SB293INTRODUCED
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AGALQ7-1
By Senator Gudger
RFD: Finance and Taxation Education
First Read: 04-May-23
2023 Regular Session
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6 AGALQ7-1 03/13/2023 DJ (F)RA 2023-896
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SYNOPSIS:
Under existing law, certain state rebates and
sales, use, and lodging tax exemptions are provided
for qualified production companies in the
entertainment industry working in efforts to attract
the entertainment industry to Alabama.
This bill would amend the Entertainment
Industry Incentive Act of 2009 to create the Film and
Music Incentive Act of 2023. This bill would expand
the entertainment rebate program offered under
current law to offset certain production expenditures
of qualified productions.
A BILL
TO BE ENTITLED
AN ACT
Relating to the Entertainment Industry Incentive Act
of 2009; to amend Sections 41-7A-40, 41-7A-41, 41-7A-42,
41-7A-43, 41-7A-45, and 41-7A-48, Code of Alabama 1975, to
expand the incentive by renaming it the Film and Music
Incentive Act of 2023, to allow for the inclusion of music
and virtual reality as qualified production companies; to
define a "historic location," and to increase the current
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cap of the incentive.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Sections 41-7A-40, 41-7A-41, 41-7A-42,
41-7A-43, 41-7A-45, and 41-7A-48, Code of Alabama 1975, are
amended to read as follows:
"§41-7A-40
This article may be cited as the " Entertainment
Industry Incentive Act of 2009. Film and Music Incentive Act
of 2023."
"§41-7A-41
The following is hereby found and declared by the
Legislature of Alabama:
(1) Although Alabama is filled with attractive natural
resources, a growing workforce, and other resources
attractive to the entertainment film and music industry,
Alabama has not developed its potential in terms of
attracting the entertainmentfilm and music industry to the
state by offering production incentives for qualified
productions not previously offered in Alabama.
(2) Entertainment Film and music industry incentives
offered by other states attract valuable projects to their
states which stimulate local economies, use local manpower
and suppliers, offer other employment and entrepreneurial
opportunities for state residents, and provide public
awareness of the natural resources available in their
states.
(3) Because Alabama does not currently offer a
sufficiently viable incentive package to the industry,
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Alabama cannot effectively compete with other states for
attracting industry projects in such a volume to cause the
development of adequate industry infrastructure and those
projects locate elsewhere.
(4) For Alabama to compete nationally or
internationally for the location and production of more
projects in Alabama and to foster a growing entertainment
film and music industry in Alabama, an increase in industry
specific production incentives are immediately necessary.
(5) The Legislature recognizes and confirms the
planning and promotion of the entertainmentfilm and music
industry are of vital importance to the economic development
of Alabama as are the recruitment, expansion, and retention
of industrial development within the state, and the
promotion of the entertainmentfilm and music industry should
be included as an integral part of any comprehensive
economic development strategy plan promoted by the state and
state agencies.
(6) Since Act 2009-144 was passed in 2009, the State
of Georgia has attracted a number of film and music
productions and established successful film production
facilities, whereas Alabama has enjoyed less success and has
yet to establish a successful film production facility.
(7) The film and music industry has been significantly
disrupted since Act 2009-144 was passed in 2009, and, to be
competitive in attracting such projects, Alabama must devote
more financial resources to the effort. "
"§41-7A-42
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For purposes of this article, the following terms
shall have the following meanings:
(1) COMPANY. A corporation, partnership, limited
liability company, or any other business entity.
(2) DEPARTMENT. The Alabama Department of Revenue.
(3) ENTERTAINMENT INDUSTRY. Those persons or entities
engaged in the production of entertainment content as
defined under paragraph a. of subdivision (8).
(4)(3) EXPENDED IN ALABAMA. In the case of tangible
property, property which is acquired or leased from a source
within the State of Alabama; in the case of services,
services performed for a qualified production project in the
State of Alabama.
(4) FILM AND MUSIC INDUSTRY. Those persons or entities
engaged in the production of qualified products with
entertainment content as defined under paragraph a. of
subdivision (8).
(5) HISTORIC LOCATION. Parcels, portions of which are
located in or within 300 feet of both of the following:
a. The Africatown Historic District, as defined in
Section 11-74-2,
b. The Mobile County Training School, one of the
oldest African American public schools in the State of
Alabama.
