Today's Law As Amended


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SB-485 Income taxes: tax credits: certified studio construction project.(2021-2022)



As Amends the Law Today


SECTION 1.

 Section 17053.99 is added to the Revenue and Taxation Code, to read:

17053.99.
 (a) For taxable years beginning on or after January 1, 2022, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 17039, subject to allocation by the California Film Commission, in an amount equal to 20 percent or 25 percent, whichever is the applicable credit as provided for in Section 17053.98, of the qualified expenditures of a qualified motion picture produced in the state at a certified studio construction project.
(b) (1) For purposes of this section, the definitions found in Section 17053.98 shall apply except as otherwise provided in this subdivision.
(2) “Certified studio construction project” means a construction or renovation project certified by the California Film Commission as having met all of the following criteria:
(A) The project provides for the construction or renovation of one or more soundstages located in the state.
(B) Actual construction or renovation expenditures are not less than one of the following:
(i) Tier One: Twenty-five million dollars ($25,000,000) made over not more than five continuous calendar years.
(ii) Tier Two: Fifteen million dollars ($15,000,000) made over not more than four continuous calendar years.
(C) The construction or renovation is performed in accordance with Section 17053.100.
(D) The construction or renovation is completed after January 1, 2022, although construction or renovation may have commenced prior to January 1, 2022.
(3) “Qualified motion picture” means a qualified motion picture, as defined in Section 17053.98, that meets all of the following requirements:
(A) For each year for which the credit is sought by the qualified motion picture, films at least 50 percent of its principal photography stage shooting days on a soundstage or soundstages certified as a certified studio construction project.
(B) For each year for which the credit is sought by a qualified motion picture, incurs at least seven million five hundred thousand dollars ($7,500,000) in qualified wages for filming on a soundstage or soundstages certified as a certified studio construction project.
(C) (i) Is produced by a qualified taxpayer that is either of the following:
(I) More than 50 percent commonly owned, directly or indirectly, by the same owner or owners of the soundstage or soundstages that is part of a certified studio construction project on which the production is filmed.
(II) Entered into a lease of 10 years or more with the owner or owners of a certified studio construction project on which the production is filmed.
(ii) For purposes of this section, a qualified taxpayer and a taxpayer include a passthrough entity and a disregarded entity.
(c) (1) (A) The credit allowed under this section shall be administered in accordance with subdivisions (a), (b), (c), (d), (h), and (k) of Section 17053.98.
(B) Subparagraph (A) of paragraph (2) and paragraphs (3), (4), (5), and (6) of subdivision (g) of Section 17053.98 shall apply.
(C) Paragraph (7) of subdivision (b) of Section 17053.98 shall not apply.
(D) Paragraph (2) of subdivision (d) of Section 17053.98 shall not apply.
(2) A conflict between this section and the foregoing provisions of Section 17053.98 shall be reconciled in favor of this section.
(3) References to the provisions of Section 17053.98 shall be to such provisions in effect on January 1, 2021.
(4) The aggregate amount of credit allocated by the California Film Commission pursuant to Sections 17053.98 and 23698 shall not be altered in any manner by the tax credit allowed pursuant to this section.
(d) The credit shall be allowed for the taxable year in which the California Film Commission issues a credit certificate in accordance with the procedures provided for in subdivision (g) of Section 17053.98 for the qualified motion picture.
(e) (1) A qualified motion picture meeting the requirements of this subdivision during the first five years for Tier One projects and during the first three years for Tier Two projects after the certified studio construction project is certified by the California Film Commission shall be allowed a credit under this section commencing with its first year of filming in the certified studio construction project facility and for each successive year the qualified motion picture continues to satisfy the criteria of this section.
(2) If the first year of production of a qualified motion picture occurs in the sixth year after the certified studio construction project is certified by the California Film Commission or any year thereafter, the qualified motion picture shall submit an application for a tax credit pursuant to the requirements under Section 17053.98.
(f) Within six months of the operative date of this section, the California Film Commission shall:
(1) Establish procedures to certify a certified studio construction project.
(2) Establish procedures to verify a qualified motion picture has met the criteria established in this section for filming in a certified studio construction project facility. That procedure shall include a requirement that the qualified motion picture pay 1 percent of the approved credit amount to the Career Pathways Training program specified in Section 17053.98.
(3) (A) Implementation of this section for the 2021–22 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the California Film Commission is hereby authorized to adopt emergency regulations to implement this section during the 2021–22 fiscal year in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(B) Notwithstanding any other law, nothing in this section shall be construed to require the Governor’s Office of Business and Economic Development to adopt regulations in order to implement this paragraph.
(g) (1) In the case where the credit allowed by this section exceeds the taxpayer’s tax liability computed under this part, if any, a qualified taxpayer may elect to sell the credit to an unrelated party in the manner provided by subdivision (c) of Section 17053.98.
(2) Notwithstanding paragraph (1), the credit is not attributable to an independent film as defined in paragraph (6) of subdivision (b) of Section 17053.98.

