Bill Text: MI SB0569 | 2011-2012 | 96th Legislature | Introduced
Bill Title: Economic development; Michigan strategic fund; film production assistance program; provide for. Amends secs. 9, 29a & 29d of 1984 PA 270 (MCL 125.2009 et seq.) & adds sec. 29h.
Spectrum: Bipartisan Bill
Status: (Passed) 2011-12-28 - Assigned Pa 0291'11 With Immediate Effect [SB0569 Detail]
Download: Michigan-2011-SB0569-Introduced.html
SENATE BILL No. 569
July 13, 2011, Introduced by Senators RICHARDVILLE, SMITH, MARLEAU, JANSEN, HILDENBRAND, WHITMER, BIEDA, GLEASON and NOFS and referred to the Committee on Economic Development.
A bill to amend 1984 PA 270, entitled
"Michigan strategic fund act,"
by amending sections 29a and 29d (MCL 125.2029a and 125.2029d), as
added by 2008 PA 75, and by adding section 29h.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 29a. (1) The Michigan film office is created in the fund.
The office shall be the successor to any authority, powers, duties,
functions, or responsibilities of the Michigan film office under
former
section 21 of the history, arts, and
libraries act, 2001 PA
63. ,
MCL 399.721.
(2) The office may do all of the following:
(a) Promote and market locations, talent, crews, facilities,
and technical production and other services related to film,
digital media, and television production in this state.
(b) Provide to interested persons descriptive and pertinent
information on locations, talent, crews, facilities, and technical
production and other services related to film, digital media, and
television production in this state.
(c) Provide technical assistance to the film, television, and
digital media industry in locating and securing the use of
locations, talent, crews, facilities, and services in this state.
(d) Encourage community and Michigan film, digital media, and
television production industry participation in, and coordination
with, state and local efforts to attract film, digital media, and
television production in this state.
(e) Serve as this state's chief liaison with the film, digital
media, and television production industry and with other
governmental units and agencies for the purpose of promoting,
encouraging, and facilitating film, digital media, and television
production in this state.
(f) Explain the benefits and advantages of producing films,
digital media, and television productions in this state.
(g) Assist film, digital media, and television producers with
securing location authorization and other appropriate services
connected with film, digital media, and television production in
this state.
(h) Scout potential film locations for national and
international film, digital media, and television prospects.
(i) Escort film, digital media, and television producers on
location scouting trips.
(j) Serve as a liaison between film, digital media, and
television producers, state agencies, local agencies, federal
agencies, community organizations and leaders, and the film,
digital media, and television industry in this state.
(k) Assist film, digital media, and television producers in
securing permits to film at specific locations in this state and in
obtaining needed services related to the production of a film,
digital media, or a television program.
(l) Represent this state at film, digital media, and television
industry trade shows and film festivals.
(m) Sponsor workshops or conferences on topics relating to
filmmaking, including, but not limited to, screenwriting, film
financing, and the preparation of communities to attract and assist
film, digital media, and television productions in this state.
(n) Encourage cooperation between local, state, and federal
government agencies and local film offices in the location and
production of films, digital media, and television programming in
this state.
(o) Coordinate activities with local film offices.
(p) Facilitate cooperation from state departments and
agencies, local governments, local film offices, federal agencies,
and private sector entities in the location and production of
films, digital media, and television programming in this state.
(q) Prepare, maintain, and distribute a directory of persons,
firms, and governmental agencies available to assist in the
production of films, digital media, and television programming in
this state.
(r) Prepare, maintain, and distribute a digital library
depicting the variety and extent of the locations within this state
for film, digital media, and television productions.
(s) Prepare and distribute appropriate promotional and
informational materials that do all of the following:
(i) Describe desirable locations in this state for film,
digital media, and television production.
(ii) Explain the benefits and advantages of producing films,
digital media, and television productions in this state.
(iii) Detail services and assistance available from state
government, from local film offices, and from the film, digital
media, and television industry in this state.
(t) Solicit and accept gifts, grants, labor, loans, and other
aid from any person, government, or entity.
(u) Employ technical experts, other officers, agents, or
employees, permanent or temporary, paid from the funds of the
office. The office shall determine the qualifications, duties, and
compensation of those the office employs.
