PRIOR PRINTER'S NOS. 1118, 1960, 2397, PRINTER'S NO. 3868
3677, 3717, 3816
No. 983 Session of 2005
INTRODUCED BY T. STEVENSON, MANN, BAKER, BALDWIN, BASTIAN,
CALTAGIRONE, CAPPELLI, CAUSER, CAWLEY, CREIGHTON, DeWEESE,
FEESE, FRANKEL, GEIST, GODSHALL, HENNESSEY, HERMAN, HERSHEY,
JAMES, W. KELLER, LEACH, LEVDANSKY, MARKOSEK, MARSICO,
McCALL, McGEEHAN, MUSTIO, NAILOR, O'NEILL, PICKETT, PISTELLA,
READSHAW, ROEBUCK, SAINATO, SATHER, SEMMEL, SHANER,
R. STEVENSON, THOMAS, TURZAI, WALKO, WATSON, WILT,
YOUNGBLOOD, ADOLPH AND FABRIZIO, MARCH 15, 2005
AMENDMENTS TO SENATE AMENDMENTS, HOUSE OF REPRESENTATIVES,
APRIL 5, 2006
AN ACT
1 Amending Title 12 (Commerce and Trade) of the Pennsylvania
2 Consolidated Statutes, further providing, in the
3 Infrastructure and Facilities Improvement Program, for
4 approvals; and providing for film production tax credits. <--
5 ESTABLISHING A FILM PRODUCTION GRANT PROGRAM; AND REPEALING <--
6 PROVISIONS OF THE TAX REFORM CODE OF 1971 RELATING TO FILM
7 PRODUCTION TAX CREDITS.
8 The General Assembly of the Commonwealth of Pennsylvania
9 hereby enacts as follows:
10 Section 1. Section 3406(b) of Title 12 of the Pennsylvania
11 Consolidated Statutes is amended to read:
12 § 3406. Approval.
13 * * *
14 (b) Grant approval.--Upon receipt of the notification
15 required in subsection (a), the department may approve the
16 application and award the applicant a grant in an annual amount
1 not to exceed the amount established by the Secretary of the
2 Budget. Prior to providing grant funds to the applicant, the
3 department shall enter into a contract with the applicant and
4 the project user. The contract shall include provisions which do
5 all of the following:
6 (1) Specify the base amount of the grant per year.
7 (2) Specify the total number of years that grant funds
8 may be provided to the applicant and the year in which the
9 grant may commence, including an option to defer commencement
10 of the grant to any date up to the date upon which the
11 project is completed and operations have commenced. If the
12 applicant is an industrial enterprise, retail enterprise, a
13 research and development enterprise or a manufacturer, the
14 number of years may not exceed ten years. If the applicant is
15 a hospital, convention center or hotel establishment, the
16 number of years may not exceed 20 years.
17 [(3) If the grant will be awarded for more than four
18 years, establish the procedure for awarding the grant after
19 the fourth year. To provide a grant beyond the initial four-
20 year period, the applicant shall be required to demonstrate
21 to the satisfaction of the department, the Secretary of the
22 Budget and the Department of Revenue that the tax revenues
23 specified in section 3405 are anticipated to be equal to or
24 exceed the amount of the grant awarded in the previous year.
25 If the department, the Secretary of the Budget and the
26 Department of Revenue determine that the tax revenues
27 specified in section 3405 are anticipated to equal or exceed
28 the amount specified in paragraph (1), the applicant shall be
29 awarded a grant for that year in the amount specified in
30 paragraph (1). If the department, the Secretary of the Budget
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1 and the Department of Revenue determine that the tax revenues
2 specified in section 3405 will not equal or exceed the amount
3 specified in paragraph (1), the applicant shall be awarded a
4 grant equal to the anticipated tax revenues specified in
5 section 3405 for that year.]
6 (3) If the grant will be awarded for more than four
7 years, establish the procedure for the award of the grant
8 after year four. If the department, the Secretary of the
9 Budget and the Department of Revenue determine that the tax
10 revenues specified in section 3405(b) during the fifth year
11 and each succeeding year thereafter are anticipated to be
12 equal to or exceed the amount of the grant awarded during the
13 previous year, the department shall award the grant in the
14 amount of the original grant as determined under this
15 section. If the department, the Secretary of the Budget and
16 the Department of Revenue determine that the tax revenues
17 specified in section 3405(b) during the fifth year and each
18 year thereafter will not equal or exceed the amount of the
19 grant for the previous year, the department shall award a
20 grant that is no less than the anticipated tax revenue
21 specified in section 3405(b) and no more than the amount of
22 the original grant awarded under this section.
