HB-4547, As Passed House, March 24, 2010

SUBSTITUTE FOR

HOUSE BILL NO. 4547

A bill to amend 1995 PA 24, entitled

"Michigan economic growth authority act,"

by amending sections 4, 5, 7, 8, and 9 (MCL 207.804, 207.805,

207.807, 207.808, and 207.809), section 4 as amended by 2006 PA

484, section 5 as amended by 2008 PA 108, section 8 as amended by

2009 PA 123, and section 9 as amended by 2007 PA 150.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 4. (1) The Michigan economic growth authority is created

within the Michigan strategic fund. The Michigan strategic fund

shall provide staff for the authority and shall carry out the

administrative duties and functions of the authority as directed by

the authority board of directors. The budgeting, procurement, and

related management functions ~~as directed by~~ of the authority are

under the direction and supervision of the president of the

Michigan strategic fund.

(2) The authority board of directors consists of the following

8 members:

(a) The president of the Michigan strategic fund, ~~or his or~~

~~her designee, as chairperson of the authority~~ who shall serve as a

nonvoting member of the authority board of directors.

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

department of treasury, who shall serve as chairperson of the

authority board of directors.

economic growth, or his or her designee from within the department

of energy, labor, and economic growth.

(d) The state budget director, ~~of the state transportation~~

~~department,~~ or his or her designee from within the state budget

office.

(e) Four other members appointed by the governor by and with

the advice and consent of the senate who are not employed by this

state and who have knowledge, skill, and experience in the

academic, business, local government, labor, or financial fields.

(3) A member of the authority board of directors under

subdivision (2)(e) shall be appointed for a term of 4 years, except

that of the members first appointed by the governor, 2 shall be

appointed for a term of 2 years and 2 for a term of 4 years from

the dates of their appointments. A vacancy shall be filled for the

balance of the unexpired term in the same manner as an original

appointment by the governor and by and with the advice and consent

of the senate.

(4) Except as otherwise provided by law, a member of the

authority board of directors shall not receive compensation for

services as a member of the authority board of directors, but ~~the~~

~~authority~~ may ~~reimburse each member~~ be reimbursed for necessary

travel and expenses ~~necessarily~~ incurred in the performance of his

or her duties consistent with applicable law and the rules and

procedures of the civil service commission and the department of

technology, management, and budget, subject to available funding.

(5) Members of the authority board of directors may elect a

vice-chairperson.

(6) Members of the authority board of directors shall

discharge their duties in a nonpartisan manner, with good faith,

and with that degree of diligence, care, and skill that an

ordinarily prudent person would exercise under similar

circumstances in a like position.

Sec. 5. (1) The powers of the authority are vested in the

authority ~~members in office~~ board of directors. Regardless of the

existence of a vacancy, a majority of the voting members of the

authority board of directors constitutes a quorum necessary for the

transaction of business at a meeting or the exercise of a power or

function of the authority. Action may be taken by the authority

board of directors at a meeting upon a vote of the majority of the

voting and serving members ~~present~~ of the authority board of

directors. Members of the authority board of directors may be

present in person at a meeting of the authority or, if authorized

by the bylaws of the authority, by use of telecommunications or

other electronic equipment if a quorum of the authority board of

directors is present at the meeting.

(2) The authority shall meet at the call of the chairperson or

as may be provided by the authority board of directors. Meetings of

the authority may be held anywhere within this state at a location

accessible to the general public.

(3) The business of the authority shall be conducted at a

public meeting of the authority board of directors 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

shall be given as provided by the open meetings act, 1976 PA 267,

MCL 15.261 to 15.275. A record or portion of a record, material, or

other data received, prepared, used, or retained by the authority

in connection with an application for a tax credit under section 9

that relates to financial or proprietary information submitted by

the applicant that is considered by the applicant and acknowledged

by the authority 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 authority board of

directors shall make the determination as to whether the authority

acknowledges as confidential any financial or proprietary

information submitted by the applicant and considered by the

applicant as confidential, with the concurrence of the office of

the chief compliance officer provided for under section 88i of the

Michigan strategic fund act, 1984 PA 270, MCL 125.2088i. Unless

considered proprietary information, the authority shall not

acknowledge routine financial information as confidential. If the

designee of the authority board of directors determines that

information submitted to the authority is financial or proprietary

information and is confidential and if the office of the chief

compliance officer concurs, the designee of the authority board of

directors shall release a written statement, subject to disclosure

under the freedom of information act, 1976 PA 442, MCL 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 authority to be confidential as financial or

proprietary information.

proprietary information determined to be confidential.

(4) The authority shall not disclose financial or proprietary

information not subject to disclosure pursuant to subsection (3)

without consent of the applicant submitting the information.

(5) 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 applicant significant competitive harm.

Financial or proprietary information does not include a written

agreement under this act or information of a fraudulent nature or

information submitted to the authority in a fraudulent manner.

(6) The authority board of directors may, as appropriate, make

inquiries, studies, and investigations, hold hearings, and receive

comments from the public. The authority board of directors also may

consult with outside experts in order to perform its duties,

including, but not limited to, experts in the private sector,

organized labor, government agencies, and at institutions of higher

education.

Sec. 7. (1) An eligible business may apply to the authority to

enter into a written agreement ~~which authorizes~~ authorizing a tax

credit under section 9.

(2) The authority shall specify the form of the application.

~~shall be as specified by the authority from time to time.~~ The

authority may request such information, in addition to that

contained in an application, as may be needed to permit the

authority and the office of the chief compliance officer provided

for under section 88i of the Michigan strategic fund act, 1984 PA

270, MCL 125.2088i, to discharge ~~its~~ their responsibilities under

~~section 8~~ this act and other applicable law.

(3) The authority shall not enter into a written agreement

authorizing a tax credit under section 9 without a written

determination by the office of the chief compliance officer

provided for under section 88i of the Michigan strategic fund act,

1984 PA 270, MCL 125.2088i, that both the application and the

authorization comply with the requirements of this act and other

applicable law.

(4) The Michigan economic growth authority shall establish a

business integrity verification program to evaluate the business

probity of a business entity applying for a tax credit under

section 9. The business integrity verification program shall

include, without limitation, all of the following:

(a) A policy adopted by the board of directors of the

authority requiring a business entity applying for a tax credit

under section 9, or a person associated with the business entity,

to submit a written business integrity questionnaire and other

documentation in a form determined by the Michigan economic growth

authority, if a questionnaire or other documentation is necessary

to verify the business integrity of the business entity.

(b) A policy adopted by the Michigan economic growth authority

requiring a business entity applying for a tax credit under section

9, or a person associated with the business entity, to submit to a

civil, criminal, or credit background check if a background check

is necessary to verify the business integrity of the business

entity. The policy shall include, without limitation, measures to

assure that the business entity or person has not been convicted of

embezzlement, fraud, theft, forgery, bribery, falsification or

destruction of records, receiving stolen property, or violation of

state or federal antitrust laws or procurement laws.

(5) If a business entity fails to comply with the requirements

of subsection (4) or if activities authorized under subsection (4)

demonstrate a lack of business integrity on the part of the

business entity, the board shall not authorize the Michigan

economic growth authority to enter into an agreement for a tax

credit with the business entity.

Sec. 8. (1) After receipt of an application, the authority may

enter into an agreement with an eligible business for a tax credit

under section 9 if the authority determines that all of the

following are met:

(a) Except as provided in subsection (5), the eligible

business creates 1 or more of the following as determined by the

authority and provided with written agreement:

(i) A minimum of 50 qualified new jobs at the facility if

expanding in this state.

(ii) A minimum of 50 qualified new jobs at the facility if

locating in this state.

(iii) A minimum of 25 qualified new jobs at the facility if the

facility is located in a neighborhood enterprise zone as determined

under the neighborhood enterprise zone act, 1992 PA 147, MCL

207.771 to 207.786, is located in a renaissance zone under the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

125.2696, or is located in a federally designated empowerment zone,

rural enterprise community, or enterprise community.

(iv) A minimum of 5 qualified new jobs at the facility if the

eligible business is a qualified high-technology business.

(v) A minimum of 5 qualified new jobs at the facility if the

eligible business is a rural business.

