March 16, 2006, Introduced by Senators McMANUS, VAN WOERKOM, BIRKHOLZ, HARDIMAN, CROPSEY, JELINEK, BROWN, GILBERT, KUIPERS, BARCIA, ALLEN and GOSCHKA and referred to the Committee on Agriculture, Forestry and Tourism.
A bill to amend 2000 PA 322, entitled
"Julian-Stille value-added act,"
by amending the title and section 2 (MCL 285.302).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
TITLE
An act to create certain committees; to create certain funds
from certain sources and to provide for the disposition of money
from the funds; to provide for the creation of certain funds by
certain private entities; to create incentives and to locate and
maintain value-added agricultural processing, commercialization of
agriculture, and production ventures within this state; to provide
for grants and loans to certain private and governmental entities
for environmental
certain purposes; to provide for certain powers
and duties for certain private entities, state agencies,
commissions, and departments; to authorize loans, expenditures, and
grants from the funds; and to finance the development of certain
programs.
Sec. 2. (1) As used in this section and sections 2a and 2b:
(a) "Agricultural processing" means 1 or more of the
operations that transform, package, sort, or grade livestock or
livestock products, agricultural commodities, or plant or plant
products into goods that are used for the intermediate or final
consumption including goods for nonfood use.
(b) "Agriculture development review committee" means a
committee selected by the commission of agriculture with
appropriate expertise to conduct an independent, unbiased,
objective, and competitive evaluation of activities funded.
(c) "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.
(d) (b)
"Department" means the Michigan
department of
agriculture.
(e) (c)
"Fund" means the agricultural development
fund
created
in this section
2a.
(f) "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.
(g) "Specialty crops" means any agricultural crop except
wheat, feed grains, oil seeds, cotton, rice, peanuts, and tobacco.
(h) (d)
"Value-added" means the enhancement or
improvement
of the overall value of an agricultural commodity or of an animal
or plant product into a product of higher value. The enhancement or
improvement includes, but is not limited to, marketing,
agricultural processing, transforming, or packaging.
(2)
The agricultural development fund is created within the
department
of treasury to be administered by the department. Money
in
the fund at the close of the fiscal year shall remain in the
fund
and shall not lapse to the general fund. The department may
utilize
up to 5% of the fund for administrative purposes. The state
treasurer
shall credit to the fund money from the following
sources:
(a)
Appropriations.
(b)
Money or other assets from any source for deposit into the
fund,
including federal money, other state revenues, gifts,
bequests,
donations, as well as money from any other source
provided
by law.
(3)
The department of treasury shall deposit not less than
$5,000,000.00
of the revenue available within the Michigan clean
air
fund under section 3(2) into the agricultural development fund
under
section 2(2).
(2) (4)
The department shall use the fund to make
grants to
qualified
grantees who apply for such grants and who submit
proposals
demonstrating feasibility for development of value-added
agricultural
processing and agricultural production ventures
consistent
with the purposes described in this act. Grantees may
include
individuals, farmer-owned cooperatives, partnerships,
limited
liability companies, private or public corporations, and
local
units of government for projects designed to establish,
retain,
expand, attract, or develop value-added agricultural
processing
and related agricultural production operations in this
state.
Grant money shall be used only for land, buildings,
equipment,
and property acquisition and assembly, demolition, site
development,
utility modifications and improvements, transportation
improvements,
infrastructure improvements, telecommunications
infrastructure,
technical assistance, marketing research, business
plan
development, and utilization of technology designed to
establish,
retain, expand, attract, or develop value-added
agricultural
processing and related agricultural production
operations
in this state. establish and
administer an agricultural
value-added grant and revolving loan program. The commission on
agriculture shall award grants and loans from the fund created in
section 2a only for the commercialization of agricultural value-
added products, processes, and services. The agriculture
development and review committee shall provide recommendations to
or assist the commission on agriculture in identifying high-quality
projects for funding that are likely to result in the
commercialization of agricultural value-added products, processes,
and services. The recommendations shall include all materials and
decision documents used by the agriculture development and review
committee in making the recommendations. The committee shall
include at least 3 producers, including 1 plant agricultural
producer, 1 animal agricultural producer, and another producer at
large.
(3) Subject to subsection (2), the department shall do all of
the following:
(a) Establish a competitive process to award grants and make
loans for the commercialization of agricultural value-added
products, processes, and services. The competitive process shall
include, but is not limited to, the following:
(i) A provision that the applications must be reviewed by the
agriculture development review committee. Scientific and technical
merit, commercial merit, and the ability to leverage additional
funding shall be given equal weight in the review and scoring
process.
(ii) A preference for proposals that demonstrate a high level
of innovation for value-added agricultural processing and related
agricultural production ventures to benefit producers in this
state.
(iii) A preference for proposals that are attempting to secure a
license for agricultural value-added technology through Michigan
state university.
(iv) A provision that the program will utilize contracts with
measurable milestones, clear objectives, provisions to revoke
awards for breach of contract, and repayment provisions for loans
given to qualified businesses that leave Michigan within 3 years
after the execution of the contract or otherwise breach the terms
of the contract.
