MICHIGAN STRATEGIC FUND BOARD MEETING October 24, 2012 1:30 p.m. Michigan Economic Development Corporation Lake Michigan Conference Room 300 N. Washington Square Lansing, Michigan AGENDA Call to Order A. Adoption of Proposed MSF, MNEA and MEGA Meeting Minutes [Action Items] 1. MSF Proposed Meeting Minutes – September 27, 2012 2. Michigan Next Energy Authority Board [MNEA] Proposed Meeting Minutes – August 22, 2012 3. Michigan Economic Growth Authority Board [MEGA] Proposed Meeting Minutes – August 22, 2012 Public Comment [Please limit public comment to three (3) minutes] Communication [Information – Ellen Graham] B. Administrative – 2013 MSF Board Meeting Dates [Action Item – Ellen Graham] C. 21st Century Jobs Fund Program 1. Business Incubator and Accelerator RFP [Action Item – Paula Sorrell] 2. Credit Suisse Quarterly Update [Information Item – Emily Heintz] 3. Michigan Business Development Program: a. Access Business Group LLC [Action Item – Joshua Hundt] b. La-Z Boy, Inc. [Action Item – Marcia Gebarowski] NOTE: This project includes a new Renaissance Zone c. RNLF Acquisition LLC [Action Item – Ken Murdoch] NOTE: This project includes the transfer of the Renaissance Zone D. MEGA 1. Nexteer Automotive Corporation – Retention Amendment [Action Item – Ken Murdoch] 2. Continental Automotive Holdings US, Inc. [Action Item – LeTasha Peebles] E. Brownfield MBT Amendments 1. Harbor Shores BHBT Land Development LLC and Powell Construction Services, LLC [Action Item – Mary Kramer] 2. Former Federal Reserve Building/Detroit [Action Item – Dan Wells] F. Brownfield Act 381 - Midland Stadium District Project [Action Item – Dan Wells] G. STEP Program – Adoption of Revised STEP Eligibility Guidelines for FY 2013 [Action Item – Deanna Richeson] H. Private Activity Bonds [Action Items – Diane Cranmer] 1. TKP Holdings/Coastal Container Corporation – Request for Change in Documents 2. Van Andel Research Institute – Bond Authorizing 3. Evangelical Homes of Michigan - $45,000,000 – Refinancing and New Financing/Nonprofit I. CDBG – Designation of the Community Development Block Grant Revolving Loan Fund Regional Manager for Regions 1-9 [Action Item – Eric Hanna/Greg West] J. Renaissance Zones [Action Items –Amy Lux] 1. Western UP Recycling Center, LLC - Revocation 2. Michigan Biodiesel, LLC - Revocation K. Tool & Die Recovery Zones [Action Items – Karla Campbell] 1. Praet Tool & Engineering, Inc. – 5-year extension 2. Paramount Tool & Die, Inc. – Revoking Prior Location and Adding New Location 3. United Engineered Tooling, Inc. – Revoking Prior Location and Adding New Location 4. Centerline Die & Engineering – New for 5 years L. Quarterly Delegation Reports 1. MEGA - Quarterly Reports of Administative Amendments [Information Item – Karla Campbell] 2. Michigan Business Development and Community Revitalization Programs [Information Item –Amy Deprez and Joe Martin] 3. MSDF and SSBCI – [Information Item – Elisabeth Alexandrian] 4. MSF Delegated Authority Quarterly Report – 21st Century Jobs Fund Loan/Grant Portfolio [Information Item –Martin Dober] 5. MSF Delegated Authority Quarterly Report – Pure Michigan Venture Match Fund [Information Item – Martin Dober] Special Assistance: The location of this meeting is accessible to mobility-challenged individuals. Persons with disabilities needing accommodations for effective participation in the meeting should contact Ellen Graham at 517.241.2244 one week in advance to request mobility, visual and hearing or other assistance. MICHIGAN STRATEGIC FUND BOARD MEETING SEPTEMBER 27, 2012 PROPOSED MEETING MINUTES A meeting of the Michigan Strategic Fund [MSF] Board was held on Thursday, September 27, 2012 at the Michigan Economic Development Corporation, Lake Michigan Room, 300 N. Washington Square, Lansing, Michigan 48933. MEMBERS PRESENT: Michael Finney, Steven Hilfinger, Paul Hodges, Sabrina Keeley, Andrew Lockwood [acting for and on behalf of Andy Dillon, designation attached], Bill Martin, James Petcoff, Shaun Wilson MEMBERS ABSENT: Mike Jackson, Howard Morris, Richard Rassel CALL TO ORDER: Mr. Finney called the meeting to order at 1:32 p.m. APPROVAL OF THE AUGUST 22, 2012 MEETING MINUTES: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Lockwood motioned approval of the August 22, 2012 MSF Board meeting minutes. Mr. Hodges seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. PUBLIC COMMENT: Mr. Finney asked if there were any comments from the public. There was none. COMMUNICATIONS: Ellen