HB-5047, As Passed Senate, October 19, 2005

SENATE SUBSTITUTE FOR

HOUSE BILL NO. 5047

     A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

by amending the title and sections 4, 5, 6, 7, and 13 (MCL

125.2004, 125.2005, 125.2006, 125.2007, and 125.2013), sections 4,

5, 6, and 13 as amended by 1987 PA 278, and by adding section 94

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 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; to provide for the

expenditure of proceeds in certain funds to which the Michigan

strategic fund succeeds in ownership; to provide for the issuance

of, and terms and conditions for, certain notes and bonds of the

Michigan strategic fund; to create certain boards and funds; to

create certain permanent funds; 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;

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

make certain loans, grants, and investments; to provide penalties;

to make an appropriation; and to repeal  certain acts and parts of

acts.

     Sec. 4. As used in this act:

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

strategic fund, except where the context clearly requires a

different definition.

     (b) "Economic development project" means 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

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.

     (c) "Financial institution" means a state or nationally

chartered bank or a state or federally chartered savings and loan

association, savings bank, or credit union whose deposits are

insured by an agency of the United States government and that

maintains a principal office or branch office in this state under

the laws of this state or the United States.

(d)  (c) "Fund" means the Michigan strategic fund created

under section 5, except where the context clearly requires a

different definition.

     (e) "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.

(f)  (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.

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

partnership, limited partnership, limited liability 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.

(h)  (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.

(i)  (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. 5. (1) There is created by this act a public body

corporate and politic to be known as the Michigan strategic fund.

The fund shall be within the department of  commerce  treasury and

shall exercise its prescribed statutory powers, duties, and

functions independently of the  director of commerce  state

treasurer.  However, the budgeting, procurement, and related

functions of the fund and administrative responsibilities for

employees of the fund shall be performed under the direction and

supervision of the director of commerce.  The statutory authority,

powers, duties, functions, records, personnel, property, unexpended

balances of appropriations, allocations, and other funds of the

fund, including the functions of budgeting, procurement, personnel,

and management-related functions, shall be retained by the fund,

and the fund shall be an autonomous entity within the department of

House Bill No. 5047 as amended October 19, 2005

treasury in the same manner as the Michigan employment security

commission was designated an autonomous entity within the Michigan

department of labor under section 379 of the executive organization

act of 1965, 1965 PA 380, MCL 16.479.

     (2)  The  Except as otherwise provided in this act, the

purposes, powers, and duties of the Michigan strategic fund are

vested in and shall be exercised by a board of directors.

     (3)  The  Except as provided in subsection (4), the board

shall consist of the director of the department of  commerce  labor

and economic growth or his or her designee from within the

department of labor and economic growth, the state treasurer or his

or her designee from within the department of treasury, <<the chief

executive officer of the medc,>> and <<7 6>> other

members with knowledge, skill, and experience in the academic,

business, or financial field, who shall be appointed by the

governor with the advice and consent of the senate.  Not more than

2 of the 7 appointed members of the board shall be, during their

term of office on the board, employees of the state of Michigan.

The remainder of the appointed members of the board shall be

representatives  None of the <<6>> members appointed under this section

shall be employees of this state. Not less than 5 members of the

board appointed under this subsection shall be members of the

private sector. Five of the <<7 6>>  appointed members appointed under

this subsection shall serve for fixed terms.  Of the 5 fixed-term

members first appointed, 2 shall be appointed for a term that

expires December 31, 1986, and 3 shall be appointed for a term that

expires December 31, 1987. Upon completion of each fixed term

expiring after December 30, 2005, a member shall be appointed for a

House Bill No. 5047 as amended October 19, 2005

term of  3  4 years. Of the private sector members appointed by the

governor for a fixed term, 1 shall be appointed from  1  a list of

3 or more nominees of the speaker of the house of representatives

representing persons within the private sector with experience in

private equity or venture capital investments, commercial lending,

or commercialization of technology and 1 shall be appointed from  1

a list of 3 or more nominees of the senate majority leader

representing persons within the private sector with experience in

private equity or venture capital investments, commercial lending,

or commercialization of technology. <<

>> A member appointed under this

subsection or subsection (4) shall serve until a successor is

appointed, and a vacancy shall be filled for the balance of the

unexpired term in the same manner as the original appointment. The

<<2  appointed members member>> appointed under this subsection

and serving

without a fixed term shall serve at the pleasure of the governor.

Of the members appointed under this subsection and subsection (4),

there shall be minority, female, and small business representation.

The chief executive officer or director of any state department,

who is a designated member of or an appointee to the board, may

appoint a representative from the department to serve as a voting

member of the fund in the absence of the chief executive officer or

director.  After <<December 31>>, 2005, at least 2 of the members of

the board shall have experience in private equity or venture

capital investments, at least 1 of the members shall have

experience in commercial lending, and at least 1 of the members of

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the board shall have experience in commercialization of technology.

     (4) In addition to the 9 members of the board under subsection

(3), not later than December 15, 2005, the governor shall appoint,

with the advice and consent of the senate, 2 additional members to

the board for terms expiring December 31, 2007. The members

appointed under this subsection shall be from the private sector

and shall have experience in private equity or venture capital

investments, commercial lending, or commercialization of

technology. From the date of the appointment of the members under

this subsection until December 31, 2007, the board shall have 11

members. After December 31, 2007, the board shall have 9 members.

(5)  (4) The governor shall designate 1 member of the board

to serve as its chairperson. <<The governor shall designate 1 member

of the board to serve as president of the fund and

Of the 2 board members

serving at the pleasure of the governor, the governor>>  shall  may

designate 1 member to serve as  the board's president and shall

designate the other member to serve as its vice-president  if a

vice-president is designated  of the fund. The chairperson,

<<president ,>> and vice-president, if a vice-president is designated,

shall serve as those officers at the pleasure of the governor.