(b) Except as provided in subsection (5), the eligible

business agrees to maintain 1 or more of the following for each

year that a credit is authorized under this act:

(i) A minimum of 50 qualified new jobs at the facility if

expanding in this state.

(ii) A minimum of 50 qualified new jobs at the facility if

locating in this state.

(iii) A minimum of 25 qualified new jobs at the facility if the

facility is located in a neighborhood enterprise zone as determined

under the neighborhood enterprise zone act, 1992 PA 147, MCL

207.771 to 207.786, is located in a renaissance zone under the

Michigan renaissance zone act, 1996 PA 376, MCL 125.2681 to

125.2696, or is located in a federally designated empowerment zone,

rural enterprise community, or enterprise community.

(iv) If the eligible business is a qualified high-technology

business, all of the following apply:

(A) A minimum of 5 qualified new jobs at the facility.

(B) A minimum of 25 qualified new jobs at the facility within

5 years after the date of the expansion or location as determined

by the authority and a minimum of 25 qualified new jobs at the

facility each year thereafter for which a credit is authorized

under this act.

(v) If the eligible business is a rural business, all of the

following apply:

(A) A minimum of 5 qualified new jobs at the facility.

(B) A minimum of 25 qualified new jobs at the facility within

5 years after the date of the expansion or location as determined

by the authority.

provided in this subdivision, in addition to the jobs specified in

subdivision (b), the eligible business, if already located within

this state, agrees to maintain a number of full-time jobs equal to

or greater than the number of full-time jobs it maintained in this

state prior to the expansion, as determined by the authority. After

an eligible business has entered into a written agreement as

provided in subsection (2), the authority may adjust the number of

full-time jobs required to be maintained by the authorized business

under this subdivision, in order to adjust for decreases in full-

time jobs in the authorized business in this state due to the

divestiture of operations, provided a single other person continues

to maintain those full-time jobs in this state. The authority shall

not approve a reduction in the number of full-time jobs to be

maintained unless the authority has determined that it can monitor

the maintenance of the full-time jobs in this state by the other

person, and the authorized business agrees in writing that the

continued maintenance of the full-time jobs in this state by the

other person, as determined by the authority, is a condition of

receiving tax credits under the written agreement. A full-time job

maintained by another person under this subdivision, that otherwise

meets the requirements of section 3(j), shall be considered a full-

time job, notwithstanding the requirement that a full-time job be

performed by an individual employed by an authorized business, or

an employee leasing company or professional employer organization

on behalf of an authorized business.

(d) Except as otherwise provided in this subdivision, the wage

paid for each retained job and qualified new job is equal to or

greater than 150% of the federal minimum wage. However, if the

eligible business is a qualified high-wage activity, then the wage

paid for each qualified new job is equal to or greater than 300% of

the state minimum wage. However, beginning on August 4, 2008, the

authority may include the value of the health care benefit in

determining the wage paid for each retained job or qualified new

job for an eligible business under this act.

(e) The plans for the expansion, retention, or location are

economically sound.

(f) Except for an eligible business described in subsection

(5)(c), the eligible business has not begun construction of the

facility.

(g) The expansion, retention, or location of the eligible

business will benefit the people of this state by increasing

opportunities for employment and by strengthening the economy of

this state.

(h) The tax credits offered under this act are an incentive to

expand, retain, or locate the eligible business in Michigan and

address the competitive disadvantages with sites outside this

state.

(i) A cost/benefit analysis reveals that authorizing the

eligible business to receive tax credits under this act will result

in an overall positive fiscal impact to the state.

(2) If the authority determines that the requirements of

subsection (1), (5), (9), or (11) have been met, the authority

shall determine the amount and duration of tax credits to be

authorized under section 9, and shall enter into a written

agreement as provided in this section. Except as otherwise provided

under this section, the duration of the tax credits shall not

exceed 20 years or for an authorized business that is a distressed

business, 3 years. In determining the amount and duration of tax

credits authorized, the authority shall consider the following

factors:

(a) The number of qualified new jobs to be created or retained

jobs to be maintained.

(b) The average wage and health care benefit level of the

qualified new jobs or retained jobs relative to the average wage

and health care benefit paid by private entities in the county in

which the facility is located.

eligible business will make.