SEC. 2.

 Section 17053.100 is added to the Revenue and Taxation Code, to read:

17053.100.
 A developer seeking certification of a certified studio construction project by the California Film Commission shall do both of the following:
(a) Certify to the California Film Commission that either of the following is true:
(1) The entirety of the project is a public work for purposes of Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code.
(2) The project is not in its entirety a public work for which prevailing wages must be paid under Article 1 (commencing with Section 1720) of Chapter 1 of Part 7 of Division 2 of the Labor Code, but all construction workers employed on the project will be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as determined by the Director of Industrial Relations pursuant to Sections 1773 and 1773.9 of the Labor Code, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate. If the project is subject to this subparagraph, then for those portions of the project that are not a public work all of the following shall apply:
(A) The developer shall ensure that the prevailing wage requirement is included in all contracts for the performance of all construction work.
(B) All contractors and subcontractors shall pay to all construction workers employed in the execution of the work at least the general prevailing rate of per diem wages, except that apprentices registered in programs approved by the Chief of the Division of Apprenticeship Standards may be paid at least the applicable apprentice prevailing rate.
(C) Except as provided in subparagraph (E), all contractors and subcontractors performing construction work shall maintain and verify payroll records pursuant to Section 1776 of the Labor Code and make those records available for inspection and copying as provided therein.
(D) Except as provided in subparagraph (E), the obligation of the contractors and subcontractors to pay prevailing wages may be enforced by the Labor Commissioner through the issuance of a civil wage and penalty assessment pursuant to Section 1741 of the Labor Code, which may be reviewed pursuant to Section 1742 of the Labor Code, within 18 months after the completion of the project, or by an underpaid worker through an administrative complaint or civil action, or by a joint labor-management committee though a civil action under Section 1771.2 of the Labor Code. If a civil wage and penalty assessment is issued, the contractor, subcontractor, and surety on a bond or bonds issued to secure the payment of wages covered by the assessment shall be liable for liquidated damages pursuant to Section 1742.1 of the Labor Code.
(E) Subparagraphs (C) and (D) shall not apply if all contractors and subcontractors performing construction work on the project are subject to a project labor agreement that requires the payment of prevailing wages to all construction workers employed in the execution of the project and provides for enforcement of that obligation through an arbitration procedure. For purposes of this subparagraph, “project labor agreement” has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.
(F) Notwithstanding subdivision (c) of Section 1773.1 of the Labor Code, the requirement that employer payments not reduce the obligation to pay the hourly straight time or overtime wages found to be prevailing shall not apply if otherwise provided in a bona fide collective bargaining agreement covering the worker. The requirement to pay at least the general prevailing rate of per diem wages does not preclude use of an alternative workweek schedule adopted pursuant to Section 511 or 514 of the Labor Code.
(b) Certify to the California Film Commission that a skilled and trained workforce will be used to perform all construction work on the project.
(1) For purposes of this section, “skilled and trained workforce” has the same meaning as provided in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code.
(2) If the developer has certified that a skilled and trained workforce will be used to construct all work on the project, the following shall apply:
(A) The developer shall require in all contracts for the performance of work that every contractor and subcontractor at every tier will individually use a skilled and trained workforce to construct the project.
(B) Every contractor and subcontractor shall use a skilled and trained workforce to construct the project.
(C) Except as provided in subparagraph (D), the applicant shall provide to the California Film Commission, on a monthly basis while the project or contract is being performed, a report demonstrating compliance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code. A monthly report provided to the California Film Commission pursuant to this subparagraph shall be a public record under the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code) and shall be open to public inspection. A developer that fails to provide a monthly report demonstrating compliance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code shall be subject to a civil penalty of ten thousand dollars ($10,000) per month for each month for which the report has not been provided. Any contractor or subcontractor that fails to use a skilled and trained workforce shall be subject to a civil penalty of two hundred dollars ($200) per day for each worker employed in contravention of the skilled and trained workforce requirement. Penalties may be assessed by the Labor Commissioner within 18 months of completion of the development using the same procedures for issuance of civil wage and penalty assessments pursuant to Section 1741 of the Labor Code, and may be reviewed pursuant to the same procedures in Section 1742 of the Labor Code. Penalties shall be paid to the State Public Works Enforcement Fund.
(D) Subparagraph (C) shall not apply if all contractors and subcontractors performing work on the project are subject to a project labor agreement that requires compliance with the skilled and trained workforce requirement and provides for enforcement of that obligation through an arbitration procedure. For purposes of this subparagraph, “project labor agreement” has the same meaning as set forth in paragraph (1) of subdivision (b) of Section 2500 of the Public Contract Code.

SEC. 3.

