HLS 17RS-2581 ORIGINAL
2017 Regular Session
HOUSE BILL NO. 686 (Substitute for House Bill No. 530 by Representative
Broadwater)
BY REPRESENTATIVE BROADWATER
Prefiled pursuant to Article III, Section 2(A)(4)(b)(i) of the Constitution of Louisiana.
ECONOMIC DEVELOPMENT: Provides for the Louisiana Headquartered Motion Picture
Production Cooperative Endeavor Program
1 AN ACT
2To enact R.S. 47:6007(C)(1)(d)(ii)(dd) and R.S. 51:2316, relative to the Louisiana Economic
3 Development Corporation; to authorize, create, and provide for the establishment of
4 the Louisiana Headquartered Motion Picture Production Cooperative Endeavor
5 Program; to provide for the terms, conditions, procedures, and requirements of the
6 program; to provide for a tax credit; to provide for definitions; to require the
7 payment of certain fees and deposits; to provide for certain limitations and
8 requirements for participation in the program; to provide for reporting requirements;
9 to provide for an effective date; and to provide for related matters.
10Be it enacted by the Legislature of Louisiana:
11 Section 1. R.S. 47:6007(C)(1)(d)(ii)(dd) is hereby enacted to read as follows:
12 §6007. Motion picture production tax credit
13 * * *
14 C. Production tax credit; specific productions and projects.
15 (1)
16 * * *
17 (d)
18 * * *
19 (ii)
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1 * * *
2 (dd) For the fiscal year beginning July 1, 2019, and each fiscal year
3 thereafter, out of the total aggregate amount of credits authorized, not less than
4 twenty million dollars each fiscal year shall be reserved for the Louisiana
5 Headquartered Motion Picture Production Cooperative Endeavor Program
6 established in R.S. 51:2316. Tax credits issued pursuant to R.S. 51:2316 shall have
7 priority over all other claims filed by taxpayers or transfers of tax credits to the
8 Department of Revenue that would otherwise be applied against the total aggregate
9 amount of credits authorized pursuant to the provisions of this Subparagraph. To the
10 extent that the Louisiana Economic Development Corporation does not enter into
11 cooperative endeavor agreements in an amount up to twenty million dollars in any
12 fiscal year, the unallocated portion of the amount reserved shall not be available for
13 allocations to other tax credit applicants.
14 * * *
15 Section 2. R.S. 51:2316 is hereby enacted to read as follows:
16 §2316. Louisiana Headquartered Motion Picture Production Cooperative Endeavor
17 Program
18 A. There is hereby established the Louisiana Headquartered Motion Picture
19 Production Cooperative Endeavor Program for the purpose of encouraging
20 Louisiana-based financial institutions to extend qualified loans to qualified
21 production companies for use in connection with the financing of qualified
22 productions and qualified media. In recognition of, and to further enhance, the
23 substantial economic benefit to the state of maintaining and further developing
24 Louisiana’s vibrant, Louisiana-based motion picture production activities, while
25 simultaneously encouraging Louisiana based financial institutions to enter new credit
26 markets, in a manner designed to achieve a direct, quantifiable, positive cash-on-cash
27 return to the State of Louisiana while promoting and facilitating the establishment
28 of an independent, self-supporting, sustainable motion picture industry that is less
29 reliant upon traditional tax credit programs, the Louisiana Headquartered Motion
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1 Picture Production Cooperative Endeavor Program shall be administered as provided
2 in this Section.
3 B. Definitions. For purposes of this Section, the following words shall have
4 the following meanings ascribed to them unless the context clearly indicates
5 otherwise:
6 (1) “Adjusted bonded budget” means the bonded budget less the following:
7 (a) Non-production related overhead.
8 (b) Amounts reimbursed by the state or any other governmental entity.
9 (c) Costs related to the transfer of tax credits.
10 (d) Amounts that are paid to persons or entities as a result of their
11 participation in profits from the exploitation of the qualified production.
12 (e) Application fees.
13 (f) State or local taxes.
14 (g) Cost of the production expenditure verification report fee required in this
15 Section.
16 (h) Expenditures for related party transactions that would be otherwise denied
17 or limited by the office pursuant to R.S. 47:6007(D)(9).
18 (i) Expenditures for Above the Line services, as defined in R.S. 47:6007, that
19 exceed forty percent of total production expenditures in the state for the qualified
20 production.