(6)  (5) Members of the board shall serve without

compensation for their membership on the board, except that  the

president and vice-president shall receive such compensation as is

reasonable and established by the board, and members of the board

shall  may receive reasonable reimbursement for necessary travel

and expenses.

(7)  (6) The board may delegate to its president, vice-

president, staff, or others those functions and authority that the

board deems necessary or appropriate, which may include the

oversight and supervision of employees of the fund. However,

responsibilities specifically vested in the board under chapter 8A

shall be performed by the board and shall not be transferred to the

MEDC.

(8)  (7) A majority of the members of the board appointed and

serving  and present in person at a board meeting constitutes a

quorum for the transaction of business at a meeting, or the

exercise of a power or function of the fund, notwithstanding the

existence of 1 or more vacancies. The board may act only by

resolution approved by a majority of board members appointed and

serving. Voting upon action taken by the board shall be conducted

by majority vote of the members appointed and serving. Members of

the board may be present in person at a meeting of the board or, if

authorized by the bylaws of the board, by use of  amplified

telephonic  telecommunications or other electronic equipment. The

fund shall meet at the call of the chair and as may be provided in

the bylaws of the fund. Meetings of the fund may be held anywhere

within the state of Michigan.

(9)  (8) The business  which  of the board  may perform

shall be conducted at a public meeting of the board held in

compliance with the open meetings act,  Act No. 267 of the Public

Acts of 1976, being sections 15.261 to 15.275 of the Michigan

Compiled Laws  1976 PA 267, MCL 15.261 to 15.275. Public notice of

the time, date, and place of the meeting shall be given in the

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manner required by  Act No. 267 of the Public Acts of 1976  the

open meetings act, 1976 PA 267, MCL 15.261 to 15.267, and shall

also be provided on an internet website operated by the fund. A

record or portion of a record, material, or other data received,

prepared, used, or retained by the fund or any of its centers in

connection with an application to or with a project or product

assisted by the fund or any of its centers  which  or with an

award, grant, loan, or investment under chapter 8A <<

>>

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,  Act No. 442 of the

Public Acts of 1976, being sections 15.231 to 15.246 of the

Michigan Compiled Laws  1976 PA 442, MCL 15.231 to 15.246. <<The

disclosure of a record concerning investment information described in section 88c under the freedom of information act, 1976 pa 442, mcl 15.231 TO 15.246, is subject to the limitations provided in section 88c.>> The

board may also meet in closed session pursuant to  Act No. 267 of

the Public Acts of 1976  the open meetings act, 1976 PA 267, MCL

15.261 to 15.267, to make a determination of whether it

acknowledges as confidential any financial or proprietary

information submitted by the applicant and considered by the

applicant as confidential. Unless considered proprietary

information, the board shall not acknowledge routine financial

information as confidential. If the board determines that

information submitted to the fund is financial or proprietary

information and is confidential, the board shall release a written

statement, subject to disclosure under the freedom of information

act, 1976 PA 442, MCL 15.231 to 15.246, that states all of the

following:

     (a) The name and business location of the person requesting

that the information submitted be confidential as financial or

proprietary information.

     (b) That the information submitted was determined by the board

to be confidential as financial or proprietary information.

     (c) A broad nonspecific overview of the financial or

proprietary information determined to be confidential.

(10)  (9) The fund shall not disclose financial or

proprietary information not subject to disclosure pursuant to

subsection  (8)  (9) without consent of the applicant submitting

the information.

(11)  (10) Any document to which the fund is a party

evidencing a loan, insurance, mortgage, lease, venture, or other

type of agreement the fund is authorized to enter into shall not be

considered financial or proprietary information that may be exempt

from disclosure under subsection  (8)  (9).

(12)  (11) For purposes of subsections  (8), (9), (10), and

(10)  (11), "financial or proprietary information" means

information  which  that has not been publicly disseminated or

which is unavailable from other sources, the release of which might

cause the applicant significant competitive harm.

     Sec. 6. (1)  Members  Notwithstanding section 3(1) of 1968 PA

317, MCL 15.323, members of the board and officers and employees of

the fund are subject to  Act No. 317 of the Public Acts of 1968,

being sections 15.321 to 15.330 of the Michigan Compiled Laws, or

Act No. 318 of the Public Acts of 1968, being sections 15.301 to

15.310 of the Michigan Compiled Laws  1968 PA 317, MCL 15.321 to

15.330, or 1968 PA 318, MCL 15.301 to 15.310, as applicable.

     (2) A member of the board or officer, employee, or agent of

the fund shall discharge the duties of his or her position in a

nonpartisan manner, with good faith, and with that degree of

diligence, care, and skill which an ordinarily prudent person would

exercise under similar circumstances in a like position. In

discharging the duties, a member of the board or an officer,

employee, or agent, when acting in good faith, may rely upon the

opinion of counsel for the fund, upon the report of an independent

appraiser selected with reasonable care by the board, or upon

financial statements of the fund represented to the member of the

board or officer, employee, or agent of the fund to be correct by

the president or the officer of the fund having charge of its books

or account, or stated in a written report by a certified public

accountant or firm of certified public accountants fairly to

reflect the financial condition of the fund.

     (3) 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, investment, or other expenditure under this act to his or

her employer.

     (4) A member, employee, or agent of the board shall not engage

in any conduct that constitutes a conflict of interest and shall

immediately advise the board in writing of the details of any

incident or circumstances that may present the existence of a

conflict of interest with respect to the performance of the board-

House Bill No. 5047 as amended October 19, 2005

related work or duty of the member, employee, or agent of the

board.

