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The California Film Commission on Thursday unanimously approved the first draft of rules for how the state will provide grants of $330 million annually in tax credits to attract movie, TV, digital, commercial and other productions.
This is a major step forward in implementing the expanded program that begins with the state’s fiscal year on July 1. It will provide tax incentives for at least the next five years.
In a meeting inside a boardroom at the Screen Actor’s Guild headquarters in the Miracle Mile area of Los Angeles, there was only brief discussion of the specifics of the 19 pages of rules and regulations presented for review.
Steve Dayan, who is commission chairman (as well as Secretary Treasurer, Local 399, of the Teamsters), urged quick passage of the draft rules. He said there will be additional opportunities to make fixes and insert clarifications.
After the passage, the rules still must go to a state agency for further review and approval, and the commission will continue to refine them as needed.
L.A. city council member Bob Blumenfield expressed concerns that the penalties built into the program for producers and companies that overestimate how many jobs a production will create (thus improving their chances of getting credits) could be impacted by unforeseen circumstances (like the cancelation of a TV series before the end of its expected run).
Blumenfield said he was concerned this could open the commission up to a lawsuit.
Nancy Stone, director of the program for the commission, said there is penalty forgiveness built into the rules and that they were sophisticated enough to understand vagaries of the entertainment industry practices.
Board member Wendy Greuel expressed concerns about web training for applicants who will need to be taught how to fill out the complicated applications and how to follow through the detailed process that eventually leads to the tax credits being issued.
Stone assured her they will have webinars and workshops for applicants. “We’re trying to make it user friendly,” said Stone.
Dayan added that he understood people were concerned something could occur with the web sites and programs like the snafus that rocked the introduction of the Affordable Care Act by the federal government last year.
Most of the provisions in the new law were known at the time it was signed into law by Gov. Jerry Brown last September, but the details are important because it is so different from the program that ends this spring.
The expanded program is designed to compete more effectively with more than 40 other states and many foreign countries that now offer incentives to attract film and TV work. Since the mid-’90s, even with the incentives put in place in 2009, California has seen a continuing outpouring of production work to states like Georgia, Louisiana and New York that offer greater incentives.
While the old program involved a lottery that randomly chose recipients, the new law uses a “jobs ratio calculation” that gives priority funding to movies, TV shows and other programming based primarily on how many jobs it will create and how well they will pay.
The percentage of the budget that can be recovered ranges from 15 percent up, based on a number of factors. For instance, there are 5 percent bonus payments if a TV series is relocating to the state or if a production shoots outside the Los Angeles area.
For the first time there are also bonus payments if musicians are hired in the state to record soundtracks or to score the productions.
There are also, for the first time, bonus payments if the production does visual effect work in the state totaling a minimum of $10 million or at least 75 percent of the qualified expenditures.
The new program for the first time also opens the door to big-budget movies and network TV series to receive tax credits, along with cable movies and series, independent productions and emerging digital productions. There are specific amounts carved out in the program so each area gets a share.
“As the media landscape shifts,” said Blumenfield, “it’s critical that we take action to protect those jobs, and the families they support, throughout the Valley and Los Angeles, and across the state.”
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