LANSING – When Michigan Rep. Bill Huizenga (R-Zeeland) and Rep. Andy Dillon (D-Redford) embarked on the creation of what became the 21st Century Jobs Fund, the state’s tool for using securitized tobacco settlement money to invest in high-tech jobs, the issue wasn’t political. But since the legislation was crafted, negotiated and signed into law in 2005, the topic’s politics have been inescapable.
That’s what happens when the state decides to launch the biggest tobacco settlement bonding offer in the nation, said Huizenga in an interview with Gongwer News Service on Friday. “Everybody’s going to be watching this.”
In contrast, Dillon may have been watching, but his hands-on approach didn’t kick in until a few weeks ago, when talks around the Capitol centered on who was being selected to serve as financial advisor and bond counsel on the deal. “Do you spend your time being a legislator or (do) you spend your time making sure your legislation rolls out?” he told Gongwer. “I was trying not to meddle.”
But that was a few weeks ago before things started hitting the proverbial fan. Now, both men find themselves sorting out how the process should be progressing – and at what pace.
While no money at this point is slated to actually be in the hands of any of the 791 grant applicants until after the election, both parties are sure to use its potential or problems during the campaign year.
To be clear, the decisions being made on how the $400 million gets sold and then invested isn’t in the vote control of Mr. Huizenga or Mr. Dillon at this point – it’s in the hands of the members of the Strategic Economic Investment and Commercialization Board, the Strategic Fund Board and the Tobacco Settlement Finance Authority. But an oversight committee formed in January, which consists of Huizenga as co-chair and Dillon as the sole House Democratic member, is bending the ear of those invested in the projects future.
“People can’t be afraid of sunshine,” Huizenga said, reiterating his call that the state only has one chance to get this project right.
The people in authority have already selected a financial adviser, bond counsel and underwriters for the project in hopes of getting the money out for sale by May. Huizenga said he has concerns for the fast-paced review and selection of those firms because that lays out how the project will be successful. “We haven’t been laying the groundwork properly,” he said.
These are concerns that have traveled to Republican leaders of the House and Senate as they reacted this week to a Detroit Free Press article highlighting the choosing of Farmington Hills-based Duffy Petroskey & Company to handle the state’s multi-million tourism campaign. The story divulged that the company has little experience in a statewide campaign such as this but has campaign contribution ties to Gov. Jennifer Granholm’s campaign.
In a joint press release this week, House Speaker Craig DeRoche (R-Novi) and Senate Majority Leader Ken Sikkema (R-Wyoming) said the contract “is confirming initial fears that the fund was going to be used for political gain instead of economic diversification.”
A spokesperson for Granholm called the allegation “rubbish,” and added that the procedures for awarding the contract were established by the Michigan Economic Development Corporation whose directors include individuals first appointed by former Gov. John Engler.
DeRoche is still in the process of appointing his selected members to two of the oversight boards.
There is also still a question of over what period of years the tourism campaign contract was to be awarded. Sources who did not want to be identified also have said that the article may have come up because a Detroit advertising firm was not selected.
Dillon said he has no problems with who has been selected for the tourism campaign, adding that the issue surfaced publicly due to a miscommunication between interested parties.
Huizenga said that he does have some concerns over the selection of Lewis & Monday as co-bond counsels for the project, because he has heard from some people in the bonding community that they aren’t the strongest firm.
Republicans are still reviewing the firm’s qualifications. At the last joint oversight committee hearing Mr. Huizenga and co-chair Sen. Valde Garcia (R-Howell) had questioned whether the Department of Treasury’s Bureau of Bond Finance asked the former clients what they thought of the firm’s performance.
Now former Treasurer Jay Rising said that the division works with the same groups all the time and the staff knows the background of each. Firms were selected based on price of service and experience in the end, he said during the meeting.
Total fees for all the panels’ consultants will amount to an estimated $50 million, Huizenga said.
Dillon said he has no qualms over the other adviser vendors chosen. “In my view, some of those were routine matters.”
However, he did acknowledge that protocols need to be followed, as the project will only get more complicated as time goes on. “I think it’s a little bit of growing pains,” Dillon said of the political tug and war.
It seems the issue of how fast-paced the process is going has been resolved by the administration and concerned members in the Legislature, as Huizenga said the attention to how that could impact the overall purpose of the project has finally been recognized.
But that doesn’t mean that progress is at a halt, he said. “No one wants to throw the boat anchor down.”
The Legislature and administration are still figuring out the gray area of whether a chief compliance officer needs to be hired, as stipulated in SB 906, which passed the Senate and is awaiting any action in the House Commerce Committee, which Huizenga chairs.
A chief compliance officer was referred to in concept by the legislation signed into law by the governor, but some in the Legislature feel the Senate vehicle bill is needed since an officer has yet to be hired. Huizenga said the Senate bill does not need to be passed because of the reference already in the law, but Mr. Dillon said an officer should be hired.
“I don’t think there is a dispute out there that can’t be resolved,” Dillon said.
In terms of having an oversight committee, Dillon and Huizenga both complemented its creation.
Dillon said at first, he didn’t see the need for another panel to oversee the fund, but has since seen it as a helpful tool for MEDC CEO Jim Epolito and others due to the complexity and scope of the issue.
Huizenga said Epolito has been good to work with and that the committee is going to be used as a tool to further conversation on the project. “It’s given us a venue and an opportunity to ask questions publicly. It gets everybody on the record both with our concerns and with their responses.”
This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com
