Senate Bill sb2110

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    Florida Senate - 2006                                  SB 2110

    By Senator Saunders





    37-1357-06                                              See HB

  1                      A bill to be entitled

  2         An act relating to entertainment industry

  3         economic development; transferring,

  4         renumbering, and amending s. 288.1254, F.S.;

  5         revising the entertainment industry financial

  6         incentive program to provide corporate income

  7         tax credits to qualified entertainment entities

  8         rather than reimbursements from appropriations;

  9         revising provisions relating to definitions,

10         creation and scope, application procedures,

11         approval process, eligibility, required

12         documents, qualified productions, rules,

13         fraudulent claims, and annual reports;

14         providing criteria and limitations for awards

15         of tax credits; providing marketing

16         requirements; providing for future repeal;

17         amending s. 477.0135, F.S.; correcting a

18         cross-reference; providing an effective date.

19  

20  Be It Enacted by the Legislature of the State of Florida:

21  

22         Section 1.  Section 288.1254, Florida Statutes, is

23  transferred and renumbered as section 220.192, Florida

24  Statutes, and amended to read:

25         220.192 288.1254  Entertainment industry financial

26  incentive program; creation; purpose; definitions; application

27  procedure; approval process; reimbursement eligibility;

28  submission of required documentation; recommendations for

29  credit award payment; policies and procedures; fraudulent

30  claims.--

31  

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1         (1)  CREATION AND PURPOSE OF PROGRAM.--Subject to

 2  specific appropriation, There is created within the Office of

 3  Film and Entertainment an entertainment industry financial

 4  incentive program. The purpose of this program is to encourage

 5  the use of this state as a site for filming and providing

 6  production services for filmed entertainment.

 7         (2)  DEFINITIONS.--As used in this section, the term:

 8         (a)  "Distributor" means a distribution company that

 9  enters into a binding distribution agreement for a

10  feature-length independent film or video.

11         (b)(a)  "Filmed entertainment" means a theatrical or

12  direct-to-video motion picture, a made-for-television motion

13  picture teleproduction, a commercial, excluding political

14  commercials, a music video, an industrial or educational film,

15  a promotional video or film, a documentary film, a television

16  pilot, a presentation for a television pilot, a television

17  series, including, but not limited to, a drama, a reality, a

18  comedy, a soap opera, a telenovela, a game show, and a

19  miniseries production, or a digital-media-effects production

20  by the entertainment industry to be sold or displayed in an

21  electronic medium. As used in this paragraph, the term "motion

22  picture" means a motion picture made on or by film, tape, or

23  otherwise and produced by means of a motion picture camera,

24  electronic camera or device, tape device, any combination of

25  the foregoing, or any other means, method, or device now used

26  or which may hereafter be adopted. As used in this paragraph,

27  the term "digital-media-effects" means visual elements created

28  through the modification of already existing or newly created

29  visual elements for film, video, or animated media through the

30  use of digital 2D/3D animation or painting, motion capture, or

31  compositing technologies. For purposes of this section, the

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  term "filmed entertainment" does not include the electronic

 2  gaming industry or sporting events.

 3         (c)  "High-impact television series" means a production

 4  created to run multiple production seasons with an estimated

 5  order of at least seven episodes per season and qualified

 6  expenditures of at least $625,000 per episode.

 7         (d)(b)  "Production costs" means the costs of real,

 8  tangible, and intangible property used and services primarily

 9  or customarily performed in the production, including

10  preproduction and postproduction, of qualified filmed

11  entertainment. Production costs generally include, but are not

12  limited to:

13         1.  Wages, salaries, or other compensation for

14  technical and production crews, directors, producers, and

15  performers who are residents of this state.

16         2.  Expenditures for sound stages, backlots, production

17  editing, digital effects, sound recordings, sets, and set

18  construction.

19         3.  Expenditures for rental equipment, including, but

20  not limited to, cameras and grip or electrical equipment.

21         4.  Expenditures for meals, travel, and accommodations,

22  and goods used in producing filmed entertainment that is

23  located and doing business in this state.

24         5.  Expenditures for goods and services used in

25  producing filmed entertainment.

26         (e)(c)  "Qualified expenditures" means production costs

27  incurred in this state for goods purchased or leased from or

28  services provided by purchased, leased, or employed from a

29  resident of this state or a vendor or supplier who is located

30  and doing business in this state, or payments to residents of

31  this state but excluding wages, salaries, or other

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  compensation paid to the two highest-paid employees in this

 2  state.