21 (j) Expenditures for airfare.
22 (k) Expenditures for bond fees, insurance premiums, finance fees, loan
23 interest fees, or payments of a similar nature, paid to investors in the qualified
24 production, unless such expenditures are made to a Louisiana resident licensed
25 insurance producer that has its principal place of business in this state as required by
26 R.S. 22:1543, a Louisiana financial institution as defined in R.S. 6:2(8), or a
27 Louisiana Business and Industrial Development Company as defined in and provided
28 for in Chapter 39-B of Title of the Louisiana Revised Statutes of 1950, R.S. 51:2386
29 et seq., that is regulated by the office of financial institutions and which have one or
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1 more offices in the state, in which case, only to the extent allocated on a pro rata
2 basis, allocating the fees based on the relative percentage of production activity
3 occurring in and out of state.
4 (2) “Bonded amount” means the “strike price”, as the term is generally
5 understood within the motion picture industry, of the bonded budget, as is set forth
6 in the completion bond with respect to the applicable qualified production.
7 (3) “Bonded budget” means the budget for a qualified production for which
8 a completion bond has been issued.
9 (4) “CEA tax credit” means tax credits earned and issued pursuant to this
10 Section.
11 (5) “Completion bond” means a bond, surety, or completion guarantee with
12 respect to a qualified production issued by a Louisiana approved completion
13 guarantor specializing in motion picture completion bonds.
14 (6) “Cooperative endeavor program” means the Louisiana Headquartered
15 Motion Picture Production Cooperative Endeavor Program.
16 (7) “Corporation” means the Louisiana Economic Development Corporation.
17 (8) “Distribution contract” means a fully executed bilateral contract pursuant
18 to which a domestic or foreign distributor agrees to pay a certain designated price for
19 the right to distribute a qualified production in a given territory or medium,
20 conditioned only upon the completion and delivery of specified deliverables to the
21 distributor.
22 (9) “Diversity plan” means a written document through which the qualified
23 production company commits to:
24 (a) Ensure that minorities and females have equal opportunities in
25 recruitment, selection, appointment, promotion, training, and related employment
26 areas in connection with the qualified production or qualified media; and
27 (b) Use good faith efforts to solicit bids from vendors certified as a
28 Disadvantaged Business Enterprises under the Louisiana Unified Certification
29 Program with respect to the qualified production or qualified media by soliciting bids
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1 from relevant vendors in the parish or parishes in which the qualified production or
2 qualified media will take place by utilizing the Louisiana Unified Certification
3 Program Directory Search.
4 (10) “Louisiana bank” means a financial institution as defined in R.S. 6:2(8)
5 that is regulated by the office of financial institutions and that has one or more
6 branches in the state.
7 (11) “Louisiana education plan” means a written document through which the
8 qualified production company commits to use good faith efforts to seek qualified
9 graduates of accredited vocational-technical schools, technical and community
10 colleges, and institutions of higher education located in Louisiana for recruitment,
11 selection, appointment, promotion, training, and related employment areas in
12 connection with the qualified production or qualified media.
13 (12) “Louisiana internship program” means an agreement between a qualified
14 production company and an accredited vocational-technical school, technical college,
15 community college, or institution of higher education located in Louisiana in which
16 the qualified production company agrees to maintain no less than two internship
17 positions for students enrolled in such school, college or institution of higher
18 education.
19 (13) “Net proceeds” means all revenues from the exploitation of a qualified
20 production or qualified media net of third-party distribution and marketing fees and
21 costs, and customary payments such as those required by creative guilds and
22 licensing agencies.
23 (14) “Producer net profits” means with respect to a qualified production or
24 qualified media, one hundred percent of all funds derived from worldwide
25 exploitation after the repayment of all true debt obligations, distribution marketing
26 costs and fees, residuals, and reasonable deferred fees owed to writers, directors,
27 producers, and cast.
28 (15) "Production expenditure verification report" means a report issued by
29 a qualified accountant who is unrelated to the qualified production company and that
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1 contains the qualified accountant's verification of the qualified production's cost
2 report of production expenditures. The production expenditure verification report
3 shall contain an opinion from the qualified accountant stating that the production's
4 cost report of production expenditures presents fairly, in all material aspects, the
5 production expenditures expended in Louisiana pursuant to the provisions of this
6 Section. The production expenditure verification report shall:
7 (a) Be performed in accordance with the accounting standards generally
8 accepted in the United States.
