By: Watson, West S.B. No. 1929
A BILL TO BE ENTITLED
AN ACT
relating to the designation of qualified media production locations
in media production development zones and to exemptions from the
sales and use tax for items used for media production facilities in
qualified media production locations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle F, Title 4, Government Code, is amended
by adding Chapter 485A to read as follows:
CHAPTER 485A. MEDIA PRODUCTION DEVELOPMENT ZONES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 485A.001. SHORT TITLE. This chapter may be cited as
the Media Production Development Zone Act.
Sec. 485A.002. DEFINITIONS. In this chapter:
(1) "Media production facility" means a structure,
building, or room used for the specific purpose of creating a moving
image project. The term includes but is not limited to:
(A) a soundstage and scoring stage;
(B) a production office;
(C) an editing facility, an animation production
facility, and a video game production facility;
(D) a storage and construction space; and
(E) a sound recording studio and motion capture
studio.
(2) "Media production development zone" means an area
recognized by a nominating body and approved by the office as a
media production development zone under this chapter.
(3) "Moving image project" means a visual and sound
production, including a film, television program, national or
multistate commercial, or digital interactive media production.
The term does not include a production that is obscene, as defined
by Section 43.21, Penal Code.
(4) "Nominating body" means the governing body of a
municipality or county, or a combination of the governing bodies of
municipalities or counties, that:
(A) recognizes a qualified area as a media
production development zone; and
(B) nominates and applies for designation of a
location in a media production development zone as a qualified
media production location.
(5) "Office" means the Music, Film, Television, and
Multimedia Office within the office of the governor.
(6) "Qualified media production location" means a
location in a media production development zone that has been
designated by the office as a qualified media production location
in accordance with this chapter.
(7) "Qualified person" means a person certified as a
qualified person under Section 485A.201.
Sec. 485A.003. JURISDICTION OF MUNICIPALITY. For the
purposes of this chapter, territory in the extraterritorial
jurisdiction of a municipality is considered to be in the
jurisdiction of the municipality.
[Sections 485A.004-485A.050 reserved for expansion]
SUBCHAPTER B. OFFICE POWERS AND DUTIES IN GENERAL
Sec. 485A.051. GENERAL POWERS AND DUTIES. (a) Except as
provided by Subsection (b), the office shall administer and monitor
the implementation of this chapter.
(b) The office and the comptroller's office shall jointly
establish criteria and procedures for:
(1) approving a qualified area recognized as a media
production development zone by a nominating body;
(2) designating a qualified location in a media
production development zone as a qualified media production
location; and
(3) certifying a person as a qualified person under
Section 485A.201.
Sec. 485A.052. RULEMAKING AUTHORITY. The office shall
adopt rules necessary to implement this chapter.
Sec. 485A.053. ANNUAL REPORT. On or before December 15 of
each year, the office shall submit to the governor, the
legislature, and the Legislative Budget Board a report that:
(1) evaluates the effectiveness of the media
production development zone program; and
(2) describes the use of state and local incentives
under this chapter and their effect on revenue.
Sec. 485A.054. ASSISTANCE. The office shall provide to
persons desiring to construct, expand, maintain, improve, or
renovate a media production facility in a qualified media
production location information and appropriate assistance
relating to the required legal authorization, including a permit,
certificate, approval, and registration, necessary in this state to
accomplish that objective.
[Sections 485A.055-485A.100 reserved for expansion]
SUBCHAPTER C. APPROVAL OF MEDIA PRODUCTION DEVELOPMENT ZONE AND
DESIGNATION OF QUALIFIED MEDIA PRODUCTION LOCATIONS
Sec. 485A.101. CRITERIA FOR MEDIA PRODUCTION DEVELOPMENT
ZONE RECOGNITION. To be approved as a media production development
zone, an area:
(1) must be in a metropolitan area, the principal
municipality of which:
(A) has a population of more than 250,000; and
(B) has the adequate workforce, infrastructure,
facilities, or resources to support the production and completion
of moving image projects;
(2) must be recognized as a media production
development zone by ordinance or order, as appropriate, of a
municipality or the commissioners court of a county; and
(3) will contain a qualified media production location
within its geographical boundaries that meets the criteria under
Section 485A.102.