(5)(6) OFFICE. The Alabama Film Office.
(6)(7) PAYROLL. All salary, wages, and other
compensation, including related benefits, including
specifically, but not limited to, compensation and benefits
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provided to resident and nonresident producers, directors,
writers, actors, and other personnel involved in qualified
production projects in Alabama.
(7)(8) PRODUCTION EXPENDITURES.
a. The term includes preproduction, production, and
postproduction expenditures incurred in the State of Alabama
that are directly used in a state-certified production,
including, but not limited to, the following: Set
construction and operation, wardrobe, makeup, set
accessories, and related services; costs associated with
photography and sound synchronization, lighting, and related
services and materials; editing and related services; rental
of facilities and equipment; leasing of vehicles; costs of
food and lodging; costs of catering; digital or tape
editing, film processing, transfer of film to tape or
digital format; transfer direct to DVD, cable, or satellite
for distribution; sound mixing, special and visual effects
including duplication, film processing digital, DVD, music
composition, and satellite distribution; total aggregate
payroll; music; airfare; insurance costs of bonding; or
other similar production expenditures as determined by rule
or regulation.
b. The term includes financial contributions or
educational or workforce development in partnership with
related educational institutions, or local industry
organizations, or both, contributed toward the furtherance
of the local entertainment media film and music industries.
c. The term does not include postproduction
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expenditures for marketing or any amounts that are paid to
persons or entities as a result of their participation in
profits from the exploitation of a motion picture
production.
(8) QUALIFIED PRODUCTION. (9) PRODUCTION HEADQUARTERS.
The temporary headquarters in Alabama of a qualified
production, as certified by a qualified production facility.
(10) QUALIFIED PRODUCTION.
a. The term means entertainment film and music content
created in whole or in part within the state, including
motion pictures; soundtracks for motion pictures;
documentaries; long-form, specials, miniseries, series,
sound recordings, videos and music videos, and interstitials
television programming; interactive television; interactive
games; video games; music albums; entertainment and
educational content that incorporates virtual reality or
augmented reality, or virtual reality film production;
commercials; infomercials; any format of digital media,
including an interactive website that is intended for
national or international distribution or exhibition to the
general public; and any trailer, pilot, video teaser, or
demo created primarily to stimulate the sale, marketing,
promotion, or exploitation of future investment in either a
product or a qualified production via any means and media in
any digital media format, film, or videotape, provided such
program meets all the underlying criteria of a qualified
production.
b. The term does not include any ongoing television
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program created primarily as news, weather, or financial
market reports, a production featuring current events,
sporting events, an awards show or other gala event, a
production whose sole purpose is fund-raising, a long-form
production that primarily markets a product or service, a
production used for corporate training or in-house corporate
advertising or other similar productions; nor does the term
include any production for which records are required to be
maintained under 18 U.S.C. § 2257 with respect to sexually
explicit content; nor does the term mean or include any form
of gambling, gaming, wagering, or pari-mutuel wagering
activity or enterprise.
(9)(11) QUALIFIED PRODUCTION COMPANY.
a. The term means a company engaged in the business of
producing a qualified production, as that term is defined.
b. The term does not mean or include any company
owned, affiliated, or controlled, in whole or in part, by
any company or person which is in default on a loan.
(12)QUALIFIED PRODUCTION FACILITY. A complex of
buildings and associated back-lot facilities in which films
or music are intended to be regularly produced that is
within the State of Alabama and that contains at least four
of the following:
a. A minimum of 5,000 square feet of office space
available for use by qualified production companies for
qualified productions.
b. Indoor, climate-controlled storage for sets and
materials anticipated to be used or are being used for
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qualified productions.
c. Space for carpentry or other set and scene
preparation activities for qualified productions.
d. At least three indoor, fully-insulated,
climate-controlled, and soundproof sound stage facilities
with a minimum ceiling height of 30 feet. Each sound stage
facility must contain sufficient electrical service so as to
not need generators for ordinary operation.
e. A minimum of 4,000 square feet of
climate-controlled, enclosed storage for costumes used for
qualified productions.
(10)(13) RESIDENT OF ALABAMA. A natural person and,
for the purpose of determining eligibility for the
incentives provided by this article, any person domiciled in
the State of Alabama and any other person who maintains a
permanent place of abode within the state and spends in the
aggregate more than six months of each year within the State
of Alabama.
