WSR 06-20-051

PROPOSED RULES

DEPARTMENT OF COMMUNITY,

TRADE AND ECONOMIC DEVELOPMENT

[ Filed September 27, 2006, 1:03 p.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 06-12-107.

Title of Rule and Other Identifying Information: Washington motion picture competitiveness program proposed rules to implement 2SSB 6558, chapter 247, Laws of 2006.

Hearing Location(s): Seattle Center, Fidalgo Room, 305 Harrison Street, Seattle, WA 98109, on November 13, 2006, at 10:00 a.m.

Date of Intended Adoption: November 30, 2006.

Submit Written Comments to: Marie Sullivan, 128 10th Avenue S.W., Olympia, WA 98504, e-mail maries@cted.wa.gov, fax (360) 586-8440, by November 15, 2006.

Assistance for Persons with Disabilities: Contact TTY (360) 586-0772.

Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The department of community, trade and economic development is charged with developing criteria to be used by a motion picture competitiveness program in determining funding assistance to productions that use Washington state as a location for Washington state film and video production.

Statutory Authority for Adoption: Chapter 247, Laws of 2006.

Statute Being Implemented: Chapter 247, Laws of 2006.

Name of Proponent: Washington department of community, trade and economic development, governmental.

Name of Agency Personnel Responsible for Drafting, Implementation and Enforcement: Marie Sullivan, 128 10th Avenue S.W., (360) 725-4010.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The economic impacts on regulated entities are negligible.

A cost-benefit analysis is not required under RCW 34.05.328. Not applicable.

September 26, 2006

Marie Sullivan

Washington Motion Picture

Competitiveness Program Proposed Rules

OTS-8967.2

Chapter 130-20 WAC

WASHINGTON MOTION PICTURE COMPETITIVENESS PROGRAM


NEW SECTION
WAC 130-20-001   Purpose and authority.   The department of community, trade, and economic development is charged with developing criteria to be used by a motion picture competitiveness program in determining funding assistance to productions that use Washington state as a location for film and video production.

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NEW SECTION
WAC 130-20-010   Definitions.   The following definitions apply to this chapter, unless the context clearly requires otherwise:

(1) "Applicant" means a movie or film production company intending to produce a qualified production in Washington state.

(2) "Motion picture competitiveness program" means an approved program that is a 501 (c)(6) nonprofit organization with the sole purpose of revitalizing the state's standing in the film production marketplace through recommending and awarding financial assistance to qualified productions.

(3) "Costs" mean actual expenses of production and postproduction expended in Washington state for the production of motion pictures, including but not limited to payments made for salaries, wages, and health insurance and retirement benefits, the rental costs of machinery and equipment, and the purchase of food, property, lodging, and permits for work conducted in Washington state.

(4) "Department" means the department of community, trade, and economic development.

(5) "State film office" means a program within the department with the responsibility of promoting Washington state as a premier location for film and video production.

(6) "Motion picture" means a recorded audio-visual production intended for distribution to theaters, DVD, video, or the internet, or television, or one or more episodes of a single television series, television pilot or television commercials. Motion picture does not mean production of a television commercial that spends less then two hundred fifty thousand dollars in the state of Washington or one or more segments of a newscast or sporting event.

(7) "Funding assistance" means financial assistance from a motion picture competitiveness program.

(8) "Person" means the same as defined in RCW 82.04.030.

(9) "Qualified production" is a production that has been certified by the motion picture competitiveness program as fully meeting the requirements for funding assistance.

(10) "Qualified expenditures" are production costs for in-state wages and benefits, goods and services purchased, leased or employed from a legal resident of this state, or a vendor or supplier who is located and doing business in this state for one year. Qualified expenditures do not include wages, salaries or other compensation for out-of-state production personnel.

(11) "Motion picture competitiveness board" means a board appointed by the governor that administers the motion picture competitiveness program. The board evaluates and awards funding assistance to motion picture projects pursuant to the guidelines of this chapter.

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NEW SECTION
WAC 130-20-020   Eligibility criteria and guidelines.   (1) To qualify for funding assistance, the applicant must:

(a) Certify that it is not engaged, to any extent, in the production of erotic material, as defined in RCW 9.68.050.

(b) Include an acknowledgement that the production was filmed in Washington state.

(c) Agree to pay all obligations the film production company incurs in Washington state.