 Section 23698.1 is added to the Revenue and Taxation Code, to read:

23698.1.
 (a) For taxable years beginning on or after January 1, 2022, there shall be allowed to a qualified taxpayer a credit against the “net tax,” as defined in Section 23036, subject to allocation by the California Film Commission, in an amount equal to 20 percent or 25 percent, whichever is the applicable credit as provided for in Section 23698, of the qualified expenditures of a qualified motion picture produced in the state at a certified studio construction project.
(b) (1) For purposes of this section, the definitions found in Section 23698 shall apply except as otherwise provided in this subdivision.
(2) “Certified studio construction project” means a construction or renovation project certified by the California Film Commission as having met all of the following criteria:
(A) The project provides for the construction or renovation of one or more soundstages located in the state.
(B) Actual construction or renovation expenditures are not less than one of the following:
(i) Tier One: Twenty-five million dollars ($25,000,000) made over not more than five continuous calendar years.
(ii) Tier Two: Fifteen million dollars ($15,000,000) made over not more than four continuous calendar years.
(C) The construction or renovation is performed in accordance with Section 17053.100.
(D) The construction or renovation is completed after January 1, 2022, although construction or renovation may have commenced prior to January 1, 2022.
(3) “Qualified motion picture” means a qualified motion picture, as defined in Section 23698, that meets all of the following requirements:
(A) For each year for which the credit is sought by the qualified motion picture, films at least 50 percent of its principal photography stage shooting days on a soundstage or soundstages certified as a certified studio construction project.
(B) For each year for which the credit is sought by a qualified motion picture, incurs at least seven million five hundred thousand dollars ($7,500,000) in qualified wages for filming on a soundstage or soundstages certified as a certified studio construction project.
(C) (i) Is produced by a qualified taxpayer that is either of the following:
(I) More than 50 percent commonly owned, directly or indirectly, by the same owner or owners of the soundstage or soundstages that is part of a certified studio construction project on which the production is filmed.
(II) Entered into a lease of 10 years or more with the owner or owners of a certified studio construction project on which the production is filmed.
(ii) For purposes of this section, a qualified taxpayer and a taxpayer include a passthrough entity and a disregarded entity.
(c) (1) (A) The credit allowed under this section shall be administered in accordance with subdivisions (a), (b), (c), (d), (h), and (k) of Section 23698.
(B) Subparagraph (A) of paragraph (2) and paragraphs (3), (4), (5), and (6) of subdivision (g) of Section 23698 shall apply.
(C) Paragraph (7) of subdivision (b) of Section 23698 shall not apply.
(D) Paragraph (2) of subdivision (d) of Section 23698 shall not apply.
(2) A conflict between this section and the foregoing provisions of Section 23698 shall be reconciled in favor of this section.
(3) References to the provisions of Section 23698 shall be to such provisions in effect on January 1, 2021.
(4) The aggregate amount of credit allocated by the California Film Commission pursuant to Sections 17053.98 and 23698 shall not be altered in any manner by the tax credit allowed pursuant to this section.
(d) The credit shall be allowed for the taxable year in which the California Film Commission issues a credit certificate in accordance with the procedures provided for in subdivision (g) of Section 23698 for the qualified motion picture.
(e) (1) A qualified motion picture meeting the requirements of this subdivision during the first five years for Tier One projects and during the first three years for Tier Two projects after the certified studio construction project is certified by the California Film Commission shall be allowed a credit under this section commencing with its first year of filming in the certified studio construction project facility and for each successive year the qualified motion picture continues to satisfy the criteria of this section.
(2) If the first year of production of a qualified motion picture occurs in the sixth year after the certified studio construction project is certified by the California Film Commission or any year thereafter, the qualified motion picture shall submit an application for a tax credit pursuant to the requirements under Section 23698.
(f) Within six months of the operative date of this section, the California Film Commission shall:
(1) Establish procedures to certify a certified studio construction project.
(2) Establish procedures to verify a qualified motion picture has met the criteria established in this section for filming in a certified studio construction project facility. That procedure shall include a requirement that the qualified motion picture pay 1 percent of the approved credit amount to the Career Pathways Training program specified in Section 23698.
(3) (A) Implementation of this section for the 2021–22 fiscal year is deemed an emergency and necessary for the immediate preservation of the public peace, health, and safety, or general welfare and, therefore, the California Film Commission is hereby authorized to adopt emergency regulations to implement this section during the 2021–22 fiscal year in accordance with the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
(B) Notwithstanding any other law, nothing in this section shall be construed to require the Governor’s Office of Business and Economic Development to adopt regulations in order to implement this paragraph.
(g) (1) In the case where the credit allowed by this section exceeds the taxpayer’s tax liability computed under this part, if any, a qualified taxpayer may elect to sell the credit to an unrelated party in the manner provided by subdivision (c) of Section 23698.
(2) Notwithstanding paragraph (1), the credit is not attributable to an independent film as defined in paragraph (6) of subdivision (b) of Section 23698.
SEC. 4.
 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIII B of the California Constitution.
SEC. 5.
 This act provides for a tax levy within the meaning of Article IV of the California Constitution and shall go into immediate effect.