     (5) A member who has a conflict of interest related to any

matter before the board shall disclose the conflict of interest

before the board takes any action with respect to the matter, which

disclosure shall become a part of the record of the board's

official proceedings. The member with the conflict of interest

shall refrain from doing all of the following with respect to the

matter that is the basis of the conflict of interest:

     (a) Voting in the board's proceedings related to the matter.

     (b) Participating in the board's discussion of and

deliberation on the matter.

     (c) Being present at the meeting when the discussion,

deliberation, and voting on the matter take place.

     (d) Discussing the matter with any other board member.

     (6) Failure of a member to comply with subsection (5)

constitutes misconduct in office subject to removal under section

94.

     (7) When authorizing expenditures and investments under this

act, the board << >> shall not consider

whether a recipient has made a contribution or expenditure under

the Michigan campaign finance act, 1976 PA 388, MCL 169.201 to

169.282.

     (8) Expenditures under this act shall not be used to finance

or influence political activities.

     Sec. 7. The fund shall have the powers  necessary or

convenient to carry out and effectuate the purposes, objectives,

and provisions of this act, the purposes and objectives of the

fund, and duties provided in this act, the powers delegated by

other laws or executive orders, including, but not limited to, the

power to:

     (a) Sue and be sued; to have a seal and alter the same at

pleasure; to have perpetual succession; to make, execute, and

deliver contracts, conveyances, and other instruments necessary or

convenient to the exercise of its powers; and to make and amend

bylaws.

     (b) Solicit and accept gifts, grants, loans, and other aids

from any person or the federal, state, or a local government or any

agency of the federal, state, or a local government, or to

participate in any other way in any federal, state, or local

government program.

     (c) Make grants, loans, and investments; to guarantee and

insure loans, leases, bonds, notes, or other indebtedness, whether

public or private; and to issue letters of credit.

     (d) Construct; acquire by gift, purchase, installment

purchase, or lease; and reconstruct, improve, repair, or equip a

project or any part of a project.

     (e) Borrow money and issue bonds and notes to finance part or

all of the project costs of a project, or of a loan  pursuant to

under subdivision (r) for an export transaction, and to secure

those bonds and notes by mortgage, assignment, or pledge of any of

its money, revenues, income, and properties. The authority provided

by this subdivision includes but is not limited to issuing bonds

and notes to acquire and install machinery, equipment, furnishings,

and other personal property, notwithstanding that the fund does not

own or propose to own or finance the building or land in or near to

which the machinery, equipment, furnishings, and other personal

property is or is to be located.

     (f) Acquire or contract to acquire from any person,

municipality, the federal or state government, or any agency of the

foregoing, or otherwise, leaseholds, real or personal property or

any interest in real or personal property; to own, hold, clear,

improve, and rehabilitate and to sell, assign, exchange, transfer,

convey, lease, mortgage, or otherwise dispose of or encumber

leaseholds, real or personal property or any interest in real or

personal property, as is convenient for the accomplishment of the

purposes of this act and of the fund.

     (g) Procure insurance against any loss in connection with the

fund's property, assets, or activities.

     (h) Invest any money of the fund at the fund's discretion, in

any obligations determined proper by the fund, and name and use

depositories for its money.

     (i) Engage personnel as is necessary and engage the services

of private consultants, managers, counsel, auditors, engineers, and

scientists for rendering professional management and technical

assistance and advice, payable out of any money of the fund legally

available for this purpose.

     (j) Charge, impose, and collect fees and charges in connection

with any transaction and provide for reasonable penalties for

delinquent payment of fees or charges.

     (k) Indemnify and procure insurance indemnifying any members

of the board from personal loss or accountability from liability

asserted by a person on the bonds or notes of the fund or from any

personal liability or accountability by reason of the issuance of

the bonds, notes, insurance, or guarantees; by reason of

acquisition, construction, ownership, or operation of a project; or

by reason of any other action taken or the failure to act by the

fund.

     (l) Enter into a lease for the use or sale of a project. The

lease may provide for options to purchase or renew.

     (m) Mortgage or create security interests in a project or any

part of a project, or in a lease or loan, or in the rents,

revenues, or sums to be paid thereunder, in favor of the holders of

the bonds or notes issued by the fund.

     (n) Convey or release a project or any part of a project to a

lessee, purchaser, or borrower under any agreement after provision

has been made for the retirement in full of the bonds or notes

issued for that project under terms and conditions provided in the

agreement or as may be agreed with the holders of the bonds or

notes, at any time where the obligation of the lessee, purchaser,

or borrower to make the payments prescribed shall remain fixed as

provided in the agreement notwithstanding the conveyance or

release, or as may otherwise be agreed with the holders of the

bonds or notes.

     (o) Make loans, participate in the making of loans, undertake

commitments to make loans and mortgages, buy and sell loans and

mortgages at public or private sale, rewrite loans and mortgages,

discharge loans and mortgages, foreclose on a mortgage, commence an

House Bill No. 5047 as amended October 19, 2005

action to protect or enforce a right conferred upon the fund by a

law, mortgage, loan, contract, or other agreement, bid for and

purchase property which was the subject of the mortgage at a

foreclosure or other sale, acquire or take possession of the

property and in that event complete, administer, pay the principal

and interest on obligations incurred in connection with that

property, and dispose of and otherwise deal with the property, in a

manner as may be necessary or desirable to protect the interests of

the fund.

     (p) Certify, for the purpose of determining eligible

investments for the basis of a single business tax credit, minority

venture capital companies, as defined by law.

