41-1517.01. Motion picture infrastructure tax incentives; definitions

A. From and after October 31, 2007 through December 31, 2010, the department of commerce shall certify motion picture infrastructure projects in this state for the purpose of tax credits under section 43-1075.01 or 43-1163.01. To qualify for certification:

1. A person must apply to the department. The applicant must be the person who will own and operate the infrastructure project and may be a motion picture production company, as defined in section 41-1517. The application must include:

(a) The applicant's name and contact information.

(b) A detailed description of the project.

(c) A preliminary budget.

(d) An outline of how the project meets the requirements of this section.

(e) The projected start and completion dates.

(f) The name and contact information for the prime contractor, if known.

(g) A copy of the construction contract, if available.

(h) An affirmation signed by an executive representing the applicant that:

(i) The applicant agrees to furnish records of expenditures on infrastructure projects in this state to the department of commerce on request.

(ii) Any items included in its base investment are intended for use by the applicant directly in the infrastructure project.

2. If the application is for a soundstage, after the date the department of commerce approves the application under subsection B of this section, the applicant must spend at least:

(a) Two hundred fifty thousand dollars in this state directly on project expenses within ninety days.

(b) An additional one million dollars in this state directly on project expenses within twelve months.

(c) A total of at least five million dollars in this state directly on project expenses within thirty-six months.

3. If the application is for support and augmentation facilities, after the date the department of commerce approves the application under subsection B of this section, the applicant must spend at least:

(a) Two hundred fifty thousand dollars in this state directly on project expenses within ninety days.

(b) A total of at least one million dollars in this state directly on project expenses within thirty-six months.

B. Within thirty days after submission, the department of commerce shall review each complete application to determine whether the applicant satisfies all of the criteria required by this section. The department may conduct a site visit as part of the review process. This process shall approve an applicant for tax credits under this section based on:

1. Priority placement for credits under this section established by the date the applicant filed its initial application under subsection A of this section.

2. The availability of tax credit amounts under the dollar limits prescribed by subsection C of this section.

C. Subject to the limits prescribed in section 41-1517, subsection J, the department of commerce shall not certify income tax credits under this section, computed as fifteen per cent of the total base investment, exceeding a total of:

1. Five million dollars for soundstage projects initially certified in 2008.

2. If no soundstage project was initially certified in 2008, five million dollars for soundstage projects initially certified in 2009.

3. If at least one soundstage project was initially certified in 2008:

(a) Five million dollars for soundstage projects initially certified in 2009.

(b) Seven million dollars for support and augmentation facilities initially certified in 2009 that are associated with certified soundstage projects.

4. If no soundstage project was initially certified in 2008 or 2009, five million dollars for soundstage projects initially certified in 2010.

5. If only one soundstage project was initially certified in 2008 or 2009:

(a) Five million dollars for soundstage projects initially certified in 2010.

(b) Nine million dollars for support and augmentation facilities initially certified in 2010 that are associated with the certified soundstage project.

6. If more than one soundstage project was initially certified in 2008 or 2009, or both:

(a) Five million dollars for soundstage projects initially certified in 2010.

(b) Nine million dollars for support and augmentation facilities initially certified in 2010 that are associated with certified soundstage projects.

7. Three million dollars for a support and augmentation facilities project.

D. After October 31 of each year, if the department has preapproved the maximum dollar amount of income tax credits under subsection C of this section for the calendar year, the department may accept initial applications for the next calendar year. The preapproval of any application pursuant to this subsection is not effective before the first business day of the following calendar year.

E. Preapproval by the department of commerce under subsection B of this section lapses, the application is void and the amount of the preapproved incentives does not apply against the dollar limit prescribed by subsection C of this section if:

1. Within ninety days after the department preapproves the company, the company fails to provide documentation of:

(a) Its expenditure in this state of the lesser of:

(i) Ten per cent of the estimated total base investment amount.

(ii) Two hundred fifty thousand dollars.

(b) A surety bond equal to the estimated total base investment amount for which the company was preapproved.

2. For soundstage projects, within one year after the department preapproves the company, the company fails to provide documentation of:

(a) Total expenditure in this state of one million two hundred fifty thousand dollars.

(b) A surety bond equal to the estimated total base investment amount for which the company was preapproved.

F. On completion of the motion picture infrastructure project, an applicant that has been preapproved for income tax credits must apply to the department in writing for approval of the total base investment in the project. If the applicant has met the eligibility requirements of this section, the department shall:

1. Approve the total base investment amount, but the calculated income tax credit shall not exceed the preapproved amount under this section.

2. Notify the department of revenue that the applicant may claim the income tax credits pursuant to section 43-1075.01 or 43-1163.01 in the amount determined under paragraph 1 of this subsection.