(v) Contract for goods and services and engage personnel as
necessary to perform the duties of the office under this chapter.
(w) Study, develop, and prepare reports or plans the office
considers necessary to assist the office in the exercise of its
powers under this chapter and to monitor and evaluate progress
under this chapter.
(x) Exercise the duties and responsibilities vested in the
office under this chapter and all of the following:
(i) Section 88d.
(ii) Section 88j(3)(e).
(iii) Section 4cc of the general sales tax act, 1933 PA 167, MCL
205.54cc.
(iv) Sections 455 to 459 of the Michigan business tax act, 2007
PA 36, MCL 208.1455 to 208.1459.
(y) Create and operate a film production assistance program as
provided in section 29h.
(z) (y)
All other things necessary or
convenient to achieve
the objectives and purposes of the office, this chapter, or other
laws that relate to the purposes and responsibilities of the
office.
(3) The enumeration of a power in this chapter shall not be
construed as a limitation upon the general powers of the office.
The powers granted under this chapter are in addition to those
powers granted by any other law.
(4) The commissioner and the president of the fund shall
cooperate in administering the budget, procurement, and related
management functions of the office. The fund may provide the office
with staff support and other services to assist the office in
performing the functions and duties of the office.
(5) State departments, agencies, boards, commissions, and
officers and local film offices shall cooperate with the office in
the performance of the office's duties under this chapter.
Sec. 29d. (1) The Michigan film promotion fund is created
within the state treasury.
(2) The state treasurer may receive money or other assets from
any source for deposit into the promotion fund, including federal
funds, other state revenues, gifts, bequests, and other donations,
including, but not limited to, all of the following:
(a) Fees deposited in the promotion fund under sections 455 to
459 of the Michigan business tax act, 2007 PA 36, MCL 208.1455 to
208.1459.
(b) Fees deposited in the promotion fund under section 367 of
the income tax act of 1967, 1967 PA 281, MCL 206.367.
(c) Proceeds deposited in the promotion fund under section
88d.
(d) Funds appropriated to create and operate the film
production assistance program.
(3) The state treasurer shall direct the investment of the
promotion fund and shall credit to the promotion fund interest and
earnings from promotion fund investments.
(4) Money in the promotion fund at the close of a fiscal year
shall remain in the promotion fund and shall not lapse to the
general fund.
(5) Money in the promotion fund may be expended, upon
appropriation, to support the functions of the office under this
chapter and other applicable law and for purposes authorized under
this chapter.
(6) Beginning October 1, 2011, the fund shall transfer to and
deposit in the promotion fund all money appropriated for Michigan
strategic fund – film incentive funding under section 1201 of 2011
PA 63.
Sec. 29h. (1) The Michigan film office shall create and
operate the film production assistance program. The film production
assistance program may provide funds to eligible production
companies for direct production expenditures, personnel
expenditures, or qualified personnel expenditures for state
certified qualified productions.
(2) If the office receives applications that would exceed what
the office can award in any year, the office may prioritize that
application for funding in the subsequent year.
(3) The film production assistance program shall provide for
all of the following:
(a) Funding shall be provided only to reimburse direct
production expenditures, personnel expenditures, or qualified
personnel expenditures.
(b) To be eligible to apply for funding, the eligible
production company shall have direct production expenditures of
$50,000.00 or more.
(c) For state certified qualified production expenditures
after September 30, 2011, an agreement under this section shall
provide for funding equal to the sum of the following:
(i) Qualified personnel expenditures as follows:
(A) 30% after September 30, 2011 and before January 1, 2015.
(B) 25% after December 31, 2014.
(ii) 27% of direct production expenditures.
(iii) Personnel expenditures as follows:
(A) 27% after September 30, 2011 and before January 1, 2013.
(B) 22% after December 31, 2012 and before January 1, 2014.
(C) 17% after December 31, 2013 and before January 1, 2015.
(D) 12% after December 31, 2014.
(iv) In addition to the expenditures described in subparagraphs
(i), (ii), and (iii), 5% of direct production expenditures and
qualified personnel expenditures at a qualified facility.
(v) In addition to the expenditures described in subparagraphs
(i), (ii), and (iii), 2% of direct production expenditures and
qualified personnel expenditures at a facility.
