Bill Text: MI HB5247 | 2009-2010 | 95th Legislature | Introduced

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Bill Title: State financing and management; funds; strategic fund incentives for film production industry; sunset. Amends secs. 29a, 29d & 88d of 1984 PA 270 (MCL 125.2029a et seq.).

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2009-08-26 - Reassign To Committee On Commerce 08/20/2009 [HB5247 Detail]

Download: Michigan-2009-HB5247-Introduced.html

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HOUSE BILL No. 5247

 

August 19, 2009, Introduced by Reps. Amash and Lund and referred to the Committee on Families and Children's Services.

 

     A bill to amend 1984 PA 270, entitled

 

"Michigan strategic fund act,"

 

by amending sections 29a, 29d, and 88d (MCL 125.2029a, 125.2029d,

 

and 125.2088d), sections 29a and 29d as added by 2008 PA 75 and

 

section 88d as amended by 2008 PA 571.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 29a. (1) The Michigan film office is created in the fund.

 

The office shall be the successor to any authority, powers, duties,

 

functions, or responsibilities of the Michigan film office under

 

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

 

399.721.

 

     (2) The office may do all of the following:

 

     (a) Promote and market locations, talent, crews, facilities,

 

and technical production and other services related to film,

 

digital media, and television production in this state.

 

     (b) Provide to interested persons descriptive and pertinent

 

information on locations, talent, crews, facilities, and technical

 

production and other services related to film, digital media, and

 

television production in this state.

 

     (c) Provide technical assistance to the film, television, and

 

digital media industry in locating and securing the use of

 

locations, talent, crews, facilities, and services in this state.

 

     (d) Encourage community and Michigan film, digital media, and

 

television production industry participation in, and coordination

 

with, state and local efforts to attract film, digital media, and

 

television production in this state.

 

     (e) Serve as this state's chief liaison with the film, digital

 

media, and television production industry and with other

 

governmental units and agencies for the purpose of promoting,

 

encouraging, and facilitating film, digital media, and television

 

production in this state.

 

     (f) Explain the benefits and advantages of producing films,

 

digital media, and television productions in this state.

 

     (g) Assist film, digital media, and television producers with

 

securing location authorization and other appropriate services

 

connected with film, digital media, and television production in

 

this state.

 

     (h) Scout potential film locations for national and

 

international film, digital media, and television prospects.

 

     (i) Escort film, digital media, and television producers on

 

location scouting trips.

 

     (j) Serve as a liaison between film, digital media, and

 

television producers, state agencies, local agencies, federal

 

agencies, community organizations and leaders, and the film,

 

digital media, and television industry in this state.

 

     (k) Assist film, digital media, and television producers in

 

securing permits to film at specific locations in this state and in

 

obtaining needed services related to the production of a film,

 

digital media, or a television program.

 

     (l) Represent this state at film, digital media, and television

 

industry trade shows and film festivals.

 

     (m) Sponsor workshops or conferences on topics relating to

 

filmmaking, including, but not limited to, screenwriting, film

 

financing, and the preparation of communities to attract and assist

 

film, digital media, and television productions in this state.

 

     (n) Encourage cooperation between local, state, and federal

 

government agencies and local film offices in the location and

 

production of films, digital media, and television programming in

 

this state.

 

     (o) Coordinate activities with local film offices.

 

     (p) Facilitate cooperation from state departments and

 

agencies, local governments, local film offices, federal agencies,

 

and private sector entities in the location and production of

 

films, digital media, and television programming in this state.

 

     (q) Prepare, maintain, and distribute a directory of persons,

 

firms, and governmental agencies available to assist in the

 

production of films, digital media, and television programming in

 

this state.

 

     (r) Prepare, maintain, and distribute a digital library

 

depicting the variety and extent of the locations within this state

 

for film, digital media, and television productions.

 

     (s) Prepare and distribute appropriate promotional and

 

informational materials that do all of the following:

 

     (i) Describe desirable locations in this state for film,

 

digital media, and television production.

 

     (ii) Explain the benefits and advantages of producing films,

 

digital media, and television productions in this state.

 

     (iii) Detail services and assistance available from state

 

government, from local film offices, and from the film, digital

 

media, and television industry in this state.

 

     (t) Solicit and accept gifts, grants, labor, loans, and other

 

aid from any person, government, or entity.

