AMENDED IN SENATE JANUARY 3, 2022
AMENDED IN SENATE MAY 20, 2021
AMENDED IN SENATE MAY 11, 2021
AMENDED IN SENATE APRIL 29, 2021
AMENDED IN SENATE MARCH 10, 2021
SENATE BILL No. 485
Introduced by Senator Portantino
(Principal coauthor: Senator Stern)
(Principal coauthors: Senators Stern and Wilk)
(Principal coauthors: Assembly Members Burke and Carrillo) (Coauthor: Senator Durazo)
(Coauthor: Assembly Member Villapudua)
February 17, 2021
An act to amend Sections 17053.98 and 23698 of, and to add Section 17053.99 to, of the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.
legislative counsel’s digest
SB 485, as amended, Portantino. Income taxes: tax credits: certified studio construction project. motion picture credit extension.
The Personal Income Tax Law and the Corporation Tax Law allow various credits ag ainst the tax es imposed by those la ws, including a motion picture credit for taxable years beginning on or after January 1, 2020, to be allocated by the California Film Commission on or after July 1, 2020, and before July 1, 2025, in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state, with additional credit amounts allowed, including
Corrected 1-6-22—See last page. 94
for amounts equal to specified qualified e xpenditures and qualified wages relating to original photograph y outside the Los Angeles zone, as specified. Existing law limits the a ggregate amount of cr edits that may be allocated to specified amounts per fiscal year , and sets forth allocation percentages for various productions under the motion picture credit.
This bill, for taxable years beginning on or after January 1, 2022, and before January 1, 2032, would allow a tax credit in an amount equal to 20% or 25% of qualified expenditures for the production of a qualified motion picture in this state at a certified studio construction project.
The bill would provide that the credits be allocated by the California Film Commission in the same manner and time period as the e xisting motion picture credit. The bill w ould define a “certified studio construction project” for these purposes as a project that pro vides for the construction or reno vation of one or more soundstages located in the state, as specified, and w ould require a de veloper seeking certification of a studio construction project to mak e v arious certifications to the commission, including that the project is a public work or pays the equivalent of prevailing wages, as provided, and uses a skilled and trained w orkforce, as defined. By requiring a de veloper to make specified certifications to the commission, which expands the scope of the crime of perjury, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimb urse local agencies and school districts for certain costs mandated by the state.
Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
This bill would e xtend the period during whic h the commission allocates the abo ve-described motion pictur e credits through July 1, 2030. The bill would also e xtend the application of the limit on the aggregate amount of credits that may be allocated through the 2029–30 fiscal year and would make conforming changes.
This bill would take effect immediately as a tax levy.
Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes no.
94 — 2 — SB 485
The people of the State of California do enact as follows:
line 1 SECTION 1. Section 17053.98 of the Revenue and Taxation line 2 Code is amended to read:
line 3 17053.98. (a) (1) For taxable years be ginning on or after line 4 January 1, 2020, there shall be allo wed to a qualified taxpayer a line 5 credit against the “net tax,” as defined in Section 17039, subject line 6 to a computation and ranking by the California Film Commission line 7 in subdivision (g) and the allocation amount categories described line 8 in subdivision (i), in an amount equal to 20 percent or 25 percent, line 9 whichever is the applicable credit percentage described in line 10 paragraph (4), of the qualified expenditures for the production of line 11 a qualified motion picture in California. A credit shall not be line 12 allowed under this section for an y qualified expenditures for the line 13 production of a motion picture in California if a credit has been line 14 claimed for those same e xpenditures under Section 17053.85 or line 15 17053.95.
line 16 (2) Except as otherwise provided in this section, the credit shall line 17 be allo wed for the taxable year in which the California Film line 18 Commission issues the credit certificate pursuant to subdi vision line 19 (g) for the qualified motion picture, but in no instance prior to July line 20 1, 2020, and shall be for the applicable percentage of all qualified line 21 expenditures paid or incurred by the qualified taxpayer in all line 22 taxable years for that qualified motion picture. line 23 (3) (A) The amount of the credit allowed to a qualified taxpayer line 24 shall be limited to the amount specified in the credit certificate line 25 issued to the qualified taxpayer by the California Film Commission line 26 pursuant to subdivision (g).
line 27 (B) In determining the amount specified in the credit certificate line 28 in subparagraph (A), the California Film Commission shall be line 29 limited to the following amounts of qualified expenditures for each line 30 qualified motion picture:
line 31 (i) In the case of a feature, up to one hundred million dollars line 32 ($100,000,000).
line 33 (ii) In the case of a miniseries described in clause (ii) of line 34 subparagraph (A) of paragraph (18) of subdivision (b), up to one line 35 hundred million dollars ($100,000,000).
line 36 (iii) In the case of a television series described in clause (iii) or line 37 clause (v) of subparagraph (A) of paragraph (18) of subdi vision line 38 (b), up to one hundred million dollars ($100,000,000) per season. 94 SB 485 — 3 —
line 1 (iv) In the case of an independent film, up to ten million dollars line 2 ($10,000,000).
line 3 (4) For purposes of paragraphs (1) and (2), the applicable credit line 4 percentage shall be:
line 5 (A) Twenty percent of the qualified e xpenditures attributable line 6 to the production of a qualified motion picture in California, line 7 including, but not limited to, a feature or a tele vision series that line 8 relocated to California that is in its second or subsequent years of line 9 receiving a tax credit allocation pursuant to this section, Section line 10 17053.85, or Section 17053.95.
line 11 (B) Twenty-five percent of the qualified e xpenditures line 12 attributable to the production of a qualified motion picture in line 13 California where the qualified motion picture is a television series line 14 that relocated to California in its first year of receiving a tax credit line 15 allocation pursuant to this section.
line 16 (C) Twenty-five percent of the qualified e xpenditures line 17 attributable to the production of a qualified motion picture that is line 18 an independent film.
line 19 (D) Additional credits shall be allowed for the production of a line 20 qualified motion picture whose applicable credit percentage is line 21 determined pursuant to subparagraph (A), in an aggregate amount line 22 not to e xceed 5 percent of the qualified e xpenditures under that line 23 subparagraph, as follows:
line 24 (i) (I) Five percent of qualified expenditures, excluding qualified line 25 wages described in subparagraph (E), relating to original line 26 photography outside the Los Angeles zone.
line 27 (II) For purposes of this clause and subparagraph (E):
line 28 (ia) “Applicable period” means the period that commences with line 29 preproduction and ends when original photography concludes. The line 30 applicable period includes the time necessary to strik e a remote line 31 location and return to the Los Angeles zone.
line 32 (ib) “Los Angeles zone” means the area within a circle 30 miles line 33 in radius from Beverly Boulevard and La Cienega Boulevard, Los line 34 Angeles, California, and includes Agua Dulce, Castaic, including line 35 Castaic Lak e, Leo Carrillo State Beach, Ontario International line 36 Airport, Piru, and Pomona, including the Los Angeles County line 37 Fairgrounds. The Metro-Goldwyn-Mayer , Inc. Conejo Ranch line 38 property is within the Los Angeles zone.
line 39 (ic) “Original photography” includes principal photography and line 40 reshooting original footage.
94 — 4 — SB 485
line 1 (id) “Qualified expenditures relating to original photograph y line 2 outside the Los Angeles zone” means amounts paid or incurred line 3 during the applicable period for tangible personal property line 4 purchased or leased and used or consumed outside the Los Angeles line 5 zone and relating to original photography outside the Los Angeles line 6 zone and qualified wages paid for services performed outside the line 7 Los Angeles zone and relating to original photography outside the line 8 Los Angeles zone.
line 9 (ii) Five percent of the qualified e xpenditures relating to line 10 qualified visual effects attributable to the production of a qualified line 11 motion picture in California.
line 12 (E) (i) Notwithstanding subparagraph (D), an amount equal to line 13 10 percent of qualified wages paid for services performed relating line 14 to original photograph y outside of the Los Angeles zone to line 15 qualified individuals who reside in California but outside the Los line 16 Angeles zone shall be allo wed as an additional credit for the line 17 production of a qualified motion picture whose applicable credit line 18 percentage is determined pursuant to subparagraph (A). line 19 (ii) Notwithstanding subparagraph (D), an amount equal to 5 line 20 percent of qualified wages paid for services performed relating to line 21 original photography outside of the Los Angeles zone to qualified line 22 individuals who reside in California b ut outside the Los Angeles line 23 zone shall be allowed as an additional credit for the production of line 24 a qualified motion picture whose applicable credit percentage is line 25 determined pursuant to subparagraph (B) or (C). line 26 (b) For purposes of this section:
line 27 (1) “Ancillary product” means any article for sale to the public line 28 that contains a portion of, or any element of, the qualified motion line 29 picture.
line 30 (2) “Budget” means an estimate of all expenses paid or incurred line 31 during the production period of a qualified motion picture. It shall line 32 be the same budget used by the qualified taxpayer and production line 33 company for all qualified motion picture purposes. line 34 (3) “Clip use” means a use of any portion of a motion picture, line 35 other than the qualified motion picture, used in the qualified motion line 36 picture.
line 37 (4) “Credit certificate” means the certificate issued by the line 38 California Film Commission pursuant to subparagraph (D) of line 39 paragraph (3) of subdivision (g).
94 SB 485 — 5 —
line 1 (5) (A) “Employee fringe benefits” means the amount allowable line 2 as a deduction under this part to the qualified taxpayer in volved line 3 in the production of the qualified motion picture, exclusive of any line 4 amounts contrib uted by emplo yees, for an y year during the line 5 production period with respect to any of the following:
line 6 (i) Employer contributions under an y pension, profit-sharing, line 7 annuity, or similar plan.
line 8 (ii) Employer-provided coverage under any accident or health line 9 plan for employees.
line 10 (iii) The employer’s cost of life or disability insurance provided line 11 to employees.
line 12 (B) Any amount treated as w ages under clause (i) of line 13 subparagraph (A) of paragraph (21) shall not be taken into account line 14 under this paragraph.
line 15 (6) “Independent film” means a motion picture with a minimum line 16 budget of one million dollars ($1,000,000) that is produced by a line 17 company that is not publicly traded and publicly traded companies line 18 do not o wn, directly or indirectly , more than 25 percent of the line 19 producing company.
line 20 (7) “Jobs ratio” means the amount of qualified w ages paid to line 21 qualified indi viduals di vided by the amount of tax credit, not line 22 including any additional credit allowed pursuant to subparagraphs line 23 (D) and (E) of paragraph (4) of subdi vision (a), as computed by line 24 the California Film Commission. F or the purposes of the line 25 calculation of the jobs ratio only , 70 percent of qualified line 26 expenditures for visual effects paid to third-party vendors for work line 27 performed in California shall be deemed to be qualified w ages line 28 paid to a qualified individual.
line 29 (8) “Licensing” means an y grant of rights to distrib ute the line 30 qualified motion picture, in whole or in part.
line 31 (9) “New use” means any use of a motion picture in a medium line 32 other than the medium for which it was initially created. line 33 (10) “Pilot for a new television series” means the initial episode line 34 produced for a proposed television series.
line 35 (11) (A) “Postproduction” means the final acti vities in a line 36 qualified motion picture’ s production, including editing, fole y line 37 recording, automatic dialogue replacement, sound editing, scoring, line 38 music track recording by musicians and music editing, beginning line 39 and end credits, ne gative cutting, ne gative processing and 94 — 6 — SB 485
line 1 duplication, the addition of sound and visual effects, sound mixing, line 2 film-to-tape transfers, encoding, and color correction. line 3 (B) “Postproduction” does not include the manuf acture or line 4 shipping of release prints or their equivalent.
line 5 (12) “Preproduction” means the process of preparation for actual line 6 physical production which begins after a qualified motion picture line 7 has recei ved a firm agreement of financial commitment, or is line 8 greenlit, with, for e xample, the establishment of a dedicated line 9 production office, the hiring of key crew members, and includes, line 10 but is not limited to, acti vities that include location scouting and line 11 execution of contracts with vendors of equipment and stage space. line 12 (13) “Principal photography” means the phase of production line 13 during which the motion picture is actually shot, as distinguished line 14 from preproduction and postproduction.
line 15 (14) “Production period” means the period be ginning with line 16 preproduction and ending upon completion of postproduction. line 17 (15) “Qualified entity” means a personal service corporation as line 18 defined in Section 269A(b)(1) of the Internal Re venue Code, a line 19 payroll services corporation, or any entity receiving qualified wages line 20 with respect to services performed by a qualified individual. line 21 (16) “Qualified expenditures” means amounts paid or incurred line 22 for tangible personal property purchased or leased, and used, within line 23 this state in the production of a qualified motion picture and line 24 payments, including qualified wages, for services performed within line 25 this state in the production of a qualified motion picture. line 26 (17) (A) “Qualified indi vidual” means an y indi vidual who line 27 performs services during the production period in an activity related line 28 to the production of a qualified motion picture. line 29 (B) “Qualified indi vidual” shall not include either of the line 30 following:
line 31 (i) Any individual related to the qualified taxpayer as described line 32 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal line 33 Revenue Code.
line 34 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of line 35 the Internal Revenue Code, of the qualified taxpayer. line 36 (18) (A) “Qualified motion picture” means a motion picture line 37 that is produced for distrib ution to the general public, re gardless line 38 of medium, that is one of the following:
line 39 (i) A feature with a minimum production budget of one million line 40 dollars ($1,000,000).
94 SB 485 — 7 —
line 1 (ii) A miniseries consisting of two or more episodes, each longer line 2 than 40 minutes of running time, e xclusive of commercials, that line 3 is produced in California, with a minimum production b udget of line 4 one million dollars ($1,000,000) per episode.
line 5 (iii) A new television series of episodes longer than 40 minutes line 6 each of running time, exclusive of commercials, that is produced line 7 in California, with a minimum production b udget of one million line 8 dollars ($1,000,000) per episode.
line 9 (iv) An independent film.
line 10 (v) A television series that relocated to California. line 11 (vi) A pilot for a ne w television series that is longer than 40 line 12 minutes of running time, exclusive of commercials, that is produced line 13 in California, and with a minimum production b udget of one line 14 million dollars ($1,000,000).
line 15 (B) To qualify as a “qualified motion picture, ” all of the line 16 following conditions shall be satisfied:
line 17 (i) At least 75 percent of the principal photography days occur line 18 wholly in California or 75 percent of the production b udget is line 19 incurred for payment for services performed within the state and line 20 the purchase or rental of property used within the state. line 21 (ii) Production of the qualified motion picture is completed line 22 within 30 months from the date on which the qualified taxpayer’s line 23 application is approved by the California Film Commission. F or line 24 purposes of this section, a qualified motion picture is “completed” line 25 when the process of postproduction has been finished. line 26 (iii) The copyright for the motion picture is registered with the line 27 United States Copyright Office pursuant to Title 17 of the United line 28 States Code.
line 29 (iv) Principal photograph y of the qualified motion picture line 30 commences after the date on which the application is approved by line 31 the California Film Commission, but no later than 180 days after line 32 the date of that approval if the qualified motion picture has a budget line 33 with qualified expenditures of less than one hundred million dollars line 34 ($100,000,000), and no later than 240 days after the date of that line 35 approval in the case of a qualified motion picture with a b udget line 36 of qualified expenditures with at least one hundred million dollars line 37 ($100,000,000), unless death, disability , or disfigurement of the line 38 director or of a principal cast member; an act of God, including, line 39 but not limited to, fire, flood, earthquake, storm, hurricane, or other line 40 natural disaster; terrorist acti vities; or go vernment sanction has 94 — 8 — SB 485
line 1 directly pre vented a production’ s ability to be gin principal line 2 photography within the prescribed 180- or 240-day commencement line 3 period.
line 4 (C) For the purposes of subparagraph (A), in computing the line 5 total w ages paid or incurred for the production of a qualified line 6 motion picture, all amounts paid or incurred by all persons or line 7 entities that share in the costs of the qualified motion picture shall line 8 be aggregated.
line 9 (D) “Qualified motion picture” shall not include commercial line 10 advertising, music videos, a motion picture produced for pri vate line 11 noncommercial use, such as weddings, graduations, or as part of line 12 an educational course and made by students, a ne ws program, line 13 current events or public e vents program, talk sho w, game show, line 14 sporting e vent or acti vity, a wards sho w, telethon or other line 15 production that solicits funds, reality television program, clip-based line 16 programming if more than 50 percent of the content is comprised line 17 of licensed footage, documentaries, v ariety programs, daytime line 18 dramas, strip shows, one-half hour (air time) episodic tele vision line 19 shows, or an y production that f alls within the recordk eeping line 20 requirements of Section 2257 of Title 18 of the United States Code. line 21 (19) (A) “Qualified taxpayer” means a taxpayer who has paid line 22 or incurred qualified e xpenditures, participated in the Career line 23 Readiness requirement in Section 17053.95, and has been issued line 24 a credit certificate by the California Film Commission pursuant line 25 to subdivision (g).