     (q) <<To Except as otherwise provided in this subdivision, to>>

create and operate centers, accounts, and funds as

required <<or permitted>> by law for the use and disbursement of

assets of the fund. <<The powers granted under this subdivision do not

apply to chapter 8a.>>

     (r) To make loans to a financial institution to facilitate

financing of all or part of an export related transaction

including, but not limited to, pre-export working capital financing

and postexport receivable financing.

     (s) Do all other things necessary or convenient to achieve the

objectives and purposes of the fund, this act, or other laws that

relate to the purposes and responsibilities of the fund.

     Sec. 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) The legislature finds and declares that the

activities authorized under this chapter to encourage

diversification of the economy and the creation of 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 and the creation of jobs resulting from this chapter shall

accrue substantially within this state.

     (2) Activities authorized under this chapter shall not be

considered a project, economic development project, or a product

assisted by the 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) A new technology, device, or system that enhances or

improves the manufacturing process of wood, timber, or

agricultural-based products.

     (vi) 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.

     (vii) Advanced computing or electronic device technology

related to technology described under this subdivision.

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

technology described under this subdivision.

     (ix) 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.

     (c) "Alternative energy technology" means applied research or

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.

House Bill No. 5047 as amended October 19, 2005

     (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) A new technology, product, or system that permits the

utilization of biomass for the production of specialty, commodity,

or foundational chemicals or of novel or economical commodity

materials through the application of biotechnology that minimizes,

complements, or replaces reliance on petroleum for the production.

     (iv) Advanced computing or electronic device technology related

to technology described under this subdivision.

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

technology described under this subdivision.

     (vi) 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 <<potential for>> 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,

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, equip, finance, or

promote a person or 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) "Fund board" means the board of the Michigan strategic

fund described in section 5.

     (j) "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

House Bill No. 5047 as amended October 19, 2005

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.

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

selected by the commercialization board with appropriate expertise

to conduct an independent, unbiased, objective, and competitive

evaluation of activities funded under <<section 88k>>. 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 commercialization

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.

     (l) "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 or an independent nonprofit degree-granting institution of

postsecondary education in this state that is approved by the state

board of education.

     (m) "Jobs for Michigan investment fund" or "investment fund"

means the jobs for Michigan investment fund 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.

     (C) Activities prohibited under section 2690 of the public

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 or the commercial manufacturing of technology described

under this subdivision.

     (iii) Product research and development related to technology

described under this subdivision.

     (p) "Qualified business" means a business entity located in

this state.

     (q) "Qualified mezzanine fund" means a person or entity

primarily engaged in making loans or investments ranging in size

from $250,000.00 to $6,000,000.00 that is managed by 2 or more

individuals with no less than 5 years' direct experience in

mezzanine lending or capital investments and that holds investment

capital or has commitments from investors other than the fund and

at least 2 financial institutions.

     (r) "Qualified private equity fund" means a firm principally

or primarily engaged in investing in or acquiring businesses that

is managed by 2 or more individuals with no less than 5 years of

direct experience in private equity investments, and that holds

investment capital from investors other than the fund.

     (s) "Qualified venture capital fund" means a firm principally

or primarily engaged in investing in or acquiring early stage

businesses with growth potential that have not yet demonstrated

consistent profitability or a proven business model, that is

managed by 2 or more individuals with not less than 5 years of

direct experience in venture capital, and that holds capital from

investors other than the fund.

     (t) "Small business" means a business entity formed or doing

business in this state, including the affiliates of the business

concern, which business entity is independently owned and operated

and employs fewer than 250 full-time employees or has gross annual

sales of less than $6,000,000.00.

     (u) "21st century investments" means investments in 1 or more

of the following:

     (i) Commercial loan guarantees under a loan enhancement program

operated by the fund.

     (ii) Private equity investments under a private equity

investment program operated by the fund.

     (iii) Venture capital investments under a venture capital

investment program operated by the fund.

     (iv) Mezzanine investments under a mezzanine investment program

operated by the fund.

     (v) "Strategic economic investment and commercialization

board" or "commercialization board" means the strategic economic

investment and commercialization board created in section 88g.

     (w) "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. (1) The fund shall create and operate programs

authorized under this chapter. The board shall determine the annual

allocation of money for programs authorized under this chapter and

make authorized expenditures or investments from the investment

fund of the 21st century jobs trust fund created in the Michigan

trust fund act, 2000 PA 489, MCL 12.251 to 12.256, as authorized

under this chapter for programs and activities authorized under

this chapter.

     (2) Money transferred or appropriated by law to the fund for

the purposes of carrying out this chapter shall be expended or

invested by the fund as authorized by law for the following

House Bill No. 5047 as amended October 19, 2005

purposes:

     (a) 21st century investments.

     (b) Grants and loans approved by the commercialization board

under section 88k.

     (c) Other programs or activities authorized under this

chapter.

     (3) The fund board shall not expend more than the following

amounts from the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.256, for the

following purposes:

     (a) 25% for the loan enhancement program.

     (b) 40% for the private equity investment program, the venture

capital investment program, and the mezzanine investment program

combined.

     (c) 70% for the commercialization of competitive edge

technology. The commercialization board shall allocate not less

than <<$40,000,000.00 IN THE 2005-2006 FISCAL YEAR AND NOT LESS THAN

$50,000,000.00 EACH FISCAL YEAR AFTER 2005-2006 FOR 4 FISCAL>> YEARS FOR GRANTS AND LOANS FOR

life sciences as provided in this chapter. The commercialization

board shall not allocate more than $100,000,000.00 for basic

research.