 

     (u) Employ technical experts, other officers, agents, or

 

employees, permanent or temporary, paid from the funds of the

 

office. The office shall determine the qualifications, duties, and

 

compensation of those the office employs.

 

     (v) Contract for goods and services and engage personnel as

 

necessary to perform the duties of the office under this chapter.

 

     (w) Study, develop, and prepare reports or plans the office

 

considers necessary to assist the office in the exercise of its

 

powers under this chapter and to monitor and evaluate progress

 

under this chapter.

 

     (x) Exercise Through September 30, 2009, exercise the duties

 

and responsibilities vested in the office under this chapter and

 

all of the following:

 

     (i) Section 88d.

 

     (ii) Section 88j(3)(e).

 

     (iii) Section 4cc of the general sales tax act, 1933 PA 167, MCL

 

205.54cc.

 

     (iv) Sections 455 to 459 of the Michigan business tax act, 2007

 

PA 36, MCL 208.1455 to 208.1459.

 

     (y) All other things necessary or convenient to achieve the

 

objectives and purposes of the office, this chapter, or other laws

 

that relate to the purposes and responsibilities of the office.

 

     (3) The enumeration of a power in this chapter shall not be

 

construed as a limitation upon the general powers of the office.

 

The powers granted under this chapter are in addition to those

 

powers granted by any other law.

 

     (4) The commissioner and the president of the fund shall

 

cooperate in administering the budget, procurement, and related

 

management functions of the office. The fund may provide the office

 

with staff support and other services to assist the office in

 

performing the functions and duties of the office.

 

     (5) State departments, agencies, boards, commissions, and

 

officers and local film offices shall cooperate with the office in

 

the performance of the office's duties under this chapter.

 

     Sec. 29d. (1) The Michigan film promotion fund is created

 

within the state treasury.

 

     (2) The state treasurer may receive money or other assets from

 

any source for deposit into the promotion fund, including federal

 

funds, other state revenues, gifts, bequests, and other donations,

 

including, but not limited to, all of the following:

 

     (a) Fees Through September 30, 2009, fees deposited in the

 

promotion fund under sections 455 to 459 of the Michigan business

 

tax act, 2007 PA 36, MCL 208.1455 to 208.1459.

 

     (b) Fees Through September 30, 2009, fees deposited in the

 

promotion fund under section 367 of the income tax act of 1967,

 

1967 PA 281, MCL 206.367.

 

     (c) Proceeds Through September 30, 2009, proceeds deposited in

 

the promotion fund under section 88d.

 

     (3) The state treasurer shall direct the investment of the

 

promotion fund and shall credit to the promotion fund interest and

 

earnings from promotion fund investments.

 

     (4) Money in the promotion fund at the close of a fiscal year

 

shall remain in the promotion fund and shall not lapse to the

 

general fund.

 

     (5) Money in the promotion fund may be expended, upon

 

appropriation, to support the functions of the office under this

 

chapter and other applicable law and for purposes authorized under

 

this chapter.

 

     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, public authorities, and local units of

 

government.

 

     (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 may be issued to an eligible production

 

company or film and digital media private equity fund even if the

 

eligible production company or film and digital media private

 

equity fund is not a small business. 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.

 

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

 

program, the fund shall establish a Michigan film and digital media

 

investment loan program to invest in loans from the investment fund

 

to eligible production companies or film and digital media private

 

equity funds. The fund board shall make investments under this

 

subsection only upon approval of the chief compliance officer and

 

the Michigan film office after a review by the investment advisory

 

committee. If an investment is made under this section, not more

 

than $15,000,000.00 may be loaned to any 1 eligible production

 

company or film and digital media private equity fund for any 1

 

qualified production. The fund board shall not make a loan or an

 

investment under this subsection after September 30, 2009. The fund

 

board may make an investment in a qualified production if all of

 

the following are satisfied:

 

     (a) The production is filmed wholly or substantially in this

 

state.

 

     (b) The eligible production company or the film and digital

 

media private equity fund has shown to the satisfaction of the

 

Michigan film office that a distribution contract or plan is in

 

place with a reputable distribution company.

 

     (c) The eligible production company or film and digital media

 

private equity fund agrees that, while filming in this state, a

 

majority of the below the line crew for the qualified production

 

will be residents of this state.