Graham, Board Relations Liaison, advised the Board of the following: • The agenda had been revised to include new Item D.7. Michigan Business Development Program – Cherry Growers, Inc. • Attachments had been added to Items F. and 2 – Ashley Grand Rapids, LLC Steelcase Campus Redevelopment and Globe Trading Building projects. • Handouts had been placed at each Board member’s seat for Agenda Item C – STEP Program. • A recusal letter had been received from Mr. Hilfinger for Globe Development, LLC, Section F.2. • The 2013 MSF Board meeting dates will remain on the 4th Wednesday of each month, except November’s meeting will be held on the 20th; and December’s meeting will be held on the 18th. The dates will be presented to the Board for approval at the October meeting. CDBG Deborah Stuart, Director, Community Incentive Programs, provided the Board with information regarding these action items. Resolution 2012-102 – City of Hart – Façade Improvement Project Ms. Stuart advised the Board the City of Hart [Oceana County] is requesting a $209,120 Community Development Block Grant to fund façade improvements for three buildings. Improvements include restoring pigmented structural glass and repairing the existing windows, installation of new windows, removing steel siding, removing wood panels from window openings, repairing wood frames, installing new wood sashes, etc. Recommendation: Staff recommends that a grant agreement in the amount of $209,120 be authorized for the City of Hart for façade improvements. Michigan Strategic Fund Board Meeting September 27, 2012 Page 1 Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Lockwood motioned approval for Resolution 2012-102. Mr. Martin seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-103 – City of Plainwell – Façade Improvement Project Ms. Stuart advised the Board the City of Plainwell [Allegan County] is requesting a $129,900 Community Development Block Grant to fund façade improvements for three buildings. Improvements include repairing open mortar joint and brick work, window restoration, removal of a cedar shake canopy; new fabric awning, etc. Recommendation: Staff recommends that a grant agreement in the amount of $129,900 be authorized for the City of Plainwell for façade improvements. Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Ms. Keeley motioned approval for Resolution 2012-103. Mr. Petcoff seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recusals; 3 absent. Resolution 2012-1014 – SubTerra Systems, LLC – Settlement Agreement and Release of Claim Ms. Stuart advised the Board that Carp Lake Township received a CDBG planning grant in the amount of $150,000 in December 1999. The grant proceeds were used for a feasibility study for the benefit of Subterra Systems, LLC. The objectives of the study were to provide research and conclusions to biotechnology, pharmaceutical and research organizations for the need to isolate, accelerated growth facilities required to augment/expedite their prospective research programs. Special terms to the agreement included a Royalty Agreement, dated May 26, 2000. The Royalty payment would take effect if the Company had sales in excess of $500,000/annually. The project was later amended to $277,000 but royalty agreement stayed in place and was not amended. The Company is having difficulty financing a proposed expansion with the Royalty Agreement pending. The Company has proposed a settlement of $229,426 in regards to the Royalty Agreement. The proposed settlement amount is taking into account the original grant amount and using nine percent non-compounded interest rate, assuming they had made monthly payments. Recommendation: Staff recommends the MSF authorize the MSF Fund Manager to enter into a Settlement Agreement and Release of Claims with Subterra, LLC for $229,426, related to the Royalty Agreement dated May 26, 2000. Board Discussion: Mr. Finney asked if there were any questions from the Board. Mr. Hilfinger asked if there were any further obligations other than the $229,000. Ms. Stuart replied there was not. Being no further questions, Mr. Wilson motioned approval for Resolution 2012-1014. Mr. Martin seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-105 – MSF/MEDC Memorandum of Understanding for CDBG Ms. Stuart explained to the Board that the US. Department of Housing and Urban Development [HUD] allocates Community Development Block Grant [CDBG] funding to the State of Michigan through the Michigan Strategic Fund [MSF] for further distribution of eligible Units of General Local Government to carry out State approved activities. HUD has recently recommended that the MSF and the Michigan Economic Development Corporation [MEDC] enter into a Memorandum of Understanding [MOU] for the purpose of specifying responsibilities between the MSF and MEDC in administering the CDBG program. The MSF believes the MEDC to be the sole source provider for these services due to MEDC’s unique qualifications, experience, and services related to the State CDBG Program. Recommendation: Staff recommends that the MSF approve the MOU between the MSF and the MEDC effective immediately through July 1, 2013. Michigan Strategic Fund Board Meeting September 27, 2012 Page 2 Board Discussion: [Side Bar – Sante Perrelli and Michael Finney. Michael Finney recuses himself. Andrew Lockwood assumes Chair.] Mr. Lockwood asked if there were any questions from the Board. There being none, Mr. Petcoff motioned approval for Resolution 2012-105. Mr. Hodges seconded the motion. The motion carried – 7 ayes; 0 nays; 1 recused; 3 absent. STEP Val Hoag, Vice President and Deputy Director, Michigan Business Development and John Wolf-Meyer, provided the Board with information regarding this action item. Resolution 2012-106 – State Trade & Export Promotion [STEP] Grant Program – Application & Continuation of Program Resolution 2012-107 – State Trade and Export Promotion [STEP] Grant Program – Amended Memorandum of Understanding Ms. Hoag explained to the Board the SBA’s State Trade and Export Promotion [STEP] program assists Small and Medium sized Enterprises [SME’s] which, according to the SBA’s definition, must have less than 500 employees. STEP is a three year program, funded at $30 million annually, to support President Obama’s call to jump start job growth by doubling U.S. exports in five years. Program goals include increasing the number of small business exporters in Michigan; increase the value and volume of exports from Michigan and expand Michigan exports to new markets, raising competitiveness in the global marketplace. Michigan is to receive $2.2 million to operate the program. Through multi-faceted marketing and outreach programs, awareness of Michigan’s SME’s opportunities for overseas market expansion, will be maintained on the MEDC’s website and linked to all Pure Michigan Export partners’ portals. Recommendation: Staff recommends the following: • MSF Board ratify and approve the application submitted to the SBA for Step Program funding; • MSF approve the amended Memorandum of Understanding with the MEDC; • MEDC will provide the identified administrative services and matching funds for the STEP Program; • Re-approval of the proposed eligibility and application guidelines and grant template used last year; • MSF Board approves the continued grants to Automation Alley, VAGTC: Lansing Regional Chamber of Commerce; and the Northwest Michigan Council of Governments; and reaffirm the delegation of authority to determine and make certain STEP Program awards. Board Discussion: Mr. Lockwood asked if there were any questions from the Board. Ms. Keeley asked who the MSF Treasurer is. Ms. Hoag responded Minesh Moody. Mr. Hilfinger inquired if the scope of the application had expanded to include other activities. Mr. Wolf-Myer indicated there has been no change from last year. There being no further questions, Ms. Keeley motioned approval for Resolution 2012-106 and Resolution 2012-107. Mr. Martin seconded the motion. The motion carried – 7 ayes; 0 nays; 1 recused; 3 absent. [Mr. Finney returns to meeting.] 21st CENTURY JOBS FUND PROGRAM Resolution 2012-108 – Michigan Business Development Program/Michigan Community Revitalization Program Background Check Amendment Karla Campbell, MSF Fund Manager, provided the Board with information regarding this action item. Michigan Strategic Fund Board Meeting September 27, 2012 Page 3 Background Review Policy for the Michigan Business Development Program [MBD], created under Section 88r of the MSF Act to replace the former MEGA program, and the Michigan Community Revitalization Program [CRP], created under Chapter 8C of the MSF Act, to replace the former Brownfield program was approved at the February 2012 MSF Board meeting. Since that time, it has been determined minor changed need to occur to meet legislative intent as well as continue to move these programs in order to complete deals. The following changes have been recommended by staff: • Ability to go back five years on all applicants and their parent Company; • Adding the language “Or its parent Company” regarding an applicant that is not publicly traded; • Understanding that issues will be uncovered in some cases, a provision to determine whether or not the deal should proceed by allowing the applicant to plead its case in writing to the MSF Chairperson and the MSF Fund Manager: a. Applicant must state how the issue does not negatively reflect on the business integrity of the applicant or Key Personnel; b. MSF Chairperson and the MSF Fund Manager may, but are not obligated to, consider the mitigating circumstances; c. MSF Chairperson and the MSF Fund Manager together may or may not determine that the circumstances have been mitigated to the satisfaction of both Recommendation: MEDC and MSF staff recommends approval of the amended MBD and CRP Background Review Process and rescinding Resolution 2012-25. Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Lockwood motioned approval for Resolution 2012-108. Mr. Hodges seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-109 – Michigan Translational Research & Commercialization Program Request for Proposal Resolution 2012-110 – Approval of Joint Evaluation Committee & Scoring for the Michigan Translational Research & Commercialization Program Request for Proposals Melda Uzbil, University Relations Director, provided the Board with information regarding this action item. Ms. Uzbil advised the Board that through the 21st Century Jobs Fund program, the MSF provides funding for entrepreneurship and innovation projects. Under Section 88o of the MSF Act, the MSF is charged with creating a program to accelerate technology transfer from Michigan’s institutions of higher education to the private sector for commercialization of competitive edge technologies. Additional “gaps” in the university ecosystem have been identified by the MEDC. The program has been developed using the Coulter process which is an acceleration program where projects are provided specialized, focused services and guided through to success in a time- and cost-efficient manner. Recommendation: Staff recommends, and as supported by the Entrepreneurial Subcommittee supports, the following actions: 1. Allocation of $6 million from funds appropriated to the MSF for innovation and entrepreneurship for the RFP; 2. Approval and issuance of the draft RFP; and 3. Appointment of the JEC and approval of the JEC scoring and evaluation criteria. Board Discussion: Mr. Finney asked if there were any questions from the Board. Ms. Keeley inquired if the Universities would receive the warrants. Ms. Uzbil responded they will not. Ms. Uzbil further explained that each university would decide how much they get in returns; they would not be investing directly. Further, she advised MEDC will be on the oversight committee and will know when a spin-off occurs. There being no further questions, Mr. Hilfinger motioned approval of Resolutions 2012-109 Michigan Strategic Fund Board Meeting September 27, 2012 Page 4 and 2012-110. Mr. Martin seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-111-Entrepreneurial Services Provider Paula Sorrell, Managing Director, Entrepreneurship Services, provided the Board with information regarding this action item. Ms. Sorrel provided the Board with background information regarding the issuance of a Request for Proposals [RFP], appointment of a Joint Evaluation Committee [JEC], and approval of the scoring criteria. Proposals were due September 5, 2012. Twenty four proposals were received. The JEC members reviewed and scored the proposals individually and then met to review as a group and determined a consensus score for each proposal, awarding the following: 1. First Customer Awards – Michigan Tech Enterprise Corporation; Mid-Michigan Innovation Center Cash Flow from Customers Program; Institute for Research on Labor, Employment and the Economy, University of Michigan 2. Industry Consortium Awards – Michigan Manufacturing Technology Center, Mi-Light, the Michigan Photonics Cluster, Michigan Medical Device Accelerator 3. Federal Matching Awards – Grand Valley State University-MI SBTDC, Macomb-OU, Oakland University, NextEnergy Center The total amount recommended for awards is $5,064,309; leaving $185,691 still available from the approved allocation of $5,250,000. The JEC recommends reserving the remaining funds for future needs of these types of programs. Recommendation: Staff recommends the above-listed awards. Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Lockwood motioned approval for Resolution 2012-111. Mr. Wilson seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-112 - Centers of Innovation Applicant Approval – SRI International Resolution 2012-113 – Confidentiality Acknowledgement for SRI International Martin Dober, Senior Vice-President, Entrepreneurship & Innovation, provided the Board with information regarding this action item and introduced guests: John Sternlicht – Senior Director, Strategic Projects; Walter Moos, Vice President, SRI Biosciences; David Sahner, Senior Director, Clinical Translation. Mr. Dober introduced members from the SRI International and provided background information on the Company. SRI [Stanford Research Institute] was formed in Menlo Park California in 1943 as a Center of Innovation. Since then, SRI has opened several research facilities across the U.S. SRI would like to open a pre-clinical and clinical trial service facility to be housed in Michigan Life Sciences Innovation Center in Plymouth, MI. They intend to accelerate SRI technologies and technologies from biotech companies, surrounding universities and hospitals from Phase I and Phase II stage development. The MSF will receive 20% royalties from SRI technologies commercialized out of the SRI facility. Recommendation: Staff recommends funding of the applicant by the MEDC, which has support of the MSF Entrepreneurial Subcommittee. Further, the recommended grant funding will be $5 million to this applicant, including a provision for a 20% royalty on technologies commercialized by SRI in Michigan. The recommended award will consume $5 million of the $7 million available, leaving $2 million remaining in the COI Program for future award consideration. Board Discussion: Mr. Finney commended SRI for their commitments within the State of Michigan, and becoming a long term innovation Company within the state. Mr. Hilfinger asked if SRI’s presence in Michigan Strategic Fund Board Meeting September 27, 2012 Page 5 Michigan will enhance Michigan’s ability to retain these types of companies. Mr. Walter responded affirmatively. There being no further questions, Mr. Wilson motioned approval for Resolutions 2012- 112 and 2012-113. Ms. Keeley seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-114 – Capital Conduit Program – Appointments to Grow Michigan, LLC Eric Hanna, Manager, Debt Capital Program, provided the Board with information regarding this action item. Mr. Hanna explained under the Capital Conduit Program, the Operating Company Initiative is designed to stimulate private sector risk capital investments, which would be used by the Grow Michigan, LLC to support growth, acquisition, and succession of Small Businesses in Michigan. As a part of the program and for the consideration of its investment in Grow Michigan LLC, the MSF may appoint three members of the Board of Managers. Staff engaged the Governor’s Office of Appointments to search, investigate and recommend candidates for appointment. The role of the appointees is to ensure that the organization incorporates as part of its focus the attainment of economic and community development objectives; specifically in helping the organization incorporate these objectives into staffing, compensation, budgeting and reporting functions. They will also lend their considerable professional skills and expertise to the already fundamentally strong organization helping it to both demonstrate viability of the investment model to the private sector and confirm the public policy value that facilitating growth and ownership transition to small businesses provides to Michigan’s economy. Recommendation: Staff recommends the approval of the Governor’s Office of Appointments for appointing the following individuals: 1. Douglas Lucianic, President & CEO of the Traverse City Chamber of Commerce. Appoint for an initial term of 1 year; 2. David Zilkowski, CEO of Garden Fresh Gourmet Food, Appoint for an initial term of 3 years; 3. Richard Baird, CEO of MI Partners, LLC for an initial term of 5 years. Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Ms. Keeley motioned approval for Resolution 2012-114. Mr. Hodges seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-115 – Michigan Business Development Program – Magna Mirrors of America DBA Magna Sealing and Glass Systems Amy Deprez, Director, Development Finance, provided the Board with information regarding this action item and introduced guests: Frank Ervin, Director, Governmental Affairs, Magna International; Randy Thelen, Lakeshore Advantage; and Sara Aumacher, Controller. Ms. Deprez provided the Board with background information on this project stating Magna International, Inc. represents itself as the most diversified global automotive supplier. Magna and its subsidiaries design, develop, and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineers and assemble complete vehicles, primarily for the sale to original equipment manufacturers of cars and light trucks. Further, Ms. Deprez advised that on June 17, 2011 the Applicant, the Michigan Strategic Fund, and Bowne Township completed a settlement agreement to set aside the Applicant’s Renaissance Zone in Bowne Township. Mr. Ervin further explained that the Company plans to expand an existing operation in Holland Charter Township, make investments and create jobs related to develop, test and commercialize a new sunroof technology for the passenger automobile industry, named SunBlade TM. The application of this technology will allow Magna Sealing and Glass to manufacture an electro-polymeric shade to be used in sunroofs. Mr. Thelen interjected that the Township has approved 12-year abatement and is in full support. Mr. Thelen gave kudos to MEDC staff and the new business development incentive program. Michigan Strategic Fund Board Meeting September 27, 2012 Page 6 Recommendation: Staff recommends approval of the Michigan Business Development Program [MBDP] proposal; closing will be subject to available funding under the MBDP at the time of closing; satisfactory completion of due diligence; finalization of all MBDP transaction documents and subject to the commitment remaining valid for 90-days with the approval for the MSF Fund Manager to extend the commitment for an additional 90-days. Board Discussion: Mr. Finney emphasized the importance of Magna’s presence in Highland Park as well as their support of the Community Ventures program at MEDC. Mr. Finney asked if there were any questions from the Board. There being none, Mr. Hilfinger motioned approval for Resolution 2012- 115. Ms. Keeley seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-116 – Michigan Business Development Program – Cherry Growers, Inc. Ms. Deprez provided the Board with information regarding this action item. Ms. Deprez explained to the Board that on July 25, 2012, the MSF approved a Michigan Business Development Performance Based grant for Cherry Growers, Inc. in the amount of up to $2.5 million. The project involves the anticipated increase of production for the Gogosqueeze fruit pouch at Cherry Growers’ plant in Grawn, Michigan, in cooperation with the expansion into the Michigan operations of a French Company, Materne North America, Corporation. Materne has also been approved for an incentive award as it relates to this project. Staff has confirmed Materne and Cherry Growers have made significant progress with the project, including the execution of a supply agreement between the two companies as well as the transfer of Materne employees into Cherry Growers’ operation. The Agreement with Materne is being drafted and is expected to be executed in the near future. However, due to a New Market Tax Credit [NMTC] funding deadline for the Company, the MEDC is recommending that the Closing Condition requirement, which is not a typical requirement, be waived to allow the MSF and the Company to close, allowing the Company to progress toward meeting the NMTC funding requirement. Recommendation: Staff recommends waiving the Closing Requirement to allow the MSF and the Company to close. All other terms and conditions of the Term Sheet remain unchanged and in effect. Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Wilson motioned approval for Resolution 2012-116. Mr. Martin seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. MEGA Resolution 2012-117 – Brembo North America, Inc. Amy Deprez, Director, Development Finance, provided the Board with background information regarding this action item. On June 17, 2008, the MEGA Board approved a Standard and Retention MEGA tax credit for Brembo North America, Inc. The standard credit was approved as a ten years, 100% employment tax credit for up to 218 new jobs and the retention credit approved for a five year up to 100% retention tax credit for the 107 jobs retained at the Company’s Albion Township facility. The Company is proposing to expand its brake disk