PRODUCTION INCENTIVES

• Tools for 2010
• Updates by Jurisdiction
• In the News
• What's New at EP?
• Maximize Your Incentives with EP

The Essential Guide to U.S. & International Production Incentives, 2010, 2nd Edition, edited by Joseph Chianese, Marco Cordova, and Barbara Rosenfeld, is now available. Contact our group to order your copy at no charge.

Monthly Production Incentives Email Updates Archive of previous newsletters is available. Click here to sign up for our newsletter.

Follow the EP Production Incentives Group on Twitter for instant updates on incentives and events at www.twitter.com/filmincentives.

Recent Updates, as of July 29, 2010, have been posted to the website.

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U.S. Updates
For more information on incentives in each state, visit the U.S. Overview on our website and click on the state of interest.

U.S. FEDERAL
Internal Revenue Code section 181 allows for immediate expensing of film production costs for qualifying U.S. films, but expired at the end of 2009. The retroactive extension of section 181 (as well as the other “extenders”) was omitted from the amended version of the American Workers, State, and Business Relief Act of 2010 before being sent to the President for signature. Senate Finance Committee Chairman Max Baucus released a revised version of tax extenders legislation, including the retroactive extension of section 181. It is possible that the Baucus proposal will be offered as an amendment to the small business tax legislation currently on the Senate floor. If the extenders version does not move forward this week, it will not likely be considered again until mid-September, after the August recess. (See HR 5297.)

CALIFORNIA
Governor Schwarzenegger announces the California film tax credit to generate $2 billion in direct spending in the state (see press release).

CALIFORNIA - Los Angeles
The Los Angeles Economic Development Corporation issued an Economic Forecast and Industry Outlook predicting employment gains this year and next, provided there are no strikes. According to its report, as many as 15,000 new jobs could be created next year. (See The Hollywood Reporter and press release.)

The Milken Institute also issued a report concerning the economics of the entertainment industry in the state. That report made recommendations for California to reclaim some of the entertainment industry direct and indirect jobs lost between 1997 and 2008, including many different enhancements to its film incentive. Included in the recommendations were (1) make the credit permanent, (2) expand the credit to include network and premium cable TV projects, and (3) consider additional credits for digital media and infrastructure investments. (See The Hollywood Reporter and Los Angeles Times.)

The Los Angeles City Council has begun looking into various incentives for film companies, including tax breaks and refunds. City Councilman Richard Alarcon has proposed a series of new incentives. The Council's Jobs and Business Development Committee has asked for more details. (See Daily News and press release.)

CALIFORNIA - Santa Clarita
Effective July 1, 2010, the Santa Clarita Film Office will coordinate the process of securing L.A. County Sheriffs for location filming in the city, reducing costs for producers. In addition, the fees for permits have been updated effective July 1. (See City of Santa Clarita City Brief.)

GEORGIA
Bill Thompson has resigned his position as Deputy Commissioner (Division Director) of the Film Office (Georgia Film, Music & Digital Entertainment Office or GFMDE, a division of the Georgia Department of Economic Development). Greg Torre has been named Division Director (Interim), and Lee Thomas has been named Director - Film. (See Creative Loafing Atlanta and our Georgia jurisdiction page).

Earlier this year, the GFMDE issued rules to provide guidance concerning the application and qualification guidelines in the 2008 Georgia Entertainment Industry Investment Act. The rules set forth the requirements for obtaining each of the two different credits available under the Act: the base film tax credit, and the Georgia entertainment promotion tax credit. Each credit requires an independent certification application. The Georgia Department of Revenue remains responsible for implementation and administration of the tax credits issued under the Act.

MARYLAND
Former Governor Robert Ehrlich is running for re-election to the State House, and has pledged to increase the film incentive fund to its earlier level of $7 million (see Baltimore Business Journal).