     (4) Not more than 4% of the annual appropriation as provided

by law from the 21st century jobs trust fund created in the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.256, may be

used for the purposes of administering the programs and activities

authorized under this chapter.

     (5) Not more than 5% of the annual appropriation as provided

by law from the 21st century jobs trust fund created in the

House Bill No. 5047 as amended October 19, 2005

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.256, may be

used for business development and business marketing costs. Not

less than 80% of the funds committed for business development and

business marketing costs shall be targeted to persons or entities

outside of this state. No funds may be used for any business

development and business marketing effort that includes <<a reference to

or the image or voice>>

OF AN ELECTED STATE OFFICER OR A CANDIDATE FOR ELECTIVE STATE

office and that is targeted to a media market in michigan. The fund

board shall select all vendors for all << >>

marketing expenditures under this chapter by issuing a request for

proposal. At a minimum, the request for proposal shall require the

responding entities to disclose any conflict of interest, disclose

any criminal convictions, disclose any investigations by the

internal revenue service or any other federal or state taxing body

or court, disclose any pertinent litigation regarding the conduct

of the entity, and maintain records and evidence pertaining to work

performed. 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.

     (6) The fund shall not use any money appropriated or

transferred for purposes authorized under this chapter to acquire

interests in or improve real property. The restriction under this

subsection applies only to the fund and not to recipients of

expenditures or investments under this chapter.

     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, and 88g 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.

House Bill No. 5047 as amended October 19, 2005

     (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.

     (4) The fund board shall establish requirements to ensure that

money expended under sections 88d, 88e, 88f, and 88g 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, 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.>>

House Bill No. 5047 as amended October 19, 2005

<<(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. The fund board

shall hold a public hearing not sooner than 14 days and not longer

than 30 days from the date notice of a proposed resolution is given

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 no sooner than 14 days after 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) 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

House Bill No. 5047 as amended October 19, 2005

442, MCL 15.232.

     Sec. 88d. (1) The fund shall create and operate a loan

enhancement program.

     (2) As a separate and distinct part of the loan enhancement

program, the fund may create a loan guarantee program that does all

of the following:

     (a) Provide a loan guarantee mechanism to financial

institutions located in this state that provide commercial loans to

qualified businesses.

     (b) <<Ensures that participating financial institutions do not

refinance prior debt.

>>

     (c) Provide that a qualified business is only eligible for a

loan guarantee under this section if it has a documented growth

opportunity. As used in this subdivision, "documented growth

opportunity" means a plant expansion, capital equipment investment,

acquisition of intellectual property or technology, or the hiring

of new employees to meet or satisfy a new business opportunity.

     (d) Provide that a qualified business that engages primarily

in retail sales is not eligible for a loan guarantee under this

chapter unless the fund board makes a specific finding that the

loan guarantee supports a new concept that has significant growth

potential.

     (e) Provide repayment provisions for a loan or a guarantee

given to a qualified business that leaves Michigan within 3 years

of the provision of the loan or guarantee or otherwise breaches the

terms of an agreement with the fund.

     (3) As a separate and distinct part of the loan enhancement

program, the fund shall reestablish the small business capital

access program that was previously operated by the fund for small

businesses in a manner similar to how that program was operated

before January 1, 2002. The small business capital access program

shall operate on a market-driven basis and provide for premium

payments by borrowers into a special reserve fund. The small

business capital access program established by the board shall

prohibit an officer, director, principal shareholder of a

participating financial institution, or his or her immediate family

members from receiving a small business capital access program loan

from the financial institution. A loan under the small business

capital access program shall provide that the proceeds of a loan

may only be used for a business purpose within this state and may

not be used for any of the following:

     (a) The construction or purchase of residential housing.

     (b) To finance passive real estate ownership.

     (c) To refinance prior debt from the participating financial

institution that is not part of the small business capital access

program.

     Sec. 88e. When creating programs for 21st century investments

under this chapter, the fund shall create and operate a private

equity investment program. The fund board shall authorize

investments only in or alongside a qualified private equity fund.

The private equity investment program shall do all of the

following:

     (a) Provide that the return on investment that is sought is

greater than the return on investment under the commercial loan

portion of the loan enhancement program to reflect the greater

risk.

     (b) Provide that the qualified private equity fund will have

an amount at risk greater than the fund's investment.

     (c) Provide that a qualified private equity fund is not

eligible to participate in a private equity investment program

unless it operates a business development office in this state

staffed with at least 1 full-time equivalent employee who is

actively seeking opportunities for investments in businesses

located in this state unless the investment opportunity requested

by the qualified private equity fund is targeted to a specific

transaction that will save jobs and will not occur without the

fund's investment as determined by the fund board.

     (d) Provide that a qualified private equity fund is not

eligible to participate in a private equity investment program

unless it agrees to make investments in this state at a percentage

rate that is not less than the percentage rate that the fund's

investment in the qualified private equity fund bears to the total

amount in the qualified private equity fund.

     (e) Provide that a qualified private equity fund is not

eligible to participate in a private equity investment program if

its investment strategy provides for the breakup and liquidation of

businesses. The fund board shall make sure that the agreements with

a private equity fund have the appropriate provisions to prohibit

the actions described in this subdivision.

     Sec. 88f. When creating programs for 21st century investments

House Bill No. 5047 as amended October 19, 2005

under this chapter, the fund shall create and operate the venture

capital investment program. The fund board shall authorize

investments that shall invest only <<in or alongside>> a qualified

venture capital fund that invests primarily in early stage

businesses. The venture capital investment program shall do all of

the following:

     (a) Provide that the return on investment that is sought is

greater than the return on investment under the commercial loan

portion of the loan enhancement program to reflect the greater

risk.