 3         (f)(d)  "Qualified production" means filmed

 4  entertainment that makes expenditures in this state for the

 5  total or partial production of filmed entertainment.

 6  Productions that are deemed by the Office of Film and

 7  Entertainment to contain obscene content, as defined by the

 8  United States Supreme Court, are not qualified productions.

 9  Also, a production is not a qualified production if it is

10  determined that the first day of principal photography in this

11  state occurred on or before the date of submitting its

12  application to the Office of Film and Entertainment or prior

13  to certification by the Office of Tourism, Trade, and Economic

14  Development.

15         (g)(e)  "Qualified production company relocation

16  project" means a corporation, limited liability company,

17  partnership, corporate headquarters, or other artificial

18  private entity engaged in productions of filmed entertainment

19  that is domiciled in another state or country and relocates

20  its operations to this state, is organized under the laws of

21  this or any other state or country, and includes as one of its

22  primary purposes digital-media-effects or motion picture and

23  television production, or postproduction.

24         (3)  APPLICATION PROCEDURE; APPROVAL PROCESS.--

25         (a)  Any company engaged in this state in producing

26  filmed entertainment may submit an application to the Office

27  of Film and Entertainment for the purpose of determining

28  qualification for an award of credits against the tax imposed

29  by this chapter as receipt of reimbursement provided in this

30  section. The office must be provided information required to

31  determine if the production is a qualified production and to

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  determine the qualified expenditures, production costs, and

 2  other information necessary for the office to determine both

 3  eligibility for and amounts of tax credits level of

 4  reimbursement.

 5         (b)  A digital-media-effects company in the state which

 6  furnishes digital material to filmed entertainment may submit

 7  an application to the Office of Film and Entertainment for the

 8  purpose of determining qualification for receipt of

 9  reimbursement authorized by this section. The office must be

10  provided information required to determine if the company is

11  qualified and to determine the amount of reimbursement.

12         (c)  Any corporation, limited liability company,

13  partnership, corporate headquarters, or other private entity

14  domiciled in another state which includes as one of its

15  primary purposes digital-media-effects or motion picture and

16  television production and which is considering relocation to

17  this state may submit an application to the Office of Film and

18  Entertainment for the purpose of determining qualification for

19  reimbursement under this section.

20         (b)(d)1.  The Office of Film and Entertainment shall

21  adopt rules establish a process by which an application is

22  accepted and reviewed and reimbursement eligibility for and

23  amounts of tax credits reimbursement amount are determined.

24  The Office of Film and Entertainment may request assistance

25  from a duly appointed local film commission in determining a

26  production's qualifications for awards of tax credits

27  reimbursement and compliance.

28         2.  The Office of Film and Entertainment shall develop

29  a standardized application form for use in approving a

30  qualified production or distribution bonus, a qualified

31  relocation project, or a company qualifying under paragraph

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  (a), paragraph (b), or paragraph (c). The application form for

 2  a qualified production must include, but need not be limited

 3  to, production-related information on employment, proposed

 4  total production budgets, planned expenditures in this state

 5  which are intended for use exclusively as an integral part of

 6  preproduction, production, or postproduction activities

 7  engaged primarily in this state, and a signed affirmation from

 8  the applicant Office of Film and Entertainment that the

 9  information on the application form has been verified and is

10  correct. The application form shall be distributed to

11  applicants by the Office of Film and Entertainment or local

12  film commissions.

13         3.  The Office of Film and Entertainment must complete

14  its review of each application and recommend a maximum tax

15  credit award to the Office of Tourism, Trade, and Economic

16  Development or notify the applicant that he or she has not met

17  the requirements for qualification within 10 business 5 days

18  after receipt of the completed application, including all

19  required information, and it must notify the applicant of the

20  certified maximum tax credit award, if any, its determination

21  within 10 business days after being notified of certification

22  by the office receipt of the completed application and

23  required information.

24         4.  Upon determination that all criteria are met for

25  qualification for reimbursement, The Office of Film and

26  Entertainment shall notify the applicant of such approval. the

27  office shall also notify the Office of Tourism, Trade, and

28  Economic Development of the applicant approval and amount of

29  tax credit award reimbursement required. The Office of

30  Tourism, Trade, and Economic Development shall make final

31  determination for actual tax credit award reimbursement.

