Rebranded SOAR Fund Bills Give 20% of Project Development to Local Communities
October 18, 2023
Sen. Mallory McMorrow (D-Royal Oak) proposes a business incentive program in which grant offers are linked to an initial question – “will this community and all Michiganders be better off after this investment, even if the company’s commitment fails to materialize?”
Thursday, the Senate Economic and Community Development Committee, which is chaired by McMorrow, heard testimony on SB 559, SB 560, SB 561, SB 562 and SB 569, legislation rebranding Michigan’s Strategic Outreach and Attraction Reserve (SOAR) Fund as the “Make it in Michigan Fund” (MMF).
Currently, the SOAR Fund – the nearly 2-year-old fund designed to attract large-scale corporate projects – is poised to receive $465 million this Fiscal Year (FY) and $500 million in FY ’25 if the corporate income tax revenue is available.
In today’s SOAR system, the Michigan Strategic Fund (MSF) Board works out deals with possible SOAR Fund recipients that the Senate and House Appropriations committees must sign off on.
The board can offer a performance-based Critical Industry Program (CIP) award to a ”qualified business,” which can be spent on workforce development and training programs, heavy machinery purchases, infrastructure upgrades and “other capital investments.”
The Board can offer Strategic Site Readiness Program (SSRP) awards, that a local economic development corporation or municipality could receive to make infrastructure improvements ahead of the company coming into a community.
The legislation reviewed Thursday in McMorrow’s committee would change that system by adding a “Michigan 360 Program.”
“We are proposing a new framework for economic development that doesn’t just center around projects, but centers around prosperity outcomes for all of our residents,” McMorrow said to her committee.
She mentioned how in 2017, when e-commerce company Amazon located its second headquarters (HQ2) in Virginia – despite Michigan offering the company about $4 billion in project incentives and tax exemptions – Virginia incorporated a more than $1 billion K-12 education investment, public transit improvements in the state’s northern region and a new Virginia Tech campus for computer science degrees into its incentive offer.
Under the bills, the MSF Board must recommend a 360 Program award to improve community amenities – such as housing, education and “wraparound services” for community wellness – worth at least 20% of the total project investment surrounding a company that’s being lured with CIP and SSRP grants to come to Michigan.
“Unlike traditional community benefits, the Michigan 360 Program will be state dollars invested directly into the sited communities at the start of the program, so this really doesn’t hold the benefits of the communities hostage if the company pauses their project or changes their scope,” said Sen. Mary Cavanagh (D-Redford Twp.), one of the package sponsors.
Recipients of 360 Program awards could be municipalities, educational institutions or other community-oriented entities through the legislation.
The MSF Board would be responsible for preparing and delivering quarterly reports on all activities involving the rebranded fund to the Senate Economic and Community Development Committee and the House Economic Development and Small Business Committee.
The chair and the majority vice chair of each committee would serve as non-voting members on the board, as well.
Already, the legislation has acquired support from Detroit Mayor Mike Duggan’s office, the Southeast Michigan Council of Governments, the Michigan League for Public Policy and the Michigan Municipal League.
The bills are opposed by the Michigan Chamber of Commerce. In an opposition letter, Leah Robinson, the chamber’s director of legislative affairs, flagged language – calling for companies to respect their workforce’s ability to unionize ahead of receiving incentives – she said lacked “clarity and definition and inappropriately seeks to make subjective value judgments about the types of businesses worthy of consideration.”
She also expressed that the legislation would deprioritize the purposes of the CIP and the SSPR.
“Expanding the MMF to include the ‘Michigan 360 Program,’ a program focused on local community economic development projects and placemaking, would weaken the original intent of the SOAR Fund and ultimately hinder Michigan’s ability to compete with other states for new jobs and investments,” she wrote.
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter