~(J)~~>>A member representing Michigan technological

university.

<<(J) ~~(K)~~>>A member representing a public university in

Michigan

other than Michigan state university, the university of Michigan,

Wayne state university, western Michigan university, or Michigan

technological university.

(4) Of the members of the board initially appointed under

subsection (3), 5 members shall be appointed for terms expiring on

December 31, 2006, 5 members shall be appointed for terms expiring

on December 31, 2007, 5 members shall be appointed for terms

expiring on December 31, 2008, and 2 members shall be appointed for

terms expiring on December 31, 2009. After the expiration of the

initial appointment terms provided for by this subsection, members

of the board shall be appointed for terms of 4 years.

(5) For members of the board appointed under subsection (3), a

vacancy on the board occurring other than by expiration of a term

shall be filled in the same manner as the original appointment for

the balance of the unexpired term. A member of the board shall hold

office until a successor has been appointed and qualified. A member

of the board is eligible for reappointment. State employees are not

eligible to serve as members appointed under subsection (3).

(6) The governor shall designate 1 of the members of the board

to serve as its chairperson at the pleasure of the governor. The

board shall select from among its members a member to serve as

vice-chairperson and a member to serve as secretary. Staff from the

department of labor and economic growth or the MEDC shall assist

the secretary with record-keeping responsibilities.

(7) Upon appointment to the board under this section and upon

the taking and filing of the constitutional oath of office

prescribed in section 1 of article XI of the state constitution of

1963, a member shall enter the office and exercise the duties of

the office.

(8) Members of the board shall serve without compensation, but

may be reimbursed for actual and necessary expenses.

(9) Upon the initial appointment of members under this

section, the board shall organize and adopt its own policies,

procedures, schedule of regular meetings, and a regular meeting

date, place, and time.

(10) The board may act only by resolution approved by a

majority of board members appointed and serving. A majority of the

members of the board then in office shall constitute a quorum for

the transaction of business. The board shall meet in person or by

means of electronic communication devices that enable all

participants in the meeting to communicate with each other.

(11) The board shall conduct all business at public meetings

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

each meeting shall be given in the manner required by the open

meetings act, 1976 PA 267, MCL 15.261 to 15.275, and shall be

published on the internet.

Sec. 88l. (1) Notwithstanding section 3(1) of 1968 PA 317, MCL

15.323, members of the board are considered public servants subject

to 1968 PA 317, MCL 15.321 to 15.330, and public officers subject

to 1973 PA 196, MCL 15.341 to 15.348. A member of the board shall

discharge the duties of the position in a nonpartisan manner, in

good faith, in the best interests of this state, and with the

degree of diligence, care, and skill that an ordinarily prudent

person would exercise under similar circumstances in a like

position. In discharging duties of the office, a member of the

board when acting in good faith may rely upon the report of an

independent expert or independent peer review expert or upon

financial statements of the board represented to the member of the

board by the officer of the board having charge of its books or

accounts or stated in a written report by the auditor general.

(2) A member of the board shall not make, participate in

making, or in any way attempt to use his or her position as a

member of the board to influence a decision regarding a loan,

grant, or other expenditure under this chapter to his or her

employer.

(3) An independent peer review expert shall not have any

financial interest in a recipient of bond proceeds under this

chapter.

Sec. 88m. (1) A record prepared, owned, used, in the

possession of, or retained by the board or the MEDC in the

performance of an official function under this chapter shall be

available to the public in compliance with the freedom of

information act, 1976 PA 442, MCL 15.231 to 15.246, unless

otherwise provided by law.

(2) A record or portion of a record, material, or other data

received, prepared, used, or retained by the board in connection

with an application for a grant or loan under this chapter that

relates to financial or proprietary information submitted by the

applicant that is considered by the applicant and acknowledged by

the board as confidential shall not be subject to the disclosure

requirements of the freedom of information act, 1976 PA 442, MCL

15.231 to 15.246. A designee of the board shall make the

determination as to whether the board 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 designee of the board

determines that information submitted to the board is financial or

proprietary information and is confidential, the designee of the

board shall release a written statement, subject to disclosure

under the freedom of information act, 1976 PA 442, 15.231 to

15.246, which 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

designee of the board to be confidential as financial or

proprietary information.

proprietary information determined to be confidential.

Senate Bill No. 533 as amended June 9, 2005

(3) Unless otherwise required by law, the board and the MEDC

shall not disclose financial or proprietary information exempt from

disclosure as provided by law without the consent of the person

submitting the information.

(4) As used in this section, "financial or proprietary

information" means information that has not been publicly

disseminated or is unavailable from other sources, the release of

which might cause the person significant competitive harm.

Sec. 94. (1) The governor shall inquire into the

administration of this act.

(2) The governor may remove or suspend any appointive public

officer for violations of this act. The governor may request the

MEDC to remove or suspend any MEDC corporate employee for

violations of this act.

(3) The governor may remove or suspend any elective public

officer for violation of this act that constitutes gross neglect of

duty, corrupt conduct in office, misfeasance, or malfeasance.

(4) This section does not apply to any public officer of the

legislative branch or the judicial branch of state government.

(5) The governor shall report the reasons for any removal or

suspension under this section to the clerk of the house of

representatives and the secretary of the senate.

<<Sec. 95. Beginning on the effective date of the amendatory act that added this section, all statutory and other references to the Michigan strategic fund shall be considered references to the jobs for Michigan fund and statutory and other references to the Michigan strategic fund act shall be considered references to this act. Nothing in the amendatory act that added this section shall be construed to alter any rights, responsibilities, or obligations of the Michigan strategic fund, which shall remain the rights, responsibilities, and obligations of the jobs for Michigan fund.>>

Enacting section 1. This amendatory act takes effect December

26, 2005.

Enacting section 2. This amendatory act does not take effect

unless Senate Joint Resolution C of the 93rd Legislature becomes a

part of the state constitution of 1963 as provided in section 1 of