line 26 (B) In the case of an y pass-thru entity , the determination of line 27 whether a taxpayer is a qualified taxpayer under this section shall line 28 be made at the entity level and any credit under this section is not line 29 allowed to the pass-thru entity, but shall be passed through to the line 30 partners or shareholders in accordance with applicable provisions line 31 of P art 10 (commencing with Section 17001) or P art 11 line 32 (commencing with Section 23001). For purposes of this paragraph, line 33 “pass-thru entity” means any entity taxed as a partnership or “S” line 34 corporation.
line 35 (20) “Qualified visual ef fects” means visual ef fects where at line 36 least 75 percent or a minimum of ten million dollars ($10,000,000) line 37 of the qualified e xpenditures for the visual ef fects is paid or line 38 incurred in California.
line 39 (21) (A) “Qualified wages” means all of the following:
94 SB 485 — 9 —
line 1 (i) Any w ages subject to withholding under Di vision 6 line 2 (commencing with Section 13000) of the Unemployment Insurance line 3 Code that were paid or incurred by an y taxpayer involved in the line 4 production of a qualified motion picture with respect to a qualified line 5 individual for services performed on the qualified motion picture line 6 production within this state.
line 7 (ii) The portion of any employee fringe benefits paid or incurred line 8 by any taxpayer involved in the production of the qualified motion line 9 picture that are properly allocable to qualified w age amounts line 10 described in clauses (i), (iii), and (iv).
line 11 (iii) Any payments made to a qualified entity for services line 12 performed in this state by qualified individuals within the meaning line 13 of paragraph (17).
line 14 (iv) Remuneration paid to an independent contractor who is a line 15 qualified individual for services performed within this state by that line 16 qualified individual.
line 17 (B) “Qualified wages” shall not include any of the following:
line 18 (i) Expenses, including w ages, related to ne w use, reuse, clip line 19 use, licensing, secondary mark ets, or residual compensation, or line 20 the creation of any ancillary product, including, but not limited to, line 21 a soundtrack album, toy, game, trailer, or teaser. line 22 (ii) Expenses, including wages, paid or incurred with respect to line 23 acquisition, development, turnaround, or any rights thereto. line 24 (iii) Expenses, including wages, related to financing, overhead, line 25 marketing, promotion, or distribution of a qualified motion picture. line 26 (iv) Expenses, including wages, paid per person per qualified line 27 motion picture for writers, directors, music directors, music line 28 composers, music supervisors, producers, and performers, other line 29 than background actors with no scripted lines.
line 30 (22) “Residual compensation” means supplemental line 31 compensation paid at the time that a motion picture is e xhibited line 32 through ne w use, reuse, clip use, or in secondary mark ets, as line 33 distinguished from payments made during production. line 34 (23) “Reuse” means any use of a qualified motion picture in the line 35 same medium for which it w as created, following the initial use line 36 in that medium.
line 37 (24) “Secondary markets” means media in which a qualified line 38 motion picture is exhibited following the initial media in which it line 39 is exhibited.
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line 1 (25) “Television series that relocated to California” means a line 2 television series, without regard to episode length or initial media line 3 exhibition, with a minimum production b udget of one million line 4 dollars ($1,000,000) per episode, that filmed at least 75 percent of line 5 principal photography days in its most recent season outside of line 6 California or has filmed all seasons outside of California and for line 7 which the taxpayer certifies that the credit pro vided pursuant to line 8 this section is the primary reason for relocating to California. line 9 (26) “Visual ef fects” means the creation, alteration, or line 10 enhancement of images that cannot be captured on a set or location line 11 during live action photography and therefore is accomplished in line 12 postproduction. It includes, but is not limited to, matte paintings, line 13 animation, set extensions, computer-generated objects, characters line 14 and environments, compositing (combining two or more elements line 15 in a final image), and wire remo vals. “Visual effects” does not line 16 include fully animated projects, whether created by traditional or line 17 digital means.
line 18 (c) (1) Notwithstanding an y other la w, a qualified taxpayer line 19 may sell any credit allowed under this section that is attrib utable line 20 to an independent film, as defined in paragraph (6) of subdivision line 21 (b), to an unrelated party.
line 22 (2) The qualified taxpayer shall report to the Franchise Tax line 23 Board prior to the sale of the credit, in the form and manner line 24 specified by the Franchise Tax Board, all required information line 25 regarding the purchase and sale of the credit, including the social line 26 security or other taxpayer identification number of the unrelated line 27 party to whom the credit has been sold, the f ace amount of the line 28 credit sold, and the amount of consideration recei ved by the line 29 qualified taxpayer for the sale of the credit.
line 30 (3) In the case where the credit allo wed under this section line 31 exceeds the “net tax, ” the e xcess credit may be carried o ver to line 32 reduce the “net tax” in the following taxable year, and succeeding line 33 eight taxable years, if necessary, until the credit has been exhausted. line 34 (4) A credit shall not be sold pursuant to this subdi vision to line 35 more than one taxpayer , nor may the credit be resold by the line 36 unrelated party to another taxpayer or other party. line 37 (5) A party that has acquired tax credits under this subdivision line 38 shall be subject to the requirements of this section. 94 SB 485 — 11 —
line 1 (6) In no event may a qualified taxpayer assign or sell an y tax line 2 credit to the extent the tax credit allowed by this section is claimed line 3 on any tax return of the qualified taxpayer.
line 4 (7) In the e vent that both the taxpayer originally allocated a line 5 credit under this section by the California Film Commission and line 6 a taxpayer to whom the credit has been sold both claim the same line 7 amount of credit on their tax returns, the Franchise Tax Board may line 8 disallow the credit of either taxpayer , so long as the statute of line 9 limitations upon assessment remains open.
line 10 (8) Chapter 3.5 (commencing with Section 11340) of Part 1 of line 11 Division 3 of Title 2 of the Go vernment Code does not apply to line 12 any standard, criterion, procedure, determination, rule, notice, or line 13 guideline established or issued by the Franchise Tax Board line 14 pursuant to this subdivision.
line 15 (9) Subdivision (g) of Section 17039 shall not apply to an y line 16 credit sold pursuant to this subdivision.
line 17 (10) For purposes of this subdi vision, the unrelated party or line 18 parties that purchase a credit pursuant to this subdivision shall be line 19 treated as a qualified taxpayer pursuant to paragraph (1) of line 20 subdivision (a).
line 21 (d) (1) No credit shall be allowed pursuant to this section unless line 22 the qualified taxpayer pro vides the follo wing to the California line 23 Film Commission:
line 24 (A) Identification of each qualified individual. line 25 (B) The specific start and end dates of production. line 26 (C) The total wages paid.
line 27 (D) The total amount of qualified w ages paid to qualified line 28 individuals.
line 29 (E) Aggregate data for indi viduals whose wages are excluded line 30 from qualified w ages by clause (i v) of subparagraph (B) of line 31 paragraph (21) of subdivision (b), including their gender, ethnic, line 32 and racial makeup.
line 33 (F) The cop yright re gistration number , as reflected on the line 34 certificate of registration issued under the authority of Section 410 line 35 of Title 17 of the United States Code, relating to re gistration of line 36 claim and issuance of certificate. The registration number shall be line 37 provided on the return claiming the credit.
line 38 (G) The total amounts paid or incurred to purchase or lease line 39 tangible personal property used in the production of a qualified line 40 motion picture.
94 — 12 — SB 485
line 1 (H) Information to substantiate its qualified expenditures. line 2 (I) Information required by the California Film Commission line 3 under re gulations promulg ated pursuant to subdi vision (g) line 4 necessary to verify the amount of credit claimed. line 5 (J) Data regarding the diversity of the workforce employed by line 6 the applicant on the qualified motion picture, as described in line 7 subdivision (g).
line 8 (K) Documentation v erifying completion of the Career line 9 Readiness requirement.
line 10 (L) Documentation verifying that the qualified taxpayer paid a line 11 fee as described in subdivision (e).
line 12 (2) (A) Based on the information pro vided in paragraph (1), line 13 the California Film Commission shall recompute the jobs ratio line 14 previously computed in subdi vision (g) and compare this line 15 recomputed jobs ratio to the jobs ratio that the qualified taxpayer line 16 previously listed on the application submitted pursuant to line 17 subdivision (g).
line 18 (B) (i) If the California Film Commission determines that the line 19 jobs ratio has been reduced by more than 10 percent for a qualified line 20 motion picture, the California Film Commission shall reduce the line 21 amount of credit allo wed by an equal percentage, unless the line 22 qualified taxpayer demonstrates, and the California Film line 23 Commission determines, that reasonable cause exists for the jobs line 24 ratio reduction.
line 25 (ii) If the California Film Commission determines that the jobs line 26 ratio has been reduced by more than 20 percent for a qualified line 27 motion picture, the California Film Commission shall not accept line 28 an application described in subdi vision (g) from that qualified line 29 taxpayer or an y member of the qualified taxpayer’ s controlled line 30 group for a period of not less than one year from the date of that line 31 determination, unless the qualified taxpayer demonstrates, and the line 32 California Film Commission determines, that reasonable cause line 33 exists for the jobs ratio reduction.
line 34 (C) For the purposes of this paragraph, “reasonable cause” line 35 means unforeseen circumstances beyond the control of the qualified line 36 taxpayer, such as, but not limited to, the cancellation of a television line 37 series prior to the completion of the scheduled number of episodes line 38 or other similar circumstances as determined by the California line 39 Film Commission in re gulations to be adopted pursuant to line 40 subdivision (e).
94 SB 485 — 13 —
line 1 (e) (1) (A) Subject to the Administrative Procedure Act line 2 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 3 Division 3 of Title 2 of the Government Code), the California Film line 4 Commission shall adopt rules and regulations to implement a pilot line 5 Career Pathways Training program including a fee to be paid by line 6 the qualified taxpayer, if the qualified taxpayer recei ves a credit line 7 under this section, to fund technical skills training to indi viduals line 8 from underserved communities for entry into film and tele vision line 9 industry jobs. The California Film Commission shall (i) identify line 10 a not-for-profit fiscal agent with direct relationships to industry line 11 skills training programs to manage the funds; and (ii) eng age line 12 labor-management jointly administered training programs with line 13 skills training focused on the entertainment industry to implement line 14 the program with California Film Commission appro val and line 15 oversight. With re gard to the Career Readiness requirement in line 16 Section 17053.95, the California Film Commission shall identify line 17 training and public service opportunities that may include, but not line 18 be limited to, hiring interns, public service announcements, and line 19 community outreach shall continue. The California Film line 20 Commission may prescribe rules and regulations to carry out the line 21 purposes of this section, including, subparagraph (D) of paragraph line 22 (4) of subdi vision (a) and clause (i v) of subparagraph (D) of line 23 paragraph (2) of subdi vision (g), and including an y rules and line 24 regulations necessary to establish procedures, processes, line 25 requirements, application fee structure, and rules identified in or line 26 required to implement this section, including credit and logo line 27 requirements and credit allocation procedures over multiple fiscal line 28 years where the qualified taxpayer is producing a series of features line 29 that will be filmed concurrently.
line 30 (B) Notwithstanding any other law, prior to preparing a notice line 31 of proposed action pursuant to Section 11346.4 of the Government line 32 Code and prior to making any revision to the proposed regulation line 33 other than a change that is nonsubstantial or solely grammatical line 34 in nature, the Go vernor’s Office of Business and Economic line 35 Development shall first appro ve the proposed re gulation or line 36 proposed change to a proposed regulation regarding allocating the line 37 credit pursuant to subdi vision (i), computing the jobs ratio as line 38 described in subdi visions (d) and (g), and defining “reasonable line 39 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision line 40 (d).
94 — 14 — SB 485
line 1 (2) (A) Implementation of this section for the 2020–21 fiscal line 2 year is deemed an emer gency and necessary for the immediate line 3 preservation of the public peace, health, and safety , or general line 4 welfare and, therefore, the California Film Commission is hereby line 5 authorized to adopt emer gency re gulations to implement this line 6 section during the 2020–21 fiscal year in accordance with the line 7 rulemaking pro visions of the Administrative Procedure Act line 8 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 9 Division 3 of Title 2 of the Government Code).
line 10 (B) Nothing in this paragraph shall be construed to require the line 11 Governor’s Office of Business and Economic De velopment to line 12 approve emergency regulations adopted pursuant to this paragraph. line 13 (3) The California Film Commission shall not be required to line 14 prepare an economic impact analysis pursuant to the Administrative line 15 Procedure Act (Chapter 3.5 (commencing with Section 11340) of line 16 Part 1 of Division 3 of Title 2 of the Government Code) with regard line 17 to any rules and regulations adopted pursuant to this subdivision. line 18 (f) If the qualified taxpayer f ails to pro vide the cop yright line 19 registration number as required in subparagraph (E) of paragraph line 20 (1) of subdivision (d), the credit shall be disallowed and assessed line 21 and collected under Section 19051 until the procedures are line 22 satisfied.
line 23 (g) For purposes of this section, the California Film Commission line 24 shall do the following:
line 25 (1) Subject to the requirements of subparagraphs (A) to (E), line 26 inclusive, of paragraph (2), on or after July 1, 2020, and before line 27 July 1, 2025, 2030, in tw o or more allocation periods per fiscal line 28 year, allocate tax credits to applicants.
line 29 (2) (A) Establish a procedure for applicants to file with the line 30 California Film Commission a written application, on a form jointly line 31 prescribed by the California Film Commission and the Franchise line 32 Tax Board for the allocation of the tax credit. The application shall line 33 include, but not be limited to, the following information:
line 34 (i) The budget for the motion picture production. line 35 (ii) The number of production days.
line 36 (iii) A financing plan for the production.
line 37 (iv) The diversity of the workforce employed by the applicant, line 38 including, but not limited to, the ethnic and racial mak eup of the line 39 individuals employed by the applicant during the production of line 40 the qualified motion picture, to the extent possible. 94 SB 485 — 15 —
line 1 (v) All members of a combined reporting group, if kno wn at line 2 the time of the application.
line 3 (vi) Financial information, if available, including, but not limited line 4 to, the most recently produced balance sheets, annual statements line 5 of profits and losses, audited or unaudited financial statements, line 6 summary budget projections or results, or the functional equivalent line 7 of these documents of a partnership or owner of a single member line 8 limited liability company that is disregarded pursuant to Section line 9 23038. The information provided pursuant to this clause shall be line 10 confidential and shall not be subject to public disclosure. line 11 (vii) The names of all partners in a partnership not publicly line 12 traded or the names of all members of a limited liability company line 13 classified as a partnership not publicly traded for California income line 14 tax purposes that ha ve a financial interest in the applicant’ s line 15 qualified motion picture. The information pro vided pursuant to line 16 this clause shall be confidential and shall not be subject to public line 17 disclosure.
line 18 (viii) The amount of qualified w ages the applicant e xpects to line 19 pay to qualified individuals.
line 20 (ix) The amount of tax credit the applicant computes the line 21 qualified motion picture will receive, applying the applicable credit line 22 percentages described in paragraph (4) of subdivision (a). line 23 (x) A statement establishing that the tax credit described in this line 24 section is a significant factor in the applicant’s choice of location line 25 for the qualified motion picture. The statement shall include line 26 information about whether the qualified motion picture is at risk line 27 of not being filmed or specify the jurisdiction or jurisdictions in line 28 which the qualified motion picture will be located in the absence line 29 of the tax credit. The statement shall be signed by an officer or line 30 executive of the applicant.
line 31 (xi) The applicant’s written policy against unlawful harassment, line 32 including, but not limited to, se xual harassment, which includes line 33 procedures for reporting and in vestigating harassment claims, a line 34 phone number for an indi vidual who will be responsible for line 35 receiving harassment claims, and a statement that the compan y line 36 will not retaliate ag ainst an indi vidual who reports harassment. line 37 The applicant shall also indicate how the policy will be distributed line 38 to emplo yees and include a summary of education training line 39 resources, including the prohibition ag ainst, and pre vention and line 40 correction of, sexual harassment and remedies available. 94 — 16 — SB 485
line 1 (xii) The ethnic and racial mak eup and gender of indi viduals line 2 whose wages are e xcluded from qualified w ages as set forth in line 3 clause (iv) of subparagraph (B) of paragraph (21) of subdi vision line 4 (b).
