HomeMy WebLinkAbout2006-08-22 - AGENDA REPORTS - AB 777 MOTION PICTURE TAX (2)Agenda Item: _12_
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR City Manager Approv
Item to be presented by: Councilmember Smyth
DATE: August 22, 2006
SUBJECT: ASSEMBLY BILL 777
DEPARTMENT: City Manager's Office
RECOMMENDED ACTION
City Council support Assembly Bill 777 (AB 777) and transmit statements of support to Speaker
Nunez, Assembly Member Richman, Senator McClintock and Senator Runner.
BACKGROUND
AB 777 is intended to enact legislation that discourages runaway production in the motion
picture industry in California. It specifically targets productions that are most likely to leave the
state due to tax incentives offered in other US states and other countries such as Canada and
Australia. The goal of the legislation it to enable the decision makers that decide where a
production films to keep those films in California.
California has been suffering from "runaway" film production for years now. Due in large part
to tax incentives, production companies have been filming their product in more affordable
locations, such as Canada, Eastern Europe and states outside of California. Santa Clarita is no
exception and has suffered from filming abroad in places such as Vancouver, New Mexico, and
Louisiana. If "runaway" production continues, the film industry will not be able to sustain itself
in our area.
AB 777 will provide a 12% refundable tax credit of qualified wages and vendor spending that
can be applied against state income tax. Productions that will be eligible include feature films
with budgets from $500,000 to $75,000,000, made for TV movies and mini-series with minimum
budgets of $500,000, one-hour TV shows with budgets between $500,000 and $1,800,000 per
episode and commercials. Eligible productions must film a minimum of 75% of their principal
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photography in California. Tax credits will be capped at $3,000,000 per production. Salaries
over $25,000 for directors, writers, actors are excluded from the tax credit.
ALTERNATIVE ACTIONS
1. City Council adopt no position on Assembly Bill 777
2. City Council adopt 'opposed" position on AB 777
3. Other action as determined by City Council
FISCAL IMPACT
Adoption of the recommended action requires no additional resources beyond those already
contained in the adopted 2006-2007 budget.