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
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.
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). 1,400 loans valued at $97 million since CAP was reinstituted (leverage ratio of 27.6 to 1). Total of 2,965 jobs created and 10,192 retained since reinstitution. Average 9.4 jobs created/retained as a result of one CAP loan.
The Michigan Supplier Diversification fund (MSDF) established in 2009 is utilizing $26.3 million of 21st Century funds to encourage bank lending to Michigan-based manufacturers 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 that is complimentary to MSDF. MSDF consists of two active loan enhancement 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.
In December, 2010, Michigan was the first state in the nation approved for the federal "State Small Business Credit Initiative" (SSBCI), which was part of the Small Business Jobs Act. Michigan economic development officials were the driving force behind the initiative, which was partly modeled after the Michigan Supplier Diversification Fund. Michigan will receive nearly $80 million in federal dollars to support loans to small businesses. MEDC will use the funds to continue the operation of its most successful loan enhancement initiatives, the Capital Access Program and the Michigan Supplier Diversification Fund. The Michigan Supplier Diversification Fund, under the federal initiative, will be renamed the Michigan Business Growth Fund (MBGF). MBGF will continue to operate the same two loan enhancement programs, the Michigan Collateral Support Program and the Michigan Loan Participation Program.