Bill Text: MI HB5170 | 2013-2014 | 97th Legislature | Introduced
Bill Title: Economic development; other; criteria for grant eligibility; modify. Amends sec. 88c of 1984 PA 270 (MCL 125.2088c).
Spectrum: Moderate Partisan Bill (Democrat 16-2)
Status: (Introduced - Dead) 2013-12-05 - Printed Bill Filed 12/05/2013 [HB5170 Detail]
Download: Michigan-2013-HB5170-Introduced.html
HOUSE BILL No. 5170
December 4, 2013, Introduced by Reps. Switalski, Faris, Phelps, Roberts, Cavanagh, Shirkey, Townsend, McMillin, Slavens, Lane, Robinson, Dillon, Brinks, Lamonte, Cochran, Abed, Greimel and Tlaib and referred to the Committee on Commerce.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending section 88c (MCL 125.2088c), as amended by 2012 PA 145.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 88c. (1) The fund board shall exercise the duties of a
fiduciary with respect to 21st century investments consistent with
the purposes of this chapter. The prudent investor rule shall be
applied by the fund board and any agent of the fund board in the
management of 21st century investments. The prudent investor rule
as applied to 21st century investments means that in making 21st
century investments, the fund board shall exercise the judgment and
care under the circumstances then prevailing that an institutional
investor of ordinary prudence, discretion, and intelligence would
exercise in similar circumstances in a like position. The fund
board shall maintain a reasonable diversification among 21st
century investments consistent with the requirements of this
chapter.
(2) The fund board shall select qualified private equity
funds, qualified venture capital funds, and qualified mezzanine
funds by issuing a request for proposal. At a minimum, the request
for proposal shall require a responding entity to disclose any
conflict of interest, disclose any criminal convictions, disclose
any investigations by the internal revenue service, the securities
and exchange commission, or any other federal or state taxing or
securities regulatory body, or court, or pertinent litigation
regarding the conduct of the person or entity. The fund board shall
establish a standard process to evaluate proposals submitted as a
result of a request for proposal and appoint a committee to review
the proposals.
(3) The fund board shall ensure that a recipient of money
under sections 88d, 88e, 88f, 88g, 88q, and 88r and chapter 8C
agrees as a condition of receiving the money not to use the money
for any 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, 1996 IL 1, 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.
(4) The fund board shall establish requirements to ensure that
money expended under sections 88d, 88e, 88f, 88g, 88q, and 88r and
chapter 8C shall not be used for any of the following:
(a) Provision of money 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, person includes affiliates,
subsidiaries, officers, directors, managerial employees as
determined by the board, and any person who, directly or
indirectly, holds a pecuniary interest in that business entity of
20% or more.
(b) Provision of money 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, 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.
(c) Provision of money to a business enterprise to induce
qualified businesses or small businesses to leave this state.
(d) Provision of money 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.
(e) Provision of money to a corporation or an affiliate of the
corporation who is incorporated in a tax haven country after
September 11, 2001, while maintaining the United States as the
principal market for the public trading of the corporation's stock.
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
Islands, Commonwealth of the Bahamas, Cyprus, Gibraltar, Isle of
Man, the principality of Liechtenstein, the principality of Monaco,
and the Republic of the Seychelles.
(5) Before adopting a resolution that establishes or
substantially changes a 21st century investment program, including
any fees, charges, or penalties attached to that program, the fund
board shall give notice of the proposed resolution to the governor,
to the clerk of the house of representatives, to the secretary of
the senate, to members of the senate and house of representatives
appropriation committees, and to each person who requested from the
fund in writing or electronically to be notified regarding proposed
resolutions. The notice and proposed resolution and all attachments
shall be published on the fund's internet website at least 10 days
prior to the date that the proposed resolution is considered by the
fund board. The fund board shall hold a public hearing and offer a
person an opportunity to present data, views, questions, and
arguments. Members of the fund board or 1 or more persons
designated by the fund board who have knowledge of the subject
matter of the proposed resolution shall be present at the public
hearing and shall participate in the discussion of the proposed
resolution. The fund board may act on the proposed resolution on
the day of the public hearing. The fund board shall produce a final
decision document that describes the basis for its decision. The
final resolution and all attachments and the decision document
shall be provided to the governor, to the clerk of the house of
representatives, to the secretary of the senate, and to members of
the senate and house of representatives appropriation committees
and shall be published on the fund's internet website.
