Original Notice.

     Preproposal statement of inquiry was filed as WSR 09-09-033 [09-06-065].

     Title of Rule and Other Identifying Information: Update to chapter 130-20 WAC Motion Picture Competitiveness Act, to align with statutory changes from the 2009 legislative session.

     Hearing Location(s): Yesler Community Center, Multi-Purpose Room, 835 Yesler Way, Seattle, WA 98105, (206) 386-1245, on July 10, 2009, at 3:00 p.m. to 4:00 p.m.

     Date of Intended Adoption: August 5, 2009.

     Submit Written Comments to: Mary Trimarco, Business Development Manager, Department of Community, Trade and Economic Development, 2001 Sixth Avenue, Suite 2600, Seattle, WA 98121-2895, e-mail maryt@cted.wa.gov, fax (206) 256-6158 by July 3, 2009.

     Assistance for Persons with Disabilities: Contact Yesler Community Center by July 9, 2009, TTY (206) 386-1245.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: During the 2009 legislative session, the legislature passed SHB 2042 and ESHB 2242 which made changes to the motion picture competitiveness program and the department of community, trade and economic development (CTED). Some of the statutory changes require an update to chapter 130-20 WAC. Additionally, the program has been under way for two years. The department is proposing rule updates based on two years of program experience.

     Reasons Supporting Proposal: Conform WAC to law (reference SHB 2402, chapter 100, Laws of 2009, and to ESHB 2242, chapter 565, Laws of 2009) and enhance program efficiency by providing additional clarity to the rules.

     Statutory Authority for Adoption: Chapter 43.365 RCW.

     Statute Being Implemented: Chapter 43.365 RCW.

     Rule is not necessitated by federal law, federal or state court decision.

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

     Name of Agency Personnel Responsible for Drafting, Implementation, and Enforcement: Mary Trimarco, Business Development Manager, CTED, International Trade and Economic Development, 2001 Sixth Avenue, Suite 2600, Seattle, WA 98121-2895, (206) 256-6156.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. No small businesses are directly affected by the rule (or statute).

     A cost-benefit analysis is not required under RCW 34.05.328. CTED is not included in the list of departments required to conduct a cost-benefit analysis.

June 1, 2009

Marie Sullivan

Director of

Government Relations

OTS-2364.2

AMENDATORY SECTION(Amending WSR 09-03-033, filed 1/12/09, effective 2/12/09)

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

     (1) "Applicant" means a television, film or commercial 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)) primary 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 preproduction, 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/lease costs of machinery, equipment and facilities, 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)) commerce.

     (((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 and assisting production needs within the state.

     (6))) (5) "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 than one hundred fifty thousand dollars in the state of Washington or)) one or more segments of a newscast or sporting event.

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

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

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

     (((10))) (9) "Qualified expenditures" include production costs for wages and benefits provided to residents of Washington state for services performed in Washington state, 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 services of nonresident production personnel.

     (((11))) (10) "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.

[Statutory Authority: RCW 43.365.020. 09-03-033, § 130-20-010, filed 1/12/09, effective 2/12/09; 07-03-015, § 130-20-010, filed 1/4/07, effective 2/4/07.]

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

     (b) The end credits of a film production must acknowledge that the production was filmed in Washington state. The type and style of acknowledgment shall be negotiated between the motion picture competitiveness board and the production company.

     (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)) department 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 plan 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 considered, but not limited to, qualified expenditures, provided the expenditure occurs in Washington state:

     (a) Production costs include costs for preproduction, production and postproduction.

     (b) Salaries of Washington state residents who are cast and crew, including wages and payments for 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, make-up, accessories, location fees and related services.

     (d) Costs associated with photography, sound synchronization, lighting and related services and materials.

     (e) Renting or leasing vehicles, equipment or facilities.

     (f) In-state food, lodging, and per diems.

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

     (h) Postproduction expenditures directly attributable to the production of a motion picture or commercial for services including, but not limited to: Editing and related services, film processing, transfers of film to tape or digital format, sound mixing, computer graphics services, special effects, animation services, and music.

     (i) Legal and accounting fees and expenses related to the production's activities in Washington state, provided such services are performed by Washington state licensed attorneys or accountants.

     (j) "Preproduction" means costs for standard activities directly related to the production, which are incurred prior to the first day of principal photography for a motion picture.

     (k) Other direct or indirect costs of producing a film in accordance with the generally accepted entertainment industry practices if expenditures occurred in the state of Washington.

     (l) 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.

[Statutory Authority: RCW 43.365.020. 09-03-033, § 130-20-020, filed 1/12/09, effective 2/12/09; 07-03-015, § 130-20-020, filed 1/4/07, effective 2/4/07.]

     (c) No more than twenty percent of a total actual expenditure in the state of at least one hundred fifty thousand dollars for an infomercial or television commercial produced in Washington state)) as specified in RCW 43.365.020.

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

[Statutory Authority: RCW 43.365.020. 09-03-033, § 130-20-030, filed 1/12/09, effective 2/12/09; 07-03-015, § 130-20-030, filed 1/4/07, effective 2/4/07.]

     (1) 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)) department.

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

     (3) 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.

     (4) Surveys shall include the following information:

     (a) The amount of funding assistance requested.

     (b) The total amount of preproduction, production and postproduction spending made in the state.

     (c) The number of total employment positions.

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

     (i) Full-time employment is forty hours or more per week, or positions held for the full shooting schedule;

     (ii) Part-time/temporary employment is for positions held for less than the full shooting schedule.

     (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 per production.

     (f) The number of jobs that have employer-provided health insurance and payments into a retirement plan by each wage band.

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

     (((5) 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.

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

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

[Statutory Authority: RCW 43.365.020. 09-03-033, § 130-20-060, filed 1/12/09, effective 2/12/09; 07-03-015, § 130-20-060, filed 1/4/07, effective 2/4/07.]

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