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1         5.  The Office of Film and Entertainment shall deny an

 2  application if it determines that:

 3         a.  The application is not complete or does not meet

 4  the requirements of this section; or

 5         b.  The tax credit amount reimbursement sought does not

 6  meet the requirements of this section for such reimbursement.

 7         (4)  CREDIT REIMBURSEMENT ELIGIBILITY; SUBMISSION OF

 8  REQUIRED DOCUMENTATION; APPLICATION RECOMMENDATIONS FOR

 9  TRANSFER PAYMENT.--

10         (a)  A production that is qualified by the Office of

11  Film and Entertainment and is certified by the Office of

12  Tourism, Trade, and Economic Development is eligible for a tax

13  credit for reimbursement of up to 15 percent of its qualifying

14  expenditures in this state on a filmed entertainment program,

15  excluding wages, salaries, or other compensation paid to the

16  two highest-paid employees of the production in this state

17  that demonstrates a minimum of $850,000 in total qualified

18  expenditures for the entire run of the project, versus the

19  budget on a single episode, within the fiscal year from July 1

20  to June 30. However, the maximum reimbursement that may be

21  made with respect to any filmed entertainment program is $2

22  million. All reimbursements under this section are subject to

23  appropriation. Tax credits awarded Payments under this section

24  in a fiscal year shall be made to qualified productions

25  according to a production's principal photography start date,

26  for those qualified productions having entered into the first

27  queue as cited in subparagraph 1. or the second queue cited in

28  subparagraph 2. within the first 2 weeks after the queue's

29  opening. All other qualified productions entering into either

30  queue after the initial 2-week openings shall be on a

31  first-come, first-served basis until the appropriation for

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  that fiscal year is exhausted. The aggregate amount of tax

 2  credits allowed under this section in any fiscal year is $25

 3  million. If the total amount of allocated tax credits applied

 4  for in any fiscal year exceeds the aggregate amount of tax

 5  credits authorized annually under this section, such excess

 6  shall be treated as having been applied for on the first day

 7  of the next fiscal year in which tax credits remain available

 8  for allocation. On February 1 of each year, the remaining

 9  funds within both queues shall be combined into a single queue

10  and distributed based on a project's principal photography

11  start date. The eligibility of qualified productions may not

12  carry over from year to year, but such productions may reapply

13  for eligibility under the guidelines established for doing so.

14  The Office of Film and Entertainment shall develop a procedure

15  to ensure that qualified productions continue on a reasonable

16  schedule until completion. If a qualified production is not

17  continued according to a reasonable schedule, the office shall

18  withdraw its eligibility and reallocate the funds to the next

19  qualified productions already in the queue that have yet to

20  receive their full tax credit maximum or 15-percent financial

21  reimbursement, if they have not started principal photography

22  by the time the funds become available.

23         1.  Film, television, and episodic queue.--Theatrical

24  or direct-to-video motion pictures, made-for-television

25  movies, commercials, music videos, industrial and educational

26  films, promotional videos or films, documentary films,

27  television specials, television series, including, but not

28  limited to, miniseries and telenovelas, and

29  digital-media-effects productions by the entertainment

30  industry to be sold or displayed in an electronic medium which

31  demonstrate a minimum of $625,000 in total qualified

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  expenditures for the entire run of the project, which, for a

 2  television series, means a season even if the season is not

 3  completed in the same fiscal year in which principal

 4  photography began, shall have their own separate queue

 5  established, and such queue shall have dedicated to it 60

 6  percent of all available tax credits in any fiscal year for

 7  which this section applies of the state incentive money. The

 8  maximum tax credit award that may be made from this queue for

 9  any single production is $2 million, unless the production is

10  a high-impact television series, in which case the production

11  shall be eligible for a maximum tax credit award of $3

12  million, provided such production meets the other criteria of

13  this section. On March 1 of each year, the remaining tax

14  credits within this queue shall be merged into a general queue

15  and may be used for other purposes of this section as

16  determined by the Office of Film and Entertainment. A

17  qualified high-impact television series shall be allowed first

18  position in this queue for its first five production seasons

19  if the application is received by the Office of Film and

20  Entertainment within the first 2 weeks after the queue's

21  opening. A television series after its fifth production season

22  is not eligible for tax credit awards under this section.

