Pennsylvania Act 2006-42 — COMMERCE AND TRADE (12 PA.C.S.) - INFRASTRUCTURE AND FACILITIES IMPROVEMENT PROGRAM APPROVALS AND FILM PRODUCTION GRANT PROGRAM

Act text

COMMERCE AND TRADE (12 PA.C.S.) - INFRASTRUCTURE AND FACILITIES
     IMPROVEMENT PROGRAM APPROVALS AND FILM PRODUCTION GRANT PROGRAM
                  Act of May 11, 2006, P.L. 167, No. 42               Cl. 12
                             Session of 2006
                               No. 2006-42

     HB 983

                                  AN ACT

     Amending Title 12 (Commerce and Trade) of the Pennsylvania
        Consolidated Statutes, further providing, in the
        Infrastructure and Facilities Improvement Program, for
        approvals; establishing a film production grant program; and
        repealing provisions of the Tax Reform Code of 1971 relating
        to film production tax credits.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  Section 3406(b) of Title 12 of the Pennsylvania
     Consolidated Statutes is amended to read:
      § 3406.  Approval.
        * * *
        (b)  Grant approval.--Upon receipt of the notification
     required in subsection (a), the department may approve the
     application and award the applicant a grant in an annual amount
     not to exceed the amount established by the Secretary of the
     Budget. Prior to providing grant funds to the applicant, the
     department shall enter into a contract with the applicant and
     the project user. The contract shall include provisions which do
     all of the following:
            (1)  Specify the base amount of the grant per year.
            (2)  Specify the total number of years that grant funds
        may be provided to the applicant and the year in which the
        grant may commence, including an option to defer commencement
        of the grant to any date up to the date upon which the
        project is completed and operations have commenced. If the
        applicant is an industrial enterprise, retail enterprise, a
        research and development enterprise or a manufacturer, the
        number of years may not exceed ten years. If the applicant is
        a hospital, convention center or hotel establishment, the
        number of years may not exceed 20 years.
            [(3)  If the grant will be awarded for more than four
        years, establish the procedure for awarding the grant after
        the fourth year. To provide a grant beyond the initial four-
        year period, the applicant shall be required to demonstrate
        to the satisfaction of the department, the Secretary of the
        Budget and the Department of Revenue that the tax revenues
        specified in section 3405 are anticipated to be equal to or
        exceed the amount of the grant awarded in the previous year.
        If the department, the Secretary of the Budget and the
        Department of Revenue determine that the tax revenues
        specified in section 3405 are anticipated to equal or exceed
        the amount specified in paragraph (1), the applicant shall be
        awarded a grant for that year in the amount specified in
        paragraph (1). If the department, the Secretary of the Budget
        and the Department of Revenue determine that the tax revenues
        specified in section 3405 will not equal or exceed the amount
        specified in paragraph (1), the applicant shall be awarded a
        grant equal to the anticipated tax revenues specified in
        section 3405 for that year.]
            (3)  If the grant will be awarded for more than four
        years, establish the procedure for the award of the grant
        after year four. If the department, the Secretary of the
        Budget and the Department of Revenue determine that the tax
        revenues specified in section 3405(b) during the fifth year
        and each succeeding year thereafter are anticipated to be
        equal to or exceed the amount of the grant awarded during the
        previous year, the department shall award the grant in the
        amount of the original grant as determined under this
        section. If the department, the Secretary of the Budget and
        the Department of Revenue determine that the tax revenues
        specified in section 3405(b) during the fifth year and each
        year thereafter will not equal or exceed the amount of the
        grant for the previous year, the department shall award a
        grant that is no less than the anticipated tax revenue
        specified in section 3405(b) and no more than the amount of
        the original grant awarded under this section.
            (4)  Require the applicant to use the grant to pay debt
        service for the project and to repay all or any portion of a
        grant if the applicant fails to use the grant to pay debt
        service.
            (5)  Specify that the annual amount of the grant in any
        one year may not exceed the annual amount of the debt service
        on the project for that year.
            (6)  If the grant in any one year exceeds the annual
        payment on debt service in that year, require the applicant