(d) The cost differential to the business between expanding,

locating, or retaining new jobs in Michigan and a site outside of

Michigan.

(e) The potential impact of the expansion, retention, or

location on the economy of Michigan.

(f) The cost of the credit under section 9, the staff,

financial, or economic assistance provided by the local government

unit, or local economic development corporation or similar entity,

and the value of assistance otherwise provided by this state.

(g) Whether the expansion, retention, or location will occur

in this state without the tax credits offered under this act.

(h) Whether the authorized business reuses or redevelops

property that was previously used for an industrial or commercial

purpose in locating the facility.

(i) The project's effects on other Michigan businesses within

the same industry.

(3) A written agreement between an eligible business and the

authority shall include, but need not be limited to, all of the

following:

(a) A description of the business expansion, retention, or

location that is the subject of the agreement.

(b) Conditions upon which the authorized business designation

is made.

the written agreement may result in the revocation of the

designation as an authorized business and the loss or reduction of

future credits under section 9.

(d) A statement by the eligible business that a

misrepresentation in the application may result in the revocation

of the designation as an authorized business and the refund of

credits received under section 9 plus a penalty equal to 10% of the

credits received under section 9.

(e) A method for measuring full-time jobs before and after an

expansion, retention, or location of an authorized business in this

state.

(f) A written certification from the eligible business

regarding all of the following:

(i) The eligible business will follow a competitive bid process

for the construction, rehabilitation, development, or renovation of

the facility, and that this process will be open to all Michigan

residents and firms. The eligible business may not discriminate

against any contractor on the basis of its affiliation or

nonaffiliation with any collective bargaining organization.

(ii) The eligible business will make a good faith effort to

employ, if qualified, Michigan residents at the facility.

(iii) The eligible business will make a good faith effort to

employ or contract with Michigan residents and firms to construct,

rehabilitate, develop, or renovate the facility.

(iv) The eligible business is encouraged to make a good faith

effort to utilize Michigan-based suppliers and vendors when

purchasing goods and services.

(g) A condition that if the eligible business qualified under

subsection (5)(b)(ii) and met the subsection (1)(e) requirement by

filing a chapter 11 plan of reorganization, the plan must be

confirmed by the bankruptcy court within 6 years of the date of the

agreement or the agreement is rescinded.

(h) All written agreements entered into on or after April 1,

2010 shall contain a provision requiring the payment of a penalty

if the authorized business fails to comply with section 3 of the

Michigan corporate responsibility act or fails to disclose a civil

or criminal offense as required by section 3 of the Michigan

corporate responsibility act. The penalty is equal to the amount of

all tax credits described in section 9 that were utilized by the

authorized business under this act.

(4) Upon execution of a written agreement as provided in this

section, an eligible business is an authorized business.

(5) Through December 31, 2007, after receipt of an

application, the authority may enter into a written agreement with

an eligible business that meets 1 or more of the following

criteria:

(a) Is located in this state on the date of the application,

makes new capital investment of $250,000,000.00 in this state, and

maintains 500 retained jobs, as determined by the authority.

(b) Meets 1 or more of the following criteria:

(i) Relocates production of a product to this state after the

date of the application, makes capital investment of

$500,000,000.00 in this state, and maintains 500 retained jobs, as

determined by the authority.

(ii) Maintains 150 retained jobs at a facility, maintains 1,000

or more full-time jobs in this state, and makes new capital

investment in this state.

(iii) Is located in this state on the date of the application,

maintains at least 100 retained jobs at a single facility, and

agrees to make new capital investment at that facility equal to the

greater of $100,000.00 per retained job maintained at that facility

or $10,000,000.00 to be completed or contracted for not later than

December 31, 2007.