(d) Payments and compensation for all producers of a qualified
production residing in this state shall not exceed 10% of the
direct production expenditures and qualified personnel expenditures
for the qualified production.
(e) Payments and compensation for all producers of a qualified
production who are not residents of this state shall not exceed 5%
of the direct production expenditures and qualified personnel
expenditures for the qualified production.
(f) If the office awards funding for a television show,
applications in subsequent years for that same television show
shall receive a priority for funding under this section.
(g) As a separate and distinct part of the film production
assistance program, the office may create a program to directly
support and promote qualified production facilities.
(4) An eligible production company intending to produce a
qualified production in this state may submit an application for
funding under this section to the Michigan film office. The request
shall be submitted in a form prescribed by the office and shall be
accompanied by an application fee equal to 0.2% of the funding
requested but not less than $200.00 and not more than $5,000.00 and
all of the information and records requested by the office. An
application fee received by the office under this subsection shall
be deposited in the Michigan film promotion fund. The office shall
not process the application until it is complete. The office shall
process each application within 60 days after the application is
complete. As part of the application, the company shall estimate
direct production expenditures, personnel expenditures, and
qualified personnel expenditures for an identified qualified
production. If the office determines to award funding under this
section to an eligible production company, the office with the
concurrence of the fund president shall enter into an agreement
under this section. The agreement shall provide for all of the
following:
(a) A requirement that the eligible production company
commence work in this state on the identified qualified production
within 90 days of the date of the agreement or else the agreement
shall expire. However, upon request submitted by the company based
on good cause, the office may extend the period for commencement of
work in this state for up to an additional 90 days.
(b) A statement identifying the company and the qualified
production that the company intends to produce in whole or in part
in this state.
(c) A unique number assigned to the qualified production by
the office.
(d) A requirement that the qualified production not depict
obscene matter or an obscene performance.
(e) If the qualified production is a long-form narrative film
production, a requirement that the qualified production include
within its presentation and all promotional trailers worldwide for
the life of the qualified production an approximately 5-second-long
animation in a form approved by the office that promotes the Pure
Michigan tourism campaign or any successor campaign. If the
qualified production is a television show, a requirement that the
qualified production include within each broadcast of 30 minutes or
longer an approximately 5-second-long animation in a form approved
by the office that promotes the Pure Michigan tourism campaign or
any successor campaign. If the qualified production is a music
video, a requirement that the music video include an animation in a
form approved by the office that promotes the Pure Michigan tourism
campaign or any successor campaign. If the qualified production is
an interactive game, a requirement that the qualified production
include with each unit distributed and online promotions an
animation approximately 15 seconds long in a form approved by the
office that promotes the Pure Michigan tourism campaign or any
successor campaign. If the qualified production is a long-form
narrative film production, the office also may require that, if the
qualified production is distributed by digital video disc or other
digital media for the secondary market, the qualified production
include a video between 30 and 60 seconds long in a form approved
by the office that promotes the Pure Michigan tourism campaign or
any successor campaign.
(f) A requirement that the company provide the office with the
information and independent certification the office deems
necessary to verify direct production expenditures, personnel
expenditures, qualified personnel expenditures, and eligibility for
funding under this section, which may include a report of direct
production expenditures, personnel expenditures, and qualified
personnel expenditures for the qualified production audited and
certified by an independent certified public accountant.
(g) If determined to be necessary by the office, a provision
for addressing expenditures in excess of those identified in the
agreement.
(5) In determining whether to award funding under this
section, the Michigan film office shall consider all of the
following:
(a) The potential that, in the absence of funding, the
qualified production will be produced in a location other than this
state.
(b) The extent to which the qualified production may have the
effect of promoting this state as a tourist destination.
(c) The extent to which the qualified production may have the
effect of promoting economic development or job creation in this
state.
(d) The extent to which state funding will attract private
investment for the production of qualified productions in this
state.
(e) The record of the eligible production company in
completing commitments to engage in a qualified production.
(6) If the Michigan film office determines that an eligible
production company has complied with the terms of an agreement
entered into under this section, the office shall award funding as
provided in this section. A person that willfully submits
information under this section that the person knows to be
fraudulent or false shall, in addition to any other penalties
provided by law, be liable for a civil penalty equal to the amount
of funding provided to the person under this section. A penalty
collected under this section shall be deposited in the Michigan
film promotion fund.