        to repay the amount of the grant for that year which exceeds
        the payment on debt service for that year.
            [(7)  If the project user is not a governmental entity,
        prohibit the project user from holding title to the project
        during the period which the applicant is receiving a grant
        from the department.]
            (8)  Require the project user to pay to the applicant a
        sum equal to any payments received by the project user from
        third parties for infrastructure which is part of the project
        during the period which the applicant is receiving a grant
        from the department. Any payment received by the applicant
        under this paragraph must be applied to payment of the debt
        service for the project.
            (9)  Require the applicant to [insure] satisfactorily
        demonstrate that the full amount of annual debt service is
        paid for the project, regardless of the amount of the grant
        received.
            (10)  Require the project user to use the project for the
        period of time the applicant is receiving grants under this
        chapter and to repay all or any portion of a grant if the
        project user fails to use the project for the period of time
        the applicant is receiving grants.
            [(11)  Require the project user to timely pay all
        Commonwealth and local taxes and fees.]
            (11)  Require the project user to timely pay all
        Commonwealth and local taxes and fees that are then due and
        owing. A local government unit as defined under 53 Pa.C.S.
        Pt. VII Subpt. B (relating to indebtedness and borrowing) or
        an issuing authority may enter into an agreement or adopt an
        ordinance or resolution to permit the local government unit
        or issuing authority to pay, waive, abate, settle, compromise
        or reimburse any local tax, fee or other imposition
        applicable to a project user imposed by any local government
        unit or issuing authority. The agreement, ordinance or
        resolution shall not affect the eligibility of an applicant
        or a project to receive a grant under this chapter.
            (12)  Require the department to approve any change of use
        of a project during the period in which the applicant is
        receiving a grant from the department. The department may not
        unreasonably withhold its consent to a change of use.
        * * *
        Section 2.  Title 12 is amended by adding a chapter to read:
                                CHAPTER 41
                          FILM PRODUCTION GRANTS
     Sec.
     4101.  Scope of chapter.
     4102.  Definitions.
     4103.  Establishment.
     4104.  Application.
     4105.  Review.
     4106.  Approval.
     4107.  Penalty.
     4108.  Limitations.
     4109.  Guidelines.
      § 4101.  Scope of chapter.
        This chapter relates to the Film Production Grant Program.
      § 4102.  Definitions.
        The following words and phrases when used in this chapter
     shall have the meanings given to them in this section unless the
     context clearly indicates otherwise:
        "Applicant."  A person that files a notice and application in
     accordance with this chapter.
        "Department."  The Department of Community and Economic
     Development of the Commonwealth.
        "Film."  The term includes a feature film, television film,
     television pilot or each episode of a television series which is
     intended as programming for a national audience. The term does
     not include a production featuring:
            (1)  News, current events, weather and market reports.
            (2)  Public programming.
            (3)  Talk shows, game shows, sports events, awards shows
        or other gala events.
            (4)  A production that solicits funds.
            (5)  A production that primarily markets a product or
        service.
            (6)  A production containing obscene material or
        performances as defined in 18 Pa.C.S. § 5903(b) (relating to
        obscene and other sexual materials and performances).
            (7)  A production primarily for private, political,
        industrial, corporate or institutional purposes.
        "Pennsylvania production expense."  A production expense
     incurred in this Commonwealth. For the purposes of wages and
     salaries, the term includes only wages and salaries on which the
     taxes imposed by Article III or IV of the act of March 4, 1971
     (P.L.6, No.2), known as the Tax Reform Code of 1971, have been
     paid or accrued.
        "Production expense."
            (1)  An expense incurred in the production of a film. The
        term includes:
                (i)  The aggregate amount of wages and salaries of
            individuals each of whom receive less than $1,000,000 and
            are employed in the production of the film.
                (ii)  The costs of construction, operations, editing,
            photography, sound synchronization, lighting, wardrobe
            and accessories.
                (iii)  The cost of rental facilities and equipment.
