§ 5533. Proposed Motion Picture Production Application -- Phase B.
10 CA ADC § 5533Barclays Official California Code of RegulationsEffective: February 8, 2024
Effective: February 8, 2024
10 CCR § 5533
§ 5533. Proposed Motion Picture Production Application -- Phase B.
(a) After a Phase A applicant receives approval from the CFC for its studio construction project and has received a Soundstage Certification Letter or Letters, Form SCL (August 12, 2022), hereby incorporated by reference, the Phase B applicant may proceed to submit the following described application.
(b)(1) If the Phase A applicant and the Phase B applicant are the same entity, the applicant shall initiate the online application process for Phase B with the same login credentials used for their Phase A application. The applicant will be required to input the unique identifier for the soundstage or soundstages, certified as part of the applicant's certified studio construction project, upon which the motion picture will be filmed.
1. Each soundstage or ancillary building, or group of buildings, approved as part of a Phase A certified studio construction project is assigned a unique identifier. This identifier must be provided for each soundstage, ancillary building, or group of buildings that the Phase B applicant will utilize in production of their qualified motion picture project.
(c) Following initiation of the online application for Phase B and review of the applicant and contact information, the applicant shall select the appropriate production category from the following: feature film, independent film, new television series, recurring television series, pilot, miniseries, relocating television series.
(B) The applicant must provide the production title, date submitted, production category, principal photography start date, post-production end date, soundstage identifiers, estimated tax credit. Estimated tax credit must be based on qualified expenditure estimates, regardless of the cap sum specified in sections 17053.98(k)(8)(B) and 23698(k)(8)(B) of the Revenue and Taxation Code, and must not exceed that cap sum.
(A) If it is a new television series indicate if TV Pilot was initially accepted in the program, number of episodes, and confirm over forty (40) minutes of running time per episode exclusive of commercials. If it is a relocating television series indicate previous location, number of episodes previously shot and number of episodes included in this season. Indicate if the previous season was filmed in California and if so, the number of principal photography days inside California and outside California. If it is a miniseries, indicate the number of episodes and confirm over forty (40) minutes of running time per episode exclusive of commercials.
(A) Principal photography (PP) Days. Note that to qualify for this Program, a motion picture must be produced by the qualified taxpayer and at least 50 percent of the qualified motion picture's principal photography stage shooting days must be on the soundstage or soundstages certified as a certified studio construction project. An applicant shall utilize the certified studio construction project soundstage(s) for six hours or more for the day to be considered a principal photography stage shooting day.
3. Percentage of PP stage shooting days on the soundstage or soundstages certified as the certified studio construction project equals (4)(C)2. divided by (4)(C)1. and multiplied by 100. A qualified motion picture must film 50% of stage shooting days on certified stages during the production period.
4. By checking the box, Applicant acknowledges the following required documentation will be submitted if and when the Applicant applies for a tax credit certificate, Form SM (August 12, 2022), hereby incorporated by reference: Subject to self-reported voluntary information, include separate listings regarding the ethnicity and gender statistics of all individuals who received qualified wages and all individuals who received non-qualified wages.
(C) Visual Effects: (excludes independent films with qualified expenditure budgets of ten million dollars ($10,000,000) or less). Provide total worldwide VFX budget amount, and total California VFX budget amount. Indicate if the total California qualified VFX is equal or greater than 75% of total worldwide VFX budget or if the California qualified VFX is at least ten million dollars ($10,000,000).
1. The applicant is responsible for collecting proof of identity and proof of the location where the qualified individual resides for local hire labor at the time of hire and for providing copies to the CPA performing the Soundstage AUP (August 28, 2023), hereby incorporated by reference. Without proof of identity and proof of the location where the qualified individual resides for a crewmember the Local Hire Labor Uplift shall not be applied for that individual.
(ii) For purposes of sections 17053.98(a)(4)(E) and 23698(a)(4)(E) of the Revenue and Taxation Code, acceptable proof of the location where the qualified individual resides is a current home or apartment rental agreement, or a utility bill, mortgage statement, internet or phone provider bill, renter's or homeowner's insurance bill, or equivalent document, issued within the previous three months.
(D) Total Diversity Goals Potential Increase: The applicant may achieve up to a four-percentage point increase in its credit percentage if it meets or makes a good faith effort to meet the diversity goals in its diversity workplan, as described in sections 17053.98(k)(3) and 23698(k)(3) of the Revenue and Taxation Code.
1. The CFC will review the Phase B applicant's diversity workplan, required pursuant to section 5534, and the applicant's subsequent diversity report, required pursuant to section 5537, to make a case-by-case determination of whether the applicant has met or made a good faith effort to meet their diversity workplan goals at the time of Phase C tax credit certification.