9 (b) Be addressed to the party which has engaged the qualified accountant,
10 with a copy addressed to the qualified production company and Louisiana bank.
11 (c) Contain the qualified accountant's name, address, and telephone number.
12 (d) Contain a certification that the qualified accountant is unrelated to the
13 qualified production company.
14 (e) Be dated as of the date of completion of the qualified accountant's field
15 work.
16 (f) Contain a statement of acknowledgment by the qualified accountant that
17 the state is relying on the qualified production expenditure verification report in the
18 issuance of the CEA tax credits under the provisions of this Section.
19 (16) “Qualified accountant” shall have the same meaning as the definition in
20 R.S. 47:6007(B).
21 (17) “Qualified indebtedness” means, with respect to a specific qualified
22 production, all indebtedness lawfully owed to a Louisiana bank on account of the
23 qualified production in accordance with a cooperative endeavor agreement executed
24 pursuant to this Section.
25 (18) “Qualified media” means a component part of a project that would
26 otherwise meet the definition of a qualified production, such as CGI, edited, color
27 corrected or otherwise modified or augmented footage, or visual effects that are
28 generated in the state by a qualified production company.
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1 (19)(a) “Qualified production” means a feature-length film, short film, video,
2 television pilot, television series, television movie of the week, animated feature
3 film, animated short film, animated television series, documentary made in
4 Louisiana, in whole or in part, for theatrical or television viewing, or for viewing on
5 any digital or online platform, that is produced by a qualified production company
6 and is subject to a completion bond that guarantees all of the following:
7 (i) The qualified production will be completed and delivered in accordance
8 with all applicable distribution contracts; however, if the production is not completed
9 and delivered in accordance with the contract, the completion guarantor shall remit
10 to the Louisiana bank, or the state, as applicable, the full principal amount of all
11 amounts financed by, or owed to, such party pursuant to this Section.
12 (ii) No less than eighty-five percent of the bonded budget will be spent
13 within Louisiana.
14 (iii) The copyright for which is owned by a qualified production company or
15 a wholly-owned subsidiary of a qualified production company until the qualified
16 indebtedness has been repaid in full.
17 (iv) At least fifty percent of the producer net profits of which shall inure to
18 the benefit of Louisiana residents.
19 (b) The term "qualified production" shall not include the production of news
20 coverage, athletic events, music or other festivals, commercials, or what is generally
21 considered or marketed to be, reality television or reality programming or any other
22 production that is required to maintain records pursuant to 18 U.S.C. 2257.
23 (20) “Qualified Production Company” means a person, corporation,
24 partnership, limited liability company, or other business entity, organized, domiciled
25 and headquartered in Louisiana, that is primarily engaged in the business of creating
26 qualified productions or qualified media, or a wholly owned subsidiary of a person
27 or entity that is organized, domiciled and headquartered in Louisiana and complies
28 with all of the following:
29 (a) Is in good standing with the Secretary of State.
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1 (b) Has its principal place of business in Louisiana and does not have any
2 fixed locations outside of Louisiana in which executive management activities are
3 conducted.
4 (c) Is seventy-five percent directly or indirectly owned by Louisiana
5 domiciled natural persons.
6 (d) Is not directly or indirectly owned by any person or entity domiciled
7 outside of Louisiana.
8 (e) Is subject to Louisiana income tax jurisdiction and is required to file
9 Louisiana income tax returns. In the case of entities taxed as partnerships, the
10 partners or members are required to file Louisiana income tax returns.
11 (f) Maintains a physical office location in the state and either owns the
12 property, or is a tenant pursuant to a long-term arms-length fair market value lease
13 of not less than twenty-four months.
14 (g) Has a Louisiana internship program.
15 (21) “Redemption Date” means the date not later than thirty days after written
16 notice to the state following the second anniversary of execution of a production
17 financing loan agreement between the Louisiana bank and the qualified production
18 company party to a cooperative endeavor agreement with the state with respect to a
19 specific qualified production.
20 (22) “Senior bank” means any state or federal banking institution that
21 provides debt financing to a qualified production collateralized by a first-position
22 security interest or mortgage in and to specific collateral that may include, but not
23 be limited to, the copyright or distribution rights of the qualified production or
24 qualified media.