23         2.  Television pilot queue.--Television pilots and,

24  presentations for television pilots for television series

25  intended to be shot in this state and, or television series,

26  including, but not limited to, drama, reality, comedy, soap

27  opera, telenovela, game show, or miniseries productions, by

28  the entertainment industry to be sold or displayed in an

29  electronic medium which demonstrate a minimum of $625,000 in

30  total qualified expenditures for the pilot episode or

31  presentation shall have their own separate queue established,

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  and such queue shall have dedicated to it 20 40 percent of all

 2  available tax credits in any given fiscal year for which this

 3  section applies of the state incentive money. The maximum tax

 4  credit award that may be made from this queue for any single

 5  project is $2 million. On March 1 of each year, the remaining

 6  tax credits within this queue shall be merged into a general

 7  queue and may be used for other purposes of this section as

 8  determined by the Office of Film and Entertainment.

 9         3.  Commercials and music video queue.--Commercials and

10  music videos by the entertainment industry to be sold or

11  displayed in an electronic medium which demonstrate a minimum

12  of $500,000 in total qualified expenditures from a production

13  company during the state fiscal year with a minimum of $75,000

14  in qualified expenditures for each production shall have their

15  own separate queue established. Such queue shall have

16  dedicated to it 20 percent of available tax credits in any

17  given fiscal year for which this section applies. The maximum

18  tax credit award that may be made from this queue for any

19  single production company is $500,000. On April 1 of each

20  year, the remaining tax credits within this queue shall be

21  merged into a general queue and may be used for other purposes

22  of this section as determined by the Office of Film and

23  Entertainment.

24         4.  Independent film and video distribution queue.--If

25  a distributor enters into a distribution agreement and

26  licenses theatrical or home video release rights for an

27  independent feature film or video more than 70 minutes in

28  length with 90 percent of its production days in this state

29  and that demonstrates a maximum of $625,000 in total qualified

30  expenditures in this state during the state fiscal year, there

31  shall be a separate queue established for releases of such

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  films or videos. Such queue shall have dedicated to it the

 2  first $250,000 of available tax credits in any given fiscal

 3  year for which this section applies. The maximum tax credit

 4  award that may be made to a distributor from this queue for

 5  any single project is $40,000 for a theatrical release and

 6  $10,000 for a home video release. A distributor may not

 7  receive more than $120,000 in total tax credits from this

 8  queue. The Office of Film and Entertainment may adopt rules to

 9  determine an acceptable theatrical or home video release. On

10  May 1 of each year, the remaining tax credits within this

11  queue shall be merged into a general queue and may be used for

12  other purposes of this section as determined by the Office of

13  Film and Entertainment.

14         (b)  The tax credit available under this section shall

15  only be surrendered in satisfaction of the tax owed by a

16  qualified production company under this chapter and only up to

17  the face amount of the credit. If the qualified production

18  company cannot use the entire tax credit in the year in which

19  the credit is approved, any excess may be carried over to a

20  succeeding taxable year. A tax credit granted under this

21  section may be carried forward only for a maximum of 5 years

22  following the year in which the credit was approved. A

23  digital-media-effects company in the state which furnishes

24  digital material to filmed entertainment may be eligible for a

25  payment in an amount not to exceed 5 percent of its annual

26  gross revenues on qualified expenditures as defined in

27  paragraph (2)(c) before taxes or $100,000, whichever is less.

28  A company applying for payment must submit documentation

29  annually as required by the Office of Film and Entertainment

30  for determination of eligibility of claimed billing and

31  

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  determination of the amount of payment for which the company

 2  is eligible.

 3         (c)  Upon application and approval by the Office of

 4  Film and Entertainment, a taxpayer may sell or assign, in

 5  whole or in part, a tax credit granted under this section. The

 6  sale or assignment of any amount of the tax credit may not be

 7  exchanged for consideration received by the taxpayer of less

 8  than 75 percent of the transferred amount of tax credit. The

 9  purchaser or assignee shall surrender the tax credit in the

10  year acquired from the qualified production company and

11  otherwise may carry the tax credit over, subject to the same

12  limitations on credit usage as the qualified production

13  company awarded the tax credit. The purchaser may not sell,

14  assign, or otherwise transfer the tax credit. A qualified

15  relocation project that is certified by the Office of Film and

16  Entertainment is eligible for a one-time incentive payment in

17  an amount equal to 5 percent of its annual gross revenues

18  before taxes for the first 12 months of conducting business in

19  its Florida domicile or $200,000, whichever is less. A company

20  applying for payment must submit documentation as required by

21  the Office of Film and Entertainment for determination of

22  eligibility of claimed billing and determination of the amount

23  of payment for which the company is eligible.