     (b) Provide that the qualified venture capital fund will have

an amount at risk greater than the fund's investment.

     (c) Provide that a qualified venture capital fund is not

eligible to participate in a venture capital investment program

unless it operates a business development office in this state

staffed with at least 1 full-time equivalent employee who is

actively seeking opportunities for venture capital investments in

businesses located in this state unless the investment opportunity

requested by the qualified venture capital fund is targeted to a

specific transaction involving a competitive edge technology that

will not occur without the fund's investment as determined by the

fund board.

     (d) Provide that a qualified venture capital fund is not

eligible to participate in a venture capital investment program

unless it agrees to make venture capital investments in this state

at a percentage rate that is not less than the percentage rate that

the fund's investment in the qualified venture capital fund bears

House Bill No. 5047 as amended October 19, 2005

to the total amount in the qualified venture capital fund.

     (e) Provide that a qualified venture capital fund is not

eligible to participate in a venture capital investment program if

its investment strategy provides for the break up and liquidation

of businesses. The fund board shall make sure that the agreements

with a venture capital fund have the appropriate provisions to

prohibit the actions described in this subdivision.

     (f) Coordinate with the Michigan early stage venture

investment fund as defined in section 3 of the Michigan early stage

venture investment act of 2003, 2003 PA 296, MCL 125.2233, to

ensure that a continuum of venture capital is available in this

state.

     (g) Provide that 80% of the funds allocated to a venture

capital investment program shall focus on competitive edge

technologies.

     (h) Provide that a qualified venture capital fund may make

follow-up investments that were eligible for investment at the time

of initial investment but that subsequently may not be

characterized as an investment in an early stage business.

     Sec. 88g. When creating programs for 21st century investments

under this chapter, the <<fund shall create and operate a private equity

investment program. The fund>> board shall authorize investments in or

alongside a qualified mezzanine fund under a mezzanine investment

program providing for all of the following:

     (a) That the return on investment that is sought is greater

than the return on investment under the commercial loan portion of

the loan enhancement program to reflect the greater risk.

     (b) That the qualified mezzanine fund will have an amount at

risk greater than the fund's investment.

     (c) That a qualified mezzanine fund is not eligible to

participate in a mezzanine investment program unless it operates a

business development office in this state staffed with at least 1

full-time equivalent employee who is actively seeking opportunities

for mezzanine investments in businesses located in this state.

     (d) That a qualified mezzanine fund is not eligible to

participate in a mezzanine investment program unless it agrees to

make mezzanine investments in this state at a percentage rate that

is not less than the percentage rate that the fund's investment in

the qualified mezzanine fund bears to the total amount in the

qualified mezzanine fund.

     (e) That a qualified mezzanine fund is not eligible to

participate in a mezzanine investment program if its investment

strategy provides for the breakup and liquidation of businesses.

The fund board shall make sure that the agreements with a qualified

mezzanine fund have the appropriate provisions to prohibit the

actions described in this subdivision.

     Sec. 88h. (1) The jobs for Michigan investment fund is created

within the fund as a permanent fund authorized by section 19 of

article IX of the state constitution of 1963. Money in the

investment fund at the close of the fiscal year shall remain in the

investment fund and shall not lapse to the general fund. Money in

the investment fund shall not be transferred to another

governmental entity or a separate legal entity and public body

corporate established under the urban cooperation act of 1967, 1967

(Ex Sess) PA 7, MCL 124.501 to 124.512, except as authorized in

this chapter.

     (2) Money or other assets deposited in the investment fund

shall be held as permanent funds as provided under section 19 of

article IX of the state constitution of 1963 and invested only as

authorized under this chapter, including, but not limited to,

investments in the stock of a company, association, or corporation.

     (3) The investment fund shall be invested as authorized under

this chapter for the benefit of the people of the state of Michigan

and for the purpose of creating incentives for the following in

this state:

     (a) Diversifying the economy.

     (b) Retaining or creating jobs.

     (c) Increasing capital investment activity.

     (d) Increasing commercial lending activity.

     (e) Encouraging the development and commercialization of

competitive edge technologies.

     (4) Funds or other assets of the investment fund also may be

invested in debt instruments or debt obligations for loans or

guarantees authorized under this chapter.

     (5) The investment fund shall consist of all of the following:

     (a) Any funds appropriated to, transferred to, or deposited in

the investment fund from the 21st century jobs trust fund under the

Michigan trust fund act, 2000 PA 489, MCL 12.251 to 12.256.

     (b) Earnings, royalties, return on investments, return of

principal, payments made, or other money received by or payable to

the fund under agreements related to grants, loans, investments, or

expenditures by the fund under this chapter.

     (c) Assets, property, money, earnings, royalties, return on

investments, return of principal, payments made, or other money

owed, received by, or payable to the fund or the Michigan economic

development corporation under agreements related to grants, loans,

investments, 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.

     (d) Money or assets received by the state treasurer or the

fund from any source for deposit in the investment fund.

     (e) Interest and earnings on any funds or other assets

deposited in the investment fund or other net income of the

investment fund.

     (6) The net income of the investment fund may be expended by

the fund only for purposes authorized under this chapter pursuant

to an appropriation authorized by law. As used in this section, the

net income of the investment fund shall be computed annually as of

the last day of the state fiscal year in accordance with generally

accepted accounting principles, excluding any unrealized gains or

losses.

     (7) The fund board shall be the trustees of the investment

fund and shall direct the investment and reinvestment of the funds

and assets of the investment fund as provided under, and consistent

with the objectives of, this chapter.

     (8) The fund board may establish restricted subaccounts within

the investment fund as necessary to administer the investment fund.