23 (4) Require the applicant to use the grant to pay debt
24 service for the project and to repay all or any portion of a
25 grant if the applicant fails to use the grant to pay debt
26 service.
27 (5) Specify that the annual amount of the grant in any
28 one year may not exceed the annual amount of the debt service
29 on the project for that year.
30 (6) If the grant in any one year exceeds the annual
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1 payment on debt service in that year, require the applicant
2 to repay the amount of the grant for that year which exceeds
3 the payment on debt service for that year.
4 [(7) If the project user is not a governmental entity,
5 prohibit the project user from holding title to the project
6 during the period which the applicant is receiving a grant
7 from the department.]
8 (8) Require the project user to pay to the applicant a
9 sum equal to any payments received by the project user from
10 third parties for infrastructure which is part of the project
11 during the period which the applicant is receiving a grant
12 from the department. Any payment received by the applicant
13 under this paragraph must be applied to payment of the debt
14 service for the project.
15 (9) Require the applicant to [insure] satisfactorily
16 demonstrate that the full amount of annual debt service is
17 paid for the project, regardless of the amount of the grant
18 received.
19 (10) Require the project user to use the project for the
20 period of time the applicant is receiving grants under this
21 chapter and to repay all or any portion of a grant if the
22 project user fails to use the project for the period of time
23 the applicant is receiving grants.
24 [(11) Require the project user to timely pay all
25 Commonwealth and local taxes and fees.]
26 (11) Require the project user to timely pay all
27 Commonwealth and local taxes and fees that are then due and
28 owing. A local government unit as defined under 53 Pa.C.S.
29 Pt. VII Subpt. B (relating to indebtedness and borrowing) or
30 an issuing authority may enter into an agreement or adopt an
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1 ordinance or resolution to permit the local government unit
2 or issuing authority to pay, waive, abate, settle, compromise
3 or reimburse any local tax, fee or other imposition
4 applicable to a project user imposed by any local government
5 unit or issuing authority. The agreement, ordinance or
6 resolution shall not affect the eligibility of an applicant
7 or a project to receive a grant under this chapter.
8 (12) Require the department to approve any change of use
9 of a project during the period in which the applicant is
10 receiving a grant from the department. The department may not
11 unreasonably withhold its consent to a change of use.
12 * * *
13 Section 2. Title 12 is amended by adding a chapter to read:
14 CHAPTER 41 <--
15 FILM PRODUCTION TAX CREDITS
16 Sec.
17 4101. Scope of chapter.
18 4102. Report.
19 § 4101. Scope of chapter.
20 This chapter relates to film production tax credits.
21 § 4102. Report.
22 The report to the General Assembly required under section
23 1709-C of the act of March 4, 1971 (P.L.6, No.2), known as the
24 Tax Reform Code of 1971, pertaining to the film production tax
25 credit shall be made available on the publicly accessible
26 Internet website of the Department of Revenue.
27 CHAPTER 41 <--
28 FILM PRODUCTION GRANTS
29 SEC.
30 4101. SCOPE OF CHAPTER.
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1 4102. DEFINITIONS.
2 4103. ESTABLISHMENT.
3 4104. APPLICATION.
4 4105. REVIEW.
5 4106. APPROVAL.
6 4107. PENALTY.
7 4108. LIMITATIONS.
8 4109. GUIDELINES.
9 § 4101. SCOPE OF CHAPTER.
10 THIS CHAPTER RELATES TO THE FILM PRODUCTION GRANT PROGRAM.
11 § 4102. DEFINITIONS.
