Site development and infrastructure grants:
Grants for public infrastructure improvements are made available to local communities that have an identified company that can commit up-front to job creation. An award of up to $10,000 for each new job created by the company can be given for 90 percent of the total infrastructure cost. The Michigan Community Development Block Grant (CDBG) program funds grants and loans for economic development, downtown and gateways, community development and planning, and discretionary projects that meet a federally required national objective to either provide direct benefit to low- and moderate-income people or to eliminate slum and blight. The fund provides money for public infrastructure improvements (water, sewer, roads).
Private Activity Bonds are tax-exempt instruments issued on behalf of the borrower by the Michigan Strategic Fund and purchased by private investors. These loans can be used for made-for-manufacturing and not-for-profit corporation projects and company-specific solid waste facilities and waste disposal facilities that dispose of waste through recycling. Bond proceeds can only be used to acquire land and buildings and for acquisition and installation of new machinery and equipment, not for working capital or inventory. These bonds are generally used when financing of $1 million and higher is required. The company for which the bond is issued must be creditworthy enough to attract a buyer for the bonds, because the state does not guarantee the bonds. The purchaser of an existing manufacturing facility must devote 15 percent of the bond proceeds to renovation of the existing facility and equipment.
New markets tax credit program:
The Michigan Magnet Fund (MMF), a partnership between the Michigan Economic Development Corporation (MEDC), the Michigan State Housing Development Authority, and the Great Lakes Capital Fund, was awarded $60 million in new markets tax credits for 2009 through the Community Development Financial Institutions Fund, a division of the U.S. Department of Treasury. In addition the Detroit Investment Fund received a $40 million allocation for the City of Detroit, and the Great Lakes Capital Fund Received an allocation of $28 million for its four-state region. When combined with the Wayne County allocation of $50 million, this will provide Michigan with investment potential of $178 million. The new markets tax credit program is a $15 billion federal tax initiative aimed at attracting new private investment capital to underserved markets and low-income communities. The allocation will allow the MMF to provide a new source of financing assistance to community development projects across the state. The new markets tax credits are very attractive. Investors that make equity investments in a qualified community development entity, such as the MMF, can qualify for a 39 percent federal tax credit over a seven-year period. This equity investment, when combined with other debt financing, offers the ability to make very attractive financing available to the borrower and stimulate difficult-to-finance projects forward.
Job Training Programs
Diversification Training Fund:
Michigan launched an aggressive training program in 2009 to help transition Michigan-based manufacturers to contract success in the following industries: Alternative Energy, Homeland Security & Defense, Medical Devices and Aerospace. Companies with a Michigan manufacturing location can potentially receive a state grant through this program for a company-specific training plan that gears the company towards success in new industry targets. Training through the program is provided by industry experts with a demonstrated track record in the target industry spaces and a history of solid work helping Michigan companies become successful in achieving new sources of business. Introductory, intermediate and advanced training options are offered for companies depending on where they are in their diversification efforts. Michigan utilizes the knowledge gained about Michigan manufacturing companies' capabilities and capacity to help broker potential connections with OEM's that could lead to more contracts for Michigan companies.
Michigan New Jobs Training Program:
The Michigan New Jobs Training Program, offered via the community college system, is available to assist businesses that are creating new jobs in Michigan. If a business is expanding operations, or locating a new facility in the state, the Michigan New Jobs Training Program can provide flexible funding to meet a wide variety of training needs for new employees - at no cost to employers. The training available ranges from highly specialized customized programs to basic skills development. For more information, please go to www.mcca.org or contact Adriana Nichols at the Michigan Community College Association at email@example.com.
The 21st Century Jobs Fund signed into law in November 2005 is a $2 billion initiative that leverages the state's tobacco settlement revenue to diversify Michigan's economy and promote innovation based economic development. The fund, which supplants the Technology Tri-Corridor (TTC) initiative, focuses resources in four areas:
1. Centers of Energy Excellence:
Legislation signed in 2008 authorizes the Michigan Strategic Fund (MSF) to allocate up to $45 million from the 21st Century Jobs fund to create Centers of Energy Excellence (COEE). In 2009 an additional $30 million was authorized.
COEE matches base companies with universities, national labs and training centers to accelerate next-generation research, workforce development and commercialization in alternative energy technologies. Grants are available only to for-profit companies, but university participation in each center is required. To date, six centers have been designated:
•In Ann Arbor, Sakti3 will receive $3 million to establish a center focused on next-generation lithium battery technologies. University of Michigan will contribute research on battery lifecycles.
•In Flint, Swedish Biogas International will utilize $4 million to launch a waste-to-energy/biomethane center at the city's wastewater treatment facility. Kettering University is a partner in the project and will collaborate with Sweden's Linköping University.
•Cambridge, Mass.-based Mascoma will use $20 million to establish a cellulosic ethanol center in Kinross (eastern Upper Peninsula) Michigan State University and Michigan Technical University will focus on improving the supply chain for woody biomass feedstock.
•A123 Systems (Ann Arbor) will receive $10 million to establish a center focused on the manufacture of rechargeable lithium batteries for the transportation and alternative energy sectors. The University of Michigan will contribute research.
•Working Bugs LLC (East Lansing/Webberville/Sweden) will receive $2 million to establish a biorefinery for production of high-value specialty biochemicals and biofuels from natural feedstocks. Michigan Tech U will contribute research.