Sec. 485A.102. CRITERIA FOR QUALIFIED MEDIA PRODUCTION
LOCATION DESIGNATION. To be designated a qualified media
production location, a location must be land or other real property
that is in a media production development zone and will:
(1) be used exclusively to build or construct one or
more media production facilities;
(2) if the real property is a building or other
facility, be renovated solely for the purpose of being converted
into one or more media production facilities; or
(3) if the real property consists solely of one or more
media production facilities, be improved or renovated for that
purpose or will be expanded into one or more additional media
production facilities.
Sec. 485A.103. MAXIMUM NUMBER OF ZONES AND LOCATIONS
THROUGHOUT STATE. (a) There may not be more than 10 media
production development zone designations under this chapter at any
one time.
(b) There may not be more than five media production
development zones under this chapter in a region at any one time.
(c) Each media production development zone may not contain
more than three media production locations at any one time.
(d) For purposes of Subsection (b), the office shall divide
the state into regions consisting of geographical boundaries
prescribed by office rule.
Sec. 485A.104. NOMINATION OF QUALIFIED MEDIA PRODUCTION
LOCATION. (a) The governing body of a municipality or county,
individually or in combination with other municipalities or
counties, by ordinance or order, as appropriate, may nominate as a
qualified media production location a location within its
jurisdiction that meets the criteria under Section 485A.102.
(b) The governing body of a county may not nominate
territory in a municipality, including extraterritorial
jurisdiction of a municipality, to be included in a proposed
qualified media production location unless the governing body of
the municipality also nominates the territory and together with the
county files a joint application under Section 485A.106.
Sec. 485A.105. NOMINATING ORDINANCE OR ORDER. An ordinance
or order nominating a location as a qualified media production
location must:
(1) describe precisely both the media production
development zone in which the location is to be included and the
proposed location by a legal description or reference to municipal
or county boundaries;
(2) state a finding that the location meets the
requirements of this chapter and that the media production
development zone in which the location is to be included has been
recognized as a zone by ordinance or order, as appropriate, by the
nominating body;
(3) summarize briefly the local financial incentives,
including tax incentives, that, at the election of the nominating
body, will apply to a qualified person;
(4) contain a brief description of the project or
activity to be conducted by a qualified person at the location;
(5) nominate the location as a qualified media
production location; and
(6) contain an economic impact analysis from an
economic expert.
Sec. 485A.106. APPLICATION FOR DESIGNATION. (a) For a
location in a media production development zone to be designated as
a qualified media production location, the nominating body, after
nominating the location as a qualified media production location,
must send to the office a written application for designation of the
location in the zone as a qualified media production location.
(b) The application must include:
(1) a certified copy of the ordinance or order, as
appropriate, nominating the location as a media production
location;
(2) a certified copy of the ordinance or order, as
appropriate, recognizing the zone in which the location is to be
included as a media production development zone;
(3) appropriate supporting documents demonstrating
that the location qualifies for designation as a qualified media
production location;
(4) an estimate of the economic impact of the
designation of the location as a qualified media production
location on the revenues of the governmental entity or entities
nominating the location as a qualified media production location,
considering the financial incentives and benefits contemplated;
(5) an economic impact analysis of the proposed
project or activities to be conducted at the proposed qualified
media production location, which must include:
(A) an estimate of the amount of revenue to be
generated to the state by the project or activity;
(B) an estimate of any secondary economic
benefits to be generated by the project or activity;
(C) an estimate of the amount of state taxes to be
exempted, as provided by Sec. 151.3415, Tax Code; and
(D) any other information required by the
comptroller for purposes of making the certification required by
Section 485A.109(b); and
(6) any additional information the office requires.
(c) Information required by Subsection (b) is for
evaluation purposes only.
(d) The economic impact analysis required by Subsection
(b)(5) must also be submitted to the comptroller.
Sec. 485A.107. ADVISORY COMMITTEE. (a) The media
production advisory committee is composed of the following members:
(1) the director of the Texas Film Commission division
of the governor's office;
(2) one representative of the comptroller's office,
appointed by the comptroller; and
(3) subject to Subsection (b), nine representatives
appointed by the comptroller.
