Cast & Crew's The Incentive Program (TIP) March 17, 2017 Update

CAST & CREW ENTERTAINMENT SERVICES

FRIDAY, MARCH 17, 2017

In this Issue

ENACTED

Virginia (H 1543)

PROPOSED LEGISLATION

Connecticut (S 787)

Florida (S 1576)

Maine (H 656)

Massachusetts (H 1491)

Massachusetts (H 1507 )

Massachusetts (S 1571)

Minnesota (S 1518)

Montana (D 2495)

North Carolina (S 198)

Rhode Island (H 5777)

Texas (S 1)

West Virginia (S 484)

IN THE NEWS

Georgia

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ENACTED

Signed by the Governor

Virginia (H 1543)

On March 13, 2017, Governor McAuliffe signed House Bill 1543 . Effective July 1, 2017, the bill extends the sunset date of the sales and use tax exemption for audiovisual works from July 1, 2019 to July 1, 2022.

PROPOSED LEGISLATION

Still in the House or Senate

Connecticut (S 787)

Senate Bill 787 proposes to extend the moratorium on feature films indefinitely. If signed, the law would take effect upon passage.

Florida (S 1576)

Senate Bill 1576 proposes to create a film investment corporation in support of local media production. Details of the program are as follows:

Allows the Florida Film Investment Corporation (FFIC) to invest in certain scripted theatrical and television productions. Preference will be given to:
- Productions with the greatest economic impact to the state;
- Productions requesting the lowest percentage investment by the FFIC;
- Productions with the quickest deployment of funds contributed towards in-state expenditures;
- Productions with a verifiable track record of producing successful productions;
- Productions by Florida-based production companies or by producers, writers, or directors who are Florida residents;
- Productions using a screenplay or teleplay based on a Florida story or including recognizable Florida locations;
- Productions whose development demonstrates a likelihood of success (e.g. employing a recognized director or actor); and,
- Productions in which the FFIC's investment is matched by local sources;
Limits investments to less than 50% of the total ownership interest in a project and 12.5% of the combined committed and uncommitted funds;
Requires at least two investment cycles per fiscal year and limits the amount that may be committed during any one cycle to no more than 40% of the FFIC's total investment.

If approved, the program would go into effect July 1, 2017.

Maine (H 656)

House Bill 656 proposes to modify the existing visual media production tax credit program by replacing it with a rebate program with the following attributes:

Creates a rebate equal to 20% of nonwage visual media production expenses;
Provides for a rebate equal to 25% of the first $100,000 of certified production wages paid to each Maine resident and, 10% of the first $100,000 of certified production wages paid to each nonresident; and,
Requires a minimum spend of $75,000 or more of visual media production expenses.

If enacted, the act would take effect immediately. However, revisions to the film incentive program would take effect only if a positive fiscal impact is reported by the Department.

Massachusetts (H 1491)

House Bill 1491 proposes to remove the sunset date of the Massachusetts motion picture incentive program.

Massachusetts (H 1507)

House Bill 1507 proposes to amend the Massachusetts film incentive program by including video game production as a qualifying project.

Massachusetts (S 1571)

Senate Bill 1571 proposes to amend the film tax credit as outlined below:

Stipulates the film incentive tax credit program will expire within one year of the bill's passage, unless reviewed and reauthorized by the legislature;

If reauthorized, the bill requires the credit to sunset within five years of reauthorization; and,

Permits the awarding state entity to recover any foregone tax receipts from tax incentive recipients who fail to achieve or meet stated goals and benchmarks.

Minnesota (S 1518)

Senate Bill 1518 proposes to create an additional production incentive by allowing the Association of Minnesota Motion Pictures (AMMP) to invest in local productions. Details of the bill are as follows:

Requires that AMMP will have ownership claims on revenue from each film and television series funded under this program that are not of lower priority than or less favorable than those of any other creditor or investor;
Necessitates the following of a film or television series in order to receive funding:
- Project must have a final script, budget, and schedule with a producer, a director, and the principal cast under contract;
- All sources of funding, other than the funding provided by AMMP, is in place and documented;
- The amount of funding requested of AMMP is not more than 50% of the total direct budget;
- The project must have a documented distribution agreement in place, through a distributor well-known and respected by the AMMP;
- The applicant must document the Minnesota-based personnel, businesses, locations, and other related activities to be used in production; and,
- The applicant guarantees credits on the project and on all relevant publicity; and,
Appropriates an, as of yet, undetermined amount of funding for the 2018 fiscal year (July 1 - June 30).

Montana (D 2495)

Draft Bill 2495 proposes to reenact the "Big Sky on the Big Screen Act"; creating a refundable tax credit for resident wages and qualified spend associated with qualified film production. Highlights of the incentive program are as follows:

Establishes a refundable tax credit equal to:
- 24% of the first $50,000 of wages paid to each Montana citizen that is a resident of an underserved area (defined as a county in which 14% or more of people of all ages residents are in poverty, as determined by the U.S. bureau of the census); and,
- 19% of the first $50,000 of wages paid to each Montana resident that is not a citizen of an underserved area.
Establishes a refundable tax credit equal to 14% of qualified expenditures, defined as all amounts spent in Montana, including lodging, construction materials, location fees, and equipment to be used in production;
Requires end credits to acknowledge that the project was filmed in Montana;
Applies the credit retroactively to productions eligible as of January 1, 2017 and to tax years beginning after December 31, 2016; and,
Establishes a sunset date of December 31, 2027.

If enacted, the program would take effect upon approval.

North Carolina (S 198)

Senate Bill 198 recommends that the Joint Legislative Economic Development and Global Engagement Oversight Committee perform a study to compare the effectiveness of the existing Film and Entertainment Grant Fund as opposed to the repealed film production tax credit program. Specifically, the study would evaluate the relative costs and benefits associated with each program and include positive and negative effects, if any, to the state and local economies.

The Committee would report its findings and recommendations to the 2018 Regular Session of the 2017 General Assembly upon its convening.

Rhode Island (H 5777)

House Bill 5777 proposes to revise the motion picture incentive program as detailed below:

Converts the film incentive from a tax credit to a rebate;
Increases the annual funding cap from $15 million to $25 million;
Eliminates the $5 million per project cap; and,
Creates an additional 5% rebate for Rhode Island resident payroll.
- Resident is defined as a person that has established residency for at least 120 days prior to the date of the production company's initial application.

If approved, the law would take effect upon passage.

Texas (S 1)

Senate Bill 1 proposes to appropriate $9,987,681 to the Office of Film & Music Marketing for the biennium beginning September 1, 2017 and ending August 31, 2019.

West Virginia (S 484)

Senate Bill 484 recommends terminating the tax credit provided by the West Virginia Film Industry Investment Act beginning July 1, 2017. Notwithstanding the abolishment, all taxpayers awarded an incentive prior to July 1, 2017 will remain eligible to redeem a credit.