G. The company and all persons signing the application for preapproval may be disqualified from receiving future tax credits pursuant to this section if, within eighteen months after the date of postapproval under subsection F of this section, the applicant fails to submit a report to the department that includes:

1. A list of activities and productions conducted at the project in the twelve months following postapproval.

2. The amount of any additional capital investment.

3. Any changes to or improvements made to the project since the date of postapproval.

H. Within sixty months after postapproval under subsection F of this section, if the department of commerce determines that a person that received a tax credit pursuant to this section failed to comply with any of the requirements prescribed by this section, the department shall terminate, adjust or recapture all or part of the tax credit. The department of commerce shall notify the department of revenue of the conditions of noncompliance. The department of revenue may also terminate the approval of the credit if it obtains information indicating a failure to qualify and comply. The department of revenue may require the person to:

1. File appropriate amended tax returns reflecting the recapture of the amount of the tax credit actually applied to reduce state income tax liability.

2. Pay a penalty of four and one-half per cent of the amount of the applied credit per month elapsing from the date the penalty is assessed until it is paid, except that the total penalty shall not exceed twenty-five per cent of the full amount of the credit.

I. The department of commerce, with the cooperation of the department of revenue, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.

J. Any information gathered from applicants for the purposes of this section is considered to be confidential taxpayer information and shall be disclosed only as provided in section 41-1517, subsection S and section 42-2003, subsection B, paragraph 12.

K. For the purposes of this section:

1. "Base investment" means the budget for the infrastructure project.

2. "Motion picture" has the same meaning as defined in section 41-1517.

3. "Motion picture infrastructure project", "infrastructure project" and "project":

(a) Means soundstages and support and augmentation facilities that are constructed in this state and primarily used for motion picture production.

(b) Does not include motion picture theaters and other commercial exhibition facilities.

4. "Soundstage" means a permanent facility in this state of one or more sets or stages used primarily for staging and filming motion pictures and any land, permanent buildings or capital equipment that is in or adjacent to, and is necessary for the operation of, a soundstage.

5. "Support and augmentation facilities" means permanent facilities in this state that are used to complement motion picture production needs and complement the motion picture production.

6. "Surety bond" means an executed written contract, issued by an insurance company with an insurance industry rating of B+ or better by A.M. Best company guarantying to the financiers of the project that it will be completed according to the terms of the preapproved application submitted by the production company in its application.

41-1517.01. Motion picture infrastructure tax incentives; definitions

A. From and after October 31, 2007 through December 31, 2010, the department of commerce shall certify motion picture infrastructure projects in this state for the purpose of tax credits under section 43-1075.01 or 43-1163.01. To qualify for certification:

1. A person must apply to the department. The applicant must be the person who will own and operate the infrastructure project and may be a motion picture production company, as defined in section 41-1517. The application must include:

(a) The applicant's name and contact information.

(b) A detailed description of the project.

(c) A preliminary budget.

(d) An outline of how the project meets the requirements of this section.

(e) The projected start and completion dates.

(f) The name and contact information for the prime contractor, if known.

(g) A copy of the construction contract, if available.

(h) An affirmation signed by an executive representing the applicant that:

(i) The applicant agrees to furnish records of expenditures on infrastructure projects in this state to the department of commerce on request.

(ii) Any items included in its base investment are intended for use by the applicant directly in the infrastructure project.

2. If the application is for a soundstage, after the date the department of commerce approves the application under subsection B of this section, the applicant must spend at least:

(a) Two hundred fifty thousand dollars in this state directly on project expenses within ninety days.

(b) An additional one million dollars in this state directly on project expenses within twelve months.

(c) A total of at least five million dollars in this state directly on project expenses within thirty-six months.

3. If the application is for support and augmentation facilities, after the date the department of commerce approves the application under subsection B of this section, the applicant must spend at least:

(a) Two hundred fifty thousand dollars in this state directly on project expenses within ninety days.

(b) A total of at least one million dollars in this state directly on project expenses within thirty-six months.

B. Within thirty days after submission, the department of commerce shall review each complete application to determine whether the applicant satisfies all of the criteria required by this section. The department may conduct a site visit as part of the review process. This process shall approve an applicant for tax credits under this section based on:

1. Priority placement for credits under this section established by the date the applicant filed its initial application under subsection A of this section.

2. The availability of tax credit amounts under the dollar limits prescribed by subsection C of this section.

C. Subject to the limits prescribed in section 41-1517, subsection J, the department of commerce shall not certify income tax credits under this section, computed as fifteen per cent of the total base investment, exceeding a total of:

1. Five million dollars for soundstage projects initially certified in 2008.

2. If no soundstage project was initially certified in 2008, five million dollars for soundstage projects initially certified in 2009.

3. If at least one soundstage project was initially certified in 2008:

(a) Five million dollars for soundstage projects initially certified in 2009.