(7) Information, records, or other data received, prepared,
used, or retained by the Michigan film office under this section
that are submitted by an eligible production company and considered
by the applicant and acknowledged by the office as confidential
shall not be subject to the disclosure requirements of the freedom
of information act, 1976 PA 442, MCL 15.231 to 15.246. Information,
records, or other data shall only be considered confidential to the
extent that the information or records describe the commercial and
financial operations or intellectual property of the company, the
information or records have not been publicly disseminated at any
time, and disclosure of the information or records may put the
company at a competitive disadvantage. For purposes of this
subsection, information or records that describe commercial and
financial operations do not include that portion of information or
records that include any expenses that qualify under this section
as direct production expenditures or personnel expenditures.
(8) Not later than March 1, 2012, the office shall produce a
performance dashboard for the assistance authorized by this
section. The performance dashboard shall be made available by the
office on the fund's website and shall be updated at least
annually. The performance dashboard shall include the following
measures:
(a) Direct and indirect economic impacts in this state of the
assistance authorized by this section.
(b) Direct and indirect job creation attributable to the
assistance authorized by this section.
(c) Direct and indirect private investment in this state
attributable to the assistance authorized by this section.
(d) Any other measures considered relevant by the office or
the Michigan film advisory council.
(9) The Michigan film office shall not award funding after
September 30, 2016.
(10) The legislature finds and declares that funding
authorized under this section to encourage diversification of the
economy, to encourage film production, to encourage investment, and
to encourage the creation of jobs in this state is a public purpose
and of paramount concern in the interest of the health, safety, and
general welfare of the citizens of this state. It is the intent of
the legislature that the economic benefits, film production,
investment, and the creation of jobs resulting from this section
shall accrue substantially within this state.
(11) The fund board may authorize the use of money
appropriated for the program authorized by this section for
administration of the program. However, the fund board shall not
use more than 4% of the annual appropriation for administering the
program authorized under this section.
(12) Beginning on September 30, 2011 and at the end of each
fiscal year thereafter, the commissioner shall certify the total
amount of unclaimed certificates of completion, agreements where
work has not commenced as required in subsection (4), and
agreements for qualified productions the commissioner reasonably
believes will not be completed. Funding allocated for qualified
productions described in the preceding sentence may be reallocated.
(13) As used in this section:
(a) "Above the line personnel" means a producer, director,
writer, actor, other than extras, or other similar personnel whose
compensation is negotiated prior to the start of the production.
(b) "Below the line crew" means persons employed by an
eligible production company for state certified qualified
production expenditures made after production begins and before
production is completed, including, but not limited to, a best boy,
boom operator, camera loader, camera operator, assistant camera
operator, compositor, dialogue editor, film editor, assistant film
editor, focus puller, Foley operator, Foley editor, gaffer, grip,
key grip, lighting crew, lighting board operator, lighting
technician, music editor, sound editor, sound effects editor, sound
mixer, steadicam operator, first assistant camera operator, second
assistant camera operator, digital imaging technician, camera
operator working with a director of photography, electric best boy,
grip best boy, dolly grip, rigging grip, assistant key for makeup,
assistant key for hair, assistant script supervisor, set
construction foreperson, lead set dresser, assistant key for
wardrobe, scenic foreperson, assistant propmaster, assistant audio
mixer, assistant boom person, assistant key for special effects,
and other similar personnel. Below the line crew does not include a
producer, director, writer, actor, or other similar personnel.
