SB-0200, As Passed Senate, December 10, 2015

SUBSTITUTE FOR

SENATE BILL NO. 200

A bill to amend 1984 PA 270, entitled

"Michigan strategic fund act,"

(MCL 125.2001 to 125.2094) by adding section 88s.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

Sec. 88s. (1) The fund shall create and operate the Michigan

investment program to provide grants, loans, and other economic

assistance to Michigan investment markets in this state and to

qualified persons that have a controlling interest in a Michigan

advancement portfolio.

(2) The Michigan investment program shall provide for all of

the following:

(a) Grants, loans, and other economic assistance to assist in

developing Michigan investment markets and Michigan advancement

portfolios in this state.

(b) A detailed application, approval, and compliance process

published and available on the fund's website. The detailed

application, approval, and compliance process shall, at a minimum,

contain the following:

(i) A Michigan investment market or qualified person with a

controlling interest in a Michigan advancement portfolio may apply

for a grant, loan, or other economic assistance in a form and

manner determined by the fund.

(ii) After receipt of an application, the fund may enter into

a written agreement with the Michigan investment market or

qualified person.

(iii) The written agreement shall provide in a clear and

concise manner all of the conditions imposed, including specific

time frames, on the Michigan investment market or the qualified

person to receive a grant, loan, or other economic assistance under

this section.

(iv) The written agreement shall provide for a repayment

provision of any grants, loans, or other economic assistance if the

Michigan investment market or qualified person fails to comply with

the provisions of the written agreement.

(v) The written agreement shall provide for an audit provision

that requires the fund to verify that established milestones for

the Michigan investment market or qualified person have been met.

qualified person shall not receive more than $1,000,000.00 under

this section.

(d) In any fiscal year, the Michigan investment program shall

not provide grants, loans, or other economic assistance that, in

the aggregate, exceeds $2,000,000.00.

(3) The fund shall not enter into a written agreement with a

Michigan investment market or qualified person unless all of the

following are met:

(a) The Michigan investment market or qualified person

provides a business plan or demonstrates the need for the grant,

loan, or other economic assistance.

(b) The Michigan investment market or qualified person agrees

to provide the data described in the written agreement necessary

for the fund to report to the legislature under this act.

(4) The fund shall post on its website or post on the website

of the Michigan economic development corporation the name and

location of each Michigan investment market and qualified person

that received a grant, loan, or other economic assistance awarded

under this section and the amount of the grant, loan, or other

economic assistance.

(5) The fund, with assistance from the Michigan economic

development corporation and the office of the chief compliance

officer, shall establish policies and procedures to conduct

background checks on each Michigan investment market and qualified

person applying for a grant, loan, or other economic assistance

under this section.

(6) Beginning April 10, 2016 and each year thereafter, the

fund shall report to each house of the legislature on the

activities of the fund under this section that occurred in the

previous fiscal year. The report shall be made available in an

electronic format. The report shall include, but is not limited to,

all of the following:

(a) The total number of new written agreements.

(b) The amount of the grant, loan, or other economic

assistance awarded under this section separately for each Michigan

investment market and each qualified person.

assistance made under this section separately for each Michigan

investment market and each qualified person verified by the fund.

(7) Beginning February 1, 2016 and not less than every 3

months thereafter, the fund shall post on its Internet website the

name and location of each Michigan investment market and each

qualified person that received approval of a grant, loan, or other

economic assistance under this section in the immediately preceding

3-month period.

(8) The legislature finds and declares that funding authorized

under this section to encourage diversification of the economy, to

encourage capital investment in this state, and to promote the

development of Michigan investment markets and Michigan advancement

portfolios in this state is a public purpose and of paramount

concern in the interest of the health, safety, and general welfare

of the citizens of this state.

(9) For purposes of this section, both of the following apply:

(a) A business is considered to be doing business in this

state if all of the following are met:

(i) If the business had gross revenues of more than $5,000.00

from the sale of products or services or other conduct of its

business for its most recent 12-month fiscal period, it derived at

least 80% of its gross revenues, and those of its subsidiaries on a

consolidated basis, from the operation of a business or of real

property located in or from the rendering of services in this state

during 1 of the following time periods:

(A) In its most recent fiscal year, if the first offer of any

part of the issue is made during the first 6 months of the issuer's

current fiscal year.

(B) In the first 6 months of its current fiscal year, or

during the 12-month fiscal period ending with that 6-month period,

if the first offer of any part of the business's intrastate

offering is made during the last 6 months of the business's current

fiscal year.

(ii) At the end of its most recent semiannual fiscal period

before the first offer of any part of the issue, the business had

at least 80% of its assets and those of its subsidiaries on a

consolidated basis located in this state.

(iii) The business intends to use and uses at least 80% of the

net proceeds to the business from the sale or resale of intrastate

securities in connection with the operation of a business or of

real property in, the purchase of real property located in, or the

rendering of services in this state.

(iv) The principal office of the business is located within

this state.

(b) Each of the following is prima facie evidence that an

individual is a resident of this state:

(i) A valid operator's license, chauffeur's license, or

official personal identification card issued by this state.

(ii) A current Michigan voter registration.

(iii) A signed affidavit as described in section 7cc(2) of the

general property tax act, 1893 PA 206, MCL 211.7cc, that indicates

that the individual owns and occupies property in this state as his

or her principal residence.

(iv) Any other record or documents issued by this state that

establishes that the individual's principal residence is in this

state.

(10) The fund shall not make a grant or loan or provide other

economic assistance or otherwise operate the Michigan investment

program under this section after September 30, 2020.

(11) As used in this section:

(a) "Institutional investor" means that term as defined in

section 102a of the uniform securities act (2002), 2008 PA 551, MCL

451.2102a.

(b) "Michigan advancement portfolio" means a collection of

investments that, as a whole, meets all of the following criteria:

(i) Includes securities only in businesses that are doing

business in this state.

(ii) At least 10% of the portfolio's overall investment for a

calendar year is in businesses that qualify as small businesses

according to the United States Small Business Administration small

business size standards for the applicable industries at the time

of the investment.

(iii) Begins with at least $200,000.00 in investments.

section 451 of the uniform securities act (2002), 2008 PA 551, MCL

451.2451.

(d) "Other economic assistance" means any other form of

assistance allowed under this act that is not a grant or a loan.

Other economic assistance may include providing security for a

qualified person's investments within its Michigan advancement

portfolio, and that security may be equal to or less than 35% of

the original value of the qualified person's Michigan advancement

portfolio. However, that security is only payable in proportion to

realized losses on investments within that portfolio on an

individual basis. The securitization described in this subdivision

is subject to all of the following:

(i) Michigan advancement portfolios with initial investments

totaling $200,000.00 to $350,000.00 are eligible for security up to

20%.

(ii) Michigan advancement portfolios with initial investments

totaling $350,000.01 to $500,000.00 are eligible for security up to

25%.

(iii) Michigan advancement portfolios with initial investments

totaling $500,000.01 to $1,000,000.00 are eligible for security up

to 30%.

(iv) Michigan advancement portfolios with initial investments

totaling more than $1,000,000.00 are eligible for security up to

35%.

(e) "Qualified person" means a person that is doing business

in this state or is a resident of this state and is either an

institutional investor or an accredited investor as defined by rule