MICHIGAN
Two film incentive "disclosure" bills are progressing in the state legislature. The first bill (SB 0889) requires the State treasurer to divulge information contained in a postproduction certificate of completion and other information required under section 455 of the Michigan business tax act. The second bill (SB 1405) requires disclosure of information related to the qualified film and digital media infrastructure project credit applications and investment expenditure certificates. (see Livingstone Daily).

The loan-out considerations on EP's Michigan jurisdiction page have been updated based on new guidelines that were recently posted.

NEW JERSEY
The New Jersey (NJ) film tax credit was temporarily suspended (S2091/A3011)as the NJ legislature and Governor Christie agreed on a budget by initiating sweeping program cuts. At the request of program participants and the state Treasurer's Office, the state Attorney General's office has now been asked to interpret the effect of the bill. A ruling is expected shortly. (See Sunshine Review).

NEW YORK
Pending film incentive legislation and funding continues to await an agreement on the budget (see The Hollywood Reporter, New York Post and NBC-WHEC). In the meantime, EP has summarized and analyzed the current proposed legislation on our New York jurisdiction page.

NORTH CAROLINA
The Governor signed two film incentive bills. One bill (HB 713) eliminates the 6.9% income tax on the value of film incentives (formerly imposed on producers, decreasing the effective incentive rate). The second bill (HB 1973) eliminates the 15% and “alternative” film credits, creating a single 25% credit. The bill also increases the project cap from $7.5 million to $20 million, and expands the definition of qualifying expenses by adding: employee fringe contributions, including health, pension and welfare contributions, and, per diems, stipends and living allowances. The Department of Revenue will issue a ruling on the effective date of the new legislation once the final legislative bill summary is published. (See Star News Online).

PENNSYLVANIA
Despite erroneous reports to the contrary, the tax credit remains intact and funding has reverted to its prior level of $75 million a year. The Film Office is accepting applications now for the $75 million 2012 allotment, payable no sooner than July 1, 2011.

SOUTH CAROLINA
The Senate overrode Governor Sanford's budget veto of the film incentives. The rebates remain intact at the rates of 20% and 30% of wages and supplies, respectively. The South Carolina Film Alliance is working to develop support for extending the term of the incentives, which are currently renewed on an annual basis. (See The Island Packet and South Carolina Radio Network.)

SOUTH DAKOTA
Despite filmmaking in the state, to date there are no reports of filmmakers accessing the local incentive, which refunds 100% of the contractor's excise tax and sales and use tax once local project costs exceed $250,000. The incentive is set to expire June 30, 2011. (See Chapter 10-46D and Argus Leader.)

UTAH
Current legislation prevents the issuance of credit certificates beyond June 30, 2011, unless the Legislature expressly provides funding in the office's budget or there are funds remaining from prior years (see 63M-1-1803). Efforts are underway to extend the incentive program. (See Deseret News.)

WISCONSIN
All three leading gubernatorial candidates support improvements to the local film incentive. Governor Doyle scaled it back to its current funding of $500,000 for 2009-2010. (See AP on Yahoo! Finance.)

International Updates

For more information on incentives around the world, visit the International Overview page on our website and click on the region or country of interest.

AUSTRIA
New incentive legislation has been passed and is awaiting approval from the EU Commission. Official guidelines have not been published. The fund will offer support of up to 25% of qualifying local spend, capped at 15% of the fund’s annual budget. The fund is expected to have a total of €20 million through 2012. The funding for 2010 is €5 million, with €7.5 million for each of the two following years. The incentive is expected to be effective in mid-August. Applications are accepted on a first-come, first-served basis. (See Location Austria and FilmStandort Austria website in German only.)

CZECH REPUBLIC
Variety reports that the 2010 funding for the new incentive will revert to the Government if not spent this year, but efforts are underway to redress the problem if it should occur. There are also reports of an insurance policy that would make the incentive "bankable." (See Variety and Deadline.)

IRELAND
The Bord Scannán na hÉireann -- the Irish Film Board (IFB) -- has announced that it will be seeking to appoint a new Chief Executive to commence at the start of January 2011. This coincides with the end of the 5-year term of the existing Chief Executive, Simon Perry. The IFB will commence advertising for the position of Chief Executive towards the end of July.