(c) "Direct production expenditure" means a development,
preproduction, production, or postproduction expenditure made in
this state directly attributable to the production, development, or
distribution of a qualified production that is a transaction
subject to taxation in this state. Direct production expenditure
does not include out-of-state production costs that are made in
this state even if the costs are passed through a third-party
company in this state or payments made by an eligible production
company to its parent company, affiliate, subsidiary, or joint
venture partner, except where such payments are for transactions
entered into pursuant to arm's length negotiations and which
reflect a commercially reasonable price for such goods and services
purchased. A direct production expenditure must have true economic
substance within the state. Direct production expenditure does not
include a prize payable to participants in a game show; an
expenditure for entertainment, amusement, or recreation; or an
expenditure of more than $2,500.00 for the purchase of artwork or
jewelry used in a production. Direct production expenditure does
not include a qualified personnel expenditure or a personnel
expenditure. Direct production expenditure includes payments to
vendors doing business in this state to purchase or use tangible
personal property in producing or distributing the qualified
production or to purchase services relating to the production,
development, or distribution of the qualified production, including
all of the following:
(i) Production work, production equipment, production software,
development work, postproduction work, postproduction equipment,
postproduction software, set design, set construction, set
operations, props, lighting, wardrobe, makeup, makeup accessories,
photography, sound synchronization, special effects, visual
effects, audio effects, digital effects, film processing, music,
sound mixing, editing, interactive game development and
programming, and related services and materials.
(ii) Use of facilities or equipment, use of soundstages or
studios, location fees, and related services and materials.
(iii) Catering, food, lodging, and related services and
materials.
(iv) Use of vehicles, which may include chartered aircraft
based in this state used for transportation in this state directly
attributable to production of a qualified production, but may not
include the chartering of aircraft for transportation outside of
this state.
(v) Commercial airfare if purchased through a travel agency or
travel company based in this state for travel to and from this
state or within this state directly attributable to production,
development, or distribution of a qualified production.
(vi) Insurance coverage or bonding if purchased from an
insurance agent based in this state.
(vii) Expenditures for distribution, including, but not limited
to, both of the following:
(A) Preproduction, production, or postproduction costs
relating to the creation of trailers, marketing videos,
commercials, point-of-purchase videos, and content created on film
or digital media, including, but not limited to, the duplication of
films, videos, compact discs, digital video discs, and digital
files or other digital media created for consumer consumption.
(B) Purchase of equipment relating to the duplication or
market distribution of any content created or produced in this
state.
(viii) Interest on a loan, if the entity from which the
financing is obtained is a public, private, or institutional entity
with the requisite level of physical presence in this state that is
not related to or affiliated with the eligible production company
or any above the line personnel or cast members, and whose
principal business activity is the lending of money to individuals
and businesses. In addition, the financing shall be a good faith
loan, payable by the eligible production company, evidenced by an
enforceable promissory note or other debt instrument with clear
repayment obligations and bearing a market-related rate of
interest.
(ix) Other expenditures for production of a qualified
production in accordance with generally accepted entertainment
industry practices.
(d) "Eligible production company" or "company" means an entity
in the business of producing qualified productions or for
interactive games in the business of developing interactive games,
but does not include an entity that is more than 30% owned,
affiliated, or controlled by an entity or individual who is in
default on a loan made by this state, a loan guaranteed by this
state, or a loan made or guaranteed by any other state. For an
interactive game, an eligible production company need not possess
ownership of or legal control over all of the intellectual property
rights or other rights necessary to complete the qualified
production in its entirety nor be the same entity that distributes
or publishes the interactive game.
(e) "Facility" means an entity within this state equipped for
the production of motion pictures or television shows that meets
all of the following requirements:
(i) Includes at least 1 but fewer than 4 soundstages.
(ii) Includes not less than 3,000 and not more than 20,000
square feet of contiguous, column-free space for production
activities with a height of at least 12 feet under any permanent
grid.
(iii) Includes a permanent grid and sufficient built-in electric
service for shooting without the need of portable electric
generators.
(iv) Has a minimum sound proof with a noise criteria of at
least 30.
(f) "Made in this state" means, for purposes of subdivision
(c) only, all of the following:
(i) Tangible personal property and services acquired by the
eligible production company from a source within this state. If an
item of tangible personal property is not available from a source
within this state and a vendor with the requisite physical presence
in this state that regularly sells or leases property of that kind
obtains the property from an out-of-state vendor and sells or
leases it to an eligible production company, that expenditure is
considered made in this state and is a direct production
expenditure and not an out-of-state production cost.
(ii) Services wholly performed within this state.
(g) "Obscene matter or an obscene performance" means matter
described in 1984 PA 343, MCL 752.361 to 752.374.