12 THE FOLLOWING WORDS AND PHRASES WHEN USED IN THIS CHAPTER
13 SHALL HAVE THE MEANINGS GIVEN TO THEM IN THIS SECTION UNLESS THE
14 CONTEXT CLEARLY INDICATES OTHERWISE:
15 "APPLICANT." A PERSON THAT FILES A NOTICE AND APPLICATION IN
16 ACCORDANCE WITH THIS CHAPTER.
17 "DEPARTMENT." THE DEPARTMENT OF COMMUNITY AND ECONOMIC
18 DEVELOPMENT OF THE COMMONWEALTH.
19 "FILM." THE TERM INCLUDES A FEATURE FILM, TELEVISION FILM,
20 TELEVISION PILOT OR EACH EPISODE OF A TELEVISION SERIES WHICH IS
21 INTENDED AS PROGRAMMING FOR A NATIONAL AUDIENCE. THE TERM DOES
22 NOT INCLUDE A PRODUCTION FEATURING:
23 (1) NEWS, CURRENT EVENTS, WEATHER AND MARKET REPORTS.
24 (2) PUBLIC PROGRAMMING.
25 (3) TALK SHOWS, GAME SHOWS, SPORTS EVENTS, AWARDS SHOWS
26 OR OTHER GALA EVENTS.
27 (4) A PRODUCTION THAT SOLICITS FUNDS.
28 (5) A PRODUCTION THAT PRIMARILY MARKETS A PRODUCT OR
29 SERVICE.
30 (6) A PRODUCTION CONTAINING OBSCENE MATERIAL OR
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1 PERFORMANCES AS DEFINED IN 18 PA.C.S. § 5903(B) (RELATING TO
2 OBSCENE AND OTHER SEXUAL MATERIALS AND PERFORMANCES).
3 (7) A PRODUCTION PRIMARILY FOR PRIVATE, POLITICAL,
4 INDUSTRIAL, CORPORATE OR INSTITUTIONAL PURPOSES.
5 "PENNSYLVANIA PRODUCTION EXPENSE." A PRODUCTION EXPENSE
6 INCURRED IN THIS COMMONWEALTH. FOR THE PURPOSES OF WAGES AND
7 SALARIES, THE TERM INCLUDES ONLY WAGES AND SALARIES ON WHICH THE
8 TAXES IMPOSED BY ARTICLE III OR IV OF THE ACT OF MARCH 4, 1971
9 (P.L.6, NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, HAVE BEEN
10 PAID OR ACCRUED.
11 "PRODUCTION EXPENSE."
12 (1) AN EXPENSE INCURRED IN THE PRODUCTION OF A FILM. THE
13 TERM INCLUDES:
14 (I) THE AGGREGATE AMOUNT OF WAGES AND SALARIES OF
15 INDIVIDUALS EACH OF WHOM RECEIVE LESS THAN $1,000,000 AND
16 ARE EMPLOYED IN THE PRODUCTION OF THE FILM.
17 (II) THE COSTS OF CONSTRUCTION, OPERATIONS, EDITING,
18 PHOTOGRAPHY, SOUND SYNCHRONIZATION, LIGHTING, WARDROBE
19 AND ACCESSORIES.
20 (III) THE COST OF RENTAL FACILITIES AND EQUIPMENT.
21 (2) THE TERM DOES NOT INCLUDE EXPENSES INCURRED IN
22 PURCHASING STORY RIGHTS, MUSIC RIGHTS, DEVELOPMENT COSTS,
23 MARKETING OR ADVERTISING A FILM.
24 "PROGRAM." THE FILM PRODUCTION GRANT PROGRAM ESTABLISHED IN
25 SECTION 4103 (RELATING TO ESTABLISHMENT).
26 "QUALIFIED FILM PRODUCTION EXPENSE." A PENNSYLVANIA
27 PRODUCTION EXPENSE IF AT LEAST 60% OF THE TOTAL PRODUCTION
28 EXPENSES ARE PENNSYLVANIA PRODUCTION EXPENSES.
29 "RECIPIENT." A PERSON WHO RECEIVES A GRANT UNDER THIS
30 CHAPTER.
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1 "START DATE." THE FIRST DAY OF PRINCIPAL PHOTOGRAPHY IN THIS
2 COMMONWEALTH.
3 § 4103. ESTABLISHMENT.
4 THERE IS ESTABLISHED WITHIN THE DEPARTMENT A PROGRAM TO BE
5 KNOWN AS THE FILM PRODUCTION GRANT PROGRAM. THE PROGRAM SHALL BE
6 ADMINISTERED BY THE DEPARTMENT TO PROVIDE GRANTS TO PERSONS FOR
7 CERTAIN FILMS PRODUCED WITHIN THIS COMMONWEALTH.
8 § 4104. APPLICATION.