24         (d)  A qualified production company that is not a

25  corporation, as defined in s. 220.03(1)(e), shall make an

26  election, a digital-media-effects company, or a qualified

27  relocation project applying for a payment under this section

28  must submit documentation for claimed qualified expenditures

29  to the Office of Film and Entertainment under paragraph (e) or

30  distribute tax credits awarded under this section to its

31  partners or members in proportion to the respective

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1  distributive share of such partners' or members' income or

 2  loss in the year in which such tax credits were approved. A

 3  tax credit granted under this section shall be carried forward

 4  only for a maximum of 5 years following the year in which the

 5  credit was approved.

 6         (e)  A qualified production applying for a tax credit

 7  award under this section must submit by August 15 of the state

 8  fiscal year following the state fiscal year in which claimed

 9  qualified expenditures were incurred a single report from a

10  certified public accountant based in this state, preapproved

11  by the Office of Film and Entertainment, documenting the

12  amount of claimed qualified expenditures to the Office of Film

13  and Entertainment. The Office of Film and Entertainment shall

14  notify the Office of Tourism, Trade, and Economic Development

15  whether an applicant meets the criteria for reimbursement and

16  shall recommend the reimbursement amount. The Office of

17  Tourism, Trade, and Economic Development shall make the final

18  determination for actual reimbursement.

19         (f)  A qualified distribution company applying for tax

20  credits under this section shall submit an application and

21  verification of the fulfillment of distribution requirements

22  by May 1 of the state fiscal year.

23         (5)  MARKETING REQUIREMENTS.--The Office of Film and

24  Entertainment shall ensure that appropriate marketing

25  materials, including promotions of this state as a tourist and

26  filming destination, are required to be included on any filmed

27  entertainment as a condition of receiving a tax credit under

28  this section. The Office of Film and Entertainment shall

29  coordinate with VISIT Florida and other appropriate state

30  entities for the development and implementation of marketing

31  materials.

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1         (6)(5)  RULES POLICIES AND PROCEDURES.--The Office of

 2  Tourism, Trade, and Economic Development may shall adopt rules

 3  policies and procedures to implement this section, including,

 4  but not limited to, rules specifying requirements for the

 5  application and approval process, records required for

 6  submission for substantiation for credit awards reimbursement,

 7  and determination of and qualification for credit awards, and

 8  marketing requirements for credit recipients reimbursement.

 9         (7)(6)  FRAUDULENT CLAIMS.--An eligible entity or

10  company that obtains a payment under this section through a

11  claim that it knows is fraudulent is liable for reimbursement

12  of the amount paid plus a penalty in an amount double the

13  payment and reimbursement of reasonable costs, which penalty

14  is in addition to any criminal penalty to which the entity or

15  company is liable for the same acts. The entity or company is

16  also liable for costs and fees incurred by the state in

17  investigating and prosecuting the fraudulent claim. Any

18  applicant who knowingly submits an application under this

19  section which includes fraudulent information shall be liable

20  for reimbursement of the reasonable costs and fees associated

21  with the review, processing, investigation, and prosecution of

22  the fraudulent application.

23         (8)(7)  ANNUAL REPORT.--The Office of Film and

24  Entertainment shall provide an annual report for the previous

25  fiscal year, due October 1, to the Governor, the President of

26  the Senate, and the Speaker of the House of Representatives

27  outlining the return on investment to the state on funds

28  expended pursuant to this section.

29         (9)  REPEAL.--This section is repealed July 1, 2014.

30         Section 2.  Subsection (5) of section 477.0135, Florida

31  Statutes, is amended to read:

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    Florida Senate - 2006                                  SB 2110
    37-1357-06                                              See HB




 1         477.0135  Exemptions.--

 2         (5)  A license is not required of any individual

 3  providing makeup, special effects, or cosmetology services to

 4  an actor, stunt person, musician, extra, or other talent

 5  during a production recognized by the Office of Film and

 6  Entertainment as a qualified production as defined in s.

 7  220.192 288.1254(2). Such services are not required to be

 8  performed in a licensed salon. Individuals exempt under this

 9  subsection may not provide such services to the general

10  public.

11         Section 3.  This act shall take effect July 1, 2006.

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