line 5 (xiii) A summary of the applicant’ s v oluntary programs to line 6 increase the representation of minorities and w omen in the job line 7 classifications that are not included in qualified wages as set forth line 8 in clause (iv) of subparagraph (B) of paragraph (21) of subdivision line 9 (b) and information about ho w these programs are publicized to line 10 interested parties. The officer or e xecutive referenced in clause line 11 (x) who is signing the statement shall pro vide additional line 12 information about these programs, if needed and upon request, to line 13 the California Film Commission.
line 14 (xiv) Any other information deemed relevant by the California line 15 Film Commission or the Franchise Tax Board.
line 16 (B) Establish criteria, consistent with the requirements of this line 17 section, for allocating tax credits.
line 18 (C) Determine and designate applicants who meet the line 19 requirements of this section.
line 20 (D) (i) For purposes of allocating the credit amounts subject to line 21 the categories described in subdi vision (i) in an y fiscal year, the line 22 California Film Commission shall do all of the following:
line 23 (ii) For each allocation date and for each cate gory, list each line 24 applicant from highest to lo west according to the jobs ratio as line 25 computed by the California Film Commission.
line 26 (iii) Subject to the applicable credit percentage, allocate the line 27 credit to each applicant according to the highest jobs ratio, working line 28 down the list, until the credit amount is exhausted. line 29 (iv) Pursuant to regulations adopted pursuant to subdivision (e), line 30 the California Film Commission may increase the jobs ratio by up line 31 to 25 percent if a qualified motion picture increases economic line 32 activity in California according to criteria de veloped by the line 33 California Film Commission that would include, but not be limited line 34 to, such factors as, the amount of the production and postproduction line 35 spending in California, the utilization of scoring musicians in line 36 California, and other criteria measuring economic impact in line 37 California as determined by the California Film Commission. line 38 (v) Notwithstanding an y other la w, an y tele vision series, line 39 relocating television series, or any new television series based on line 40 a pilot for a new television series that has been approved and issued 94 SB 485 — 17 —
line 1 a credit allocation by the California Film Commission under this line 2 section, Section 23698, 17053.95, 23695, 17053.85, or 23685 shall line 3 be issued a credit for each subsequent season, for the life of that line 4 television series whenever credits are allocated within a fiscal year. line 5 The California Film Commission shall limit the amount of credits line 6 any recurring television series receives in a subsequent season to line 7 no more than the amount reserv ed in its prior fiscal year Credit line 8 Allocation Letter or Letters, or if no amounts were reserved in the line 9 prior fiscal year, the most immediate prior fiscal year in which a line 10 Credit Allocation Letter or Letters were received. In the event that line 11 insufficient tax credits are available to fund all recurring television line 12 series pursuant to this clause for any fiscal year or in the event the line 13 California Film Commission projects, in collaboration with the line 14 Department of Finance, that there will be insufficient tax credits line 15 available to fund all recurring tele vision series in either of the line 16 subsequent two fiscal years, the California Film Commission shall line 17 make the follo wing adjustments in the order gi ven until the line 18 shortfall, or any projected shortfall for the two subsequent fiscal line 19 years, for recurring television series is eliminated:
line 20 (I) Notwithstanding clause (iii) of subparagraph (A) of paragraph line 21 (2) of subdivision (i), the California Film Commission may redirect line 22 up to 100 percent of the credit amounts allocated to the relocating line 23 television series cate gory to recurring tele vision series for that line 24 fiscal year until the shortfall or projected shortfall is eliminated. line 25 (II) Notwithstanding clause (i v) of subparagraph (A) of line 26 paragraph (2) of subdivision (i), the California Film Commission line 27 may redirect up to 100 percent of the credit amounts allocated to line 28 a new television series to recurring television series for that fiscal line 29 year until the shortfall or projected shortfall is eliminated. line 30 (III) Notwithstanding clause (ii) of subparagraph (A) of line 31 paragraph (2) of subdivision (i), the California Film Commission line 32 may redirect up to 100 percent of the credit allocations from the line 33 features category to the recurring tele vision series cate gory for line 34 that fiscal year until the shortfall is eliminated. line 35 (IV) Allocate up to 25 percent of total credit allocations that line 36 would otherwise be allocated in the 2024–25 2029–30 fiscal year line 37 to recurring tele vision series in the current fiscal year until the line 38 shortfall is eliminated. Any amounts transferred for allocation in line 39 the current fiscal year shall be subtracted from the amount allowed line 40 to be allocated in the 2024–25 2029–30 fiscal year as specified in 94 — 18 — SB 485
line 1 subdivision (i). Notwithstanding paragraph (3), the credit line 2 allocations that are subtracted from 2024–25 2029–30 shall not be line 3 certified until July 1, 2025 2030, or later.
line 4 (V) The California Film Commission shall consult with the line 5 qualified taxpayers who are producing the recurring tele vision line 6 series for purposes of negotiating a minimally impactful reduction line 7 in the amount of credits awarded to each recurring television series line 8 for that fiscal year until the shortfall is eliminated. line 9 (E) Subject to the annual cap and the allocation credit amounts line 10 based on cate gories described in subdi vision (i), allocate an line 11 aggregate amount of credits under this section and Section 23698, line 12 and allocate any carryover of unallocated or unused credits from line 13 prior years and Sections 17053.85, 17053.95, 23685, and 23695, line 14 and the amount of an y credits reduced pursuant to paragraph (2) line 15 of subdivision (d).
line 16 (3) Certify tax credits allocated to qualified taxpayers. line 17 (A) Establish a verification procedure to update the information line 18 in subparagraph (A) of paragraph (2) of subdivision (g), including, line 19 but not limited to, all of the following:
line 20 (i) The amounts of qualified e xpenditures paid or incurred by line 21 the applicant.
line 22 (ii) The diversity of the workforce employed by the applicant. line 23 (iii) The ethnic and racial mak eup and gender of indi viduals line 24 whose wages are excluded from qualified wages by clause (iv) of line 25 subparagraph (B) of paragraph (21) of subdivision (b). line 26 (B) Establish audit requirements that shall be satisfied before a line 27 credit certificate may be issued by the California Film Commission. line 28 (C) (i) Establish a procedure for a qualified taxpayer to report line 29 to the California Film Commission, prior to the issuance of a credit line 30 certificate, the following information:
line 31 (I) If readily available, a list of the states, pro vinces, or other line 32 jurisdictions in which an y member of the applicant’ s combined line 33 reporting group in the same business unit as the qualified taxpayer line 34 that, in the preceding calendar year , has produced a qualified line 35 motion picture intended for release in the United States mark et. line 36 For purposes of this clause, “qualified motion picture” shall not line 37 include any episodes of a television series that were complete or line 38 in production prior to July 1, 2020.
line 39 (II) Whether a qualified motion picture described in subclause line 40 (I) was awarded any financial incentive by the state, province, or 94 SB 485 — 19 —
line 1 other jurisdiction that w as predicated on the performance of line 2 primary principal photography or postproduction in that location. line 3 (ii) The California Film Commission may provide that the report line 4 required by this subparagraph be filed in a single report provided line 5 on a calendar year basis for those qualified taxpayers that receive line 6 multiple credit certificates in a calendar year. line 7 (D) Issue a credit certificate to a qualified taxpayer upon line 8 completion of the qualified motion picture reflecting the credit line 9 amount allocated after qualified e xpenditures have been verified line 10 and the jobs ratio computed under this section. The amount of line 11 credit shown on the credit certificate shall not exceed the amount line 12 of credit allocated to that qualified taxpayer pursuant to this section. line 13 (4) Obtain, when possible, the follo wing information from line 14 applicants that do not receive an allocation of credit:
line 15 (A) Whether the qualified motion picture that w as the subject line 16 of the application was completed.
line 17 (B) If completed, in which state or foreign jurisdiction was the line 18 primary principal photography completed.
line 19 (C) Whether the applicant recei ved an y financial incenti ves line 20 from the state or foreign jurisdiction to make the qualified motion line 21 picture in that location.
line 22 (5) Provide the Legislative Analyst’s Office, upon request, any line 23 or all application materials or an y other materials received from, line 24 or submitted by, the applicants, in electronic format when available, line 25 including, but not limited to, information pro vided pursuant to line 26 clauses (i) to (xi) inclusive, of subparagraph (A) of paragraph (2) line 27 and the di versity workplans provided pursuant to clause (i v) of line 28 subparagraph (B) of paragraph (2) of subdivision (k). line 29 (6) The information provided to the California Film Commission line 30 pursuant to this section shall constitute confidential tax information line 31 for purposes of Article 2 (commencing with Section 19542) of line 32 Chapter 7 of Part 10.2.
line 33 (7) (A) Notwithstanding any other law, on or after July 1, 2025, line 34 2030, the California Film Commission may allocate, pursuant to line 35 this section, any previously allocated credits not certified that have line 36 not previously been added to credit amounts available for allocation line 37 under this section or a successor section or sections. line 38 (B) For purposes of this section, “pre viously allocated credits line 39 not certified” means either:
94 — 20 — SB 485
line 1 (i) Credits allocated under paragraph (1) for which the qualified line 2 taxpayer to which the credit amounts were originally allocated has line 3 notified the California Film Commission in writing that the line 4 qualified taxpayer will not request certification for the allocated line 5 credits.
line 6 (ii) The difference between the amount of credits allocated under line 7 paragraph (1) to a qualified taxpayer and the amount of credits the line 8 California Film Commission certified, for that qualified taxpayer. line 9 For purposes of calculating the dif ference, the California Film line 10 Commission shall not consider any credit amounts for which the line 11 qualified taxpayer notifies the California Film Commission under line 12 clause (i).
line 13 (8) Notwithstanding any other la w, on or after July 1, 2025, line 14 2030, the California Film Commission may allocate, pursuant to line 15 this section, an y credit amounts described in subparagraphs (B) line 16 and (E) of paragraph (1) of subdivision (i) that have not previously line 17 been added to credit amounts a vailable for allocation under this line 18 section or a successor section or sections.
line 19 (9) The California Film Commission shall submit a report to line 20 the Legislature, on an annual basis beginning January 1, 2022, on line 21 aggregate diversity information for the productions allocated tax line 22 credits allo wed in this section and the di versity of the motion line 23 picture production industry in California more generally. line 24 (h) (1) The California Film Commission shall annually provide line 25 the Legislative Analyst’s Office, the Franchise Tax Board, and the line 26 California Department of Tax and Fee Administration with a list line 27 of qualified taxpayers and the tax credit amounts allocated to each line 28 qualified taxpayer by the California Film Commission. The list line 29 shall include the names and taxpayer identification numbers, line 30 including taxpayer identification numbers of each partner or line 31 shareholder, as applicable, of the qualified taxpayer. line 32 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the line 33 California Film Commission shall annually post on its internet line 34 website and make available for public release the following:
line 35 (i) A table which includes all of the follo wing information: a line 36 list of qualified taxpayers and the tax credit amounts allocated to line 37 each qualified taxpayer by the California Film Commission, the line 38 number of production days in California the qualified taxpayer line 39 represented in its application would occur, the number of California line 40 jobs that the qualified taxpayer represented in its application would 94 SB 485 — 21 —
line 1 be directly created by the production, and the total amount of line 2 qualified expenditures expected to be spent by the production. line 3 (ii) A narrative staff summary describing the production of the line 4 qualified taxpayer as well as background information re garding line 5 the qualified taxpayer contained in the qualified taxpayer’ s line 6 application for the credit.
line 7 (iii) For qualified taxpayers allocated a credit, the aggre gate line 8 diversity information collected pursuant to clauses (i v) and (xii) line 9 of subparagraph (A) of paragraph (2) of subdivision (g) organized line 10 per production and an aggre gate compilation describing the line 11 voluntary programs collected pursuant to clause (xiii) of line 12 subparagraph (A) of paragraph (2) of subdivision (g). line 13 (B) Nothing in this subdivision shall be construed to make the line 14 information submitted by an applicant for a tax credit under this line 15 section a public record.
line 16 (3) The California Film Commission shall pro vide each city line 17 and county in California with an instructional guide that includes, line 18 but is not limited to, a re view of best practices for f acilitating line 19 motion picture production in local jurisdictions, resources on line 20 hosting and encouraging motion picture production, and the line 21 California Film Commission’ s Model Filming Ordinance. The line 22 California Film Commission shall maintain on its internet website line 23 a list of initiati ves by locality that encourage motion picture line 24 production in regions across the state. The list shall be distributed line 25 to each appro ved applicant for the program to highlight local line 26 jurisdictions that offer incentives to facilitate film production. line 27 (i) (1) (A) The aggre gate amount of credits that may be line 28 allocated for a fiscal year pursuant to this section and Section line 29 23698, except as provided in subdivision (k) of this section and line 30 subdivision (k) of Section 23698, is three hundred thirty million line 31 dollars ($330,000,000), plus any amount described in subparagraph line 32 (B), (C), (D), or (E) in credits for the 2020–21 fiscal year and each line 33 fiscal year thereafter, through and including the 2024–25 2029–30 line 34 fiscal year, except as provided in paragraph (7) of subdivision (g), line 35 plus the amount described in subparagraph (F) in credits for the line 36 2021–22 and 2022–23 fiscal years.
line 37 (B) (i) Subject to clauses (ii) and (iii), the unused allocation line 38 credit amount, if any, for the preceding fiscal year. 94 — 22 — SB 485
line 1 (ii) The amount of unused credit allocation attrib utable to line 2 independent films shall only be allocated according to clause (i) line 3 of subparagraph (A) of paragraph (2).
line 4 (iii) The total amount of an y unused credit allocation amount line 5 that is remaining shall only be allocated pursuant to clause (iv) of line 6 subparagraph (A) of paragraph (2).
line 7 (C) The amount of previously allocated credits not certified. line 8 (D) The amount of an y credits reduced pursuant to paragraph line 9 (2) of subdivision (d).
line 10 (E) That portion of any unused allocation credit amount, if any, line 11 attributable to Section 17053.85, 17053.95, 23685, or 23695 line 12 available for that fiscal year in a manner as determined by line 13 regulations promulgated by the California Film Commission. line 14 (F) (i) For fiscal years 2021–22 and 2022–23, the California line 15 Film Commission shall allocate an additional fifteen million dollars line 16 ($15,000,000) in credits to be granted e xclusively to tele vision line 17 series that relocate to California.
line 18 (I) Notwithstanding subparagraph (A) of paragraph (2) of this line 19 subdivision and clause (v) of subparagraph (D) of paragraph (2) line 20 of subdi vision (g), the mone ys allocated pursuant to this line 21 subparagraph shall not be redirected or reallocated. line 22 (II) Notwithstanding paragraph (25) of subdi vision (b), for line 23 purposes of this subparagraph, a “tele vision series that relocated line 24 to California” means a television series, without regard to episode line 25 length or initial media e xhibition, with a minimum production line 26 budget of one million dollars ($1,000,000) per episode that both line 27 filmed at least 75 percent of principal photography days for at least line 28 one episode outside of California and has not filmed more than 25 line 29 percent of principal photograph y days for an y episode inside of line 30 California.
line 31 (ii) For fiscal years 2021–22 and 2022–23, the California Film line 32 Commission shall allocate an additional se venty-five million line 33 dollars ($75,000,000) in credits to be granted e xclusively to line 34 recurring television series.
line 35 (2) (A) Notwithstanding the foregoing, and subject to paragraph line 36 (4) of this subdivision and changes in allocations pursuant to clause line 37 (v) of subparagraph (D) of paragraph (2) of subdi vision (g), the line 38 California Film Commission shall allocate the credit amounts line 39 subject to the following categories:
94 SB 485 — 23 —
line 1 (i) Independent films with qualified expenditures of ten million line 2 dollars ($10,000,000) or less shall be allocated 4.8 percent of the line 3 amount specified in paragraph (1). Independent films with qualified line 4 expenditures in excess of ten million dollars ($10,000,000) shall line 5 be allocated 3.2 percent of the amount specified in paragraph (1). line 6 These amounts shall be in addition to any unused allocation credit line 7 amount, if an y, for the preceding fiscal year as described in line 8 subparagraph (B) of paragraph (1).
line 9 (ii) Features shall be allocated 35 percent of the amount specified line 10 in paragraph (1).
line 11 (iii) A relocating television series shall be allocated 17 percent line 12 of the amount specified in paragraph (1).