and drum manufacturing operation as a result of new business contracts. Overall this project is expected to result in the creation of 112 new jobs and $33.2 million in additional capital investment. Recommendation: Staff recommends the following amendments to the 100% Standard MEGA tax credit for 10 years: • Increase the maximum Qualified New Jobs by 100, allowing for up to 318 Qualified New Jobs for the tax years through 2015 through 2019 to be covered under this tax credit; • Amend the Company’s administrative fee to increase the fee by $5,175 due to the increase in credit value. The increased administrative fee is due December 31, 2015. Michigan Strategic Fund Board Meeting September 27, 2012 Page 7 Board Discussion: Mr. Finney asked if there were any questions from the Board. There being none, Mr. Wilson motioned approval for Resolution 2012-117. Mr. Martin seconded the motion. The motion carried – 8 ayes; 0 nays; 0 recused; 3 absent. Resolution 2012-118 – General Motors LLC – Global Retention Credit Resolution 2012-119 – General Motors LLC – Plug-In Electric Vehicle Engineering Credit Resolution 2012-120 – General Motors LLC – Plug-In Battery Pack Credit Amy Deprez, Director, Development Finance, and Bruce Seymore, Business Development Manager, provided the Board with information regarding this action item and introduced guests: Troy Kennedy, General Motors; Candace Butler, General Motors; and Brian O’Connell, General Motors. Ms. Deprez introduced Brian O’Connell who provided the Board with an overview of the project. Mr. O’Connell advised the Board that since the amendments to all the existing and Global Retention Credits, General Motors has continued to grow in Michigan. The Company is considering further investment that may result in the creation of 2,000 additional jobs in the state and up to $300 million in additional new investment. These figures are in excess of the 30,000 jobs currently being retained and up to $2.5 billion in investment in Michigan as the result of the credits. One of the potential projects is a new IT Development Center to be located at GM Technical Center in Warren. The Company is nearing the cap of 30,000 for retained jobs on their Global Retention MEGA Tax credit. As a result of these projects the Company is requesting an increase in the maximum allowance for retained jobs on their Global Retention MEGA. In addition to this request, the Company is seeking additional amendments to the Global retention MEGA tax credit, the Plug-In Electric Vehicle Engineering Credit and the Amendment to the Plug-In Battery Pack Credit to simplify, clarify and enhance the credit agreements. Recommendation: Staff recommends the following: 1. Global Retention a. Increase maximum retained jobs by 3,000, allowing for up to 33,000 retained jobs to be covered under this tax credit; b. Amend agreement to require for reporting purposes annual submission of employment information; c. Amend maximum credit for Detroit Renaissance Center from $75 million to $125 million over the life of the credit; d. Amend agreement to remove the exception for the Battery Research and Testing Lab and the Manufacturing Validation Center at the GM Technical Center and allow for inclusion of up to 5,000 retained jobs at GM Technical Center; e. Amend the repayment provision for relocation to 100% repayment for relocation that occurs on or before the end of the 4th year of the credit and a rolling 50% repayment of the three previous years of the credit for a relocation that occurs after the 4th year and within 24 months after the end of the 20th year of the credit; and f. Set the effective date of these amendments as of January 1, 2011. 2. Plug-In Electric Vehicle Engineering Credit: a. The current repayment for relocation is a repayment of up to 100% for a relocation that occurs on or before the third year of the credit and a repayment of up to 50% for a relocation that occurs within 36 months after the end of the term of the credit. Amend proposal to remove the 50% repayment provision for the second 36 months. 3. Plug-In Battery Pack Credit: a. The current repayment for relocation is a repayment of up to 100% for a relocation that occurs on or before the third year of the credit and a repayment of up to 50% for a relocation that occurs within 36 months after the end of the term of the credit. Amend proposal to remove the 50% repayment provision for the second 36 months. Michigan Strategic Fund Board Meeting September 27, 2012 Page 8