•Atlanta-based American Process Inc. in partnership with San Antonio's Valero Energy will receive $4 million to establish a pilot scale biorefinery at the Decorative Panels International hardwood plant in Alpena. It will convert process waste effluent from the plant into cellulosic ethanol, sodium acetate and clean water. Michigan Tech U will research improved fermentation processes.
2. Increased commercial lending activity.
The Capital Access Program (CAP) was reauthorized in 2006, providing a loan loss reserve fund for participating banks, encouraging lending to small businesses. CAP operated from June 1986 to September 2002 and reinstituted in April 2006. Currently, 96 banks are enrolled. State contribution to the program totals $24.5 million since 1986 resulting in 11,252 loans totaling $649.5 million (leverage ratio of 27 to 1). 1,135 loans valued at $72.5 million since CAP was reinstituted (leverage ratio of 27.6 to 1). Total of 2,392 jobs created and 8,514 retained since reinstitution. Average 9.6 jobs created/retained as a result of one CAP loan.
The Michigan Supplier Diversification fund (MSDF) established in 2009 is utilizing $32 million of 21st Century funds to encourage bank lending to Michigan-based automotive suppliers trying to diversify their product and customer base to other industries. Michigan has undertaken an extensive program to train and assist suppliers who chose to diversify into alternative energy, defense, medical device and aerospace industries. Designed with two active programs, one for collateral support and one for loan participation, to assist in cash flow to service debt, the MSDF met a critical gap in capital access for manufacturers.
3. Encourage development and commercialization of four competitive-edge technologies: life sciences, alternative energy, advanced manufacturing, and homeland security and defense: Since its inception in 2006, the 21st Century Jobs fund has held two rounds of a commercialization business plan competition totaling $168 million in direct investment in 108 projects. Combined with the investment from the predecessor programs, the Michigan Life Science Corridor and Michigan Technology Tri-Corridor, between 2000 and 2009, $386 million has been invested directly in 132 start-ups, four venture funds, 136 basic and applied research projects and 24 entrepreneurial support organizations.
4. Increased capital investment activity:
The 21st Century Investment Fund is prepared to invest up to $114 million in qualified private equity, venture capital, and mezzanine firms. A portion of those investments may also be placed directly in companies in which a qualified firm has made or is making an investment. The 21st Century Investment Fund will seek a superior rate of return and require that firms in which investments are made maintain an office in Michigan as well as make investments in the State that are equal to or greater than the amount invested in those firms. In addition to rates of return, the fund's goals target job creation and diversification of the State's economy.
In addition to the 21st Century Investment Fund, the Venture Michigan Fund was created to increase the availability of capital for seed and early stage companies. It is prepared to be a major force for strengthening the state's capital markets, promoting economic growth and diversification, and creating and retaining jobs. The fund will invest solely in venture capital firms that target seed and early stage investments with emphasis given to a firm's likelihood of providing above-average returns, its presence in and history of investments in Michigan, and its consideration of minority-owned businesses in its investment activities. The Venture Michigan Fund anticipates investing $95 million in qualified firms.
Recognizing that the availability of capital is critical to the growth and well-being of Michigan's businesses and strengthening of the economy, the State of Michigan developed these two investment fund-of-funds totaling $200 million to promote access to a continuum of capital. The Venture Michigan Fund and the 21st Century Investment Fund target competitive edge technology sectors as a way to promote job growth and diversify the State's economy. The funds have a single manager, Credit Suisse, and are designed to complement each other and enhance the capital environment in Michigan for companies across the entire spectrum of the capital lifecycle.
In the past few years, seven groups of angel investors (high net worth individuals who provide investment capital to start-up companies) have been organized across Michigan. In the last three years alone, these groups have helped finance more than 50 early-stage companies. A proposal to refresh and expand the Angel Tax Incentive is being advanced to help spur investment at the vital early stage in a company's development.
Michigan Emerging Technologies Fund:
Michigan ETF is designed to expand funding opportunities for Michigan technology-based companies in the federal innovation research and development arena. The MEDC, in partnership with the Michigan Small Business and Technology Center (MI-SBTDC) network, is dedicating up to $1.4 million to match federal SBIR/STTR funding for exceptional research and technical innovation generated in Michigan.
The Michigan ETF is a 21st Century Jobs Fund Program and supported projects must advance at least one of Michigan's four competitive-edge technology areas: Life sciences; alternative energy, advanced automotive, manufacturing & materials; homeland security and defense. This program is in its fourth year providing up to 25 percent in matching funds.
Michigan's 15 SmartZones allow municipalities to use tax increment financing for property acquisition infrastructure; business incubators; and other park facilities, management, and marketing. SmartZones are designed to stimulate the growth of technology-based businesses and jobs by aiding in the creation of recognized clusters of new and emerging businesses. The emerging businesses are primarily focused on commercializing ideas, patents, and other opportunities surrounding university or private institute research and development efforts. The SmartZone program has been very successful in spurring entrepreneurship and economic growth. Through June 30, 2009: 16 incubators/demonstration facilities; 1,128 businesses located or expanding in SmartZones; 1,552 companies assisted; 18,519 jobs created; $1.47 billion in public and private investment.
Michigan State Contact:
Michigan Economic Development Corporation
300 N. Washington Square
Lansing, MI 48913
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.