Signed by Governor Rick Snyder

Vote Smart's Synopsis:

Vote to pass a bill that authorizes taxpayer subsidies for creation of the rural development fund.

Highlights:

• Defines “rural development fund” as an entity approved by the funds that meet all of the following (Sec. 90/):

• The Entity or its affiliate is a rural business investment company, or a small business investment company;

• The entity or its affiliates have invested at least $75 million in nonpublic companies located in counties throughout the United States with a population less than 50,000; and

• The entity or its affiliates have received equity investments from investors who are not affiliates of the applicant in an amount equal to least $100 million.

• Defines “qualified rural county” means a county in Michigan with a population of 200,000 or less (Sec. 90/).

• Defines “repayable grant” as a grant of cash by the fund into a rural development fund that will be matched dollar-for-dollar with private contributions up to the investment authority of the rural development fund (Sec. 90/).

• Defines “repayment amount” as an amount equal to 50 percentage of a rural development fund’s investment authority, minus the sum of the product of new full-time equivalent employees reported to the fund in each of the rural development fund’s annual reports and the product of full-time equivalent employees at the time of the initial growth investments in qualified businesses, provided the rural growth fund receives an affidavit from the president or chief executive officer of the qualified business attesting that the full-time equivalent employee positions would have been eliminated without receipt of the initial growth investment and 50% of the earned job factor (Sec. 90/).

• Defines “earned job factor” as an amount equal to $25,000 (Sec. 90/).

• Defines “full-time equivalent employees” as the number of salaried employment positions plus the quotient obtained by dividing the total number of hours for which employees with an hourly wage rate of at least 150% of the federal minimum wage were compensated for employment over the preceding 12-month period by 2,080 with respect to hourly employees (Sec. 90/).

• Requires the fund accept applications for approval as a rural development fund, which shall include all of the following (Sec. 90M):

• The total investment authority by the applicant;

• A copy of the applicant’s license showing that the entity or its affiliate is a rural business investment company or a small business investment company;

• The entity or its affiliates have invested at least $75 million in nonpublic companies located in counties throughout the united states with a population less than 50,000; and

• The entity or its affiliates have received equity investments from investors who are not affiliates of the applicant in an amount equal to least $100 million.

• Prohibits the fund from approving more than $100 million in the investment authority and $50 million in repayable grants (Sec. 90M).  

• Authorizes the fund to deny an application for the following reasons (Sec. 90M):

• The applicant does not satisfy all the criteria; and

• The fund has already approved to maximum amount of investment authority.

• Requires a rural development fund to do all of the following (Sec. 90M):

• Within 60 days after receiving the approval, collect private contributions equal to 50% of the rural development fund’s investment authority; and

• Within 65 days after receiving the approval, send to the fund documentation sufficient to prove that the amounts have been collected.

• Authorizes the State Treasurer to receive money or other assets from any source from deposit into the rural development job creation fund (Sec. 90N).

• Requires the State Treasurer to direct the investment of the rural development job creation fund (Sec. 90N).

• Requires the State Treasurer to credit to the rural development job creation fund interest and earnings from rural development job creation fund investments (Sec. 90N).

• Requires the money in the rural development job creation fund to remain within the fund at the close of the fiscal year and not lapse into the General Fund (Sec. 90N).

• Requires the fund to demand immediate repayment of the repayable grant if any of the following occurs with respect to the rural development fund before it is certified to exit the program (Sec. 90N):

• The rural development fund does not invest all its investment authority in growth investments within 3 years of the closing date with 100% of its investment authority invested in growth investments in qualified businesses with principal business operations located in qualified rural counties;

• The rural development fund fails to maintain growth investments at the required levels until the sixth anniversary of the closing date;

• The rural development fund makes a distribution or payment that results in the rural development fund having less than 100% of its investment authority invested in growth investments in this state or available for investment in growth investments and held in cash and other marketable securities;

• The rural development fund makes a growth investment in a qualified business that directly or indirectly through an affiliate owns, has the right to acquire an ownership interest, makes a loan to, or makes an investment in the rural development fund, and affiliate of the rural development fund, or an investor in the rural development fund.

• Requires the fund to notify the rural development fund of the reasons of the pending repayment, before demanding repayment (Sec. 90N).

• Authorizes the rural development, before making a growth investment, to request from the fund a written opinion as to whether the business in which it proposes to invest is a qualified business (Sec. 90N).

• Requires the rural development fund to submit an annual report to the fund on, or before the last day of February of each year until the rural development fund has exited the program (Sec. 90N).

• Requires the annual report to provide documentation as to the rural development fund’s growth investments and include all of the following (Sec. 90N):

• A bank statement evidencing each growth investment;

• The name, location, and industry of each qualified business receiving a growth investment, including either the determination letter or evidence that the business was a qualified business a the time the growth investment was made;

• The number of new full-time equivalent employees at the qualified business in this state;

• The number of full-time equivalent employees at the qualified business on the date of receipt of the initial growth investment;

• Any other information required by the fund.

• Requires the fund to submit an annual report to each house of the legislature on or before April 1, 2020, including all of the following (Sec. 90N):

• The name and number of all the rural development funds approved to participate in the program;

• The amount of investment authority awarded to each rural development fund;

• Any investments made by the rural development fund, including the location of the investments;

• Whether the rural development funds are in compliance with this bill; and

• Any other information required by the fund.

Full Bill Text