 

     (d) The eligible production company or film and digital media

 

private equity fund posts a completion bond approved by the

 

Michigan film office and has obtained no less than 1/3 of the

 

estimated total production costs from other sources as approved by

 

the chief compliance officer and the Michigan film office or has

 

obtained a full, unconditional, and irrevocable guarantee of the

 

repayment of the amount invested by the fund in favor of the

 

investment fund that satisfies 1 or more of the following:

 

     (i) The guarantee is from an entity that has a credit rating of

 

not less than BAA or BBB from a national rating agency.

 

     (ii) The guarantee is from a substantial subsidiary of an

 

entity that has a credit rating of not less than BAA or BBB from a

 

national rating agency.

 

     (iii) The eligible production company or the film and digital

 

media private equity fund provides a full, unconditional letter of

 

credit from a bank with a credit rating of not less than A from a

 

national rating agency.

 

     (iv) The guarantee is from a substantial and solvent entity as

 

determined by the investment advisory committee.

 

     (e) The fund board may make a loan under this subsection at a

 

market rate of interest for a qualified production of up to 80% of

 

expected and estimated tax credits available to the eligible

 

production company or film and digital media private equity fund

 

under sections 455 to 459 of the Michigan business tax act, 2007 PA

 

36, MCL 208.1455 to 208.1459, if the eligible production company or

 

the film and digital media private equity fund agrees to name the

 

fund as its agent for the purpose of filing for the tax credits

 

should the eligible production company not apply for the tax

 

credits. The Michigan film office and the state treasurer shall

 

determine the estimated amount of tax credits for purposes of this

 

subsection. The fund board shall approve guidelines for the

 

initiation of a loan and the terms of the loan under this

 

subsection.

 

     (f) A loan under this subsection may be converted to an equity

 

investment by the fund board with the approval of the chief

 

compliance officer and the Michigan film office.

 

     (g) An eligible production company or film and digital media

 

production company that receives a loan under this subsection is

 

not also eligible for a loan for the same qualified production

 

under subsection (5).

 

     (h) Fifty percent of any earnings on a loan or investment

 

under this subsection shall be deposited in the investment fund and

 

the remainder of the earnings shall be deposited in the Michigan

 

film promotion fund created under chapter 2A. One hundred percent

 

of principal repaid under this subsection shall be deposited in the

 

investment fund upon repayment.

 

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

 

program, the fund shall establish and operate the choose Michigan

 

film and digital media loan fund to invest in loans from the

 

investment fund to eligible production companies or film and

 

digital media private equity funds eligible for a tax credit under

 

the Michigan economic growth authority act, 1995 PA 24, MCL 207.801

 

to 207.810, or sections 455 to 459 of the Michigan business tax

 

act, 2007 PA 36, MCL 208.1455 to 208.1459. The fund board shall

 

make investments under this subsection only upon approval of the

 

chief compliance officer and the Michigan film office. The fund

 

board shall not make a loan or an investment under this subsection

 

after September 30, 2009. A loan issued under this subsection is

 

subject to all of the following requirements:

 

     (a) A loan shall be provided at an interest rate of not less

 

than 1%.

 

     (b) The minimum amount of a loan under this subsection is

 

$500,000.00.

 

     (c) The maximum term of a loan under this subsection is 10

 

years, including up to 3 years of deferred principal payments to

 

align principal payments with receipt of primary incentives, as

 

determined by the fund board.

 

     (d) The value of the loan may not exceed the value of the

 

primary incentive that the eligible production company or film and

 

digital media private equity fund is eligible to receive over 7

 

years, as discounted by the fund board. A loan authorized by the

 

fund board may provide for a loan amount equal to a portion or all

 

of the discounted value of the primary incentives, as discounted by

 

the fund board.

 

     (e) The eligible production company or film and digital media

 

private equity fund is responsible for repayment of the loan

 

regardless of actual primary incentive amounts received.

 

     (f) The eligible production company or film and digital media

 

private equity fund is responsible for loan preparation and closing

 

costs.

 

     (g) An eligible production company or film and digital media

 

private equity fund that receives a loan under this subsection is

 

not also eligible for a loan for the same qualified production

 

under subsection (4).

 

     (h) The eligible production company or film and digital media

 

private equity fund also obtains an additional loan from an

 

accredited financial institution or other approved lending market.