(iv) Maintains 300 retained jobs at a facility; the facility is

at risk of being closed and if it were to close, the work would go

to a location outside this state, as determined by the authority;

new management or new ownership is proposed for the facility that

is committed to improve the viability of the facility, unless

otherwise provided in this subparagraph; and the tax credits

offered under this act are necessary for the facility to maintain

operations. The authority may not enter into a written agreement

under this subparagraph after December 31, 2007. Of the written

agreements entered into under this subparagraph, the authority may

enter into 3 written agreements under this subparagraph that are

excluded from the requirements of subsection (1)(e), (f), and (h)

if the authority considers it in the public interest and if the

eligible business would have met the requirements of subsection

(1)(g) and (h) within the immediately preceding 6 months from the

signing of the written agreement for a tax credit. Of the 3 written

agreements described in this subparagraph, the authority may also

waive the requirement for new management if the existing management

and labor make a commitment to improve the viability and

productivity of the facility to better meet international

competition as determined by the authority.

(v) Maintains 100 retained jobs at a facility; is a rural

business, unless otherwise provided in this subparagraph; the

facility is at risk of being closed and if it were to close, the

work would go to a location outside this state, as determined by

the authority; new management or new ownership is proposed for the

facility that is committed to improve the viability of the

facility; and the tax credits offered under this act are necessary

for the facility to maintain operations. The authority may not

enter into a written agreement under this subparagraph after

December 31, 2007. Of the written agreements entered into under

this subparagraph, the authority may enter into 3 written

agreements under this subparagraph that are excluded from the

requirements of subsection (1)(e), (f), and (h) if the authority

considers it in the public interest and if the eligible business

would have met the requirements of subsection (1)(e) ~~, (g),~~ and (h)

within the immediately preceding 6 months from the signing of the

written agreement for a tax credit. Of the 3 written agreements

described in this subparagraph, the authority may also waive the

requirement that the business be a rural business if the business

is located in a county with a population of 500,000 or more and

600,000 or less.

(vi) Maintains 175 retained jobs and makes new capital

investment at a facility in a county with a population of not less

than 7,500 but not greater than 8,000.

(vii) Is located in this state on the date of the application,

maintains at least 675 retained jobs at a facility, agrees to

create 400 new jobs, and agrees to make a new capital investment of

at least $45,000,000.00 to be completed or contracted for not later

than December 31, 2007. Of the written agreements entered into

under this subparagraph, the authority may enter into 1 written

agreement under this subparagraph that is excluded from the

requirements of subsection (1)(f) if the authority considers it in

the public interest.

(viii) Is located in this state on the date of the application,

makes new capital investment of $250,000,000.00 or more in this

state, and makes that capital investment at a facility located

north of the 45th parallel.

(6) Through December 31, 2008, each year, the authority shall

not execute new written agreements that in total provide for more

than 400 yearly credits over the terms of those agreements entered

into that year for eligible businesses that are not qualified high-

technology businesses, distressed businesses, rural businesses, or

an eligible business described in subsection (11). For calendar

year 2009, the authority shall not execute new written agreements

described in this subsection that in total provide for more than

400 yearly credits over the terms of those agreements entered into

that year, plus up to 85 additional yearly credits taken from

previously issued credits by the authority. For calendar year 2010

and each year thereafter, the authority shall not execute new

written agreements described in this subsection that in total

provide for more than 300 yearly credits over the terms of those

agreements entered into that year, plus up to 85 additional yearly

credits taken from previously issued credits by the authority. As

used in this subsection, beginning calendar year 2010, "yearly

credit" means the number of years over the term of an agreement

multiplied by the percentage amount authorized in the agreement. As

used in this subsection, "previously issued credits" means 2/3 of

the number of tax credits authorized by the authority for an

authorized business beginning in calendar year 1999 that meet all

of the following:

(a) That the authorized business did not use any or a portion

of the tax credits authorized under that written agreement.

(b) The authority determined at a meeting upon a vote of the

majority of the members present that the credits previously

authorized satisfy subdivision (a).

(7) The authority shall not execute more than 50 new written

agreements each year for eligible businesses that are qualified

high-technology businesses or rural business. In addition, the

authority may execute not more than 25 additional new written

agreements each year for eligible businesses that are qualified

high-technology businesses that have demonstrated that not less

than 10% of the total operating expenses of the eligible business

in the immediately preceding 2 years was attributable to research

and development. Not more than 35 of the 75 written agreements for

businesses that are qualified high-technology businesses or rural

business may be executed each year for qualified rural businesses.