9 (A) NOTICE.--PRIOR TO COMMENCING PRODUCTION OF A FILM, A <--
10 PERSON MAY SUBMIT A NOTICE TO THE DEPARTMENT INFORMING IT OF THE
11 PERSON'S INTENTION TO REQUEST A GRANT FOR A PENNSYLVANIA FILM
12 PRODUCTION. THE NOTICE SHALL BE ON THE FORM REQUIRED BY THE
13 DEPARTMENT AND SHALL INCLUDE OR DEMONSTRATE ALL OF THE
14 FOLLOWING:
15 (1) AN ITEMIZED LIST OF PRODUCTION EXPENSES TO BE
16 INCURRED.
17 AT ANY TIME PRIOR TO 60 DAYS AFTER THE COMPLETION OF <--
18 PRODUCTION OF A FILM, A PERSON MAY SUBMIT AN APPLICATION FOR A
19 FILM PRODUCTION GRANT TO THE DEPARTMENT. THE APPLICATION SHALL
20 BE ON A FORM REQUIRED BY THE DEPARTMENT AND SHALL INCLUDE OR
21 DEMONSTRATE ALL OF THE FOLLOWING:
22 (1) AN ITEMIZED LIST OF PRODUCTION EXPENSES INCURRED OR
23 TO BE INCURRED DURING THE CURRENT FISCAL YEAR, AND THE
24 ANTICIPATED EXPENSES TO BE INCURRED FOR ANY SUBSEQUENT YEAR
25 IF THE FILM PRODUCTION IS ANTICIPATED TO EXTEND INTO ANY SUCH
26 YEAR.
27 (2) AN ITEMIZED LIST OF PENNSYLVANIA PRODUCTION EXPENSES
28 TO BE INCURRED. <--
29 (3) THE START DATE.
30 (4) THE ACTUAL OR PROJECTED COMPLETION DATE. <--
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1 (5) A STATEMENT OF THE AMOUNT OF GRANT SOUGHT.
2 (6) ANY OTHER INFORMATION REQUIRED BY THE DEPARTMENT.
3 (B) APPLICATION.--WITHIN 60 DAYS OF THE COMPLETION OF <--
4 PRODUCTION OF A FILM, THE APPLICANT SHALL FILE AN APPLICATION
5 FOR A FILM PRODUCTION GRANT WITH THE DEPARTMENT. THE APPLICATION
6 SHALL BE ON THE FORM REQUIRED BY THE DEPARTMENT AND SHALL
7 INCLUDE OR DEMONSTRATE ALL OF THE FOLLOWING:
8 (1) AN ITEMIZED LIST OF PRODUCTION EXPENSES ACTUALLY
9 INCURRED.
10 (2) AN ITEMIZED LIST OF PENNSYLVANIA PRODUCTION EXPENSES
11 ACTUALLY INCURRED. EXPENSES SUBMITTED UNDER THIS PARAGRAPH
12 MAY NOT IN THE AGGREGATE EXCEED THE AMOUNT OF PROJECTED
13 EXPENSES SUBMITTED TO THE DEPARTMENT UNDER SUBSECTION (A)(2).
14 (3) THE DATE OF THE COMPLETION OF PRODUCTION OF THE
15 FILM.
16 (4) ANY OTHER INFORMATION REQUIRED BY THE DEPARTMENT.
17 § 4105. REVIEW.
18 THE DEPARTMENT SHALL REVIEW THE APPLICATION TO DETERMINE IF
19 THE APPLICANT HAS MET ALL OF THE CRITERIA SET FORTH IN SECTION
20 4104 (RELATING TO APPLICATION).
21 § 4106. APPROVAL.
22 THE FOLLOWING SHALL APPLY:
23 (1) UPON BEING SATISFIED THAT ALL REQUIREMENTS HAVE BEEN
24 MET AND SUBJECT TO SECTION 4108 (RELATING TO LIMITATIONS),
25 THE DEPARTMENT MAY APPROVE THE APPLICATION AND AWARD A FILM
26 PRODUCTION GRANT.
27 (2) PRIOR TO PROVIDING GRANT FUNDS TO THE APPLICANT, THE
28 DEPARTMENT SHALL ENTER INTO A CONTRACT WITH THE APPLICANT.
29 THE CONTRACT SHALL INCLUDE PROVISIONS REQUIRING THE APPLICANT
30 TO USE THE GRANT TO PAY COSTS ASSOCIATED WITH THE PRODUCTION
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1 OF THE FILM.