25 C. Certification of Qualified Production Companies. The corporation shall,
26 within thirty days after receipt of a request for certification, certify qualified
27 production companies that meet the following criteria:
28 (1) The company meets the definition of Qualified Production Company
29 contained in this Section.
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1 (2) The company has provided the corporation with all of the following:
2 (a) A commitment letter from a Louisiana bank committing to participate,
3 subject to satisfaction of all applicable underwriting criteria, in a cooperative
4 endeavor agreement with the state and the company as authorized by this Section.
5 (b) In the case of qualified media, a copy of the underlying motion picture’s
6 completion bond and bonded budget reflecting coverage of the qualified media; and
7 for a qualified productions, a letter of recommendation from a corporation-approved
8 completion guarantor willing to issue, subject to satisfaction of issuance criteria, a
9 completion bond with respect to the qualified production.
10 (c) A commitment from a corporation-approved internationally recognized
11 collection account management company, which has not defaulted on any obligation
12 to the state that is willing to provide collection account management services.
13 (d) A statement of interest from one or more corporation approved
14 distributors or sales agents.
15 (e) A non-refundable application fee of ten thousand dollars, and a
16 commitment to, within ten days of certification as a qualified production company,
17 deposit, escrow, or ensure via reputable bank letter of credit, guaranty, surety or
18 payment bond of up to one hundred thousand dollars to be applied against the state’s
19 legal fees in connection with the cooperative endeavor process.
20 (f) A commitment to, together with its qualified production company owners
21 and any wholly owned or commonly owned production company affiliates, within
22 thirty days of being certified as a qualified production company, employ no fewer
23 than three full-time, year-round employees domiciled in Louisiana for state income
24 tax purposes, and to, subject to reasonable short-term interruptions due to ordinary
25 employee transitions, continue to employ not less than three full-time, year-round
26 employees until the repayment of all qualified indebtedness owned by the company
27 and its affiliates.
28 (g) A Louisiana education plan.
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1 (h) A statement that the qualified production company shall not be required
2 to maintain records pursuant to 18 U.S.C. 2257 in connection with any qualified
3 production.
4 D. Cooperative Endeavor Agreements. The state, through the corporation, is
5 authorized and directed to enter into cooperative endeavor agreements within thirty
6 days of a request submitted by a Louisiana bank and qualified production company,
7 each with a Louisiana Bank and a qualified production company, for the purpose of
8 financing a portion of the production expenses of a qualified production undertaken
9 by the qualified production company, that, in addition to requiring the satisfaction
10 of all underwriting criteria and conditions precedent required by the Louisiana bank,
11 provide as follows:
12 (1) On or prior to the redemption date, the state shall issue CEA tax credits
13 equal to the full amount of qualified indebtedness, subject to the following
14 limitations:
15 (a) The CEA tax credits issued with respect to any particular qualified
16 production shall not exceed the lesser of:
17 (i) Fifty percent of the adjusted bonded budget, increased by an additional
18 fifteen percent if a diversity plan is approved by the corporation; or
19 (ii) If the qualified production or qualified media has distribution contracts
20 in an aggregate amount exceeding fifteen percent of the bonded budget, five million
21 dollars; or
22 (iii) If the qualified production or qualified media has distribution contracts
23 in an aggregate amount exceeding thirty-five percent of the bonded budget, eight
24 million dollars.
25 (b) In the aggregate, Above the Line producer and production company fees
26 related to any recognized category of producers or production companies who are
27 directly or indirectly related to the qualified production company shall not exceed
28 fifteen percent of the bonded budget. This limitation shall not apply to fees paid for
29 bona fide separate and distinct production-related services, such as writing, directing,
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1 distributing, and financing activities, but in no case shall fees paid to related parties
2 exceed twenty five percent of the bonded budget.
3 (c) Subject to customary motion picture industry limitations, the Louisiana
4 bank’s loan shall be secured by the qualified production or qualified media and all
5 proceeds of the foregoing. The Louisiana bank’s loan may be subject to the terms of
6 an inter-creditor agreement with a senior bank and other financiers with respect to
7 the applicable qualified production or qualified media; provided that the Louisiana
8 bank shall be granted a security interest, all or part of which may be subordinate to
9 the senior bank, in the same collateral as the senior bank to the extent the collateral
10 is specific, and relative, to the qualified production or qualified media, and the
11 Louisiana bank’s rights shall not be subordinate to any party other than the senior
12 bank, and, with respect to the state, the senior bank’s rights with respect to the
13 applicable qualified production shall be exclusive of any cross-collateralization in
14 favor of senior bank with respect to any indebtedness not directly used in connection
15 with the production of the applicable qualified production.