(d) Complete a survey as required in WAC 130-20-060 and file it with the state film office following the completion of the part of the project covered by the contract with the competitiveness board and before distribution of the funding assistance.

(e) Make every effort to maximize the hiring of local cast, crew and support services.

(f) Make industry standard payments for health insurance and a retirement program for those positions typically covered by a collective bargaining agreement; and

(g) Enter into a contract with the motion picture competitiveness program accepting the terms above.

(2) The following activities are qualified expenditures, provided the expenditure occurs in Washington state:

(a) Production costs.

(b) Salaries of Washington state residents who are cast and crew, not to exceed two hundred fifty thousand dollars for any one employee, including wages and payments into health insurance and retirement plans, or fees of Washington state residents to include talent, management and labor.

(c) Cost of set construction and operations, wardrobe, accessories, location fees and related services.

(d) Costs of photography, sound synchronization, lighting and related services.

(e) Renting or leasing vehicles.

(f) Actual food and lodging, or a per diem not to exceed the IRS rate.

(g) Agency fees for airfare, if purchased through a Washington state-based travel agency or company.

(h) Agency fees for insurance coverage and bonding if purchased from Washington state-based insurance agent.

(i) Postproduction expenditures directly attributable to the production of a motion picture or commercial for services.

(j) Other direct costs of producing a film in accordance with the generally accepted entertainment industry practices if expenditures.

(k) Other costs the competitiveness program believes add economic benefit to the state of Washington.

(3) The board is encouraged to consider the following when considering certifying a production for funding assistance:

(a) The additional income and tax revenue to be retained in the state for general purposes.

(b) Creation and retention of family wage jobs that provide health insurance and payments into a retirement plan.

(c) The impact of projects to maximize in-state labor and use of in-state film production and film postproduction companies.

(d) The impact on the local economy and the state economy as a whole.

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NEW SECTION
WAC 130-20-030   Funding assistance limits.   (1) Maximum funding assistance from a motion picture competitiveness program is capped at one million dollars per production and subject to the following limitations:

(a) No more than twenty percent of a total actual expenditure in the state of at least five hundred thousand dollars for a single featured film produced in Washington state.

(b) No more than twenty percent of a total actual expenditure in the state of at least three hundred thousand dollars per television episode produced in Washington state (e.g., television series, pilot, movie of the week).

(c) No more than twenty percent of a total actual expenditure in the state of at least two hundred fifty thousand dollars for an infomercial or television commercial produced in Washington state.

(2) Funding assistance is subject to the amount available in the account managed by the motion picture competitiveness program.

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NEW SECTION
WAC 130-20-040   Disqualification from the program.   A production will be disqualified for funding assistance if the motion picture competitiveness program determines the qualified production does not meet requirements in WAC 130-20-020.

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NEW SECTION
WAC 130-20-050   Sales and use tax exemptions.   Unless otherwise prohibited, production companies may use both existing sales and use tax exemptions and the funding assistance provided by the motion picture competitiveness program while filming qualified productions in Washington state.

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NEW SECTION
WAC 130-20-060   Survey requirement.   In order to recognize the accountability and effectiveness of tax policy, the legislature requires that each production receiving funding assistance from the motion picture competitiveness program shall report information to the state film office through a survey. The motion picture competitiveness program shall ensure that no funds are disbursed until an applicant submits answers to a survey developed by the state film office.

(1) The state film office will make available on its web site a survey template.

(2) The motion picture competitiveness program may extend the due date for timely filing of the survey if failure to file was the result of circumstances beyond the control of the motion picture production receiving the funding assistance.

(3) Surveys shall include the following information:

(a) The amount of funding assistance received.

(b) The amount of production spending left in the state.

(c) The number of total employment positions.

(d) The number of full-time, part-time and temporary employment positions as a percent of total employment.

(e) The number of jobs at the wage bands of less than thirty thousand dollars, thirty thousand to sixty thousand dollars, and sixty thousand dollars and greater.

(f) The number of jobs that have employer-provided medical, dental and retirement benefits by each wage band.

(g) Additional information as requested by the department or state film office.

(4) The state film office will continue to track total production spending of projects, monitor the state's competitiveness in the national marketplace, and continue to build partnerships that streamline the delivery of production services statewide.

(5) The department shall submit a summary of descriptive statistics based on information from the survey each year by September 1.

(6) The department shall provide the complete surveys to the joint legislative audit and review committee each year by September 1.

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Washington State Code Reviser's Office