(b) In making appointments to the advisory committee under
Subsection (a)(3), the comptroller shall provide for a balanced
representation of the different geographic regions of this state.
Each of the following types of companies or organizations must be
represented by at least one member serving on the advisory
committee:
(1) animation production companies;
(2) film and television production companies;
(3) labor or workforce organizations;
(4) equipment vendors;
(5) the video gaming industry; and
(6) commercial production companies.
(c) The director of the Texas Film Commission division of
the office of the governor serves as the presiding officer of the
advisory committee. The advisory committee shall meet at the call
of the presiding officer.
(d) The advisory committee, through review of applications
submitted under Section 485A.108, shall make recommendations to the
office for designation of qualified media production locations
under this subchapter. The office may provide administrative
support to the advisory committee.
(e) Section 2110.008 does not apply to the advisory
committee.
Sec. 485A.108. REVIEW OF APPLICATION. (a) On receipt of
an application for the designation of a qualified media production
location, the office shall review the application to determine
whether the nominated location qualifies for designation as a
qualified media production location under this chapter.
(b) The office shall consider recommendations submitted by
the media production advisory committee with respect to
applications received by the office.
Sec. 485A.109. DESIGNATION. (a) If the office determines
that a nominated location for which a designation application has
been received satisfies the criteria under Section 485A.102 and on
recommendation of the media production advisory committee, the
office may designate the nominated location as a qualified media
production location unless the office determines that the
designation request should be denied for the reasons specified by
Section 485A.110.
(b) A designation of a qualified media production location
may not be made under this section until the comptroller, based on
an evaluation of the economic impact analysis submitted under
Section 485A.106(b)(5), certifies that the project or activity to
be conducted at the designated location will have a positive impact
on state revenue.
(c) On designation of the first qualified media production
location in a media production development zone recognized by the
nominating body for that purpose, the office shall simultaneously
approve the media production development zone.
Sec. 485A.110. DENIAL OF APPLICATION; NOTICE. (a) The
office shall deny an application for the designation of a qualified
media production location if:
(1) the office determines that the nominated
location does not satisfy the criteria under Section 485A.102;
(2) the office determines that the number of media
production location designations or number of approved media
production development zones at the time of the application are at
the maximum limit prescribed by Section 485A.103; or
(3) the comptroller has not certified that the
proposed project or activity to be conducted at the location will
have a positive impact on state revenue.
(b) The office shall inform the nominating body of the
specific reasons for denial of an application under this section.
Sec. 485A.111. PERIOD OF APPROVAL OR DESIGNATION. (a) An
area that qualifies under this subchapter may be approved by the
office as a media production development zone for a maximum of five
years after the date that last qualified media production location
was designated within the zone's boundaries.
(b) A location may be designated as a qualified media
production location, and may be eligible for the sales and use tax
exemption as provided by Section 151.3415, Tax Code, for a maximum
of two years.
(c) Except as provided by Section 485A.112, a media
production development zone approval and qualified media
production location designation remains in effect until September 1
of the final year of the approval or designation, as appropriate.
Sec. 485A.112. REMOVAL OF APPROVAL OR DESIGNATION.
(a) The office may remove the approval of an area recognized as a
media production development zone if the area no longer meets the
criteria for that recognition under this chapter or by office rule
adopted under this chapter.
(b) The office may remove the designation of a location as a
qualified media production location if the location no longer meets
the criteria for that designation under this chapter or by office
rule adopted under this chapter.
(c) The removal of a designation or approval does not affect
the validity of a tax incentive granted or accrued before the
removal.
[Sections 485A.113-485A.150 reserved for expansion]
SUBCHAPTER D. ADMINISTRATION OF MEDIA PRODUCTION LOCATION
Sec. 485A.151. ANNUAL REPORT. (a) For purposes of this
section, the governing body of a qualified media production
location is the governing body of the municipality or county, or the
governing bodies of the combination of municipalities or counties,
that applied to have the location designated as a qualified media
production location.
(b) Not later than October 1 of each year, the governing
body of a qualified media production location shall submit to the
office a report in the form prescribed by the office.
