BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1696|
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THIRD READING
Bill No: AB 1696
Author: Bass (D)
Amended: 9/15/08 in Senate
Vote: 27 - Urgency
SENATE BUSINESS, PROF. & ECON. DEV. COMMITTEE : 7-2, 7/9/07
AYES: Ridley-Thomas, Calderon, Corbett, Florez, Harman,
Simitian, Yee
NOES: Aanestad, Denham
ASSEMBLY FLOOR : 55-17, 6/7/07 - See last page for vote
SUBJECT : California Film Commission: financial
assistance: motion
Picture production
SOURCE : Author
DIGEST : This bill establishes a financial assistance
program, within the California Film Commission, to
encourage filming motion pictures and commercials in
California, and requires the Business, Transportation and
Housing Agency to report on the economic impact created by
this program to the Legislature by December 11, 2011.
Senate Floor Amendments of 9/15/08 clarify quarterly
allocation restrictions and allowances and add an urgency
clause.
ANALYSIS :
CONTINUED
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Existing law:
1. Establishes the 26-member California Film Commission
(CFC), within the Business, Transportation and Housing
Agency (BT&H), for the purpose of promoting, increasing
and retaining the production of filmed entertainment in
California.
2. Requires the CFC to develop and oversee the
implementation of a Cooperative Motion Picture Marketing
Plan and to offer state resources to local film
commissions and local government liaisons to the film
industry for the purpose marketing their locales to the
motion picture industry.
3. Authorizes the State Theatrical Arts Resources
Partnership to provide filmmakers access to unused state
properties, such as health facilities and vacant office
structures at no charge or at a nominal fee.
4. Creates the Uniform Permit Assistance Act that directs
the CFC, with input from the motion picture industry and
local and state government, to develop and adopt a model
process for granting film permits.
5. Requires the Employment Development Department, in
consultation with the film and movie industry, BT&H and
the CFC, to research and maintain data on film industry
employment.
This bill:
1. Authorizes an allocation of an unspecified amount to the
CFC to fund grants that encourage filming motion
pictures and commercials within California.
2. Defines the following terms for the purpose of
establishing and administering the grant program:
A. "Qualified amount" means the total amount paid or
incurred during the production period for qualified
wages, qualified property and preproduction costs
that include set design and construction, props,
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wardrobe, prosthetics, testing and location scouting.
The term does not include qualified wages paid or
incurred or services or property purchased or leased
before January 1, 2008.
B. "Qualified entity" means a personal service
corporation as defined in the federal tax code, a
payroll services corporation or an entity receiving
qualified wages for services performed by a qualified
individual.
C. "Qualified individual" means an individual who
performs services during the production period of a
qualified motion picture.
D. "Qualified motion picture" means a motion picture
that is produced, adapted or altered for exploitation
in movie theaters, television, videotapes,
videodiscs, DVDs or any other digital format or on
commercial carriers. The term excludes the
following:
(1) Motion pictures produced for noncommercial
use (weddings or graduations), by students made as
a part of any educational course or produced for
industrial purposes.
(2) New programs, current events or public
events programs, talk shows, game shows, sporting
events or activities, award shows, telethons,
reality television shows, variety programs or
daytime dramas.
To qualify as a "qualified motion picture", all of
the following conditions must be satisfied:
(1) A feature, movie of the week or miniseries
must have a minimum budget of one million dollars
and a maximum of $75 million.
(2) Television series new to California must
have a minimum budget of $500,000 and a maximum of
$1.8 million.
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(3) Actual expenses must fall with the fiscal
ranges in clauses (1) and (2) at the time of grant
application.
(4) At least 75 percent of the qualified motion
picture's principal photography must occur in
California.
(5) Production of the qualified motion picture
must be completed within 30 months of application
approval.
(6) Principal photography of the qualified
motion picture must begin within 180 days of being
designated as a qualified applicant by the CFC.
E. "Qualified property" means tangible property
purchased or leased in California for use in the
production of a qualified motion picture.
F. "Qualified wages" means wages reported pursuant to
Section 13050 of the Unemployment Insurance Code,
fringe benefits, payments to qualified services that
were paid or incurred by a production company in the
production of a qualified motion picture. The term
does not include the following:
(1) Expenses for legal or accounting services,
except production accountants.
(2) Expenses, including wages, in excess of the
first $25,000 paid per person for writers,
directors, music composers and supervisors,
producers and performers, other than background
actors with no scripted lines.
(3) Expenses, including wages, related to new
use, reuse, clip use, licensing or creation of
ancillary products, such as soundtracks.