16 (2) In exchange for issuing the CEA tax credits, the cooperative endeavor
17 agreement shall provide for the state to receive revenues derived from commercial
18 exploitation of the qualified production in all territories worldwide up to the face
19 value of the CEA tax credits.
20 (3) In addition to the right of repayment of the face value of the CEA tax
21 credits issued to the qualified production company, the state shall receive ten percent
22 of one hundred percent of all producer net profits of the qualified production. The
23 state shall be afforded “most-favored nations” treatment with respect to its profit
24 interest vis-à-vis all other producer net profit participants and shall receive
25 distributions from the collection account manager on a pro rata and pari passu basis
26 with all other producer net profits participants.
27 (4) The qualified production shall engage an internationally recognized
28 collection account management company which has not defaulted on any obligation
29 to the state, which shall commit to receive all proceeds into an account controlled by
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1 it and, after the satisfaction of any senior bank obligations, remit proceeds first to the
2 state and then, and only after the state has fully recouped an amount equal to the face
3 value of the CEA tax credits issued to qualified production, to any other financiers,
4 equity investors or profit participants, including, without limitation, the state.
5 Notwithstanding the foregoing, the collection account management company may
6 make customary payments to itself for its fees and cost reimbursement, and to guilds
7 on account of the qualified production.
8 (5) Upon execution of a cooperative endeavor agreement pursuant to this
9 Section, the state shall reserve the requested amount from the first available fiscal
10 year allocation of CEA tax credits for ninety days. If the Louisiana bank’s loan does
11 not close within ninety days, then the cooperative endeavor agreement and initial
12 reservation of CEA tax credits shall be terminated. No individual qualified
13 production company shall be allowed more than two reservations for the same
14 qualified production or qualified media, unless granting additional reservations
15 would have no impact on other qualified productions having applied for participation
16 in the program. To the extent evidenced by a written statement from a Louisiana
17 bank with respect to the whole or partial repayment of qualified indebtedness, the
18 corporation may release reservations with respect CEA tax credits. To the extent of
19 any unreserved CEA tax credits for any given fiscal year CEA tax credit allocation,
20 the corporation may authorize and enter into additional cooperative endeavor
21 agreements in accordance with this Section.
22 (6) Except with respect to qualified media, the state’s role shall be recognized
23 in the opening credits of the motion picture, or if a feature-length film, short film,
24 television pilot, television series, television movie of the week, animated feature
25 film, animated short film, animated television series, or documentary, on a single
26 card that reads: “Made in Louisiana”, and otherwise, the credit shall appear in the
27 end credits.
28 (7) The qualified production shall maintain all standard liability insurance
29 and the state shall be an additional insured under all policies of insurance.
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1 (8) A cooperative endeavor agreement shall in no way limit the Louisiana
2 bank’s ability to syndicate, allow participation, or assign to any third party, in whole
3 or in part, its rights and obligations in connection with the underlying loan to the
4 qualified production company.
5 (9) The corporation shall issue CEA tax credits pursuant to the contractual
6 terms of a cooperative endeavor agreement, when due, provided the production
7 expenditure verification report requirements in Subsection (F) of this Section have
8 been completed.
9 (10) The corporation shall engage legal counsel to represent the state’s
10 interests in connection with the negotiation, drafting, execution and enforcement of
11 the cooperative endeavor agreement. The legal counsel shall be identified by the
12 qualified production company, acceptable to the Louisiana bank, and subject to the
13 approval of the corporation at its next scheduled meeting, or within thirty days,
14 whichever is sooner. All fees and expenses due and payable to counsel shall be paid
15 directly by the qualified production company.
16 E. Cooperative Endeavor Agreement Program Tax Credits
17 (1) There is hereby authorized a tax credit against state income tax for
18 Louisiana taxpayers awarded CEA tax credits pursuant to a cooperative endeavor
19 agreement as described in this Section. The CEA tax credits shall be earned by a
20 qualified production company as described in this Section. CEA tax credits shall be
21 regarded as separate and distinct from all other tax credits described in R.S. 47:6007;
22 however, CEA tax credits shall be recorded in the tax credit registry in accordance
23 with R.S. 47:1524 as with any other transferable tax credit.