(c) The report must include for the year preceding the date
of the report:
(1) the use of local incentives for which the
governing body provided in the ordinance or order nominating the
qualified media production location and the effect of those
incentives on revenue;
(2) the number of qualified persons engaging in a
project or activity related to a media production facility at the
qualified media production location; and
(3) the types of projects or activities engaged or to
be engaged in by qualified persons at the qualified media
production location.
[Sections 485A.152-485A.200 reserved for expansion]
SUBCHAPTER E. QUALIFIED PERSON DESIGNATION AND CERTIFICATION
Sec. 485A.201. QUALIFIED PERSON. A person is a qualified
person if the office, for the purpose of state benefits under this
chapter, or the nominating body of a qualified media production
location, for the purpose of local benefits, certifies that the
person, not later than 18 months after the date of the designation:
(1) will build or construct one or more media
production facilities at a location;
(2) will renovate a building or facility solely for
the purpose of being converted into one or more media production
facilities at a location; or
(3) will renovate or expand one or more media
production facilities at a location.
Sec. 485A.202. PROHIBITION ON QUALIFIED PERSON
CERTIFICATION. If the office determines that the nominating body
of a qualified media production location is not complying with this
chapter, the office shall prohibit the certification of a qualified
person at the location until the office determines that the
nominating body is complying with this chapter.
Sec. 485A.203. DURATION OF DESIGNATION. Except as provided
by Section 485A.204, the office's certification of a person as a
qualified person is effective until the second anniversary of the
date the designation is made, regardless of whether the designation
of the qualified media production location at which the qualified
person is to perform its commitments under this chapter is
terminated before that date.
Sec. 485A.204. REMOVAL OF DESIGNATION. The office shall
remove the certification of a qualified person for state benefits
under this chapter if the office determines that the construction,
renovation, improvement, maintenance, or expansion of a media
production facility has not been completed at the qualified media
production location for which it has received its certification
within the period prescribed by Section 485A.201.
[Sections 485A.205-485A.250 reserved for expansion]
SUBCHAPTER F. MEDIA PRODUCTION LOCATION BENEFITS
Sec. 485A.251. EXEMPTION FROM SALES AND USE TAX. Certain
items are exempt from the sales and use tax as provided by Section
151.3415, Tax Code.
Sec. 485A.252. MONITORING QUALIFIED PERSON COMMITMENTS.
(a) The office may monitor a qualified person to determine whether
and to what extent the qualified person has followed through on the
commitments made by the qualified person under this chapter.
(b) The office may determine that the qualified person is
not entitled to a tax exemption under Section 151.3415, Tax Code, if
the office determines that the qualified person:
(1) is not willing to cooperate with the office in
providing information needed by the office to make the
determination under Subsection (a);
(2) has substantially failed to follow through on the
commitments made by the person under this chapter before the first
anniversary of the date of the qualified media production location
designation; or
(3) fails to submit the report required by Section
151.3415, Tax Code.
SECTION 2. Subchapter H, Chapter 151, Tax Code, is amended
by adding Section 151.3415 to read as follows:
Sec. 151.3415. ITEMS SOLD TO OR USED TO CONSTRUCT,
MAINTAIN, EXPAND, IMPROVE, EQUIP, OR RENOVATE MEDIA PRODUCTION
FACILITIES AT MEDIA PRODUCTION LOCATIONS; REPORT. (a) In this
section, "qualified person" and "qualified media production
location" have the meanings assigned by Section 485A.002,
Government Code.
(b) The sale, lease, or rental of a taxable item to a
qualified person is exempted from the taxes imposed by this chapter
for a maximum of two years if the item is used:
(1) for the construction, maintenance, expansion,
improvement, or renovation of a media production facility at a
qualified media production location;
(2) to equip a media production facility at a
qualified media production location; or
(3) for the renovation of a building or facility at a
qualified media production location that is to be used exclusively
as a media production facility.
(c) A qualified person shall submit an annual report to the
comptroller regarding the sale, lease, or rental of taxable items
for which a tax exemption is granted to the qualified person under
this section. The report must be in the form and manner prescribed
by the comptroller.
(d) The comptroller shall share information from reports
submitted under Subsection (c), on request, with the Music, Film,
Television, and Multimedia Office within the office of the
governor.
SECTION 3. This Act takes effect September 1, 2009.