(b) Seven million dollars for support and augmentation facilities initially certified in 2009 that are associated with certified soundstage projects.

4. If no soundstage project was initially certified in 2008 or 2009, five million dollars for soundstage projects initially certified in 2010.

5. If only one soundstage project was initially certified in 2008 or 2009:

(a) Five million dollars for soundstage projects initially certified in 2010.

(b) Nine million dollars for support and augmentation facilities initially certified in 2010 that are associated with the certified soundstage project.

6. If more than one soundstage project was initially certified in 2008 or 2009, or both:

(a) Five million dollars for soundstage projects initially certified in 2010.

(b) Nine million dollars for support and augmentation facilities initially certified in 2010 that are associated with certified soundstage projects.

7. Three million dollars for a support and augmentation facilities project.

D. After October 31 of each year, if the department has preapproved the maximum dollar amount of income tax credits under subsection C of this section for the calendar year, the department may accept initial applications for the next calendar year. The preapproval of any application pursuant to this subsection is not effective before the first business day of the following calendar year.

E. Preapproval by the department of commerce under subsection B of this section lapses, the application is void and the amount of the preapproved incentives does not apply against the dollar limit prescribed by subsection C of this section if:

1. Within ninety days after the department preapproves the company, the company fails to provide documentation of:

(a) Its expenditure in this state of the lesser of:

(i) Ten per cent of the estimated total base investment amount.

(ii) Two hundred fifty thousand dollars.

(b) A surety bond equal to the estimated total base investment amount for which the company was preapproved.

2. For soundstage projects, within one year after the department preapproves the company, the company fails to provide documentation of:

(a) Total expenditure in this state of one million two hundred fifty thousand dollars.

(b) A surety bond equal to the estimated total base investment amount for which the company was preapproved.

F. On completion of the motion picture infrastructure project, an applicant that has been preapproved for income tax credits must apply to the department in writing for approval of the total base investment in the project. If the applicant has met the eligibility requirements of this section, the department shall:

1. Approve the total base investment amount, but the calculated income tax credit shall not exceed the preapproved amount under this section.

2. Notify the department of revenue that the applicant may claim the income tax credits pursuant to section 43-1075.01 or 43-1163.01 in the amount determined under paragraph 1 of this subsection.

G. The company and all persons signing the application for preapproval may be disqualified from receiving future tax credits pursuant to this section if, within eighteen months after the date of postapproval under subsection F of this section, the applicant fails to submit a report to the department that includes:

1. A list of activities and productions conducted at the project in the twelve months following postapproval.

2. The amount of any additional capital investment.

3. Any changes to or improvements made to the project since the date of postapproval.

H. Within sixty months after postapproval under subsection F of this section, if the department of commerce determines that a person that received a tax credit pursuant to this section failed to comply with any of the requirements prescribed by this section, the department shall terminate, adjust or recapture all or part of the tax credit. The department of commerce shall notify the department of revenue of the conditions of noncompliance. The department of revenue may also terminate the approval of the credit if it obtains information indicating a failure to qualify and comply. The department of revenue may require the person to:

1. File appropriate amended tax returns reflecting the recapture of the amount of the tax credit actually applied to reduce state income tax liability.

2. Pay a penalty of four and one-half per cent of the amount of the applied credit per month elapsing from the date the penalty is assessed until it is paid, except that the total penalty shall not exceed twenty-five per cent of the full amount of the credit.

I. The department of commerce, with the cooperation of the department of revenue, shall adopt rules and publish and prescribe forms and procedures as necessary to effectuate the purposes of this section.

J. Any information gathered from applicants for the purposes of this section is considered to be confidential taxpayer information and shall be disclosed only as provided in section 41-1517, subsection S and section 42-2003, subsection B, paragraph 12.

K. For the purposes of this section:

1. "Base investment" means the budget for the infrastructure project.

2. "Motion picture" has the same meaning as defined in section 41-1517.

3. "Motion picture infrastructure project", "infrastructure project" and "project":

(a) Means soundstages and support and augmentation facilities that are constructed in this state and primarily used for motion picture production.

(b) Does not include motion picture theaters and other commercial exhibition facilities.

4. "Soundstage" means a permanent facility in this state of one or more sets or stages used primarily for staging and filming motion pictures and any land, permanent buildings or capital equipment that is in or adjacent to, and is necessary for the operation of, a soundstage.

5. "Support and augmentation facilities" means permanent facilities in this state that are used to complement motion picture production needs and complement the motion picture production.

6. "Surety bond" means an executed written contract, issued by an insurance company with an insurance industry rating of B+ or better by A.M. Best company guarantying to the financiers of the project that it will be completed according to the terms of the preapproved application submitted by the production company in its application.