line 13 (iv) A new television series, pilots for a ne w television series, line 14 miniseries, and recurring tele vision series shall be allocated 40 line 15 percent of the amount specified in paragraph (1), plus any unused line 16 allocation credit amount, if an y, for the preceding fiscal year as line 17 described in subparagraph (B) of paragraph (1). line 18 (B) Within an y allocation period for credits to a relocating line 19 television series, an y unused amount shall be reallocated to the line 20 category described in clause (iv) of subparagraph (A) and, if any line 21 unused amount remains, reallocated in the next allocation period line 22 for credits to a relocating television series.
line 23 (C) With respect to a relocating television series issued a credit line 24 in a subsequent year pursuant to clause (v) of subparagraph (D) line 25 of paragraph (2) of subdivision (g), that subsequent credit amount line 26 shall be allowed from the allocation amount described in clause line 27 (iv) of subparagraph (A).
line 28 (3) Any act that reduces the amount that may be allocated line 29 pursuant to paragraph (1) constitutes a change in state tax es for line 30 the purpose of increasing revenues within the meaning of Section line 31 3 of Article XIIIA of the California Constitution and may be passed line 32 by not less than two-thirds of all Members elected to each of the line 33 two houses of the Legislature.
line 34 (4) (A) Except as pro vided in subparagraph (B), a qualified line 35 motion picture, as defined in subdivision (k), shall not be eligible line 36 for an allocation under subdi visions (a) to (j), inclusi ve, if it line 37 receives a credit under subdivision (k) during that fiscal year. line 38 (B) Notwithstanding an y other pro vision in this section, a line 39 recurring television series, as that term is used under subdivision line 40 (k), that is no longer eligible for the credit in paragraph (9) of 94 — 24 — SB 485
line 1 subdivision (k) shall be eligible to apply for an allocation of credits line 2 under subdivisions (a) to (j), inclusive.
line 3 (j) The California Film Commission shall have the authority to line 4 allocate tax credits in accordance with this section and in line 5 accordance with any regulations prescribed pursuant to subdivision line 6 (e) upon adoption.
line 7 (k) (1) For taxable years beginning on or after January 1, 2022, line 8 and before January 1, 2032, there shall be allo wed to a qualified line 9 taxpayer a credit against the “net tax,” as defined in Section 17039, line 10 subject to allocation by the California Film Commission, in an line 11 amount equal to 20 percent or 25 percent, whiche ver is the line 12 applicable credit percentage described in paragraph (4) of line 13 subdivision (a), as modified by paragraph (3) of this subdivision, line 14 of the qualified e xpenditures paid or incurred during the taxable line 15 year by a qualified motion picture produced in the state at a line 16 certified studio construction project.
line 17 (2) For purposes of this subdi vision, the definitions in line 18 subdivision (b) shall apply e xcept as otherwise pro vided in this line 19 subdivision.
line 20 (A) “Certified studio construction project” means a construction line 21 or renovation project certified by the California Film Commission line 22 as having met all of the following criteria:
line 23 (i) The project pro vides for the construction or reno vation of line 24 one or more soundstages located in the state.
line 25 (ii) Actual construction or renovation expenditures are not less line 26 than twenty-fiv e million dollars ($25,000,000) of actual line 27 construction or renovation expenditures made over not more than line 28 five continuous calendar years.
line 29 (iii) The construction or reno vation of each certified studio line 30 construction project is performed in accordance with Section line 31 17053.99.
line 32 (iv) The construction or reno vation of each certified studio line 33 construction project commences pursuant to a foundation permit line 34 or a structural building permit for the construction or reno vation line 35 that is issued after the ef fective date of the act adopting this line 36 subdivision.
line 37 (v) The applicant shall not have received a California Competes line 38 Grant under Section 12096.6 of the Government Code for wages line 39 or investment related to construction of the studio construction line 40 project.
94 SB 485 — 25 —
line 1 (B) “Qualified motion picture” means a qualified motion picture, line 2 as defined in subdi vision (b), that meets all of the follo wing line 3 requirements:
line 4 (i) For each taxable year for which the credit is claimed by the line 5 qualified motion picture, films at least 50 percent of its principal line 6 photography stage shooting days on a soundstage or soundstages line 7 certified as a certified studio construction project, for which line 8 certification was issued within the prior 36 months. line 9 (ii) For each taxable year for which the credit is claimed by a line 10 qualified motion picture, incurs at least seven million five hundred line 11 thousand dollars ($7,500,000) in qualified wages for filming on a line 12 soundstage or soundstages certified as a certified studio line 13 construction project that are paid or incurred in that taxable year. line 14 (iii) Is produced by a qualified taxpayer that is either of the line 15 following:
line 16 (I) More than 50 percent o wned, directly or indirectly, by the line 17 same owner or o wners of the soundstage or soundstages that is line 18 part of a certified studio construction project on which the line 19 production is filmed.
line 20 (II) Entered into a contract or lease of 10 years or more with line 21 the owner or owners of a certified studio construction project on line 22 which the production is filmed.
line 23 (iv) Provides a di versity w orkplan that is appro ved by the line 24 California Film Commission.
line 25 (C) For purposes of this subdi vision, a qualified taxpayer and line 26 a taxpayer include a passthrough entity and a disregarded entity. line 27 (3) (A) The diversity workplan required pursuant to clause (iv) line 28 of subparagraph (B) of paragraph (2) shall include all of the line 29 following:
line 30 (i) A statement of the di versity goals the motion picture will line 31 seek to achieve in terms of qualified wages paid by race, ethnicity, line 32 and gender.
line 33 (ii) A statement of the di versity goals the motion picture will line 34 seek to achie ve for indi viduals whose w ages are e xcluded from line 35 qualified wages as set forth in clause (iv) of subparagraph (B) of line 36 paragraph (21) of subdi vision (b), with respect to both line 37 compensation and to the representation of diversity in the creative line 38 aspects of the motion picture.
line 39 (iii) A plan of what strate gies the motion picture will emplo y line 40 to achieve the goals in clauses (i) and (ii).
94 — 26 — SB 485
line 1 (B) The diversity workplan shall include goals that are broadly line 2 reflective of California’ s population, in terms of race, ethnicity , line 3 and gender.
line 4 (C) The California Film Commission shall approve or reject the line 5 diversity workplan of an applicant, to the extent allowed by federal line 6 and state law.
line 7 (D) (i) The California Film Commission shall not certify an y line 8 tax credit under this subdi vision until they have received a final line 9 diversity report from the applicant.
line 10 (ii) The final di versity report shall calculate and pro vide line 11 evidence for the e xtent to which the applicant met the di versity line 12 goals laid out in their diversity workplan.
line 13 (iii) The California Film Commission shall ha ve the authority line 14 to audit the final diversity report to determine if the diversity goals line 15 set forth in the applicant’s diversity workplan for the motion picture line 16 production were achieved.
line 17 (iv) If the California Film Commission determines that the line 18 applicant has met or made a good faith effort to meet the diversity line 19 goals in its di versity workplan, the applicant’s credit percentage line 20 described in paragraph (1) shall be increased by up to four line 21 percentage points as follows:
line 22 (I) By two percentage points if the California Film Commission line 23 determines that the applicant has met or made a good f aith effort line 24 to meet the di versity goals with respect to the di versity of the line 25 workforce emplo yed by the applicant in its di versity w orkplan line 26 statement.
line 27 (II) By two percentage points if the California Film Commission line 28 determines that the applicant has met or made a good f aith effort line 29 to meet the diversity goals with respect to individuals whose wages line 30 are excluded from qualified w ages as set forth in clause (i v) of line 31 subparagraph (B) of paragraph (21) of subdi vision (b), in its line 32 diversity workplan statement.
line 33 (E) The California Film Commission, in consultation with the line 34 Governor’s Office of Business and Economic Development, shall line 35 establish guidelines to evaluate diversity workplans as described line 36 in this paragraph. The guidelines shall be posted on the California line 37 Film Commission’s internet website.
line 38 (4) The credit allo wed under this subdi vision shall be line 39 administered in accordance with subdivisions (a), (b), (c), (d), (h), 94 SB 485 — 27 —
line 1 and (l), except that paragraph (7) of subdivision (b) shall not apply line 2 and paragraph (2) of subdivision (d) shall not apply. line 3 (5) Subparagraph (A) of paragraph (2), subparagraphs (A), (B), line 4 and (C) of paragraph (3), and paragraphs (4), (5), and (6) of line 5 subdivision (g) shall apply.
line 6 (6) A conflict between this subdi vision and an y other line 7 subdivisions in this section shall be reconciled in f avor of this line 8 subdivision.
line 9 (7) The aggregate amount of credit allocated by the California line 10 Film Commission pursuant to subdivisions (a) to (j), inclusive, of line 11 this section and Section 23698 shall not be reduced by the tax line 12 credit allowed pursuant to this subdivision. The amount of credit line 13 allowed by this subdivision shall not be limited by subdivision (i). line 14 (8) (A) The credit allocated pursuant to this subdi vision shall line 15 be allo wed for the taxable year in which the California Film line 16 Commission issues a credit certificate in accordance with the line 17 procedures provided for in subdivision (g) for the qualified motion line 18 picture. The California Film Commission shall issue a credit line 19 certificate to a qualified taxpayer upon completion of the qualified line 20 motion picture reflecting the credit amount allocated after qualified line 21 expenditures have been verified.
line 22 (B) (i) The California Film Commission, commencing with line 23 fiscal year 2021–22, shall allocate tax credits each year to qualified line 24 motion pictures meeting the criteria of this subdivision. The total line 25 amount of credits that may be allocated under this subdi vision is line 26 one hundred fifty million dollars ($150,000,000). A season of a line 27 series or feature film may not be allocated more than twelve million line 28 dollars ($12,000,000) under this subdivision. Recurring television line 29 series receiving an initial allocation under this subdi vision shall line 30 be allocated for subsequent seasons no more than allo wed under line 31 this paragraph.
line 32 (ii) A qualified motion picture shall not be eligible to receive a line 33 credit allocation under this subdi vision if that qualified motion line 34 picture receives a credit allocation under subdi visions (a) to (j), line 35 inclusive for the fiscal year. However, subject to paragraph (4) of line 36 subdivision (i), any television series, relocating television series, line 37 or any new television series based on a pilot for a ne w television line 38 series that is no longer eligible for a credit under this subdivision line 39 pursuant to paragraph (9) may apply to recei ve an allocation of line 40 credits pursuant to subdivisions (a) to (j), inclusive. 94 — 28 — SB 485
line 1 (C) In any year the tax credits under this paragraph ha ve been line 2 allocated by the California Film Commission, a qualified motion line 3 picture or a recurring television series that satisfies the criteria of line 4 this subdivision, but have not recei ved an allocation of credits, line 5 may apply to recei ve an allocation of credits pursuant to line 6 subdivision (i).
line 7 (D) Credits shall be allocated based on the assumption that the line 8 motion picture meets the diversity criteria specified in clause (iv) line 9 of subparagraph (D) of paragraph (3).
line 10 (9) (A) A qualified motion picture meeting the requirements line 11 of this subdivision during the first three years after the certified line 12 studio construction project is certified by the California Film line 13 Commission shall be allo wed a credit under this subdi vision line 14 commencing with its first year of filming in the certified studio line 15 construction project facility and for each successive year until the line 16 certified studio construction project has reached its fourth year line 17 after being certified, as long as the qualified motion picture line 18 continues to satisfy the criteria of this subdivision and to the extent line 19 the total credit amount the California Film Commission is permitted line 20 to allocate pursuant to subparagraph (B) of paragraph (8) has not line 21 previously been allocated.
line 22 (B) (i) Subject to the allocation of credits under paragraph (8) line 23 of this subdi vision, if the first year of production of a qualified line 24 motion picture occurs in the fourth year after the certified studio line 25 construction project is certified by the California Film Commission line 26 or any year thereafter, the qualified motion picture shall submit line 27 an application subject to the annual cap and the allocation credit line 28 amounts based on categories described in subdivision (i), subject line 29 to the modifications included in this subparagraph. line 30 (ii) For feature films and ne w television series, the jobs ratio line 31 used to rank qualified motion pictures in subparagraph (D) of line 32 paragraph (2) of subdi vision (g) shall be equal to the product of line 33 the jobs ratio calculated in paragraph (7) of subdi vision (b) and line 34 133 percent.
line 35 (10) Within six months of the effective date of this subdivision, line 36 the California Film Commission shall:
line 37 (A) Establish procedures to certify a certified studio construction line 38 project.
line 39 (B) Establish procedures to v erify a qualified motion picture line 40 has met the criteria established in this section for filming in a 94 SB 485 — 29 —
line 1 certified studio construction project facility. That procedure shall line 2 include a requirement that the qualified motion picture pay 0.5 line 3 percent of the appro ved credit amount to the Career P athways line 4 Training program specified in subdivision (e).
line 5 (C) (i) Implementation of this subdi vision for the 2021–22 line 6 fiscal year is deemed an emer gency and necessary for the line 7 immediate preservation of the public peace, health, and safety, or line 8 general welfare and, therefore, the California Film Commission line 9 is hereby authorized to adopt emergency regulations to implement line 10 this subdivision during the 2021–22 fiscal year in accordance with line 11 the rulemaking pro visions of the Administrative Procedure Act line 12 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 13 Division 3 of Title 2 of the Government Code).
line 14 (ii) The California Film Commission shall adopt regulations in line 15 order to implement this paragraph.
line 16 (11) In the case where the credit allo wed by this subdi vision line 17 exceeds the taxpayer’s tax liability computed under this part, the line 18 excess credit may be carried o ver to reduce the “net tax” in the line 19 following taxable year , and succeeding eight taxable years, if line 20 necessary, until the credit has been exhausted. line 21 (12) Upon completion of construction or reno vation of the line 22 soundstage or soundstages, the taxpayer shall certify to the line 23 California Film Commission that all contractors and subcontractors line 24 performing construction work on the soundstage or soundstages line 25 were required to use a skilled and trained w orkforce to perform line 26 such work in accordance with subdivision (b) of Section 17053.99. line 27 (13) (A) Upon completion of construction or renovation of the line 28 soundstage or soundstages, the soundstage or soundstages shall line 29 be continuously operated, maintained, and repaired by any of the line 30 following:
line 31 (i) A workforce that is paid at least the general pre vailing rate line 32 of per diem w ages for the type of w ork and geographic area, as line 33 determined by the Director of Industrial Relations pursuant to line 34 Sections 1773 and 1773.9 of the Labor Code, if such services are line 35 performed by a workforce that is employed directly, or indirectly line 36 through a motion picture payroll services company, by the owner line 37 or affiliate of the o wner of the soundstage or lessee of the line 38 soundstage described in subclause (II) of clause (iii) of line 39 subparagraph (B) of paragraph (2) of this subdivision. 94 — 30 — SB 485
line 1 (ii) A skilled and trained w orkforce as defined in Chapter 2.9 line 2 (commencing with Section 2600) of P art 1 of Di vision 2 of the line 3 Public Contract Code, if such services are provided by third-party line 4 vendors.
line 5 (B) Each year follo wing completion of construction or line 6 renovation of the soundstage or soundstages that a qualified motion line 7 picture is allocated a tax credit pursuant to this subdi vision, the line 8 qualified taxpayer shall certify to the California Film Commission line 9 both of the following:
line 10 (i) The total amount of payments to third-party v endors or line 11 qualified w ages for operation, maintenance, and repair of the line 12 certified soundstage.
line 13 (ii) The amount and percentage of the total amount of payments line 14 to third-party v endors or qualified w ages for operation, line 15 maintenance, and repair of the certified soundstage performed by line 16 each workforce described in subparagraph (A).
line 17 (C) If the percentage paid to w orkers in clause (i) of line 18 subparagraph (A) is certified to be 90 percent of the total amount line 19 under clause (i) of subparagraph (B) or greater , the qualified line 20 taxpayer shall be entitled to 100 percent of the applicable credit line 21 issued under this subdivision for the period. If the percentage paid line 22 to workers in clause (i) of subparagraph (A) is certified to be less line 23 than 90 percent of the total amount under clause (i) of subparagraph line 24 (B) but greater than or equal to 75 percent of the total amount line 25 under clause (i) of subparagraph (B), the qualified taxpayer shall line 26 be entitled to 50 percent of the applicable credit issued under this line 27 subdivision for the period. If the percentage paid to w orkers in line 28 clause (i) of subparagraph (A) is certified to be less than 75 percent line 29 of the total amount under clause (i) of subparagraph (B), the line 30 qualified taxpayer shall not be entitled to any credit issued under line 31 this subdivision for the applicable period.
line 32 (l) Section 41 shall not apply to the credits allo wed by this line 33 section.