The fund board may contract with the state treasurer to assist the

fund board in administering the investment fund. The fund board may

authorize money in the investment fund not invested as authorized

under sections 88d, 88e, 88f, and 88g to be managed by the state

treasurer as part of the common cash fund of this state under 1967

PA 55, MCL 12.51 to 12.53. Money managed by the state treasurer

under this subsection shall be separately accounted for by the

House Bill No. 5047 as amended October 19, 2005

state treasurer. When authorized under this subsection, the state

treasurer may invest the funds or assets of the investment fund in

any investment authorized under 1855 PA 105, MCL 21.141 to 21.147,

for surplus funds of this state, in obligations issued by any state

or political subdivision or instrumentality of the United States,

or in any obligation issued, assumed, or guaranteed by a solvent

entity created or existing under the laws of the United States or

of any state, district, or territory of the United States, which

are not in default as to principal or interest.

     (9) A member of the fund board or officer of the fund shall

not gain from any investment of funds or assets of the investment

fund. A member of the fund board or officer of the fund shall not

have any direct or indirect interest in an investment of funds or

assets of the investment fund. A member of the fund board or person

connected with the investment fund directly or indirectly, for

himself or herself, or as an agent or partner of others, shall not

borrow any of the funds or assets of the investment fund or in any

manner use funds or assets of the investment fund except as

authorized under this chapter. A member of the fund board or

officer of the fund shall not become an endorser or surety or

become in any manner an obligor for money loaned by or borrowed

from the investment fund. Failure to comply with this subsection

constitutes misconduct in office subject to removal <<under section 94>>.

     Sec. 88i. (1) The office of the chief compliance officer is

created within the fund. The office shall <<exercise its powers and

duties under this section>> independently of

the fund.

     (2) The office shall assist the fund board with the creation,

House Bill No. 5047 as amended October 19, 2005

implementation, monitoring, and enforcement of policies and

procedures to prevent illegal, unethical, or improper conduct on

the part of fund board members, commercialization board members and

employees, or agents of the fund board and commercialization board

in carrying out their duties under this chapter.

     (3) The principal executive officer of the office is the chief

compliance officer. The state administrative board shall be the

appointing authority of the chief compliance officer<<.

>>

     (4) A person may not interfere with, prevent, or prohibit the

chief compliance officer from carrying out his or her duties as

established in this section and set by the state administrative

board. The chief compliance officer is an employee for purposes of

the whistleblowers' protection act, 1980 PA 469, MCL 15.361 to

15.369.

     (5) All departments, state agencies, committees,

commissioners, or officers of this state or any political

subdivision of this state, so far as is compatible with their

duties, shall give the chief compliance officer any necessary

assistance required by the chief compliance officer in the

performance of the duties of the chief compliance officer. All

departments, state agencies, committees, commissioners, or officers

of this state or any political subdivision of this state shall

provide the chief compliance officer free access to any book,

record, or document in their custody, relating to the matters

within the scope of the chief compliance officer in the performance

of his or her duties.

House Bill No. 5047 as amended October 19, 2005

     (6) The chief compliance officer shall do all of the

following:

     (a) Recommend policies and procedures, including, but not

limited to, a conflict of interest policy, an investment policy,

and an ethics policy to the fund board and the commercialization

board that shall protect the state's assets consistent with the

requirements of this chapter and applicable state and federal law.

The chief compliance officer shall also assist in the design of the

policies and procedures that will prevent violations from

occurring, detect violations that have occurred, and correct such

violations promptly.

     (b) Assist employees and agents of the board and the

commercialization board to ensure that they are in compliance with

internal policies and procedures and with applicable state and

federal law.

     (c) Provide guidance to the board, the commercialization

board, and employees <<of the board and the commercialization board>> on

matters related to compliance with internal

policies and procedures and with applicable state and federal law.

     (d) Make recommendations to the board, the commercialization

board, and employees <<of the board and the commercialization board>>

regarding the appropriate evaluation,

investigation, and resolution of issues and concerns regarding

compliance with internal policies and procedures and with

applicable state and federal law.

     (e) Review and evaluate compliance with internal policies and

procedures and with applicable state and federal law.

     (f) Cooperate with the office of the auditor general as the

auditor general carries out his or her duties.

House Bill NO. 5047 as amended October 19, 2005

     (g) Report quarterly to the fund board and the state

administrative board regarding compliance with internal policies

and procedures and with applicable state and federal law.

     (h) Contact persons receiving awards, investments, grants, and

loans <<under this chapter>> to the extent necessary to carry out

responsibilities under

this chapter.

     (i) Prepare a written annual report that evaluates compliance

with internal policies and procedures and with applicable state and

federal law, explains any compliance matters that arose during the

previous year, and suggests revisions to agency policies and

procedures. Copies of the report shall be provided to the governor,

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

senate, and the chairpersons of the senate and house of

representatives << >> committees on appropriations. The annual

report shall also be published on the fund's internet website.

     (j) Do all other things necessary to carry out the chief

compliance officer's responsibilities under this section.

     (7) As used in this section, "office" means the office of the

chief compliance officer.

     Sec. 88j. (1) Upon request from the fund board, the state

treasurer shall transfer appropriated funds from the 21st century

jobs trust fund to the fund in the amounts designated by the fund

board at the time and as necessary to fund disbursements or

reserves required for programs or activities authorized under this

chapter or to fund investments authorized by the fund board from

the investment fund. Funds appropriated or transferred to the fund

shall not be transferred to another governmental entity or a

House Bill No. 5047 as amended October 19, 2005

separate legal entity and public body corporate established under

the urban cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501

to 124.512, except as authorized under this chapter.