(F) Total tax credit uplifts. Total qualified expenditures shall be multiplied by 25% if production category is an independent film or relocating television series; totals in this section shall be multiplied by 20% for all other production categories. (Credit allocation applies only to the first ten million ($10,000,000) of qualified expenditures for independent films and the first ten million ($10,000,000) of qualified expenditures eligible for uplifts. Credit allocation applies only to the first one hundred million ($100,000,000) of qualified expenditures for non-independent films and the first one hundred million ($100,000,000) of qualified expenditures eligible for uplifts.)
(A) An electronic copy of the qualified expenditure budget in a motion picture industry standard budgeting program, such as, but not limited to, Movie Magic Budgeting or Showbiz. The electronic copy shall be uploaded to the online application portal for the qualified motion picture. The industry standard budgeting program shall provide the following:
2. For non-independent films (excluding relocating TV series in their first season in California) indicate those accounts for which an additional five percent (5%) tax credit is allowed for qualified expenditures purchased or rented and used outside the Los Angeles zone during preproduction through strike on location; qualified visual effects if at least ten million dollars ($10,000,000) or seventy-five percent (75%) of worldwide visual effects paid or incurred in the state; and qualified wages for services performed outside the Los Angeles zone during preproduction through strike by individuals who reside within the Los Angeles Zone. Productions shall also indicate those accounts for which an additional ten percent (10%) tax credit is allowed for local hire labor.
3. A television series shall submit a qualified expenditure budget including all pattern and amortization costs, or separate amortization and pattern budgets. The budget shall be in an industry standard budgeting program uploaded to the online application. The Production Budget shall indicate, as applicable, the information required in clauses (8)(A)1. And 2. Of this subdivision.
(B) Fringe Benefit Matrix: Applicant shall submit information on fringe benefit payments included in the qualified expenditure budget. After entering project title, category, and date, applicant provides a detailed breakdown of qualified fringe benefit payments for union and/or non-union background performers, union and/or non-union crew, Director's Guild of America (DGA) crew, as applicable. Fringe payments include: state unemployment tax, payroll/handling fees, pension, health, vacation and holiday, workers compensation, DGA fringes benefit payments, and non-union health insurance payments. Casting fees are not included as fringe benefit payments but must be included as a line item in the budget, if incurred.
(C) One-Line Schedule (“production board”). Applicant shall submit in PDF or equivalent non-proprietary document format a One-Line Schedule which shall include scene descriptions, scene numbers, holidays and cast numbers and shall indicate which days are scheduled for filming outside of the Los Angeles zone.
1. A television series may submit in PDF or equivalent non-proprietary document format a production calendar, including: the start and end dates of the season, the number of in-state and out-of-state principal photography days, holidays, and the total number of episodes in lieu of a one-line shooting schedule. The production calendar must indicate which days are scheduled for filming outside the Los Angeles zone.
(D) Applicant shall submit in PDF or equivalent non-proprietary document format the screenplay, including scene numbers that match the submitted schedule for the production. If the application is for a pilot that does not have a script, this requirement shall be waived. This requirement is waived for recurring television series.
(E) Applicant shall submit supporting documentation that confirms at least 60% of production financing. Applicant shall include documentation for each financing source including, but not limited to, commitment letters, financing agreements, term sheets, and/or bank statements in PDF or equivalent nonproprietary document format. If the CFC is unable to verify at least 60% of production financing based on the supporting documentation provided, the application shall be considered incomplete.
(F) Pick-up order. A pilot, new television series, recurring television series, or relocating television series shall submit evidence, in PDF or equivalent non-proprietary document format, that the pilot or series is scheduled for photography, e.g., a pick-up order, when applying for a credit allocation. The number of episodes indicated on the pick-up order must match the number of episodes in the application.
(G) Narrative statement pursuant to sections 17053.98(g)(2)(A)(viii) and 23698(g)(2)(A)(viii) of the Revenue and Taxation Code. Recurring television series in their second or subsequent seasons are not required to submit a narrative statement if the statement is already in the applicant's online submission portal.
(H) Relocating statement. Applicant certifies that the credit provided is the primary reason for relocation to California (if applicable). The Applicant must state that at least 75 percent of principal photography days of its most recent season was filmed outside of California. The submitted budgets must be no less than one million dollars ($1,000,000) per episode. If submitting a relocating statement, the detailed narrative statement as per Revenue and Taxation Code sections 17053.98 (g)(2)(A)(viii) and 23698(g)(2)(A)(viii) is not required. The certification shall be submitted in PDF or equivalent non-proprietary document format.