24 (2) The CEA tax credit shall be allowed against the income tax for the taxable
25 period in which the CEA tax credit is reserved by the secretary of the Department of
26 Revenue pursuant to R.S. 47:6007(C). If the CEA tax credit allowed pursuant to this
27 Paragraph exceeds the amount of taxes due for the taxable period, then any unused
28 credit may be carried forward as a credit against subsequent tax liability for a period
29 not to exceed five years.
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1 (3) Application of the credit.
2 (a) All entities taxed as corporations for Louisiana income tax purposes shall
3 claim the credit allowed under this Section on their corporation income tax return.
4 (b) Individuals, estates, and trusts shall claim any credit allowed under this
5 Section on their income tax return.
6 (c) Entities not taxed as corporations shall claim any credit allowed under this
7 Section on the returns of the partners or members as follows:
8 (i) Corporate partners or members shall claim their share of the credit on their
9 corporation income tax returns.
10 (ii) Individual partners or members shall claim their share of the credit on
11 their individual income tax returns.
12 (iii) Partners or members that are estates or trusts shall claim their share of
13 the credit on their fiduciary income tax returns.
14 (4) Transferability of the credit. CEA tax credits not previously claimed by
15 any taxpayer against its income tax may be transferred or sold to another Louisiana
16 taxpayer or to the Department of Revenue, subject to the following conditions:
17 (a) A single transfer or sale may involve one or more transferees. The
18 transferee of the CEA tax credits may transfer or sell such CEA tax credits subject
19 to the conditions of this Subsection.
20 (b) Transferors and transferees shall submit to the Department of Revenue
21 in writing, a notification of any transfer or sale of CEA tax credits within ten
22 business days after the transfer or sale of such CEA tax credits. No transfer or sale
23 of CEA tax credits shall be effective until recorded in the tax credit registry in
24 accordance with R.S. 47:1524. The notification shall include the transferor's CEA tax
25 credit balance prior to transfer, a copy of any CEA tax credit certification letter
26 issued by the corporation, the transferor's remaining CEA tax credit balance after
27 transfer, all tax identification numbers for both transferor and transferee, the date of
28 transfer, the amount transferred, a copy of the credit certificate, and price paid by the
29 transferee to the transferor. The CEA tax credit transfer value means the percentage
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1 as determined by the price paid by the transferee to the transferor divided by the
2 dollar value of the CEA tax credits that were transferred in return. The notification
3 submitted to the Department of Revenue shall include a processing fee of not more
4 than two hundred dollars per transferee, and any information submitted by a
5 transferor or transferee shall be treated by the office and the Department of Revenue
6 as proprietary to the entity reporting the information and therefore confidential.
7 However, this shall not prevent the publication of summary data that includes no
8 fewer than three transactions.
9 (c) Failure to comply with this Subsection shall result in the disallowance of
10 the CEA tax credit until the taxpayer is in full compliance.
11 (d) The transfer or sale of this CEA tax credit shall not extend the time in
12 which the credit can be used. The carryforward period for the credit that is
13 transferred or sold begins on the date on which the credit was earned.
14 (e) To the extent that the transferor did not have rights to claim or use the
15 credit at the time of the transfer, the Department of Revenue shall either disallow the
16 credit claimed by the transferee or recapture the credit from the transferee through
17 any collection method authorized by R.S. 47:1561. The transferee's recourse is
18 against the transferor.
19 (f)(i) The qualified production company that earns CEA tax credits or the
20 company's irrevocable designee, as provided for in Item (iii) of this Subparagraph,
21 may transfer the credits to the Department of Revenue for one hundred percent of the
22 face value of the CEA tax credits in accordance with the procedures and
23 requirements of Item (iii) of this Subparagraph.
24 (ii) The Department of Revenue may require the transferor to submit
25 additional information as may be necessary to administer the provisions of this
26 Section. The secretary of the Department of Revenue shall make payment to the
27 qualified production company or its irrevocable designee in the amount to which he
28 is entitled from the current collections of the taxes collected pursuant to Chapter 1
29 of Subtitle II, of this Title provided the tax credits are transferred to the Department
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1 of Revenue within one calendar year of certification by the corporation.