2 (3) THE DEPARTMENT MAY IMPOSE ANY OTHER TERMS AND
3 CONDITIONS ON THE GRANTS AUTHORIZED BY THIS CHAPTER AS THE
4 DEPARTMENT DETERMINES ARE IN THE BEST INTERESTS OF THE
5 COMMONWEALTH.
6 § 4107. PENALTY.
7 (A) IMPOSITION.--EXCEPT AS PROVIDED IN SUBSECTION (B), THE
8 DEPARTMENT SHALL IMPOSE A PENALTY UPON A RECIPIENT FOR VIOLATION
9 OF THE CONTRACT REQUIRED BY SECTION 4106 (RELATING TO APPROVAL).
10 (B) EXCEPTION.--THE DEPARTMENT MAY WAIVE THE PENALTY
11 REQUIRED BY SUBSECTION (A) IF THE DEPARTMENT DETERMINES THAT THE
12 FAILURE WAS DUE TO CIRCUMSTANCES OUTSIDE THE CONTROL OF THE
13 RECIPIENT.
14 (C) AMOUNT.--THE AMOUNT OF THE PENALTY SHALL BE EQUAL TO THE
15 FULL AMOUNT OF THE GRANT RECEIVED PLUS AN ADDITIONAL AMOUNT OF
16 UP TO 10% OF THE AMOUNT OF THE GRANT RECEIVED. THE PENALTY SHALL
17 BE PAYABLE IN ONE LUMP SUM OR IN INSTALLMENTS, WITH OR WITHOUT
18 INTEREST, AS THE DEPARTMENT DEEMS APPROPRIATE.
19 § 4108. LIMITATIONS.
20 THE FOLLOWING LIMITATIONS SHALL APPLY:
21 (1) A RECIPIENT MAY NOT RECEIVE A GRANT UNDER THIS <--
22 CHAPTER FOR MORE THAN ONE YEAR FOR THE SAME FILM.
23 (2) (1) A GRANT AWARDED UNDER THIS CHAPTER TO AN <--
24 APPLICANT FOR A FILM MAY NOT EXCEED 20% OF THE QUALIFIED FILM
25 PRODUCTION EXPENSES INCURRED FOR THE FILM.
26 (3) (2) IN NO CASE SHALL THE AGGREGATE AMOUNT OF GRANTS <--
27 AWARDED IN ANY FISCAL YEAR UNDER THIS CHAPTER EXCEED
28 $10,000,000.
29 (4) (3) A GRANT AWARDED UNDER THIS CHAPTER SHALL IN NO <--
30 WAY CONSTITUTE AN ENTITLEMENT DERIVED FROM THE COMMONWEALTH
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1 OR A CLAIM ON ANY OTHER FUNDS OF THE COMMONWEALTH.
2 § 4109. GUIDELINES.
3 THE DEPARTMENT SHALL DEVELOP NECESSARY WRITTEN GUIDELINES FOR
4 THE PROGRAM.
5 SECTION 3. REPEALS ARE AS FOLLOWS:
6 (1) THE GENERAL ASSEMBLY DECLARES THAT THE REPEAL UNDER
7 PARAGRAPH (2) IS NECESSARY TO EFFECTUATE THE ADDITION OF 12
8 PA.C.S. CH. 41.
9 (2) ARTICLE XVII-C OF THE ACT OF MARCH 4, 1971 (P.L.6,
10 NO.2), KNOWN AS THE TAX REFORM CODE OF 1971, IS REPEALED, <--
11 PROVIDED THAT THIS REPEAL SHALL NOT APPLY TO ANY FILM
12 PRODUCTION TAX CREDIT APPROVED OR ISSUED PRIOR TO THE
13 EFFECTIVE DATE OF THIS SECTION.
14 Section 3 4. The amendment of 12 Pa.C.S. § 3406 shall apply <--
15 retroactively to July 1, 2004.
16 Section 4 5. This act shall take effect immediately. <--
17 SECTION 5. THIS ACT SHALL TAKE EFFECT AS FOLLOWS: <--
18 (1) SECTION 3 OF THIS ACT SHALL TAKE EFFECT JUNE 30,
19 2006.
20 (2) THE REMAINDER OF THIS ACT SHALL TAKE EFFECT
21 IMMEDIATELY.
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