(J) Applicants that administer voluntary programs to increase the representation of women and minorities, or have access to such programs, shall submit a summary of those programs including a description of what the program is designed to accomplish and information about how the programs are publicized to interested parties as set forth in sections 17053.98(g)(2)(A)(xi) and 23698(g)(2)(A)(xi) of the Revenue and Taxation Code.
(A) Clicking submit on the Application Summary is the applicant's acknowledgement, agreement, and certification that the applicant has read and reviewed the application, including all its attachments, and that the content provided in the application by the applicant is true and accurate to the best of their knowledge or at least the knowledge of what would be expected of a reasonable person in the same capacity.
(e) Upon approval of an applicant's Phase B submission, a CAL, Form SD (August 12, 2022), hereby incorporated by reference, shall be issued to the applicant indicating the amount of tax credits allocated. The amount of tax credits allocated may be reduced prior to issuance of the final tax credit certificate based on the Soundstage AUP and the applicant's submissions following completion of the qualified motion picture and CFC verification of such submissions as compared to the criteria for the Program. The applicant may never receive more tax credits than as provided on the CAL and in no event more than the cap sum specified in sections 17053.98(k)(8)(B) and 23698(k)(8)(B) of the Revenue and Taxation Code.
(1) Submitting an application for an allocation of credits under the California Film and Television Tax Credit Program 3.0 or its successor programs simultaneously with an application for an allocation of tax credits under the California Soundstage Filming Tax Credit Program shall constitute a “duplicate application.”
(2) Submitting an application for an allocation of credits under the California Soundstage Filming Tax Credit Program for a project that has applied for but has confirmation that it is not receiving credits under the California Film and Television Tax Credit Program 3.0 or its successor programs for the project shall not constitute a “duplicate application.”
(i) Any expenditures for services, wages, or goods incurred prior to the date of CAL issuance shall not be considered qualified expenditures with the exception of production facility, office rentals, completion bonds and insurance premiums, which are permitted on a prorated basis, to include the expenditures which are incurred on or after CAL issuance.
(j) An applicant of a television series shall submit one application for a season of that television series. A television series with an order for additional episodes for the same season may submit an additional application for the additional episodes, however, the season as a whole shall be subject to the credit allocation cap.
(1) If revisions to the diversity workplan required pursuant to section 5534 are required, the re-submission of the amended document pursuant to subdivision (c) of section 5534, will count as the application date for purposes of the timeframe specified in subdivision (k) above and for purposes of determining the order of applications received by the CFC.
Credits
Note: Authority cited: Sections 17053.98(k)(10) and 23698(k)(10), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98(k)(1)-(5), 17053.98(k)(8), 17053.98(k)(10), 17053.98(a), 17053.98(b), 17053.98(g), 23698(k)(1)-(5), 23698(k)(8), 23698(k)(10), 23698(a), 23698(b) and 23698(g), Revenue and Taxation Code; and Section 14998.1, Government Code.
History
1. New section filed 4-11-2022 as an emergency; operative 4-11-2022 (Register 2022, No. 15). A Certificate of Compliance must be transmitted to OAL by 10-10-2022 or emergency language will be repealed by operation of law on the following day.
2. New section refiled with amendments 10-3-2022 as an emergency; operative 10-11-2022 (Register 2022, No. 40). A Certificate of Compliance must be transmitted to OAL by 1-9-2023 or emergency language will be repealed by operation of law on the following day.
3. Refiling of 10-3-2022 emergency on 1-9-2023; operative 1-10-2023 (Register 2023, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-10-2023 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 10-3-2022 order, including amendment of subsections (d)(6)(D)1., (d)(8)(A), (d)(8)(B) and (d)(8)(E) and amendment of Note, transmitted to OAL 1-3-2023 and filed 2-15-2023; amendments effective 2-15-2023 pursuant to Government Code section 11343.4(b)(3) (Register 2023, No. 7).
5. Amendment filed 8-18-2023 as an emergency; operative 8-18-2023 (Register 2023, No. 33). A Certificate of Compliance must be transmitted to OAL by 2-14-2024 or emergency language will be repealed by operation of law on the following day.
6. Certificate of Compliance as to 8-18-2023 order, including amendment of subsections (d)(3)(A), (d)(6)(B)1., (d)(6)(B)1.(ii), (d)(8)(K) and (i) transmitted to OAL 12-26-2024 and filed 2-8-2024; amendments effective 2-8-2024 pursuant to Government Code section 11343.4(b)(3) (Register 2024, No. 6).
This database is current through 7/12/24 Register 2024, No. 28.
Cal. Admin. Code tit. 10, § 5533, 10 CA ADC § 5533
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