     (2) For the fiscal year ending September 30, 2006, there is

appropriated and transferred from the 21st century jobs trust fund

to the fund $400,000,000.00 for the purposes of carrying out the

purposes of this chapter.

     (3) From the funds appropriated and transferred in subsection

(2), the fund shall make the following commitments<<,>> dispersible as

provided in subsection (1):

     (a) $26,000,000.00 as a grant to the Michigan forest finance

authority <<for purposes>> under part 505 of the natural resources and

environmental protection act, 1994 PA 451, MCL 324.50501 to

324.50522. The money shall be spent only as provided by the

Michigan forest finance authority.

     (b) $10,000,000.00, up to 1/2 in loans, to support the

development and creation of a defense contract coordination center

program to assist Michigan companies in securing more federal

defense and homeland security procurement contracts. This program

shall include, but is not limited to, providing low-interest rate

loans to support the expansion of manufacturing operations in order

to fulfill federal procurement contracts. The loan repayments shall

return to the investment fund.

     (c) $4,000,000.00 for a private research institute that has

received a specific federal appropriation prior to 2005 for the

creation of a good manufacturing facility. The facility shall be

used for the production of drugs approved for use in clinical

trials, as approved by the United States food and drug

administration, and shall work to market the core technology

alliance for the purposes of commercialization and providing access

to advanced technologies to researchers affiliated with

universities, private research institutes, and biotech and

pharmaceutical firms.

     (d) $6,000,000.00 for an automotive technology business

accelerator to provide for the research, development, and

commercialization of innovative technologies and products. The

funds shall be used to support international business development,

encourage development of competitive edge technologies through the

creation of early stage seed funds, and support the outreach and

growth of technology based businesses and professionals.

     (e) $2,000,000.00 for a Michigan film initiative to promote

the filming of motion pictures in this state. No funds may be used

to promote the filming of a motion picture that depicts obscene

matter or an obscene performance. As used in this subdivision,

"obscene matter or an obscene performance" means obscene material,

the dissemination of which is a violation of 1984 PA 343, MCL

752.361 to 752.374. The Michigan film office created under section

21 of the history, arts, and libraries act, 2001 PA 63, MCL

399.721, shall use the funds in the following manner:

     (i) To hire an independent firm to conduct a baseline study

that will accurately demonstrate Michigan's status within the film

industry and include recommendations of necessary improvements for

Michigan to attract motion pictures.

     (ii) To market and promote Michigan as a premiere location for

House Bill No. 5047 as amended October 19, 2005

filming motion pictures, commercials, and documentaries. Marketing

and promoting include, but are not limited to, website development,

promotional and research expenses, event and festival sponsorship,

and advertising.

     (iii) Assist in workforce development within the film industry

by supporting on-the-job training of qualified crew members. Job

training of film and media technicians includes, but is not limited

to, technical training, practical training, and internship

opportunities.

     (f) $2,000,000.00 to implement the transfer of competitive

edge technology research from institutions of higher education to

the private sector as provided in this chapter.

     (g) $15,000,000.00 for a Michigan promotion program to enhance

funding beyond that included in the annual appropriation for travel

Michigan to attract additional tourism expenditures in this state.

No funds may be used for any tourism marketing effort that includes

the image of an elected state officer or a candidate for elective

state office that is targeted to a media market in Michigan.

     <<(h) $10,000,000.00 as a grant to the agricultural development fund created in section 2 of the Julian-Stille value-added act, 2000 PA 322, MCL 285.302. The money shall not be spent until after April 1, 2006.>>

     (4) Not more than 4% of the appropriation made in subsection

(2) may be expended for administrative costs related to the

administration of programs or activities authorized under this

chapter.

     (5) Not more than 5% of the appropriation made in subsection

(2) may be expended for business development and business marketing

costs. Not less than 80% of the funds committed for business

development and business marketing costs shall be targeted to

persons or entities outside of this state. No funds shall be used

House Bill No. 5047 as amended October 19, 2005

for any business development and business marketing effort that

includes <<a reference to or the image or voice >> of an elected state

officer or a candidate for

elective state office and that is targeted to a media market in

this state. The fund board shall select all vendors for all

<< >> marketing expenditures under this chapter

by issuing a request for proposal. At a minimum, the request for

proposal shall require the responding entities to disclose any

conflict of interest, disclose any criminal convictions, disclose

any investigations by the internal revenue service or any other

federal or state taxing body or court, disclose any pertinent

litigation regarding the conduct of the entity, and maintain

records and evidence pertaining to work performed. 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.

     (6) Following the disbursements described in subsections (3),

(4), and (5), the remaining money shall be allocated pursuant to

section 88b(1).

     (7) The appropriation authorized in subsection (2) is a work

project appropriation and any unencumbered or unallotted funds are

carried forward into the following fiscal year. The following is in

compliance with section 451a(1) of the management and budget act,

1984 PA 431, MCL 18.1451a:

     (a) The purpose of the project is to provide substantial

economic benefits and job creation within this state and to create

incentives for the diversification of the economy of this state

through 21st century investments, grants and loans approved by the

commercialization board under section 88k, and other programs or

activities authorized under this chapter.

     (b) The work project will be accomplished through the use of

interagency agreements, grants, loans, investments, state

employees, and contracts.

     (c) The total estimated completion cost of the work project is

$400,000,000.00.

     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.

     Enacting section 1. This amendatory act does not take effect

unless all of the following bills of the 93rd Legislature are

enacted into law:

     (a) Senate Bill No. 298.

     (b) Senate Bill No. 359.

     (c) Senate Bill No. 521.

     (d) Senate Bill No. 533.

     (e) House Bill No. 5048.

     (f) House Bill No. 5109.