2 (iii) A bank or other lender may be named as an irrevocable designee in a
3 cooperative endeavor agreement described in this Section. As an irrevocable
4 designee, a bank or other lender may elect to have the CEA tax credits issued directly
5 to it from the corporation, and in addition to the rights of a transferee, may also elect
6 to transfer the credits to the Department of Revenue in accordance with the
7 provisions of Items (i) and (ii) of this Subparagraph.
8 F. Data Collection and Verification Report.
9 (1) Each Louisiana bank participating in the program shall deliver to the
10 corporation, on a quarterly basis, a statement with respect to each qualified
11 production with respect to which qualified indebtedness was outstanding during the
12 immediately preceding calendar quarter in a form acceptable to the corporation.
13 (2) To identify and track in-state spending for purposes of economic impact
14 analyses, ensure compliance with the cooperative endeavor agreement, and to
15 determine the amount of CEA tax credits to be issued by the state, the corporation
16 shall directly engage and assign a qualified accountant to prepare for the corporation,
17 the required production expenditure verification report on a qualified production's
18 cost report of expenditures or claims. The qualified production company shall be
19 responsible for and assessed any production expenditure verification report fee which
20 may be required by law, including any up-front deposit of the fee. For purposes of
21 the report, the qualified production company shall make all records available to the
22 qualified accountant. The qualified production company shall be assessed the
23 corporation's actual cost for the production expenditure verification report fee. The
24 maximum fee for the report shall be fifteen thousand dollars for verification of a cost
25 report reflecting production expenditures between three hundred thousand dollars
26 and twenty-five million dollars, and the maximum fee shall be twenty-five thousand
27 dollars for verification of a cost report reflecting production expenditures in excess
28 of twenty-five million dollars.
29 (3) At the time of the request for a production expenditure verification report
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1 and before the redemption date, the qualified production company shall submit a
2 deposit of the production expenditure verification report fee of seven thousand five
3 hundred dollars for a production with qualified expenditures projected to be between
4 three hundred thousand dollars and twenty-five million dollars, and a deposit of
5 fifteen thousand dollars for those projected to be in excess of twenty-five million
6 dollars.
7 (4) At the time of the request for a production expenditure verification report,
8 the qualified production company shall submit to the office a notarized statement
9 demonstrating conformity with, and agreeing to, the following:
10 (a) To pay all undisputed legal obligations the qualified production company
11 has incurred in Louisiana with respect to the qualified production.
12 (b) To publish, at completion of principal photography, a notice at least once
13 a week for three consecutive weeks in local newspapers in regions where filming has
14 taken place in order to notify the public of the need to file creditor claims against the
15 qualified production by a specified date; however, outstanding obligations shall not
16 be waived if a creditor fails to file by the specified date.
17 (5) In addition to any other requirements of this Subsection, the production
18 expenditure verification report shall include information concerning the total number
19 of people who were paid salary, wages, benefits, and other compensation which was
20 included as payroll, and the number of those who were Louisiana residents.
21 (6) In addition to any other requirements of this Subsection, the production
22 expenditure verification report shall include a sworn affidavit by the individual
23 responsible for providing the accounts, documents, records and any other
24 information necessary to the accountant charged with preparing and filing the
25 production expenditure verification report that the accounts, documents, records, and
26 other information are true and correct; and that all related party transactions are
27 accurately reported in accordance with this Subsection; all to the best of the affaint's
28 knowledge, information, and belief. Any false statement under oath contained in the
29 affidavit required by this Subparagraph shall constitute perjury and shall be punished
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1 as provided by R.S. 14:123(C)(4).
2 (7) Qualified productions or qualified media that are already subject to the
3 requirements of R.S. 47:6007(D) shall not also be subject to Paragraphs (2) through
4 (6) of this Subsection.
5 G. Reports. (1) With input from the Legislative Fiscal Office, the corporation
6 shall prepare an interim written report to be submitted to the Senate Committee on
7 Revenue and Fiscal Affairs and the House of Representatives Committee on Ways
8 and Means no less than sixty days prior to the start of the Regular Session of the
9 Legislature in 2021, and every second year thereafter. The report shall include the
10 overall impact of the cooperative endeavor program, the amount of agreements
11 executed, CEA tax credits issued per qualified production and in the aggregate,
12 payments received per qualified production and in the aggregate, the number of net
13 new jobs created, the amount of Louisiana payroll created, the economic impact of
14 the cooperative endeavor program, and any other factors that describe the impact of
15 the program.