line 34 SEC. 2. Section 23698 of the Revenue and Taxation Code is line 35 amended to read:
line 36 23698. (a) (1) For taxable years beginning on or after January line 37 1, 2020, there shall be allo wed to a qualified taxpayer a credit line 38 against the “tax, ” as defined in Section 23036, subject to a line 39 computation and ranking by the California Film Commission in line 40 subdivision (g) and the allocation amount categories described in 94 SB 485 — 31 —
line 1 subdivision (i), in an amount equal to 20 percent or 25 percent, line 2 whichever is the applicable credit percentage described in line 3 paragraph (4), of the qualified expenditures for the production of line 4 a qualified motion picture in California. A credit shall not be line 5 allowed under this section for an y qualified expenditures for the line 6 production of a motion picture in California if a credit has been line 7 claimed for those same expenditures under Section 23685 or 23695. line 8 (2) Except as otherwise provided in this section, the credit shall line 9 be allo wed for the taxable year in which the California Film line 10 Commission issues the credit certificate pursuant to subdi vision line 11 (g) for the qualified motion picture, but in no instance prior to July line 12 1, 2020, and shall be for the applicable percentage of all qualified line 13 expenditures paid or incurred by the qualified taxpayer in all line 14 taxable years for that qualified motion picture. line 15 (3) (A) The amount of the credit allowed to a qualified taxpayer line 16 shall be limited to the amount specified in the credit certificate line 17 issued to the qualified taxpayer by the California Film Commission line 18 pursuant to subdivision (g).
line 19 (B) In determining the amount specified in the credit certificate line 20 in subparagraph (A), the California Film Commission shall be line 21 limited to the following amounts of qualified expenditures for each line 22 qualified motion picture:
line 23 (i) In the case of a feature, up to one hundred million dollars line 24 ($100,000,000).
line 25 (ii) In the case of a miniseries described in clause (ii) of line 26 subparagraph (A) of paragraph (18) of subdivision (b), up to one line 27 hundred million dollars ($100,000,000).
line 28 (iii) In the case of a television series described in clause (iii) or line 29 clause (v) of subparagraph (A) of paragraph (18) of subdi vision line 30 (b), up to one hundred million dollars ($100,000,000) per season. line 31 (iv) In the case of an independent film, up to ten million dollars line 32 ($10,000,000).
line 33 (4) For purposes of paragraphs (1) and (2), the applicable credit line 34 percentage shall be:
line 35 (A) Twenty percent of the qualified e xpenditures attributable line 36 to the production of a qualified motion picture in California, line 37 including, but not limited to, a feature or a tele vision series that line 38 relocated to California that is in its second or subsequent years of line 39 receiving a tax credit allocation pursuant to this section, Section line 40 23685, or Section 23695.
94 — 32 — SB 485
line 1 (B) Twenty-five percent of the qualified e xpenditures line 2 attributable to the production of a qualified motion picture in line 3 California where the qualified motion picture is a television series line 4 that relocated to California in its first year of receiving a tax credit line 5 allocation pursuant to this section.
line 6 (C) Twenty-five percent of the qualified e xpenditures line 7 attributable to the production of a qualified motion picture that is line 8 an independent film.
line 9 (D) Additional credits shall be allowed for the production of a line 10 qualified motion picture whose applicable credit percentage is line 11 determined pursuant to subparagraph (A), in an aggregate amount line 12 not to e xceed 5 percent of the qualified e xpenditures under that line 13 subparagraph, as follows:
line 14 (i) (I) Five percent of qualified expenditures, excluding qualified line 15 wages described in subparagraph (E), relating to original line 16 photography outside the Los Angeles zone.
line 17 (II) For purposes of this clause and subparagraph (E):
line 18 (ia) “Applicable period” means the period that commences with line 19 preproduction and ends when original photography concludes. The line 20 applicable period includes the time necessary to strik e a remote line 21 location and return to the Los Angeles zone.
line 22 (ib) “Los Angeles zone” means the area within a circle 30 miles line 23 in radius from Beverly Boulevard and La Cienega Boulevard, Los line 24 Angeles, California, and includes Agua Dulce, Castaic, including line 25 Castaic Lak e, Leo Carrillo State Beach, Ontario International line 26 Airport, Piru, and Pomona, including the Los Angeles County line 27 Fairgrounds. The Metro-Goldwyn-Mayer , Inc. Conejo Ranch line 28 property is within the Los Angeles zone.
line 29 (ic) “Original photography” includes principal photography and line 30 reshooting original footage.
line 31 (id) “Qualified expenditures relating to original photograph y line 32 outside the Los Angeles zone” means amounts paid or incurred line 33 during the applicable period for tangible personal property line 34 purchased or leased and used or consumed outside the Los Angeles line 35 zone and relating to original photography outside the Los Angeles line 36 zone and qualified wages paid for services performed outside the line 37 Los Angeles zone and relating to original photography outside the line 38 Los Angeles zone.
94 SB 485 — 33 —
line 1 (ii) Five percent of the qualified e xpenditures relating to line 2 qualified visual effects attributable to the production of a qualified line 3 motion picture in California.
line 4 (E) (i) Notwithstanding subparagraph (D), an amount equal to line 5 10 percent of qualified wages paid for services performed relating line 6 to original photograph y outside of the Los Angeles zone to line 7 qualified individuals who reside in California but outside the Los line 8 Angeles zone shall be allo wed as an additional credit for the line 9 production of a qualified motion picture whose applicable credit line 10 percentage is determined pursuant to subparagraph (A). line 11 (ii) Notwithstanding subparagraph (D), an amount equal to 5 line 12 percent of qualified wages paid for services performed relating to line 13 original photography outside of the Los Angeles zone to qualified line 14 individuals who reside in California b ut outside the Los Angeles line 15 zone shall be allowed as an additional credit for the production of line 16 a qualified motion picture whose applicable credit percentage is line 17 determined pursuant to subparagraph (B) or (C). line 18 (b) For purposes of this section:
line 19 (1) “Ancillary product” means any article for sale to the public line 20 that contains a portion of, or any element of, the qualified motion line 21 picture.
line 22 (2) “Budget” means an estimate of all expenses paid or incurred line 23 during the production period of a qualified motion picture. It shall line 24 be the same budget used by the qualified taxpayer and production line 25 company for all qualified motion picture purposes. line 26 (3) “Clip use” means a use of any portion of a motion picture, line 27 other than the qualified motion picture, used in the qualified motion line 28 picture.
line 29 (4) “Credit certificate” means the certificate issued by the line 30 California Film Commission pursuant to subparagraph (D) of line 31 paragraph (3) of subdivision (g).
line 32 (5) (A) “Employee fringe benefits” means the amount allowable line 33 as a deduction under this part to the qualified taxpayer in volved line 34 in the production of the qualified motion picture, exclusive of any line 35 amounts contrib uted by emplo yees, for an y year during the line 36 production period with respect to any of the following:
line 37 (i) Employer contributions under an y pension, profit-sharing, line 38 annuity, or similar plan.
line 39 (ii) Employer-provided coverage under any accident or health line 40 plan for employees.
94 — 34 — SB 485
line 1 (iii) The employer’s cost of life or disability insurance provided line 2 to employees.
line 3 (B) Any amount treated as w ages under clause (i) of line 4 subparagraph (A) of paragraph (21) shall not be taken into account line 5 under this paragraph.
line 6 (6) “Independent film” means a motion picture with a minimum line 7 budget of one million dollars ($1,000,000) that is produced by a line 8 company that is not publicly traded and publicly traded companies line 9 do not o wn, directly or indirectly , more than 25 percent of the line 10 producing company.
line 11 (7) “Jobs ratio” means the amount of qualified w ages paid to line 12 qualified indi viduals di vided by the amount of tax credit, not line 13 including any additional credit allowed pursuant to subparagraphs line 14 (D) and (E) of paragraph (4) of subdi vision (a), as computed by line 15 the California Film Commission. F or the purposes of the line 16 calculation of the jobs ratio only , 70 percent of qualified line 17 expenditures for visual effects paid to third-party vendors for work line 18 performed in California shall be deemed to be qualified w ages line 19 paid to a qualified individual.
line 20 (8) “Licensing” means an y grant of rights to distrib ute the line 21 qualified motion picture, in whole or in part.
line 22 (9) “New use” means any use of a motion picture in a medium line 23 other than the medium for which it was initially created. line 24 (10) “Pilot for a new television series” means the initial episode line 25 produced for a proposed television series.
line 26 (11) (A) “Postproduction” means the final acti vities in a line 27 qualified motion picture’ s production, including editing, fole y line 28 recording, automatic dialogue replacement, sound editing, scoring, line 29 music track recording by musicians and music editing, beginning line 30 and end credits, ne gative cutting, ne gative processing and line 31 duplication, the addition of sound and visual effects, sound mixing, line 32 film-to-tape transfers, encoding, and color correction. line 33 (B) “Postproduction” does not include the manuf acture or line 34 shipping of release prints or their equivalent. line 35 (12) “Preproduction” means the process of preparation for actual line 36 physical production which begins after a qualified motion picture line 37 has recei ved a firm agreement of financial commitment, or is line 38 greenlit, with, for e xample, the establishment of a dedicated line 39 production office, the hiring of key crew members, and includes, 94 SB 485 — 35 —
line 1 but is not limited to, acti vities that include location scouting and line 2 execution of contracts with vendors of equipment and stage space. line 3 (13) “Principal photography” means the phase of production line 4 during which the motion picture is actually shot, as distinguished line 5 from preproduction and postproduction.
line 6 (14) “Production period” means the period be ginning with line 7 preproduction and ending upon completion of postproduction. line 8 (15) “Qualified entity” means a personal service corporation as line 9 defined in Section 269A(b)(1) of the Internal Re venue Code, a line 10 payroll services corporation, or any entity receiving qualified wages line 11 with respect to services performed by a qualified individual. line 12 (16) “Qualified expenditures” means amounts paid or incurred line 13 for tangible personal property purchased or leased, and used, within line 14 this state in the production of a qualified motion picture and line 15 payments, including qualified wages, for services performed within line 16 this state in the production of a qualified motion picture. line 17 (17) (A) “Qualified indi vidual” means an y indi vidual who line 18 performs services during the production period in an activity related line 19 to the production of a qualified motion picture. line 20 (B) “Qualified indi vidual” shall not include either of the line 21 following:
line 22 (i) Any individual related to the qualified taxpayer as described line 23 in subparagraph (A), (B), or (C) of Section 51(i)(1) of the Internal line 24 Revenue Code.
line 25 (ii) Any 5-percent owner, as defined in Section 416(i)(1)(B) of line 26 the Internal Revenue Code, of the qualified taxpayer. line 27 (18) (A) “Qualified motion picture” means a motion picture line 28 that is produced for distrib ution to the general public, re gardless line 29 of medium, that is one of the following:
line 30 (i) A feature with a minimum production budget of one million line 31 dollars ($1,000,000).
line 32 (ii) A miniseries consisting of two or more episodes, each longer line 33 than 40 minutes of running time, e xclusive of commercials, that line 34 is produced in California, with a minimum production b udget of line 35 one million dollars ($1,000,000) per episode.
line 36 (iii) A new television series of episodes longer than 40 minutes line 37 each of running time, exclusive of commercials, that is produced line 38 in California, with a minimum production b udget of one million line 39 dollars ($1,000,000) per episode.
line 40 (iv) An independent film.
94 — 36 — SB 485
line 1 (v) A television series that relocated to California. line 2 (vi) A pilot for a ne w television series that is longer than 40 line 3 minutes of running time, exclusive of commercials, that is produced line 4 in California, and with a minimum production b udget of one line 5 million dollars ($1,000,000).
line 6 (B) To qualify as a “qualified motion picture, ” all of the line 7 following conditions shall be satisfied:
line 8 (i) At least 75 percent of the principal photography days occur line 9 wholly in California or 75 percent of the production b udget is line 10 incurred for payment for services performed within the state and line 11 the purchase or rental of property used within the state. line 12 (ii) Production of the qualified motion picture is completed line 13 within 30 months from the date on which the qualified taxpayer’s line 14 application is approved by the California Film Commission. F or line 15 purposes of this section, a qualified motion picture is “completed” line 16 when the process of postproduction has been finished. line 17 (iii) The copyright for the motion picture is registered with the line 18 United States Copyright Office pursuant to Title 17 of the United line 19 States Code.
line 20 (iv) Principal photograph y of the qualified motion picture line 21 commences after the date on which the application is approved by line 22 the California Film Commission, but no later than 180 days after line 23 the date of that approval if the qualified motion picture has a budget line 24 with qualified expenditures of less than one hundred million dollars line 25 ($100,000,000), and no later than 240 days after the date of that line 26 approval in the case of a qualified motion picture with a b udget line 27 of qualified expenditures with at least one hundred million dollars line 28 ($100,000,000), unless death, disability , or disfigurement of the line 29 director or of a principal cast member; an act of God, including, line 30 but not limited to, fire, flood, earthquake, storm, hurricane, or other line 31 natural disaster; terrorist acti vities; or go vernment sanction has line 32 directly pre vented a production’ s ability to be gin principal line 33 photography within the prescribed 180- or 240-day commencement line 34 period.
line 35 (C) For the purposes of subparagraph (A), in computing the line 36 total w ages paid or incurred for the production of a qualified line 37 motion picture, all amounts paid or incurred by all persons or line 38 entities that share in the costs of the qualified motion picture shall line 39 be aggregated.
94 SB 485 — 37 —
line 1 (D) “Qualified motion picture” shall not include commercial line 2 advertising, music videos, a motion picture produced for pri vate line 3 noncommercial use, such as weddings, graduations, or as part of line 4 an educational course and made by students, a ne ws program, line 5 current events or public e vents program, talk sho w, game show, line 6 sporting e vent or acti vity, a wards sho w, telethon or other line 7 production that solicits funds, reality television program, clip-based line 8 programming if more than 50 percent of the content is comprised line 9 of licensed footage, documentaries, v ariety programs, daytime line 10 dramas, strip shows, one-half hour (air time) episodic tele vision line 11 shows, or an y production that f alls within the recordk eeping line 12 requirements of Section 2257 of Title 18 of the United States Code. line 13 (19) (A) “Qualified taxpayer” means a taxpayer who has paid line 14 or incurred qualified e xpenditures, participated in the Career line 15 Readiness requirement in Section 23695 and has been issued a line 16 credit certificate by the California Film Commission pursuant to line 17 subdivision (g).
line 18 (B) (i) In the case of any pass-thru entity, the determination of line 19 whether a taxpayer is a qualified taxpayer under this section shall line 20 be made at the entity level and any credit under this section is not line 21 allowed to the pass-thru entity, but shall be passed through to the line 22 partners or shareholders in accordance with applicable provisions line 23 of P art 10 (commencing with Section 17001) or P art 11 line 24 (commencing with Section 23001). For purposes of this paragraph, line 25 “pass-thru entity” means any entity taxed as a partnership or “S” line 26 corporation.
line 27 (ii) In the case of an “S” corporation, the credit allo wed under line 28 this section shall not be used by an “S” corporation as a credit line 29 against a tax imposed under Chapter 4.5 (commencing with Section line 30 23800) of Part 11 of Division 2.
line 31 (20) “Qualified visual ef fects” means visual ef fects where at line 32 least 75 percent or a minimum of ten million dollars ($10,000,000) line 33 of the qualified e xpenditures for the visual ef fects is paid or line 34 incurred in California.
line 35 (21) (A) “Qualified wages” means all of the following:
line 36 (i) Any w ages subject to withholding under Di vision 6 line 37 (commencing with Section 13000) of the Unemployment Insurance line 38 Code that were paid or incurred by an y taxpayer involved in the line 39 production of a qualified motion picture with respect to a qualified 94 — 38 — SB 485
line 1 individual for services performed on the qualified motion picture line 2 production within this state.
line 3 (ii) The portion of any employee fringe benefits paid or incurred line 4 by any taxpayer involved in the production of the qualified motion line 5 picture that are properly allocable to qualified w age amounts line 6 described in clauses (i), (iii), and (iv).
line 7 (iii) Any payments made to a qualified entity for services line 8 performed in this state by qualified individuals within the meaning line 9 of paragraph (17).
line 10 (iv) Remuneration paid to an independent contractor who is a line 11 qualified individual for services performed within this state by that line 12 qualified individual.
line 13 (B) “Qualified wages” shall not include any of the following:
line 14 (i) Expenses, including w ages, related to ne w use, reuse, clip line 15 use, licensing, secondary mark ets, or residual compensation, or line 16 the creation of any ancillary product, including, but not limited to, line 17 a soundtrack album, toy, game, trailer, or teaser. line 18 (ii) Expenses, including wages, paid or incurred with respect to line 19 acquisition, development, turnaround, or any rights thereto. line 20 (iii) Expenses, including wages, related to financing, overhead, line 21 marketing, promotion, or distribution of a qualified motion picture. line 22 (iv) Expenses, including wages, paid per person per qualified line 23 motion picture for writers, directors, music directors, music line 24 composers, music supervisors, producers, and performers, other line 25 than background actors with no scripted lines.