(h) "Personnel expenditure" means an expenditure made in this
state directly attributable to the production, development, or
distribution of a qualified production that is a transaction
subject to taxation in this state and is a payment or compensation
for above the line personnel, nonresident below the line crew,
talent, management, or labor, not to exceed $2,000,000.00 for any 1
employee or contractual or salaried employee of a qualified
production, including both of the following:
(i) Payment of wages, benefits, or fees for talent, management,
or labor.
(ii) Payment to a personal services corporation or professional
employer organization for the services of a performing artist or
crew member if the personal services corporation or professional
employer organization is subject to taxation in this state on the
portion of the payment qualifying for funding under this section
and the payments received by the performing artist or crew member
that are subject to taxation under the income tax act of 1967, 1967
PA 281, MCL 206.1 to 206.532, and are withheld and paid to this
state in the amount provided under section 351 of the income tax
act of 1967, 1967 PA 281, MCL 206.351.
(i) "Postproduction expenditure" means a direct expenditure
for editing, Foley recording, automatic dialogue replacement, sound
editing, special or visual effects including computer-generated
imagery or other effects, scoring and music editing, beginning and
end credits, negative cutting, soundtrack production, dubbing,
subtitling, or addition of sound or visual effects. Postproduction
expenditure includes direct expenditures for advertising,
marketing, distribution, or related expenses.
(j) "Producer" means and individual without regard to his or
her actual title or screen credit involved in or responsible for
any of the following:
(i) Funding for financing in whole or in part, or arranging for
the funding, or financing, of the qualified production.
(ii) Obtaining the creative rights to or the intellectual
property for development or production of the qualified production.
(iii) Hiring above the line personnel.
(iv) Supervising the overall production of the qualified
production.
(v) Arranging for the distribution or exhibition of the
qualified production.
(k) "Qualified facility" means a facility within this state
equipped for the production of motion pictures or television shows
that meets all of the following requirements:
(i) Includes more than 3 soundstages.
(ii) Includes not less than 20,000 square feet of contiguous,
column-free space for production activities with a height of at
least 16 feet under any permanent grid.
(iii) Includes a permanent grid and sufficient built-in electric
service for shooting without the need of portable electric
generators.
(iv) Has a minimum sound proof with a noise criteria of at
least 30.
(l) "Qualified personnel expenditure" means an expenditure made
in this state directly attributable to the production, development,
or distribution of a qualified production that is a transaction
subject to taxation in this state and is a payment or compensation
payable to below the line crew for below the line crew members who
are residents of this state not to exceed $2,000,000.00 for any 1
employee or contractual or salaried employee who performs service
in this state for the production of a qualified production,
including both of the following:
(i) Payment of wages, benefits, or fees.
(ii) Payment to a personal services corporation or professional
employer organization for the services of a performing artist or
crew member if the personal services corporation or professional
employer organization is subject to taxation in this state on the
portion of the payment qualifying for funding under this section
and the payments received by the performing artist or crew member
that are subject to taxation under the income tax act of 1967, 1967
PA 281, MCL 206.1 to 206.532, are withheld and paid to this state
in the amount provided under section 351 of the income tax act of
1967, 1967 PA 281, MCL 206.351.
(m) "State certified qualified production" or "qualified
production" means single media or multimedia entertainment content
created in whole or in part in this state for distribution or
exhibition to the general public in 2 or more states by any means
and media in any digital media format, film, or video tape,
including, but not limited to, a motion picture, a documentary, a
television series, a television miniseries, a television special,
interstitial television programming, long-form television,
interactive television, music videos, interactive games such as
video games or wireless games, commercials, internet programming,
an internet video, a sound recording, a video, digital animation,
or an interactive website. Qualified production also includes any
trailer, pilot, video teaser, or demo created primarily to
stimulate the sale, marketing, promotion, or exploitation of future
investment in a production. Qualified production does not include
any of the following:
(i) A production for which records are required to be
maintained with respect to any performer in the production under 18
USC 2257.
(ii) A production that includes obscene matter or an obscene
performance.
(iii) A production that primarily consists of televised news or
current events.
(iv) A production that primarily consists of a live sporting
event.
(v) A production that primarily consists of political
advertising.
(vi) A radio program.
(vii) A weather show.
(viii) A financial market report.
(ix) An awards show or other gala event production.
(x) A production with the primary purpose of fund-raising.
(xi) A production that primarily is for employee training or
in-house corporate advertising or other similar production.