16 (2) It is anticipated that the distribution window for motion pictures is
17 approximately seven years, and therefore at the conclusion of the eighth year of the
18 program, the corporation shall annually issue a final report for each particular year
19 of the program beginning with the first year. The corporation shall report to the
20 Senate Committee on Revenue and Fiscal Affairs and the House of Representatives
21 Committee on Ways and Means the average return on investment for all motion
22 pictures included in the program year.
23 Section 3. This Act shall become effective upon signature by the governor
24or, if not signed by the governor, upon expiration of the time for bills to become law without
25signature by the governor, as provided by Article III, Section 18 of the Constitution of
26Louisiana. If vetoed by the governor and subsequently approved by the legislature, this Act
27shall become effective on the day following such approval.
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DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part
of the legislative instrument. The keyword, one-liner, abstract, and digest do not constitute
part of the law or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 686 Original 2017 Regular Session Broadwater
Abstract: Establishes the La. Motion Picture Production Cooperative Endeavor Program
and authorizes a tax credit against state income tax pursuant to the cooperative
endeavor agreement.
Proposed law establishes the Louisiana Headquartered Motion Picture Production
Cooperative Endeavor Program.
Proposed law defines a “Louisiana bank” as a financial institution that is regulated by the
office of financial institutions and that has one or more branches in the state.
Proposed law defines a “qualified production company” as a person, corporation,
partnership, limited liability company, or other business entity, organized, domiciled and
headquartered in Louisiana, that is primarily engaged in the business of creating qualified
productions or qualified media, or a wholly owned subsidiary of such a person or entity that
is organized, domiciled and headquartered in Louisiana and complies with certain
requirements as provided in proposed law.
Proposed law defines a “qualified production” as a feature-length film, short film, video,
television pilot, television series, television movie of the week, animated feature film,
animated short film, animated television series, documentary made in Louisiana, in whole
or in part, for theatrical or television viewing, or for viewing on any digital or online
platform, that is produced by a qualified production company and is subject to a completion
bond that makes certain guarantees as provided in proposed law. Further, the term "qualified
production" shall not include the production of news coverage, athletic events, music or
other festivals, commercials, or what is generally considered or marketed to be, reality
television or reality programming or any other production that is required to maintain
records pursuant to federal law.
Proposed law authorizes the state, through the Louisiana Economic Development
Corporation, to enter into cooperative endeavor agreements with a Louisiana Bank and a
qualified production company for the purpose of financing a portion of the production
expenses of a qualified production undertaken by the qualified production company.
Proposed law authorizes a tax credit against state income tax for Louisiana taxpayers
pursuant to a Louisiana Headquartered Motion Picture Production Cooperative Endeavor
agreement ("CEA tax credit"). The CEA tax credits shall be earned by a qualified production
company. CEA tax credits shall be regarded as separate and distinct from all other tax
credits provided in present law regarding the motion picture production tax credit.
Present law (R.S. 47:6007) authorizes a tax credit for state-certified motion picture
productions. Further provides that in Fiscal Years 2016 through 2018, the tax credit is
limited to an aggregate total of $180 million each fiscal year.
Proposed law provides that beginning in Fiscal Year 2019-2020, and each fiscal year
thereafter, credits in an amount not to exceed $20 million issued under the provisions of
present law shall be reserved for the Louisiana Headquartered Motion Picture Production
Cooperative Endeavor Program established in proposed law. Credits available for the
cooperative endeavor program shall be included in the total aggregate amount of caps
authorized pursuant to the provisions of present law and shall have priority over all other
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claims filed by taxpayers or transfers of tax credits to the Dept. of Revenue that would
otherwise be applied against the total aggregate amount of caps authorized pursuant to the
provisions of this present law. To the extent that the Louisiana Economic Development
Corporation does not enter into cooperative endeavor agreements in an amount up to $20
million dollars in any fiscal year, the unallocated portion shall not otherwise be available to
be earned.
Effective upon signature of the governor.
(Adds R.S. 47:6007(C)(1)(d)(ii)(dd) and R.S. 51:2316)
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