            (2)  The term does not include expenses incurred in
        purchasing story rights, music rights, development costs,
        marketing or advertising a film.
        "Program."  The Film Production Grant Program established in
     section 4103 (relating to establishment).
        "Qualified film production expense."  A Pennsylvania
     production expense if at least 60% of the total production
     expenses are Pennsylvania production expenses.
        "Recipient."  A person who receives a grant under this
     chapter.
        "Start date."  The first day of principal photography in this
     Commonwealth.
      § 4103.  Establishment.
        There is established within the department a program to be
     known as the Film Production Grant Program. The program shall be
     administered by the department to provide grants to persons for
     certain films produced within this Commonwealth.
      § 4104.  Application.
        At any time prior to 60 days after the completion of
     production of a film, a person may submit an application for a
     film production grant to the department. The application shall
     be on a form required by the department and shall include or
     demonstrate all of the following:
            (1)  An itemized list of production expenses incurred or
        to be incurred during the current fiscal year and the
        anticipated expenses to be incurred for any subsequent year
        if the film production is anticipated to extend into any such
        year.
            (2)  An itemized list of Pennsylvania production expenses
        incurred.
            (3)  The start date.
            (4)  The actual or projected completion date.
            (5)  A statement of the amount of grant sought.
            (6)  Any other information required by the department.
      § 4105.  Review.
        The department shall review the application to determine if
     the applicant has met all of the criteria set forth in section
     4104 (relating to application).
      § 4106.  Approval.
        The following shall apply:
            (1)  Upon being satisfied that all requirements have been
        met and subject to section 4108 (relating to limitations),
        the department may approve the application and award a film
        production grant.
            (2)  Prior to providing grant funds to the applicant, the
        department shall enter into a contract with the applicant.
        The contract shall include provisions requiring the applicant
        to use the grant to pay costs associated with the production
        of the film.
            (3)  The department may impose any other terms and
        conditions on the grants authorized by this chapter as the
        department determines are in the best interests of the
        Commonwealth.
      § 4107.  Penalty.
        (a)  Imposition.--Except as provided in subsection (b), the
     department shall impose a penalty upon a recipient for violation
     of the contract required by section 4106 (relating to approval).
        (b)  Exception.--The department may waive the penalty
     required by subsection (a) if the department determines that the
     failure was due to circumstances outside the control of the
     recipient.
        (c)  Amount.--The amount of the penalty shall be equal to the
     full amount of the grant received plus an additional amount of
     up to 10% of the amount of the grant received. The penalty shall
     be payable in one lump sum or in installments, with or without
     interest, as the department deems appropriate.
      § 4108.  Limitations.
        The following limitations shall apply:
            (1)  A grant awarded under this chapter to an applicant
        for a film may not exceed 20% of the qualified film
        production expenses incurred for the film.
            (2)  In no case shall the aggregate amount of grants
        awarded in any fiscal year under this chapter exceed
        $10,000,000.
            (3)  A grant awarded under this chapter shall in no way
        constitute an entitlement derived from the Commonwealth or a
        claim on any other funds of the Commonwealth.
      § 4109.  Guidelines.
        The department shall develop necessary written guidelines for
     the program.
        Section 3.  Repeals are as follows:
            (1)  The General Assembly declares that the repeal under
        paragraph (2) is necessary to effectuate the addition of 12
        Pa.C.S. Ch. 41.
            (2)  Article XVII-C of the act of March 4, 1971 (P.L.6,
        No.2), known as the Tax Reform Code of 1971, is repealed,
        provided that this repeal shall not apply to any film
        production tax credit approved or issued prior to the
        effective date of this section.
        Section 4.  The amendment of 12 Pa.C.S. § 3406 shall apply
     retroactively to July 1, 2004.
        Section 5.  This act shall take effect as follows:
            (1)  Section 3 of this act shall take effect June 30,
        2006.
            (2)  The remainder of this act shall take effect
        immediately.

     APPROVED--The 11th day of May, A. D. 2006.

     EDWARD G. RENDELL