line 26 (22) “Residual compensation” means supplemental line 27 compensation paid at the time that a motion picture is e xhibited line 28 through ne w use, reuse, clip use, or in secondary mark ets, as line 29 distinguished from payments made during production. line 30 (23) “Reuse” means any use of a qualified motion picture in the line 31 same medium for which it w as created, following the initial use line 32 in that medium.
line 33 (24) “Secondary markets” means media in which a qualified line 34 motion picture is exhibited following the initial media in which it line 35 is exhibited.
line 36 (25) “Television series that relocated to California” means a line 37 television series, without regard to episode length or initial media line 38 exhibition, with a minimum production b udget of one million line 39 dollars ($1,000,000) per episode, that filmed at least 75 percent of line 40 principal photography days in its most recent season outside of 94 SB 485 — 39 —
line 1 California or has filmed all seasons outside of California and for line 2 which the taxpayer certifies that the credit pro vided pursuant to line 3 this section is the primary reason for relocating to California. line 4 (26) “Visual ef fects” means the creation, alteration, or line 5 enhancement of images that cannot be captured on a set or location line 6 during live action photography and therefore is accomplished in line 7 postproduction. It includes, but is not limited to, matte paintings, line 8 animation, set extensions, computer-generated objects, characters line 9 and environments, compositing (combining two or more elements line 10 in a final image), and wire remo vals. “Visual effects” does not line 11 include fully animated projects, whether created by traditional or line 12 digital means.
line 13 (c) (1) Notwithstanding subdivision (i) of Section 23036, in line 14 the case where the credit allo wed by this section e xceeds the line 15 taxpayer’s tax liability computed under this part, a qualified line 16 taxpayer may elect to assign an y portion of the credit allo wed line 17 under this section to one or more affiliated corporations for each line 18 taxable year in which the credit is allo wed. For purposes of this line 19 subdivision, “affiliated corporation” has the meaning provided in line 20 subdivision (b) of Section 25110, as that section was amended by line 21 Chapter 881 of the Statutes of 1993, as of the last day of the taxable line 22 year in which the credit is allo wed, except that “100 percent” is line 23 substituted for “more than 50 percent” wherever it appears in the line 24 section, and “v oting common stock” is substituted for “v oting line 25 stock” wherever it appears in the section.
line 26 (2) The election provided in paragraph (1):
line 27 (A) May be based on an y method selected by the qualified line 28 taxpayer that originally receives the credit.
line 29 (B) Shall be irrevocable for the taxable year the credit is allowed, line 30 once made.
line 31 (C) May be changed for an y subsequent taxable year if the line 32 election to make the assignment is expressly shown on each of the line 33 returns of the qualified taxpayer and the qualified taxpayer’ s line 34 affiliated corporations that assign and receive the credits. line 35 (D) Shall be reported to the Franchise Tax Board, in the form line 36 and manner specified by the Franchise Tax Board, along with all line 37 required information re garding the assignment of the credit, line 38 including the corporation number , the federal emplo yer line 39 identification number, or other taxpayer identification number of line 40 the assignee, and the amount of the credit assigned. 94 — 40 — SB 485
line 1 (3) (A) Notwithstanding an y other la w, a qualified taxpayer line 2 may sell any credit allowed under this section that is attrib utable line 3 to an independent film, as defined in paragraph (6) of subdivision line 4 (b), to an unrelated party.
line 5 (B) The qualified taxpayer shall report to the Franchise Tax line 6 Board prior to the sale of the credit, in the form and manner line 7 specified by the Franchise Tax Board, all required information line 8 regarding the purchase and sale of the credit, including the social line 9 security or other taxpayer identification number of the unrelated line 10 party to whom the credit has been sold, the f ace amount of the line 11 credit sold, and the amount of consideration recei ved by the line 12 qualified taxpayer for the sale of the credit.
line 13 (4) In the case where the credit allo wed under this section line 14 exceeds the “tax,” the excess credit may be carried over to reduce line 15 the “tax” in the follo wing taxable year , and succeeding eight line 16 taxable years, if necessary, until the credit has been exhausted. line 17 (5) A credit shall not be sold pursuant to this subdi vision to line 18 more than one taxpayer , nor may the credit be resold by the line 19 unrelated party to another taxpayer or other party. line 20 (6) A party that has been assigned or acquired tax credits under line 21 this subdivision shall be subject to the requirements of this section. line 22 (7) In no event may a qualified taxpayer assign or sell an y tax line 23 credit to the extent the tax credit allowed by this section is claimed line 24 on any tax return of the qualified taxpayer.
line 25 (8) In the e vent that both the taxpayer originally allocated a line 26 credit under this section by the California Film Commission and line 27 a taxpayer to whom the credit has been sold both claim the same line 28 amount of credit on their tax returns, the Franchise Tax Board may line 29 disallow the credit of either taxpayer , so long as the statute of line 30 limitations upon assessment remains open.
line 31 (9) Chapter 3.5 (commencing with Section 11340) of Part 1 of line 32 Division 3 of Title 2 of the Go vernment Code does not apply to line 33 any standard, criterion, procedure, determination, rule, notice, or line 34 guideline established or issued by the Franchise Tax Board line 35 pursuant to this subdivision.
line 36 (10) Subdivision (i) of Section 23036 shall not apply to an y line 37 credit sold pursuant to this subdivision.
line 38 (11) For purposes of this subdivision:
94 SB 485 — 41 —
line 1 (A) An affiliated corporation or corporations that are assigned line 2 a credit pursuant to paragraph (1) shall be treated as a qualified line 3 taxpayer pursuant to paragraph (1) of subdivision (a). line 4 (B) The unrelated party or parties that purchase a credit pursuant line 5 to paragraphs (3) to (10), inclusive, shall be treated as a qualified line 6 taxpayer pursuant to paragraph (1) of subdivision (a). line 7 (d) (1) No credit shall be allowed pursuant to this section unless line 8 the qualified taxpayer pro vides the follo wing to the California line 9 Film Commission:
line 10 (A) Identification of each qualified individual. line 11 (B) The specific start and end dates of production. line 12 (C) The total wages paid.
line 13 (D) The total amount of qualified w ages paid to qualified line 14 individuals.
line 15 (E) Aggregate data for indi viduals whose wages are excluded line 16 from qualified w ages by clause (i v) of subparagraph (B) of line 17 paragraph (21) of subdivision (b), including their gender, ethnic, line 18 and racial makeup.
line 19 (F) The cop yright re gistration number , as reflected on the line 20 certificate of registration issued under the authority of Section 410 line 21 of Title 17 of the United States Code, relating to re gistration of line 22 claim and issuance of certificate. The registration number shall be line 23 provided on the return claiming the credit.
line 24 (G) The total amounts paid or incurred to purchase or lease line 25 tangible personal property used in the production of a qualified line 26 motion picture.
line 27 (H) Information to substantiate its qualified expenditures. line 28 (I) Information required by the California Film Commission line 29 under re gulations promulg ated pursuant to subdi vision (g) line 30 necessary to verify the amount of credit claimed. line 31 (J) Data regarding the diversity of the workforce employed by line 32 the applicant on the qualified motion picture, as described in line 33 subdivision (g).
line 34 (K) Documentation v erifying completion of the Career line 35 Readiness requirement.
line 36 (L) Documentation verifying that the qualified taxpayer paid a line 37 fee as described in subdivision (e).
line 38 (2) (A) Based on the information pro vided in paragraph (1), line 39 the California Film Commission shall recompute the jobs ratio line 40 previously computed in subdi vision (g) and compare this 94 — 42 — SB 485
line 1 recomputed jobs ratio to the jobs ratio that the qualified taxpayer line 2 previously listed on the application submitted pursuant to line 3 subdivision (g).
line 4 (B) (i) If the California Film Commission determines that the line 5 jobs ratio has been reduced by more than 10 percent for a qualified line 6 motion picture, the California Film Commission shall reduce the line 7 amount of credit allo wed by an equal percentage, unless the line 8 qualified taxpayer demonstrates, and the California Film line 9 Commission determines, that reasonable cause exists for the jobs line 10 ratio reduction.
line 11 (ii) If the California Film Commission determines that the jobs line 12 ratio has been reduced by more than 20 percent for a qualified line 13 motion picture, the California Film Commission shall not accept line 14 an application described in subdi vision (g) from that qualified line 15 taxpayer or an y member of the qualified taxpayer’ s controlled line 16 group for a period of not less than one year from the date of that line 17 determination, unless the qualified taxpayer demonstrates, and the line 18 California Film Commission determines, that reasonable cause line 19 exists for the jobs ratio reduction.
line 20 (C) For the purposes of this paragraph, “reasonable cause” line 21 means unforeseen circumstances beyond the control of the qualified line 22 taxpayer, such as, but not limited to, the cancellation of a television line 23 series prior to the completion of the scheduled number of episodes line 24 or other similar circumstances as determined by the California line 25 Film Commission in re gulations to be adopted pursuant to line 26 subdivision (e).
line 27 (e) (1) (A) Subject to the Administrative Procedure Act line 28 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 29 Division 3 of Title 2 of the Government Code), the California Film line 30 Commission shall adopt rules and regulations to implement a pilot line 31 Career Pathways Training program including a fee to be paid by line 32 the qualified taxpayer, if the qualified taxpayer recei ves a credit line 33 under this section, to fund technical skills training to indi viduals line 34 from underserved communities for entry into film and tele vision line 35 industry jobs. The California Film Commission shall (i) identify line 36 a not-for-profit fiscal agent with direct relationships to industry line 37 skills training programs to manage the funds; and (ii) eng age line 38 labor-management jointly administered training programs with line 39 skills training focused on the entertainment industry to implement line 40 the program with California Film Commission appro val and 94 SB 485 — 43 —
line 1 oversight. With re gard to the Career Readiness requirement in line 2 Section 23695, the California Film Commission shall identify line 3 training and public service opportunities that may include, but not line 4 be limited to, hiring interns, public service announcements, and line 5 community outreach shall continue. The California Film line 6 Commission may prescribe rules and regulations to carry out the line 7 purposes of this section, including, subparagraph (D) of paragraph line 8 (4) of subdi vision (a) and clause (i v) of subparagraph (D) of line 9 paragraph (2) of subdi vision (g), and including an y rules and line 10 regulations necessary to establish procedures, processes, line 11 requirements, application fee structure, and rules identified in or line 12 required to implement this section, including credit and logo line 13 requirements and credit allocation procedures over multiple fiscal line 14 years where the qualified taxpayer is producing a series of features line 15 that will be filmed concurrently.
line 16 (B) Notwithstanding any other law, prior to preparing a notice line 17 of proposed action pursuant to Section 11346.4 of the Government line 18 Code and prior to making any revision to the proposed regulation line 19 other than a change that is nonsubstantial or solely grammatical line 20 in nature, the Go vernor’s Office of Business and Economic line 21 Development shall first appro ve the proposed re gulation or line 22 proposed change to a proposed regulation regarding allocating the line 23 credit pursuant to subdi vision (i), computing the jobs ratio as line 24 described in subdi visions (d) and (g), and defining “reasonable line 25 cause” pursuant to subparagraph (C) of paragraph (2) of subdivision line 26 (d).
line 27 (2) (A) Implementation of this section for the 2020–21 fiscal line 28 year is deemed an emer gency and necessary for the immediate line 29 preservation of the public peace, health, and safety , or general line 30 welfare and, therefore, the California Film Commission is hereby line 31 authorized to adopt emer gency re gulations to implement this line 32 section during the 2020–21 fiscal year in accordance with the line 33 rulemaking pro visions of the Administrative Procedure Act line 34 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 35 Division 3 of Title 2 of the Government Code).
line 36 (B) Nothing in this paragraph shall be construed to require the line 37 Governor’s Office of Business and Economic De velopment to line 38 approve emergency regulations adopted pursuant to this paragraph. line 39 (3) The California Film Commission shall not be required to line 40 prepare an economic impact analysis pursuant to the Administrative 94 — 44 — SB 485
line 1 Procedure Act (Chapter 3.5 (commencing with Section 11340) of line 2 Part 1 of Division 3 of Title 2 of the Government Code) with regard line 3 to any rules and regulations adopted pursuant to this subdivision. line 4 (f) If the qualified taxpayer f ails to pro vide the cop yright line 5 registration number as required in subparagraph (E) of paragraph line 6 (1) of subdivision (d), the credit shall be disallowed and assessed line 7 and collected under Section 19051 until the procedures are line 8 satisfied.
line 9 (g) For purposes of this section, the California Film Commission line 10 shall do the following:
line 11 (1) Subject to the requirements of subparagraphs (A) to (E), line 12 inclusive, of paragraph (2), on or after July 1, 2020, and before line 13 July 1, 2025, 2030, in tw o or more allocation periods per fiscal line 14 year, allocate tax credits to applicants.
line 15 (2) (A) Establish a procedure for applicants to file with the line 16 California Film Commission a written application, on a form jointly line 17 prescribed by the California Film Commission and the Franchise line 18 Tax Board for the allocation of the tax credit. The application shall line 19 include, but not be limited to, the following information:
line 20 (i) The budget for the motion picture production. line 21 (ii) The number of production days.
line 22 (iii) A financing plan for the production.
line 23 (iv) The diversity of the workforce employed by the applicant, line 24 including, but not limited to, the ethnic and racial mak eup of the line 25 individuals employed by the applicant during the production of line 26 the qualified motion picture, to the extent possible. line 27 (v) All members of a combined reporting group, if kno wn at line 28 the time of the application.
line 29 (vi) Financial information, if available, including, but not limited line 30 to, the most recently produced balance sheets, annual statements line 31 of profits and losses, audited or unaudited financial statements, line 32 summary budget projections or results, or the functional equivalent line 33 of these documents of a partnership or owner of a single member line 34 limited liability company that is disregarded pursuant to Section line 35 23038. The information provided pursuant to this clause shall be line 36 confidential and shall not be subject to public disclosure. line 37 (vii) The names of all partners in a partnership not publicly line 38 traded or the names of all members of a limited liability company line 39 classified as a partnership not publicly traded for California income line 40 tax purposes that ha ve a financial interest in the applicant’ s 94 SB 485 — 45 —
line 1 qualified motion picture. The information pro vided pursuant to line 2 this clause shall be confidential and shall not be subject to public line 3 disclosure.
line 4 (viii) The amount of qualified w ages the applicant e xpects to line 5 pay to qualified individuals.
line 6 (ix) The amount of tax credit the applicant computes the line 7 qualified motion picture will receive, applying the applicable credit line 8 percentages described in paragraph (4) of subdivision (a). line 9 (x) A statement establishing that the tax credit described in this line 10 section is a significant factor in the applicant’s choice of location line 11 for the qualified motion picture. The statement shall include line 12 information about whether the qualified motion picture is at risk line 13 of not being filmed or specify the jurisdiction or jurisdictions in line 14 which the qualified motion picture will be located in the absence line 15 of the tax credit. The statement shall be signed by an officer or line 16 executive of the applicant.
line 17 (xi) The applicant’s written policy against unlawful harassment, line 18 including, but not limited to, se xual harassment, which includes line 19 procedures for reporting and in vestigating harassment claims, a line 20 phone number for an indi vidual who will be responsible for line 21 receiving harassment claims, and a statement that the compan y line 22 will not retaliate ag ainst an indi vidual who reports harassment. line 23 The applicant shall also indicate how the policy will be distributed line 24 to emplo yees and include a summary of education training line 25 resources, including the prohibition ag ainst, and pre vention and line 26 correction of, sexual harassment and remedies available. line 27 (xii) The ethnic and racial mak eup and gender of indi viduals line 28 whose wages are e xcluded from qualified w ages as set forth in line 29 clause (iv) of subparagraph (B) of paragraph (21) of subdi vision line 30 (b).
line 31 (xiii) A summary of the applicant’ s v oluntary programs to line 32 increase the representation of minorities and w omen in the job line 33 classifications that are not included in qualified wages as set forth line 34 in clause (iv) of subparagraph (B) of paragraph (21) of subdivision line 35 (b) and information about ho w these programs are publicized to line 36 interested parties. The officer or e xecutive referenced in clause line 37 (x) who is signing the statement shall pro vide additional line 38 information about these programs, if needed and upon request, to line 39 the California Film Commission.