(4) Expenses, including wages, paid or incurred
for acquisition, development or turnaround rights.
(5) Expenses, including wages, related to
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financing, overhead, marketing, promotions or
distribution of a qualified motion picture.
3. Requires the Director of the CFC to administer the
program and specifically, engage in the following
activities:
A. Reserve grant allocations for applicants.
B. Establish an application procedure, which includes
a form approved by the CFC, as specified.
C. Evaluate all applicants and select those that are
qualified applicants.
D. Process, approve or reject all applications on a
first-come, first-served basis.
E. Cancel an applicant's grant if principal
photography does not begin within 180 days after
being designated a qualified applicant.
F. Certify grants awarded to program applicants.
G. Establish specific audit requirements that must be
complied with prior to the issuance of grant
certificates and provide for the reallocation of
reserved allocations that are disallowed by the audit
requirement.
H. Issue certificates to the qualified applicants
that include the name of the qualified applicant,
identification of the qualified motion picture and
the amount of the grant.
I. Establish an appeals procedure with the CFC for
the amount of certified grants.
4. Requires the CFC to adopt regulations to implement the
act no later than March 1, 2008.
5. Sunsets the program on January 1, 2018.
6. Requires the CFC to annually report to the Legislature,
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beginning no later than June 1, 2009, on the diversity
of the workforce employed by grant recipients.
7. Requires BT&H to report to the Legislature on the
economic impact of this program by December 31, 2011.
8. Allow up to 25 percent of any amount appropriated for
the motion picture financial assistance program
established by this measure, to be allocated to
qualifying projects by the Film Commission each quarter.
9. Allows quarterly allocations to be increased to include:
A. Unused financial assistance from the previous
calendar quarter.
B. Previously allocated amounts that were
subsequently cancelled or disallowed.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2008-09 2009-10
2010-11 Fund
Film production unknown,
potentially several million General
financial assistancedollars annually
program
CFC administration estimated $500
annually, ongoing General
BTHA study estimated
$100 annually, ongoing to General
contract for the economic impact report
A qualified motion picture, as defined, shall be a feature,
a movie of the week, or a miniseries with a minimum budget
of $1 million and a maximum budget of $75 million. A
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qualified motion picture shall also include a single
episode in a single season, not to exceed 22 episodes per
season, of a television series new to California with a
minimum budget of $500,000 and a maximum budget of $1.8
million per episode. This provision shall only apply to
the first three seasons of a television series that is new
to California. The actual expenses totaled at the
completion of the qualified motion picture must fall within
the ranges noted above at the time of application to the
CFC. Additionally, at least 75 percent of the total days
spent in principal photography must occur in state.
SUPPORT : (Unable to verify at time of writing)
California Labor Federation
ARGUMENTS IN SUPPORT : According to the author's office,
this bill seeks to "create an atmosphere where film
industries will not only stay but will relocate to this
state; thus providing more high paying, highly skilled jobs
which are specialized for the film industry and economic
stimulus to the local economies. The film production
industry in California accounts for approximately 50% of
the total United States motion picture output and is the
18th largest industry sector contributor to California's
gross state product. The dominance that California has
enjoyed for so many decades is slowly being eroded by
progressive policies from other states within this country,
such as Louisiana, and foreign countries, such as Canada.
These states are now beginning to enjoy an industry that is
capital and labor intensive, non-polluting and creates high
wage jobs."
ASSEMBLY FLOOR :
AYES: Adams, Aghazarian, Arambula, Bass, Beall, Berg,
Brownley, Caballero, Charles Calderon, Carter, Cook,
Coto, Davis, De La Torre, De Leon, DeSaulnier, Duvall,
Dymally, Emmerson, Eng, Evans, Feuer, Fuentes, Galgiani,
Garcia, Hancock, Hayashi, Hernandez, Horton, Huffman,
Karnette, Krekorian, Laird, Leno, Levine, Lieber, Lieu,
Ma, Mendoza, Nava, Parra, Plescia, Portantino, Price,
Richardson, Salas, Saldana, Silva, Smyth, Solorio,
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Strickland, Swanson, Torrico, Wolk, Nunez
NOES: Anderson, Benoit, DeVore, Fuller, Gaines, Garrick,
Houston, Huff, La Malfa, Maze, Nakanishi, Niello, Sharon
Runner, Spitzer, Tran, Villines, Walters
NO VOTE RECORDED: Berryhill, Blakeslee, Jeffries, Jones,
Keene, Mullin, Ruskin, Soto
JJA:mw 9/15/08 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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