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The March 17 revelation that the MEDC awarded a $9.1 tax credit to a convicted embezzler
suggests that the Michigan Legislature may want to reintegrate the MEDC programs into state
government. Such a reintegration would subject the state’s economic development programs to
state laws and oversight that are now frequently avoided by the legal structure and opaque
operating style of the MEDC.
In the event the Legislature decides to bring the economic development functions back into
state government, the documents establishing the Michigan Economic Development
Corporation (“MEDC”) allows it to do so.
2. The stage for the MEDC was created when Governor Engler issued Executive Order
1999-1, pursuant to Michigan Constitution of 1963, Article 5, §2 and the laws of the
State of Michigan, consolidated State of Michigan economic development functions
and programs and their accompanying powers in the Michigan Strategic Fund.
3. The next step in moving the economic development functions was taken pursuant to the
Michigan Constitution of 1963, Article 7, §28 and the Urban Cooperation Act of 1967,
Act No. 7 of the Public Acts of 1967, Ex. Sess., being MCL 124.501 et seq. of the
Michigan Compiled Laws (the “Cooperation Act”). The laws permit a Public Agency
(i.e., the Strategic Fund) to exercise jointly with any other Public Agency any power,
privilege or authority which such Public Agencies share in common and which each
might exercise separately.
5. No new economic development functions were created when the MEDC was created. It
simply transferred state functions outside state government and legislative control. The
powers of the MEDC are listed in Section 3.01 to include performing “successful,
effective and efficient economic development programs and functions throughout the
State” as follows:
b. Facilitate, coordinate, and advance Projects for encouraging new and existing
businesses in locating, purchasing, constructing, reconstructing, modernizing,
improving, maintaining, repairing, furnishing, equipping, and expanding in the
State;
d. Encourage and solicit private sector involvement, support, and funding for
Projects;
f. Provide information to tourists and the travel industry and encourage tourism
within the State;
g. Conduct studies and research, develop and maintain data and records in
connection with a comprehensive economic strategy; and
6. The MEDC was never intended as a permanent entity. Section 6.01 provides:
7. Pursuant to Section 6.02, the Strategic Fund itself may withdraw from the MEDC
MEDC Notes
Page 3 of 4
8. Pursuant to Section 6.04, the MEDC is terminated upon “withdrawal of the [Strategic]
Fund” or upon “Three-fourths (3/4) vote of the Executive Committee.” [Note: The
members of the Executive Committee are appointed by the Governor.]
9. Pursuant to Section 6.05, upon Termination all the MEDC’s remaining assets are
distributed back to the Strategic Fund within state government.
10. The interlocal agreement recognizes that the MEDC is operating with state funds at the
sufferance of the Legislature. At anytime the Legislature and Governor could decide to
appropriate economic development funds to the Strategic Fund, or another agency,
without permitting the transfer to the MEDC. The language reads as follows:
Furthermore, the Legislature retains the power to required the return of all MEDC funds
to the Strategic Fund under the following provision:
11. The salaries and benefits of classified employees were protected under the following
provision:
MEDC Notes
Page 4 of 4
12. Pursuant to Section 11.02, “all documents and records of the Corporation… shall be
maintained until termination of this Agreement and shall be returned to the Fund, or any
statutory successor or if neither, the State.”