 

     (i) The loan shall be issued consistent with guidelines for

 

the initiation of a loan and the terms of the loan under this

 

subsection approved by the fund board.

 

     (j) Fifty percent of any earnings on a loan under this

 

subsection shall be deposited in the investment fund and the

 

remainder of the earnings shall be deposited in the Michigan film

 

promotion fund created under chapter 2A. One hundred percent of

 

principal repaid under this subsection shall be deposited in the

 

investment fund upon repayment.

 

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

 

program, the fund shall operate the choose Michigan fund program to

 

invest in loans from the investment fund to a qualified business.

 

The choose Michigan fund program shall operate on an incentive

 

basis and shall provide loans to qualified businesses to promote

 

and enhance significant job creation or retention within this

 

state. The choose Michigan fund shall not make a loan under this

 

subsection after September 30, 2009. Notwithstanding any

 

requirement imposed by the fund before April 1, 2008, to receive a

 

loan under this subsection, the fund board may or may not require a

 

qualified business to obtain an additional loan from an accredited

 

financial institution or other approved lending market to obtain a

 

loan under this subsection. At the discretion of the fund board,

 

not more than 3 loans provided through the choose Michigan fund may

 

be forgivable. A loan issued under this subsection is subject to

 

all of the following requirements:

 

     (a) A loan shall be provided at an interest rate of not less

 

than 1%.

 

     (b) The minimum amount of a loan under this subsection is

 

$500,000.00.

 

     (c) The maximum term of a loan under this subsection is 10

 

years, including up to 3 years of deferred principal payments to

 

align principal payments with receipt of any primary incentives, as

 

determined by the fund board.

 

     (d) Except as provided in subdivision (g), the qualified

 

business is responsible for repayment of the loan regardless of any

 

primary incentives received.

 

     (e) The qualified business is responsible for loan preparation

 

and closing costs.

 

     (f) The loan shall be issued consistent with guidelines for

 

the initiation of a loan and the terms of the loan under this

 

subsection approved by the fund board.

 

     (g) A loan under this subsection may be converted to an equity

 

investment by the fund board.

 

     (h) The loan shall be subject to repayment provisions. If the

 

loan is with a qualified business that closes down or relocates

 

outside of Michigan anytime within 3 years after the term of the

 

loan, then the provisions of the loan shall also include, at a

 

minimum, immediate repayment of any outstanding principal, payment

 

of a default interest rate, and repayment of any amounts forgiven.

 

     (i) In determining whether to forgive all or a portion of a

 

loan to a qualified business, the fund shall consider the net

 

economic impact of the project on the state's economy. The loan

 

agreement between the fund and the qualified business shall clearly

 

enumerate the terms, conditions and requirements under which all or

 

a portion of the loan may be forgiven, including, but not limited

 

to, job creation and investment in this state.

 

     (7) As used in this section:

 

     (a) "Below the line crew" means that term as defined under

 

section 459 of the Michigan business tax act, 2007 PA 36, MCL

 

208.1459.

 

     (b) "Eligible production company" means that term as defined

 

under section 455 of the Michigan business tax act, 2007 PA 36, MCL

 

208.1455.

 

     (c) "Film and digital media private equity fund" means any

 

limited partnership, limited liability company, or corporation

 

organized and operating in the United States that satisfies all of

 

the following:

 

     (i) Has as its primary business activity the investment of

 

funds in return for equity in qualified productions.

 

     (ii) Holds out the prospect for capital appreciation from the

 

investments.

 

     (iii) Accepts investments only from accredited investors as that

 

term is defined in section 2 of the federal securities act of 1963

 

and rules promulgated under that act.

 

     (d) "Investment advisory committee" means the committee

 

created within the department under section 91 of the executive

 

organization act of 1965, 1965 PA 380, MCL 16.191.

 

     (e) "Michigan film office" means the office created under

 

chapter 2A.

 

     (f) "Primary incentive" means a tax credit an eligible

 

production company is eligible to receive under the Michigan

 

economic growth authority act, 1995 PA 24, MCL 207.801 to 207.810,

 

or under sections 455 to 459 of the Michigan business tax act, 2007

 

PA 36, MCL 208.1455 to 208.1459.

 

     (g) "Qualified production" means that term as defined under

 

section 455 of the Michigan business tax act, 2007 PA 36, MCL

 

208.1455.