(11)(14) STATE-CERTIFIED PRODUCTION. A qualified
production approved by the office, produced by a qualified
production company."
"§41-7A-43
(a) Beginning January 1, 2009, a qualified production
company shall be entitled to a rebate for production
expenditures, as defined in subdivision (7) of Section
41-7A-42, related to a state-certified production. The
rebate shall be equal to 25 percent of the state-certified
production's production expenditures excluding payroll paid
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to residents of Alabama plus 35 percent of all payroll paid
to residents of Alabama for the state-certified production,
provided the total production expenditures for a project
must equal or exceed at least five hundred thousand dollars
($500,000), but for each year until the fiscal year ending
September 30, 2023, no rebate shall be available for
production expenditures incurred after the first twenty
million dollars ($20,000,000) . of production expenditures
expended in Alabama on a state-certified production. For the
fiscal year ending September 30, 2024, no rebate shall be
available for production expenditures incurred after the
first sixty-five million dollars ($65,000,000). For the
fiscal year ending September 30, 2025, no rebate shall be
available for production expenditures incurred after the
first one hundred ten million dollars ($110,000,000). For
the fiscal year ending September 30, 2026, and each
subsequent fiscal year thereafter, no rebate shall be
available for production expenditures incurred after the
first one hundred fifty million dollars ($150,000,000).
(b) A single episode in a television series or
miniseries may be considered a single production project for
purposes of this section. However, in determining the total
production expenditures incurred by a qualified production
company on a qualified production, the total production
expenditures of a television series or miniseries, whether a
single season or multiple seasons thereof, to be filmed
within a period of 12 consecutive months, each individual
episode of which separately and independently meets the
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definition of a qualified production, may be aggregated to
meet the monetary requirements set forth in subsection (a)
as long as each individual episode within the series
pertains to the same subject as the other episodes in the
series.
(c) A single commercial may be considered a single
production project for purposes of this section. However, in
determining the total production expenditures incurred by a
qualified production company on a qualified production, the
total production expenditures of a series of commercials to
be filmed within a period of 12 consecutive months, each of
which separately and independently meets the definition of a
qualified production, may be aggregated to meet the monetary
requirements set forth in subsection (a) as long as each
individual commercial within the series pertains to the same
subject as the other commercials in the series and was
planned as part of a series of commercials to be filmed
within a period of 12 consecutive months at the time the
qualified production company applied for the incentives.
(d) A qualified production company shall be entitled
to the rebate for production expenditures as provided in
subsection (a) for a qualified project that is limited only
to the production of a soundtrack used in a motion picture
or documentary, provided that the production expenditures
for the soundtrack project must equal or exceed at least
fifty thousand dollars ($50,000), but no rebate shall be
available for production expenditures incurred after the
first three hundred thousand dollars ($300,000) of
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production expenditures expended in Alabama under this
subsection.
(e) A qualified production company shall be entitled
to the rebate for production expenditures as provided in
subsection (a) for a qualified project that is limited only
to the production of a music album or music video, provided
that the production expenditures for the music album equal
or exceed twenty thousand dollars ($20,000) and the
production expenditures for the music video equal or exceed
fifty thousand dollars ($50,000), but no rebate shall be
available for production expenditures incurred after the
first two hundred thousand dollars ($200,000) of production
expenditures expended in Alabama under this subsection.
Rebates received under this subsection may not, in the
aggregate, exceed five percent of the funding available each
year under Section 41-7A-43(a) for all qualified production
companies.
(f) The rebate described in this section may be
applied to offset any income tax liability applicable to a
qualified production company for the tax year in which
production activity in Alabama on the state-certified
production concludes.
(g) If the rebate available under this section exceeds
a qualified production company's Alabama income tax
liability for the tax year in which production activity in
Alabama concludes on the state-certified production, the
excess of the rebate over a qualified production company's
Alabama income tax liability shall be rebated to the
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qualified production company.
(h) The Commissioner of the Department of Revenue and
the office shall promulgate adopt rules necessary to
administer this section."