NEW ZEALAND
A review of the New Zealand Film Commission is contained in a report to the Minister for Arts, Culture & Heritage. Sir Peter Jackson and David Court authored the report.

UNITED KINGDOM
The Department of Culture, Media and Sport (DCMS) has announced cost cutting measures that involve the abolition, merger or streamlining of 55 public bodies, including the UK Film Council.

Oxford Economics' report shows that the UK film industry contributes over £4.5 billion a year to the UK GDP, and more than £1.2 billion to the Exchequer.

A campaign is underway to seek incentives for animation, similar to the tax relief available for film (see The Guardian).

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Our Basic Overview of U.S. & International Production Incentives was cited as a source in the Milken Institute report on "Film Flight: Lost Production and Its Economic Impact on California." See page 4 (endnote 7), page 13 (endnote 21), and the "Appendix: Incentive Programs by Location" on pages 29-33. For more information on the report, see CALIFORNIA - Los Angeles above.

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Website and Comparison Tool
Visit www.epincentivesolutions.com for the most up-to-date incentives information, including a new extensive glossary covering types of incentives, eligibility criteria, benefit limits, and other key issues to consider. Be sure to check out the Comparison Tool that enables you to compare incentives in up to three different jurisdictions.

EPPS Participating Vendor List
A participating vendor list is now available for EPPS Purchasing, Inc., which provides production equipment and supplies, at competitive rates, in certain states to help maximize your production incentives. Please contact Marco Cordova at 818.955.6278 regarding our EPPS Purchasing, Inc., services.

Want to be a participating EPPS Purchasing, Inc., vendor? Please contact Mary Ann McBride at 412.956.7325 for more information.

EP Incentive Solutions
Please contact EP's production incentives specialists by email or by phone at 818.955.6216 if you have any questions regarding your next production. We can help you budget your next production and find the most beneficial incentives at no charge. We also provide fee-based services for production incentives administration, finance facilitation, corporate-structure planning, and agreed-upon consulting projects. Visit our Services section for more information and contact information for our EP Incentive Solutions specialists.

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Entertainment Partners has purchased Workers' Compensation policies from local brokers throughout the United States to help maximize your production incentives! Listed below are those production incentives states where EP currently has a local policy.

Florida
Hawaii
Illinois
Louisiana
Mississippi
New Jersey
New Mexico
Pennsylvania
Texas

More policies to be announced soon!

Entertainment Partners has an office in each of the following states to help maximize your production incentives (more to open soon!):

California
Connecticut *
Florida
Georgia **
Louisiana ***
Michigan ****
New Mexico *****
New York
Pennsylvania ******
Utah


* EP and EPPS Purchasing, Inc., have a full-time Account Representative in Connecticut to help maximize your production incentives benefits. Please contact Scott Brant at 203.291.9399 for more information regarding our services in Connecticut.

** EP and EPPS Purchasing, Inc., have a full-time Account Representative in Georgia to help maximize your production incentives benefits. Please contact Karen Sortor at 678.690.8469 for more information regarding our services in Georgia.

*** EP and EPPS Purchasing, Inc. have full-time employees working in our Jefferson Parish office to help maximize your production incentives. Please contact Ryan Broussard at 504.296.2502 for more information regarding our services in Louisiana.

**** EP and EPPS Purchasing, Inc. have a full-time Account Representative in Detroit to help maximize your production incentives. Please contact Blane Hailemichael at 313.573.0018 for more information regarding our services in Michigan.

***** EP and EPPS Purchasing, Inc., have an office at Albuquerque Studios. EP provides super loan-out services in New Mexico to help maximize your production incentives. For more information contact the EP Production Incentives Group.

****** EP and EPPS Purchasing, Inc., have a full-time Account Representative in Pennsylvania to help maximize your production incentive benefits. Please contact Mary Ann McBride at 412.956.7325 for more information regarding our services in Pennsylvania.

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