(6) The notice described in subsection (5) shall include all
of the following:
(a) A copy of the proposed resolution and all attachments.
(b) A statement that the addressee may express any data,
views, or arguments regarding the proposed resolution.
(c) The address to which written comments may be sent and the
date by which comments must be mailed or electronically
transmitted, which date shall not be before the date of the public
hearing.
(d) The date, time, and place of the public hearing.
(7) The fund board shall employ or contract with a fund
manager or other persons it considers necessary to implement this
section. The person employed or contracted under this subsection
shall have not less than 10 years' experience in commercial
lending, private equity, mezzanine funding, or venture capital. The
person employed or contracted under this section shall exercise the
duties of a fiduciary toward investments from the investment fund
under this section. Management fees payable by the fund and other
investors in a qualified private equity fund, a qualified mezzanine
fund, or a qualified venture capital fund shall be considered an
investment expense and not an administrative cost incurred by the
fund.
(8) Subject to subsection (9), a record received, prepared,
used, or retained by an investment fiduciary in connection with an
investment or potential investment of the investment fund that
relates to investment information pertaining to a portfolio company
in which the investment fiduciary has invested or has considered an
investment that is considered by the portfolio company and
acknowledged by the investment fiduciary as confidential, or that
relates to investment information whether prepared by or for the
investment fiduciary regarding loans and assets directly owned by
the investment fiduciary and acknowledged by the investment
fiduciary as confidential, is exempt from the disclosure
requirements of the freedom of information act, 1976 PA 442, MCL
15.231 to 15.246, if at least annually the fund provides to the
fund board, and makes available to the public, a report of fund
investments during the prior state fiscal year that includes all of
the following:
(a) The name of each portfolio company in which the investment
fund invested during the reporting period.
(b) The aggregate amount of money invested by the investment
fund in portfolio companies during the reporting period.
(c) The rate of return realized during the reporting period on
the investments of the investment fund in portfolio companies.
(d) The source of any public funds invested by the investment
fund in portfolio companies during the reporting period.
(9) If a record described in subsection (8) is an agreement or
instrument to which an investment fiduciary is a party, only those
parts of the record that contain investment information are exempt
from the disclosure requirements of the freedom of information act,
1976 PA 442, MCL 15.231 to 15.246.
(10) The fund board shall ensure that all agreements with
recipients of grants, loans, economic assistance, or community
revitalization incentives under this act contain a claw back and
repayment provision if performance under the contract related to
job creation, commercialization, or other metrics does not comply
with the agreement. This provision shall be part of the public
record and is subject to the freedom of information act, 1976 PA
442, MCL 15.231 to 15.246.
(11) (10)
As used in subsections (8) and (9):
(a) "Investment fiduciary" means a person who exercises any
discretionary authority or control over an investment of the
investment fund or renders investment advice for the fund for a fee
or other direct or indirect compensation.
(b) "Investment information" means information that has not
been publicly disseminated or that is unavailable from other
sources, the release of which might cause a portfolio company or an
investment fiduciary significant competitive harm. Investment
information includes, but is not limited to, financial performance
data and projections, financial statements, list of coinvestors and
their level of investment, product and market data, rent rolls, and
leases.
(c) "Portfolio company" means an entity in which an investment
fiduciary has made or considered an investment on behalf of the
investment fund.
(d) "Record" means all or part of a writing, as that term is
defined in section 2 of the freedom of information act, 1976 PA
442, MCL 15.232.