(v) A provision that the applicant leverage other resources as
a condition of the grant or loan.
(vi) Limit overhead rates for recipients of grants and loans to
reflect actual overhead but not greater than 15% of the grant or
loan.
(vii) A provision that grants can only be awarded to Michigan
institutions of higher education, Michigan nonprofit research
institutions, and Michigan nonprofit corporations.
(viii) A preference for proposals that forecast revenues within
2 years or have outside investments from investors with experience
and management teams with experience in the area targeted by the
proposal, or both.
(b) (5)
The director of the department shall have final
approval
of grants made under this act. The department shall
prepare
Prepare a request for proposals on at least an annual
basis for grants and loans from the fund. Grants and loans are
contingent upon the availability of funds.
(4) In approving a grant or loan under this section, the
commission of agriculture shall state the specific objective
reasons supporting the selection of the applicant over competing
applicants.
(5) Subject to subsection (3)(a)(i), an application for a grant
or loan, or both, submitted under this section shall be evaluated
and ranked according to selection criteria and a scoring or point
system approved by the director of the department. The selection
criteria and the scoring or point system shall be reviewed and
approved by the commission of agriculture. In developing such a
system, the department shall seek the assistance of the Michigan
economic development corporation, Michigan state university, the
United States department of agriculture--rural development agency,
the rural development council of Michigan, 3 producers, including 1
plant agricultural producer and another producer at large, and
other industry and professional organizations as determined by the
director of the department.
(6) The commission of agriculture shall ensure that a
recipient of a grant or loan under this section agrees that, as a
condition of receiving the grant or loan, that recipient shall not
use the money for the development of a casino regulated under the
Michigan gaming control and revenue act, the Initiated Law of 1996,
MCL 432.101 to 432.226, a casino regulated under the Indian gaming
regulatory act, Public Law 100-497, 102 Stat. 2467, or any other
gaming enterprise.
(7) (6)
The director of the department may impose fiduciary
obligations upon a recipient of a grant or loan, including
performance bonding, and may impose conditions upon the receipt and
expenditure of the grant or loan money. For purposes of this
section, the commission of agriculture shall discharge the duties
of the position in a nonpartisan manner, in good faith, in the best
interests of this state, and with the degree of diligence, care,
and skill that a fiduciary would exercise under similar
circumstances in a like position. In discharging duties of the
office, the commission of agriculture when acting in good faith may
rely upon the report of the agriculture development review
committee or upon financial statements of the department
represented to the commission of agriculture by the officer having
charge of its books or accounts or stated in a written report by
the auditor general. A member of the commission of agriculture or
the agriculture development review committee shall not make or
participate in making, or in any way attempt to use his or her
position to influence, a matter before the department regarding a
loan, grant, or other expenditure under this act. A member of the
commission of agriculture or the agriculture development review
committee shall not have any financial interest in a recipient of
proceeds under this act and shall not engage in any conduct that
constitutes a conflict of interest. In such case, a member of the
commission of agriculture or the agriculture development review
committee shall immediately advise the commission of agriculture 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 his or her duty under this act. A member of the
commission of agriculture or the agriculture development review
committee having a conflict of interest related to any matter
before the department shall disclose the conflict of interest
before the department or commission of agriculture takes any action
with respect to the matter, which disclosure shall become a part of
the record of the official proceedings. A member of the commission
of agriculture or the agriculture development review committee 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 proceedings related to the matter.
(b) Participating in the 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 peer review expert.
(7)
A cash match of at least 10% of the grant by the applicant
or
other repayment guarantee with a dedicated funding source is
required
before a grant can be awarded.
(8)
An application for a grant submitted under this section
shall
be evaluated and ranked according to selection criteria and a
scoring
or point system approved by the director of the department.
The
selection criteria and the scoring or point system shall be
reviewed
and approved by the commission of agriculture. In
developing
such a system, the department shall seek the assistance
of
the Michigan economic development corporation, Michigan state
university,
the United States department of agriculture--rural
development
agency, the rural development council of Michigan, 3
producers
including 1 plant agricultural producer, 1 animal
agricultural
producer, and another producer at large, and other
industry
and professional organizations as determined appropriate
by
the director of the department.
(9)
The selection criteria shall give primary consideration to
the
ability of the proposed project to provide sound agricultural
economic
development in a given geographical area of this state
with
demonstrated economic and social benefits and the analysis of
the
proposed project in terms of and relative to risk, business and
market
planning, financial soundness, and credit-worthiness.
Special
consideration shall be given to those projects meeting the
considerations
described in this subsection and that demonstrate a
high
level of innovation and initiative for value-added
agricultural
processing and related agricultural production
ventures
to benefit producers in this state.
(8) (10)
An application for a grant or loan from
the fund
shall be made on a form or format prescribed by the department. The
department may require the applicant to provide information
reasonably necessary to allow the department to make a
determination required under this section.
(9) (11)
The department shall promulgate rules under the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, to implement this section.
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. 1169.
(b) Senate Bill No. 1167.