94 — 46 — SB 485
line 1 (xiv) Any other information deemed relevant by the California line 2 Film Commission or the Franchise Tax Board.
line 3 (B) Establish criteria, consistent with the requirements of this line 4 section, for allocating tax credits.
line 5 (C) Determine and designate applicants who meet the line 6 requirements of this section.
line 7 (D) (i) For purposes of allocating the credit amounts subject to line 8 the categories described in subdi vision (i) in an y fiscal year, the line 9 California Film Commission shall do all of the following:
line 10 (ii) For each allocation date and for each cate gory, list each line 11 applicant from highest to lo west according to the jobs ratio as line 12 computed by the California Film Commission.
line 13 (iii) Subject to the applicable credit percentage, allocate the line 14 credit to each applicant according to the highest jobs ratio, working line 15 down the list, until the credit amount is exhausted. line 16 (iv) Pursuant to regulations adopted pursuant to subdivision (e), line 17 the California Film Commission may increase the jobs ratio by up line 18 to 25 percent if a qualified motion picture increases economic line 19 activity in California according to criteria de veloped by the line 20 California Film Commission that would include, but not be limited line 21 to, such factors as, the amount of the production and postproduction line 22 spending in California, the utilization of scoring musicians in line 23 California, and other criteria measuring economic impact in line 24 California as determined by the California Film Commission. line 25 (v) Notwithstanding an y other la w, an y tele vision series, line 26 relocating television series, or any new television series based on line 27 a pilot for a new television series that has been approved and issued line 28 a credit allocation by the California Film Commission under this line 29 section, Section 17053.98, 17053.85, 17053.95, 23685, or 23695 line 30 shall be issued a credit for each subsequent season, for the life of line 31 that television series whenever credits are allocated within a fiscal line 32 year. The California Film Commission shall limit the amount of line 33 credits an y recurring tele vision series recei ves in a subsequent line 34 season to no more than the amount reserved in its prior fiscal year line 35 Credit Allocation Letter or Letters, or if no amounts were reserved line 36 in the prior fiscal year , the most immediate prior fiscal year in line 37 which a Credit Allocation Letter or Letters were recei ved. In the line 38 event that insufficient tax credits are available to fund all recurring line 39 television series pursuant to this clause for an y fiscal year or in line 40 the event the California Film Commission projects, in collaboration 94 SB 485 — 47 —
line 1 with the Department of Finance, that there will be insufficient tax line 2 credits available to fund all recurring television series in either of line 3 the subsequent two fiscal years, the California Film Commission line 4 shall make the following adjustments in the order given until the line 5 shortfall, or any projected shortfall for the two subsequent fiscal line 6 years, for recurring television series is eliminated:
line 7 (I) Notwithstanding clause (iii) of subparagraph (A) of paragraph line 8 (2) of subdivision (i), the California Film Commission may redirect line 9 up to 100 percent of the credit amounts allocated to the relocating line 10 television series cate gory to recurring tele vision series for that line 11 fiscal year until the shortfall or projected shortfall is eliminated. line 12 (II) Notwithstanding clause (i v) of subparagraph (A) of line 13 paragraph (2) of subdivision (i), the California Film Commission line 14 may redirect up to 100 percent of the credit amounts allocated to line 15 a new television series to recurring television series for that fiscal line 16 year until the shortfall or projected shortfall is eliminated. line 17 (III) Notwithstanding clause (ii) of subparagraph (A) of line 18 paragraph (2) of subdivision (i), the California Film Commission line 19 may redirect up to 100 percent of the credit allocations from the line 20 features category to the recurring tele vision series cate gory for line 21 that fiscal year until the shortfall is eliminated. line 22 (IV) Allocate up to 25 percent of total credit allocations that line 23 would otherwise be allocated in the 2024–25 2029–30 fiscal year line 24 to recurring tele vision series in the current fiscal year until the line 25 shortfall is eliminated. Any amounts transferred for allocation in line 26 the current fiscal year shall be subtracted from the amount allowed line 27 to be allocated in the 2024–25 2029–30 fiscal year as specified in line 28 subdivision (i). Notwithstanding paragraph (3), the credit line 29 allocations that are subtracted from 2024–25 2029–30 shall not be line 30 certified until July 1, 2025 2030, or later.
line 31 (V) The California Film Commission shall consult with the line 32 qualified taxpayers who are producing the recurring tele vision line 33 series for purposes of negotiating a minimally impactful reduction line 34 in the amount of credits awarded to each recurring television series line 35 for that fiscal year until the shortfall is eliminated. line 36 (E) Subject to the annual cap and the allocation credit amounts line 37 based on cate gories described in subdi vision (i), allocate an line 38 aggregate amount of credits under this section and Section line 39 17053.98, and allocate an y carryover of unallocated or unused line 40 credits from prior years and Sections 17053.85, 17053.95, 23685, 94 — 48 — SB 485
line 1 and 23695, and the amount of an y credits reduced pursuant to line 2 paragraph (2) of subdivision (d).
line 3 (3) Certify tax credits allocated to qualified taxpayers. line 4 (A) Establish a verification procedure to update the information line 5 in subparagraph (A) of paragraph (2) of subdivision (g), including, line 6 but not limited to, all of the following:
line 7 (i) The amounts of qualified e xpenditures paid or incurred by line 8 the applicant.
line 9 (ii) The diversity of the workforce employed by the applicant. line 10 (iii) The ethnic and racial mak eup and gender of indi viduals line 11 whose wages are excluded from qualified wages by clause (iv) of line 12 subparagraph (B) of paragraph (21) of subdivision (b). line 13 (B) Establish audit requirements that shall be satisfied before a line 14 credit certificate may be issued by the California Film Commission. line 15 (C) (i) Establish a procedure for a qualified taxpayer to report line 16 to the California Film Commission, prior to the issuance of a credit line 17 certificate, the following information:
line 18 (I) If readily available, a list of the states, pro vinces, or other line 19 jurisdictions in which an y member of the applicant’ s combined line 20 reporting group in the same business unit as the qualified taxpayer line 21 that, in the preceding calendar year , has produced a qualified line 22 motion picture intended for release in the United States mark et. line 23 For purposes of this clause, “qualified motion picture” shall not line 24 include any episodes of a television series that were complete or line 25 in production prior to July 1, 2020.
line 26 (II) Whether a qualified motion picture described in subclause line 27 (I) was awarded any financial incentive by the state, province, or line 28 other jurisdiction that w as predicated on the performance of line 29 primary principal photography or postproduction in that location. line 30 (ii) The California Film Commission may provide that the report line 31 required by this subparagraph be filed in a single report provided line 32 on a calendar year basis for those qualified taxpayers that receive line 33 multiple credit certificates in a calendar year. line 34 (D) Issue a credit certificate to a qualified taxpayer upon line 35 completion of the qualified motion picture reflecting the credit line 36 amount allocated after qualified e xpenditures have been verified line 37 and the jobs ratio computed under this section. The amount of line 38 credit shown on the credit certificate shall not exceed the amount line 39 of credit allocated to that qualified taxpayer pursuant to this section. 94 SB 485 — 49 —
line 1 (4) Obtain, when possible, the follo wing information from line 2 applicants that do not receive an allocation of credit:
line 3 (A) Whether the qualified motion picture that w as the subject line 4 of the application was completed.
line 5 (B) If completed, in which state or foreign jurisdiction was the line 6 primary principal photography completed.
line 7 (C) Whether the applicant recei ved an y financial incenti ves line 8 from the state or foreign jurisdiction to make the qualified motion line 9 picture in that location.
line 10 (5) Provide the Legislative Analyst’s Office, upon request, any line 11 or all application materials or an y other materials received from, line 12 or submitted by, the applicants, in electronic format when available, line 13 including, but not limited to, information pro vided pursuant to line 14 clauses (i) to (xi) inclusive, of subparagraph (A) of paragraph (2) line 15 and the di versity workplans provided pursuant to clause (i v) of line 16 subparagraph (B) of paragraph (2) of subdivision (k). line 17 (6) The information provided to the California Film Commission line 18 pursuant to this section shall constitute confidential tax information line 19 for purposes of Article 2 (commencing with Section 19542) of line 20 Chapter 7 of Part 10.2.
line 21 (7) (A) Notwithstanding any other law, on or after July 1, 2025, line 22 2030, the California Film Commission may allocate, pursuant to line 23 this section, any previously allocated credits not certified that have line 24 not previously been added to credit amounts available for allocation line 25 under this section or a successor section or sections. line 26 (B) For purposes of this section, “pre viously allocated credits line 27 not certified” means either:
line 28 (i) Credits allocated under paragraph (1) for which the qualified line 29 taxpayer to which the credit amounts were originally allocated has line 30 notified the California Film Commission in writing that the line 31 qualified taxpayer will not request certification for the allocated line 32 credits.
line 33 (ii) The difference between the amount of credits allocated under line 34 paragraph (1) to a qualified taxpayer and the amount of credits the line 35 California Film Commission certified, for that qualified taxpayer. line 36 For purposes of calculating the dif ference, the California Film line 37 Commission shall not consider any credit amounts for which the line 38 qualified taxpayer notifies the California Film Commission under line 39 clause (i).
94 — 50 — SB 485
line 1 (8) Notwithstanding any other la w, on or after July 1, 2025, line 2 2030, the California Film Commission may allocate, pursuant to line 3 this section, an y credit amounts described in subparagraphs (B) line 4 and (E) of paragraph (1) of subdivision (i) that have not previously line 5 been added to credit amounts a vailable for allocation under this line 6 section or a successor section or sections.
line 7 (9) The California Film Commission shall submit a report to line 8 the Legislature, on an annual basis beginning January 1, 2022, on line 9 aggregate diversity information for the productions allocated tax line 10 credits allo wed in this section and the di versity of the motion line 11 picture production industry in California more generally. line 12 (h) (1) The California Film Commission shall annually provide line 13 the Legislative Analyst’s Office, the Franchise Tax Board, and the line 14 California Department of Tax and Fee Administration with a list line 15 of qualified taxpayers and the tax credit amounts allocated to each line 16 qualified taxpayer by the California Film Commission. The list line 17 shall include the names and taxpayer identification numbers, line 18 including taxpayer identification numbers of each partner or line 19 shareholder, as applicable, of the qualified taxpayer. line 20 (2) (A) Notwithstanding paragraph (6) of subdivision (g), the line 21 California Film Commission shall annually post on its internet line 22 website and make available for public release the following:
line 23 (i) A table which includes all of the follo wing information: a line 24 list of qualified taxpayers and the tax credit amounts allocated to line 25 each qualified taxpayer by the California Film Commission, the line 26 number of production days in California the qualified taxpayer line 27 represented in its application would occur, the number of California line 28 jobs that the qualified taxpayer represented in its application would line 29 be directly created by the production, and the total amount of line 30 qualified expenditures expected to be spent by the production. line 31 (ii) A narrative staff summary describing the production of the line 32 qualified taxpayer as well as background information re garding line 33 the qualified taxpayer contained in the qualified taxpayer’ s line 34 application for the credit.
line 35 (iii) For qualified taxpayers allocated a credit, the aggre gate line 36 diversity information collected pursuant to clauses (i v) and (xii) line 37 of subparagraph (A) of paragraph (2) of subdivision (g) organized line 38 per production and an aggre gate compilation describing the line 39 voluntary programs collected pursuant to clause (xiii) of line 40 subparagraph (A) of paragraph (2) of subdivision (g). 94 SB 485 — 51 —
line 1 (B) Nothing in this subdivision shall be construed to make the line 2 information submitted by an applicant for a tax credit under this line 3 section a public record.
line 4 (3) The California Film Commission shall pro vide each city line 5 and county in California with an instructional guide that includes, line 6 but is not limited to, a re view of best practices for f acilitating line 7 motion picture production in local jurisdictions, resources on line 8 hosting and encouraging motion picture production, and the line 9 California Film Commission’ s Model Filming Ordinance. The line 10 California Film Commission shall maintain on its internet website line 11 a list of initiati ves by locality that encourage motion picture line 12 production in regions across the state. The list shall be distributed line 13 to each appro ved applicant for the program to highlight local line 14 jurisdictions that offer incentives to facilitate film production. line 15 (i) (1) (A) The aggre gate amount of credits that may be line 16 allocated for a fiscal year pursuant to this section and Section line 17 17053.98, except as provided in subdivision (k) of this section and line 18 subdivision (k) of Section 17053.98, is three hundred thirty million line 19 dollars ($330,000,000), plus any amount described in subparagraph line 20 (B), (C), (D), or (E) in credits for the 2020–21 fiscal year and each line 21 fiscal year thereafter, through and including the 2024–25 2029–30 line 22 fiscal year, except as provided in paragraph (7) of subdivision (g), line 23 plus the amount described in subparagraph (F) in credits for the line 24 2021–22 and 2022–23 fiscal years.
line 25 (B) (i) Subject to clauses (ii) and (iii), the unused allocation line 26 credit amount, if any, for the preceding fiscal year. line 27 (ii) The amount of unused credit allocation attrib utable to line 28 independent films shall only be allocated according to clause (i) line 29 of subparagraph (A) of paragraph (2).
line 30 (iii) The total amount of an y unused credit allocation amount line 31 that is remaining shall only be allocated pursuant to clause (iv) of line 32 subparagraph (A) of paragraph (2).
line 33 (C) The amount of previously allocated credits not certified. line 34 (D) The amount of an y credits reduced pursuant to paragraph line 35 (2) of subdivision (d).
line 36 (E) That portion of any unused allocation credit amount, if any, line 37 attributable to Section 17053.85, 17053.95, 23685, or 23695 line 38 available for that fiscal year in a manner as determined by line 39 regulations promulgated by the California Film Commission. 94 — 52 — SB 485
line 1 (F) (i) For fiscal years 2021–22 and 2022–23, the California line 2 Film Commission shall allocate an additional fifteen million dollars line 3 ($15,000,000) in credits to be granted e xclusively to tele vision line 4 series that relocate to California.
line 5 (I) Notwithstanding subparagraph (A) of paragraph (2) of this line 6 subdivision and clause (v) of subparagraph (D) of paragraph (2) line 7 of subdi vision (g), the mone ys allocated pursuant to this line 8 subparagraph shall not be redirected or reallocated. line 9 (II) Notwithstanding paragraph (25) of subdi vision (b), for line 10 purposes of this subparagraph, a “tele vision series that relocated line 11 to California” means a television series, without regard to episode line 12 length or initial media e xhibition, with a minimum production line 13 budget of one million dollars ($1,000,000) per episode that both line 14 filmed at least 75 percent of principal photography days for at least line 15 one episode outside of California and has not filmed more than 25 line 16 percent of principal photograph y days for an y episode inside of line 17 California.
line 18 (ii) For fiscal years 2021–22 and 2022-23, the California Film line 19 Commission shall allocate an additional se venty-five million line 20 dollars ($75,000,000) in credits to be granted e xclusively to line 21 recurring television series.
line 22 (2) (A) Notwithstanding the foregoing, and subject to paragraph line 23 (4) of this subdivision and changes in allocations pursuant to clause line 24 (v) of subparagraph (D) of paragraph (2) of subdi vision (g), the line 25 California Film Commission shall allocate the credit amounts line 26 subject to the following categories:
line 27 (i) Independent films with qualified expenditures of ten million line 28 dollars ($10,000,000) or less shall be allocated 4.8 percent of the line 29 amount specified in paragraph (1). Independent films with qualified line 30 expenditures in excess of ten million dollars ($10,000,000) shall line 31 be allocated 3.2 percent of the amount specified in paragraph (1). line 32 These amounts shall be in addition to any unused allocation credit line 33 amount, if an y, for the preceding fiscal year as described in line 34 subparagraph (B) of paragraph (1).
line 35 (ii) Features shall be allocated 35 percent of the amount specified line 36 in paragraph (1).
line 37 (iii) A relocating television series shall be allocated 17 percent line 38 of the amount specified in paragraph (1).
line 39 (iv) A new television series, pilots for a ne w television series, line 40 miniseries, and recurring tele vision series shall be allocated 40 94 SB 485 — 53 —
line 1 percent of the amount specified in paragraph (1), plus any unused line 2 allocation credit amount, if an y, for the preceding fiscal year as line 3 described in subparagraph (B) of paragraph (1).
line 4 (B) Within an y allocation period for credits to a relocating line 5 television series, an y unused amount shall be reallocated to the line 6 category described in clause (iv) of subparagraph (A) and, if any line 7 unused amount remains, reallocated in the next allocation period line 8 for credits to a relocating television series.
