November 28, 2007, Introduced by Rep. Donigan and referred to the Committee on Tax Policy.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending sections 7, 63, 68, and 69a (MCL 125.2007, 125.2063,
125.2068, and 125.2069a), section 7 as amended by 2005 PA 225 and
section 63 as amended by 1987 PA 278.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 7. The fund shall have the powers 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 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
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 under the
single business tax act, 1975 PA 228, MCL 208.1 to 208.145,
minority venture capital companies, as defined by law.
(q) 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. 63. (1) The fund is empowered to certify a minority
venture capital company and a MESBIC for the purpose of verifying
that the business satisfies the qualifications provided by law for
being an eligible recipient of investments that qualify for a
credit
under the single business tax act, Act No. 228 of the Public
Acts
of 1975, being sections 208.1 to 208.145 of the Michigan
Compiled
Laws 1975 PA 228, MCL 208.1
to 208.145, for an investment
in a minority venture capital company or MESBIC certified under
this chapter. The certification shall not be construed to impose
liability on this state or to authorize the giving or lending of
the credit of this state to any business enterprise. All documents
promulgated by the department of commerce, the fund, or business
enterprises in conjunction with this program shall include a
statement reflecting the limited purpose of the certification and
disclaiming the involvement of this state.
(2) Certification applications by a minority venture capital
company or a MESBIC shall be forwarded to the fund. To qualify for
its initial certification and to retain its certification, a
minority venture capital company or a MESBIC shall comply with all
of the following applicable requirements:
(a) Qualify as a minority venture capital company or as a
MESBIC.
(b) If a minority venture capital company, has raised or has
commitments for at least $1,000,000.00 to capitalize the minority
venture capital company. Amounts which the minority venture capital
company is or may be obligated to repay shall not be included as
money which has been raised or committed to capitalize the minority
venture capital company.
(c) Demonstrate that the professional staff which will manage
the minority venture capital company or MESBIC possesses relevant
experience in the administration and operation of a venture capital
company.
(d) Either have invested at time of application or, if the
minority venture capital company or MESBIC has not yet made
investments, agree to invest and to retain an investment of 100% of
its portfolio in businesses operating within this state.
(e) Either have invested at time of application or, if the
minority venture capital company or MESBIC has not yet made
investments or has not yet reached the applicable year of
operation, agree to invest and to retain an investment of 50% of
its paid-in capital by the end of the third year of operation and
70% of its paid-in capital by the end of the fifth year of
operation.
(f) Agree to comply with the terms of this act and with its
investment plan and management plan submitted pursuant to
subdivision (g).
(g) Provide the information the fund determines to be
necessary or appropriate for the fund to review in considering the
application including, but not necessarily limited to, the
following:
(i) A detailed investment plan describing the current and
proposed activities of the minority venture capital company or
MESBIC.
(ii) A management plan, including a description of the business
experience and reputation of the professional staff that has been
or is to be assembled, and a description of the current and
proposed management structure.
(iii) A listing of the present or committed investors in the
minority venture capital company or MESBIC and background
information on the investors.
(h) If a minority venture capital company, agree to disclose
to the fund and to allow the fund to approve or disapprove a
contract entered into between the minority venture capital company
and a minority owned business in which an officer or director of
the minority venture capital company owns 10% or more.
(i) Agree to comply with the condition that, of the
investments for which a request for certification is or will be
filed under section 69a, not less than 50% shall be invested by
persons who, if they receive a credit under section 36b of the
single
business tax act, Act No. 228 of the Public Acts of 1975,
being
section 208.36b of the Michigan Compiled Laws 1975 PA 228,
MCL 208.36b, would have that credit revoked if the minority venture
capital company or MESBIC has its certification revoked within 6
years after the tax year for which the person received the credit.
Sec. 68. (1) Unless revoked, a certification provided under
this chapter shall be effective and subject the minority venture
capital company or MESBIC to the requirements of this chapter from
the date of its certification until 6 years following the date of
its tax credit disqualification pursuant to subsection (3).
(2) Unless the certification is revoked, from the date of its
certification until the date the fund approves a tax credit
disqualification for the minority venture capital company or MESBIC
pursuant to subsection (3) a certified minority venture capital
company and a certified MESBIC shall be an eligible recipient of
investments that qualify for a credit under the single business tax
act,
Act No. 228 of the Public Acts of 1975, being sections 208.1
to
208.145 of the Michigan Compiled Laws 1975 PA 228, MCL 208.1 to
208.145, for an investment in a minority venture capital company or
MESBIC certified under this chapter.
(3) Upon request of a certified minority venture capital
company or a certified MESBIC the fund shall approve a tax credit
disqualification for the minority venture capital company or MESBIC
and thereafter the minority venture capital company or MESBIC shall
not be an eligible recipient of investments that qualify under, and
the fund shall not provide a tax credit certification pursuant to
section
69a for credits under, Act No. 228 of the Public Acts of
1975
the single business tax act,
1975 PA 228, MCL 208.1 to
208.145.
Sec. 69a. (1) Upon written request to the fund not later than
90 days following an investment, the fund shall certify the
following for a person subject to the tax imposed under the single
business
tax act, Act No. 228 of the Public Acts of 1975, being
sections
208.1 to 208.145 of the Michigan Compiled Laws 1975 PA
228, MCL 208.1 to 208.145, who seeks to claim the credit provided
under
Act No. 228 of the Public Acts of 1975 the single business
tax act, 1975 PA 228, MCL 208.1 to 208.145, for an investment in a
minority venture capital company or MESBIC certified under this
chapter:
(a) The date which the person made the investment.
(b) That the investment is in a certified minority venture
capital company or MESBIC which has not been disqualified pursuant
to section 68(3) as of the date of the investment.
(c) The amount of the investment in the certified minority
venture capital company or MESBIC that was made after the effective
date
of the amendatory act providing for a tax credit under Act No.
228
of the Public Acts of 1975 the
single business tax act, 1975 PA
228, MCL 208.1 to 208.145, for an investment in a minority venture
capital company or MESBIC certified under this chapter.
(d) The amount of the credit to which the person is entitled
under
Act No. 228 of the Public Acts of 1975 the single business
tax act, 1975 PA 228, MCL 208.1 to 208.145, for an investment in a
minority venture capital company or MESBIC certified under this
chapter.
(2) A minority venture capital company or MESBIC certified
under this chapter and a person requesting a tax credit
certification of an investment pursuant to subsection (1) shall
provide the fund with all information it requires to make the
certification under subsection (1).
(3) A tax credit certification report for an investment
certified under subsection (1) shall be sent by the fund to the
requester and the department of treasury.