Not more than 50 of the 75 written agreements for businesses that

are qualified high-technology businesses or rural businesses may be

executed each year for a high-technology business that engages in a

qualified high-wage activity. Not more than 4 of the 75 agreements

executed under this subsection may provide for a tax credit with a

duration of more than 12 years but not more than 20 years. The

authority shall not execute a written agreement for an eligible

business that is a qualified high-technology business or rural

business under this subsection if that eligible business has

claimed a credit under section 455 of the Michigan business tax

act, 2007 PA 36, MCL 208.1455.

(8) The authority shall not execute more than 20 new written

agreements each year for eligible businesses that are distressed

businesses. The authority shall not execute more than 5 of the

written agreements described in this subsection each year for

distressed businesses that had 1,000 or more full-time jobs at a

facility 4 years immediately preceding the application to the

authority under this act. The authority shall not execute more than

5 new written agreements each year for eligible businesses

described in subsection (11). The authority shall not execute more

than 4 new written agreements each year for eligible businesses

described in subsection (11) in local governmental units that have

a population greater than 16,000.

(9) Beginning January 1, 2008, after receipt of an

application, the authority may enter into a written agreement with

an eligible business that does not meet the criteria described in

subsection (1), if the eligible business meets all of the

following:

(a) Agrees to retain not fewer than 50 jobs.

(b) Agrees to invest, through construction, acquisition,

transfer, purchase, contract, or any other method as determined by

the authority, at a facility equal to $50,000.00 or more per

retained job maintained at the facility.

this act and without the new capital investment, the facility is at

risk of closing and the work and jobs would be removed to a

location outside of this state.

(d) Certifies to the authority that the management or

ownership is committed to improving the long-term viability of the

facility in meeting the national and international competition

facing the facility through better management techniques, best

practices, including state of the art lean manufacturing practices,

and market diversification.

(e) Certifies to the authority that it will make best efforts

to keep jobs in Michigan when making plant location and closing

decisions.

(f) Certifies to the authority that the workforce at the

facility demonstrates its commitment to improving productivity and

profitability at the facility through various means.

(10) Beginning on April 28, 2008, if the authority enters into

a written agreement with an eligible business, the written

agreement shall include a repayment provision of all or a portion

of the credits received by the eligible business for a facility if

the eligible business moves full-time jobs outside this state

during the term of the written agreement and for a period of years

after the term of the written agreement, as determined by the

authority.

(11) Beginning January 1, 2008, after receipt of an

application, the authority may enter into a written agreement with

an eligible business that does not meet the criteria described in

subsection (1), if the eligible business meets all of the

following:

(a) Agrees to create or retain not fewer than 15 jobs.

(b) Agrees to occupy property that is a historic resource as

that term is defined in section 435 of the Michigan business tax

act, 2007 PA 36, MCL 208.1435, and that is located in a downtown

district as defined in section 1 of 1975 PA 197, MCL 125.1651.

job is equal to or greater than 150% of the federal minimum wage.

(12) Beginning April 1, 2010, the authority shall not enter

into an agreement with an eligible business that has failed to

comply with section 3 of the Michigan corporate responsibility act.

Sec. 9. (1) An authorized business is eligible for the credits

provided in sections 37c, 37d, and 38g(19) to (24) of ~~the single~~

~~business tax act,~~ former 1975 PA 228 ~~, MCL 208.37c, 208.37d, and~~

~~208.38g,~~ and sections 407 and 431 of the Michigan business tax act,

2007 PA 36, MCL 208.1407 and 208.1431.

(2) The authority shall issue a certificate each year to an

authorized business that states the following:

(a) That the eligible business is an authorized business.

(b) The amount of the tax credit for the designated tax year.

the Michigan treasury number assigned to the taxpayer.

(d) The taxpayer continues to comply with the requirements of

this act and other laws of this state applicable to the tax credit.

(3) The authority shall not issue a certificate for a tax

credit to an eligible business under this section if the office of

the chief compliance officer created under section 88i of the

Michigan strategic fund act, 1984 PA 270, MCL 125.2088i, determines

that the eligible business is not in compliance with this act or

other laws of this state applicable to the tax credit.