"§41-7A-45
A qualified production company that intends to expend
in the aggregate one hundred fifty thousand dollars
($150,000) or more in connection with a qualified production
in the State of Alabama within a consecutive 12-month
period, upon making application for, meeting the
requirements of, and receiving written certification of that
designation from the office, shall be exempted from the
payment of the state portion, but not the local portion of
sales, use, and lodging taxes levied pursuant to Sections
40-23-2, 40-23-61, and 40-26-1, respectively, on production
expenditures expended in Alabama in connection with the
state-certified productions production. For each year until
the fiscal year ending September 30, 2023, the The exemption
provided by this section shall not be available for
production expenditures incurred by a qualified production
company after the first twenty million dollars
($20,000,000). For the fiscal year ending September 30,
2024, the cap on such of production expenditures expended
eligible for the exemption described in this section, shall
be sixty-five million dollars ($65,000,000). For the fiscal
year ending September 30, 2025, the cap on such production
expenditures eligible for the exemption described in in
Alabama on a state-certified project. this section shall be
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one hundred ten million dollars ($110,000,000). For the
fiscal year ending September 30, 2026, and each subsequent
fiscal year thereafter, the cap on such production
expenditures eligible for the exemption described in this
section shall be one hundred fifty million dollars
($150,000,000)."
"§41-7A-48
(a) For the fiscal year ending September 30, 2009,
the aggregate cap of incentives granted under this article
shall not exceed five million dollars ($5,000,000) for all
qualified production companies. For the fiscal year ending
September 30, 2010, the aggregate cap of incentives granted
under this article shall not exceed seven million five
hundred thousand dollars ($7,500,000) for all qualified
production companies. For fiscal years ending September 30,
2011, and September 30, 2012, the aggregate cap of
incentives granted under this article shall not exceed ten
million dollars ($10,000,000) for all qualified production
companies. For the fiscal year ending September 30, 2013,
the aggregate cap of incentives granted under this article
shall not exceed fifteen million dollars ($15,000,000) . for
all qualified production companies. For the fiscal year
ending September 30, 2014, the aggregate cap of incentives
granted under this article shall not exceed fifteen million
dollars ($15,000,000) and for all each subsequent fiscal
years thereafter, year until the fiscal year ending
September 30, 2023, the aggregate cap of incentives granted
under this article shall not exceed twenty million dollars
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($20,000,000) for all qualified production companies. For
the fiscal year ending September 30, 2024, the aggregate cap
of incentives granted under this article shall not exceed
sixty-five million dollars ($65,000,000) for all qualified
production companies. For the fiscal year ending September
30, 2025, the aggregate cap of incentives granted under this
article shall not exceed one hundred ten million dollars
($110,000,000) for all qualified production companies. For
the fiscal year ending September 30, 2026, and each
subsequent fiscal year thereafter, the aggregate cap of
incentives granted under this article shall not exceed one
hundred fifty million dollars ($150,000,000) for all
qualified production companies.
(b) Beginning the fiscal year ending September 30,
2024, one-third of the aggregate cap described in subsection
(a), together with the caps described in Section
41-7A-43(e), shall be reserved each year for qualified
productions created, in whole or in part, at a qualified
production facility located at a historic location and which
also has its production headquarters at such qualified
production facility, as certified by such qualified
production facility. The applicable qualified production
facility shall be required to make a certification of the
foregoing and may impose a cap on the rebate available on
applicable qualified productions that is less than the caps
provided in Section 41-7A-43. In the event that applications
are not received by the close of the fourth quarter of a
particular year for the amounts reserved in this section,
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such reserved but unallocated funds shall carry forward for
allocations in accordance with this subsection in the
subsequent fiscal years until fully allocated. Amounts
carried forward into subsequent fiscal years shall not be
counted towards the aggregate caps described in subsection
(a) for purposes of calculating the amount reserved under
this section for the subsequent fiscal years. The aggregate
caps described in subsection (a) shall be increased to allow
for the carry forward described in this section."
Section 2. If a court of competent jurisdiction
adjudges invalid or unconstitutional any clause, sentence,
paragraph, section, or part of this act, such judgment or
decree shall not affect, impair, invalidate, or nullify the
remainder of this act, but the effect of the decision shall
be confined to the clause, sentence, paragraph, section, or
part of this act adjudged to be invalid or unconstitutional.
Section 3. All laws or parts of laws which conflict
with this act are repealed.
Section 4. This act shall become effective
immediately following its passage and approval by the
Governor, or its otherwise becoming law.
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