line 9 (C) With respect to a relocating television series issued a credit line 10 in a subsequent year pursuant to clause (v) of subparagraph (D) line 11 of paragraph (2) of subdivision (g), that subsequent credit amount line 12 shall be allowed from the allocation amount described in clause line 13 (iv) of subparagraph (A).
line 14 (3) Any act that reduces the amount that may be allocated line 15 pursuant to paragraph (1) constitutes a change in state tax es for line 16 the purpose of increasing revenues within the meaning of Section line 17 3 of Article XIIIA of the California Constitution and may be passed line 18 by not less than two-thirds of all Members elected to each of the line 19 two houses of the Legislature.
line 20 (4) (A) Except as pro vided in subparagraph (B), a qualified line 21 motion picture, as defined in subdivision (k), shall not be eligible line 22 for an allocation under subdi visions (a) to (j), inclusi ve, if it line 23 receives a credit under subdivision (k) during that fiscal year. line 24 (B) Notwithstanding an y other pro vision in this section, a line 25 recurring television series, as that term is used under subdivision line 26 (k), that is no longer eligible for the credit in paragraph (9) of line 27 subdivision (k) shall be eligible to apply for an allocation of credits line 28 under subdivisions (a) to (j), inclusive.
line 29 (j) The California Film Commission shall have the authority to line 30 allocate tax credits in accordance with this section and in line 31 accordance with any regulations prescribed pursuant to subdivision line 32 (e) upon adoption.
line 33 (k) (1) For taxable years beginning on or after January 1, 2022, line 34 and before January 1, 2032, there shall be allo wed to a qualified line 35 taxpayer a credit ag ainst the “tax,” as defined in Section 23036, line 36 subject to allocation by the California Film Commission, in an line 37 amount equal to 20 percent or 25 percent, whiche ver is the line 38 applicable credit percentage described in paragraph (4) of line 39 subdivision (a), as modified by paragraph (3) of this subdivision, line 40 of the qualified e xpenditures paid or incurred during the taxable 94 — 54 — SB 485
line 1 year by a qualified motion picture produced in the state at a line 2 certified studio construction project.
line 3 (2) For purposes of this subdi vision, the definitions in line 4 subdivision (b) shall apply e xcept as otherwise pro vided in this line 5 subdivision.
line 6 (A) “Certified studio construction project” means a construction line 7 or renovation project certified by the California Film Commission line 8 as having met all of the following criteria:
line 9 (i) The project pro vides for the construction or reno vation of line 10 one or more soundstages located in the state.
line 11 (ii) Actual construction or renovation expenditures are not less line 12 than twenty-fiv e million dollars ($25,000,000) of actual line 13 construction or renovation expenditures made over not more than line 14 five continuous calendar years.
line 15 (iii) The construction or reno vation of each certified studio line 16 construction project is performed in accordance with Section line 17 17053.99.
line 18 (iv) The construction or reno vation of each certified studio line 19 construction project commences pursuant to a foundation permit line 20 or a structural building permit for the construction or reno vation line 21 that is issued after the ef fective date of the act adopting this line 22 subdivision.
line 23 (v) The applicant shall not have received a California Competes line 24 Grant under Section 12096.6 of the Government Code for wages line 25 or investment related to construction of the studio construction line 26 project.
line 27 (B) “Qualified motion picture” means a qualified motion picture, line 28 as defined in subdi vision (b), that meets all of the follo wing line 29 requirements:
line 30 (i) For each taxable year for which the credit is claimed by the line 31 qualified motion picture, films at least 50 percent of its principal line 32 photography stage shooting days on a soundstage or soundstages line 33 certified as a certified studio construction project, for which line 34 certification was issued within the prior 36 months. line 35 (ii) For each taxable year for which the credit is claimed by a line 36 qualified motion picture, incurs at least seven million five hundred line 37 thousand dollars ($7,500,000) in qualified wages for filming on a line 38 soundstage or soundstages certified as a certified studio line 39 construction project that are paid or incurred in that taxable year. 94 SB 485 — 55 —
line 1 (iii) Is produced by a qualified taxpayer that is either of the line 2 following:
line 3 (I) More than 50 percent o wned, directly or indirectly, by the line 4 same owner or o wners of the soundstage or soundstages that is line 5 part of a certified studio construction project on which the line 6 production is filmed.
line 7 (II) Entered into a contract or lease of 10 years or more with line 8 the owner or owners of a certified studio construction project on line 9 which the production is filmed.
line 10 (iv) Provides a di versity w orkplan that is appro ved by the line 11 California Film Commission.
line 12 (C) For purposes of this subdi vision, a qualified taxpayer and line 13 a taxpayer include a passthrough entity and a disregarded entity. line 14 (3) (A) The diversity workplan required pursuant to clause (iv) line 15 of subparagraph (B) of paragraph (2) shall include all of the line 16 following:
line 17 (i) A statement of the di versity goals the motion picture will line 18 seek to achieve in terms of qualified wages paid by race, ethnicity, line 19 and gender.
line 20 (ii) A statement of the di versity goals the motion picture will line 21 seek to achie ve for indi viduals whose w ages are e xcluded from line 22 qualified wages as set forth in clause (iv) of subparagraph (B) of line 23 paragraph (21) of subdi vision (b), with respect to both line 24 compensation and to the representation of diversity in the creative line 25 aspects of the motion picture.
line 26 (iii) A plan of what strate gies the motion picture will emplo y line 27 to achieve the goals in clauses (i) and (ii).
line 28 (B) The diversity workplan shall include goals that are broadly line 29 reflective of California’ s population, in terms of race, ethnicity , line 30 and gender.
line 31 (C) The California Film Commission shall approve or reject the line 32 diversity workplan of an applicant, to the extent allowed by federal line 33 and state law.
line 34 (D) (i) The California Film Commission shall not certify an y line 35 tax credit under this subdi vision until they have received a final line 36 diversity report from the applicant.
line 37 (ii) The final di versity report shall calculate and pro vide line 38 evidence for the e xtent to which the applicant met the di versity line 39 goals laid out in their diversity workplan.
94 — 56 — SB 485
line 1 (iii) The California Film Commission shall ha ve the authority line 2 to audit the final diversity report to determine if the diversity goals line 3 set forth in the applicant’s diversity workplan for the motion picture line 4 production were achieved.
line 5 (iv) If the California Film Commission determines that the line 6 applicant has met or made a good faith effort to meet the diversity line 7 goals in its di versity workplan, the applicant’s credit percentage line 8 described in paragraph (1) shall be increased by up to four line 9 percentage points as follows:
line 10 (I) By two percentage points if the California Film Commission line 11 determines that the applicant has met or made a good f aith effort line 12 to meet the di versity goals with respect to the di versity of the line 13 workforce emplo yed by the applicant in its di versity w orkplan line 14 statement.
line 15 (II) By two percentage points if the California Film Commission line 16 determines that the applicant has met or made a good f aith effort line 17 to meet the diversity goals with respect to individuals whose wages line 18 are excluded from qualified w ages as set forth in clause (i v) of line 19 subparagraph (B) of paragraph (21) of subdi vision (b), in its line 20 diversity workplan statement.
line 21 (E) The California Film Commission, in consultation with the line 22 Governor’s Office of Business and Economic Development, shall line 23 establish guidelines to evaluate diversity workplans as described line 24 in this paragraph. The guidelines shall be posted on the California line 25 Film Commission’s internet website.
line 26 (4) The credit allo wed under this subdi vision shall be line 27 administered in accordance with subdivisions (a), (b), (c), (d), (h), line 28 and (l), except that paragraph (7) of subdivision (b) shall not apply line 29 and paragraph (2) of subdivision (d) shall not apply. line 30 (5) Subparagraph (A) of paragraph (2), subparagraphs (A), (B), line 31 and (C) of paragraph (3), and paragraphs (4), (5), and (6) of line 32 subdivision (g) shall apply.
line 33 (6) A conflict between this subdi vision and an y other line 34 subdivisions in this section shall be reconciled in f avor of this line 35 subdivision.
line 36 (7) The aggregate amount of credit allocated by the California line 37 Film Commission pursuant to subdivisions (a) to (j), inclusive, of line 38 this section and Section 17053.98 shall not be reduced by the tax line 39 credit allowed pursuant to this subdivision. The amount of credit line 40 allowed by this subdivision shall not be limited by subdivision (i). 94 SB 485 — 57 —
line 1 (8) (A) The credit allocated pursuant to this subdi vision shall line 2 be allo wed for the taxable year in which the California Film line 3 Commission issues a credit certificate in accordance with the line 4 procedures provided for in subdivision (g) for the qualified motion line 5 picture. The California Film Commission shall issue a credit line 6 certificate to a qualified taxpayer upon completion of the qualified line 7 motion picture reflecting the credit amount allocated after qualified line 8 expenditures have been verified.
line 9 (B) (i) The California Film Commission, commencing with line 10 fiscal year 2021–22, shall allocate tax credits each year to qualified line 11 motion pictures meeting the criteria of this subdivision. The total line 12 amount of credits that may be allocated under this subdi vision is line 13 one hundred fifty million dollars ($150,000,000). A season of a line 14 series or feature film may not be allocated more than twelve million line 15 dollars ($12,000,000) under this subdivision. Recurring television line 16 series receiving an initial allocation under this subdi vision shall line 17 be allocated for subsequent seasons no more than allo wed under line 18 this paragraph.
line 19 (ii) A qualified motion picture shall not be eligible to receive a line 20 credit allocation under this subdi vision if that qualified motion line 21 picture receives a credit allocation under subdi visions (a) to (j), line 22 inclusive, for the fiscal year. However, subject to paragraph (4) of line 23 subdivision (i), any television series, relocating television series, line 24 or any new television series based on a pilot for a ne w television line 25 series that is no longer eligible for a credit under this subdivision line 26 pursuant to paragraph (9) may apply to recei ve an allocation of line 27 credits pursuant to subdivisions (a) to (j), inclusive. line 28 (C) In any year the tax credits under this paragraph ha ve been line 29 allocated by the California Film Commission, a qualified motion line 30 picture or a recurring television series that satisfies the criteria of line 31 this subdivision, but have not recei ved an allocation of credits, line 32 may apply to recei ve an allocation of credits pursuant to line 33 subdivision (i).
line 34 (D) Credits shall be allocated based on the assumption that the line 35 motion picture meets the diversity criteria specified in clause (iv) line 36 of subparagraph (D) of paragraph (3).
line 37 (9) (A) A qualified motion picture meeting the requirements line 38 of this subdivision during the first three years after the certified line 39 studio construction project is certified by the California Film line 40 Commission shall be allo wed a credit under this subdi vision 94 — 58 — SB 485
line 1 commencing with its first year of filming in the certified studio line 2 construction project facility and for each successive year until the line 3 certified studio construction project has reached its fourth year line 4 after being certified, as long as the qualified motion picture line 5 continues to satisfy the criteria of this subdivision and to the extent line 6 the total credit amount the California Film Commission is permitted line 7 to allocate pursuant to subparagraph (B) of paragraph (8) has not line 8 previously been allocated.
line 9 (B) (i) Subject to the allocation of credits under paragraph (8) line 10 of this subdi vision, if the first year of production of a qualified line 11 motion picture occurs in the fourth year after the certified studio line 12 construction project is certified by the California Film Commission line 13 or any year thereafter, the qualified motion picture shall submit line 14 an application subject to the annual cap and the allocation credit line 15 amounts based on categories described in subdivision (i), subject line 16 to the modifications included in this subparagraph. line 17 (ii) For feature films and ne w television series, the jobs ratio line 18 used to rank qualified motion pictures in subparagraph (D) of line 19 paragraph (2) of subdi vision (g) shall be equal to the product of line 20 the jobs ratio calculated in paragraph (7) of subdi vision (b) and line 21 133 percent.
line 22 (10) Within six months of the effective date of this subdivision, line 23 the California Film Commission shall:
line 24 (A) Establish procedures to certify a certified studio construction line 25 project.
line 26 (B) Establish procedures to v erify a qualified motion picture line 27 has met the criteria established in this section for filming in a line 28 certified studio construction project facility. That procedure shall line 29 include a requirement that the qualified motion picture pay 0.5 line 30 percent of the appro ved credit amount to the Career P athways line 31 Training program specified in subdivision (e).
line 32 (C) (i) Implementation of this subdi vision for the 2021–22 line 33 fiscal year is deemed an emer gency and necessary for the line 34 immediate preservation of the public peace, health, and safety, or line 35 general welfare and, therefore, the California Film Commission line 36 is hereby authorized to adopt emergency regulations to implement line 37 this subdivision during the 2021–22 fiscal year in accordance with line 38 the rulemaking pro visions of the Administrative Procedure Act line 39 (Chapter 3.5 (commencing with Section 11340) of P art 1 of line 40 Division 3 of Title 2 of the Government Code).
94 SB 485 — 59 —
line 1 (ii) The California Film Commission shall adopt regulations in line 2 order to implement this paragraph.
line 3 (11) In the case where the credit allo wed by this subdi vision line 4 exceeds the taxpayer’s tax liability computed under this part, the line 5 excess credit may be carried o ver to reduce the “tax” in the line 6 following taxable year , and succeeding eight taxable years, if line 7 necessary, until the credit has been exhausted.
line 8 (12) Upon completion of construction or reno vation of the line 9 soundstage or soundstages, the taxpayer shall certify to the line 10 California Film Commission that all contractors and subcontractors line 11 performing construction work on the soundstage or soundstages line 12 were required to use a skilled and trained w orkforce to perform line 13 such work in accordance with subdivision (b) of Section 17053.99. line 14 (13) (A) Upon completion of construction or renovation of the line 15 soundstage or soundstages, the soundstage or soundstages shall line 16 be continuously operated, maintained, and repaired by any of the line 17 following:
line 18 (i) A workforce that is paid at least the general pre vailing rate line 19 of per diem w ages for the type of w ork and geographic area, as line 20 determined by the Director of Industrial Relations pursuant to line 21 Sections 1773 and 1773.9 of the Labor Code, if such services are line 22 performed by a workforce that is employed directly, or indirectly line 23 through a motion picture payroll services company, by the owner line 24 or affiliate of the o wner of the soundstage or lessee of the line 25 soundstage described in subclause (II) of clause (iii) of line 26 subparagraph (B) of paragraph (2) of this subdivision. line 27 (ii) A skilled and trained w orkforce as defined in Chapter 2.9 line 28 (commencing with Section 2600) of P art 1 of Di vision 2 of the line 29 Public Contract Code, if such services are provided by third-party line 30 vendors.
line 31 (B) Each year follo wing completion of construction or line 32 renovation of the soundstage or soundstages that a qualified motion line 33 picture is allocated a tax credit pursuant to this subdi vision, the line 34 qualified taxpayer shall certify to the California Film Commission line 35 both of the following:
line 36 (i) The total amount of payments to third-party v endors or line 37 qualified w ages for operation, maintenance, and repair of the line 38 certified soundstage.
line 39 (ii) The amount and percentage of the total amount of payments line 40 to third-party v endors or qualified w ages for operation, 94 — 60 — SB 485
line 1 maintenance, and repair of the certified soundstage performed by line 2 each workforce described in subparagraph (A).
line 3 (C) If the percentage paid to w orkers in clause (i) of line 4 subparagraph (A) is certified to be 90 percent of the total amount line 5 under clause (i) of subparagraph (B) or greater , the qualified line 6 taxpayer shall be entitled to 100 percent of the applicable credit line 7 issued under this subdivision for the period. If the percentage paid line 8 to workers in clause (i) of subparagraph (A) is certified to be less line 9 than 90 percent of the total amount under clause (i) of subparagraph line 10 (B) but greater than or equal to 75 percent of the total amount line 11 under clause (i) of subparagraph (B), the qualified taxpayer shall line 12 be entitled to 50 percent of the applicable credit issued under this line 13 subdivision for the period. If the percentage paid to w orkers in line 14 clause (i) of subparagraph (A) is certified to be less than 75 percent line 15 of the total amount under clause (i) of subparagraph (B), the line 16 qualified taxpayer shall not be entitled to any credit issued under line 17 this subdivision for the applicable period.
line 18 (l) Section 41 shall not apply to the credits allo wed by this line 19 section.
line 20 SEC. 3. This act provides for a tax levy within the meaning of line 21 Article IV of the California Constitution and shall go into line 22 immediate effect.
line 23
line 24
line 25 All matter omitted in this version of the bill
line 26 appears in the bill as amended in the
line 27 Senate, May 20, 2021. (JR11)
line 28
line 29
line 30
line 31 CORRECTIONS:
line 32 Heading—Line 5.
line 33
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94 SB 485 — 61 —