California Code of Regulations
Title 10 - Investment
Chapter 7.75 - California Film Commission
Article 2 - California Film and Television Job Retention and Promotion Act California Film and Television Tax Credit Program 2.0
Section 5515 - Jobs Ratio Ranking Process

Universal Citation: 10 CA Code of Regs 5515

Current through Register 2024 Notice Reg. No. 38, September 20, 2024

(a) For the purposes of the jobs ratio calculation, qualified wages shall include:

(1) Qualified wages which are directly paid by the applicant or its payroll service; plus (2) thirty-five percent (35%) of all qualified non-wage expenditures, including contracted services in which the qualified wages are not directly paid by the applicant, but by the vendor.

(b) The jobs ratio as defined in Section 5508(k) may be increased by up to twenty-five percent (25%), if the qualified motion picture demonstrates an increase in economic activity in the state. This activity is based on the following:

(1) Percentage points are based on the visual effects expenditures per project category, e.g., independent film, non-independent feature, television project. One to fifteen percentage points.

(2) Principal photography in production facility. Percentage points are based on the percentage of principal photography days that occur in production facilities in the state in relation to the qualified motion picture's total principal photography days in the state. One to seven percentage points.
(A) The production facility shall meet the provisions in section 5508(v) and applicant shall utilize the production facility for six hours or more for the day to be considered a production facility day.

(B) The CFC shall provide applicant with a Notice of Approval or Disapproval on whether a production facility is approved as required in 5508(v). The Notice of Disapproval shall state the reasons for disapproval. Disapproval is final and shall not be subject to administrative appeal. Principal photography days filmed in an approved production facility shall be eligible for additional percentage points as provided for in Section 5515(b).

(3) Principal photography outside the LA Zone. Percentage points are based on the percentage of principal photography days outside the Los Angeles Zone in relation to the qualified motion picture's total principal photography days in the state. One to ten percentage points.

(c) The CFC shall establish the percentage ranges as follows:

(1) Percentage points for principal photography in a production facility as provided in subsection (b)(2) and principal photography days out of the Los Angeles zone as provided in subsection (b)(3) shall be determined by applying percentage points on a linear proportionate scale. Starting with 10% of principal photography days, the applicants will receive one point for every 10 percent increase of out of zone principal photography days and/or facility principal photography days (10% or more of the above days = 1 point, 20% or more of the above days = 2 points, etc.) until the maximum cap of points is received. The percentages for each is determined by dividing either the out of zone principal photography days or the facility principal photography days by the total principal photography days.
(A) If the maximum number of points is not achieved by any project in a given year's applicant pool, the CFC may decrease the step size (for example from 10% to 5% incremental steps) needed to gain an additional point in subsequent allocations, but maintain the linear proportionate structure.

(2) Percentage points for visual effects as provided in subsection (b)(1) shall be determined utilizing the following method: visual effects spending shall be sorted from lowest to highest value. The CFC shall then use the National Institute of Standards and Technology formula to create cut-off values that sort an equal number of projects into each point range as further described below.

Following the National Institute of Standards and Technology (NIST) "Engineering Statistics Handbook: Percentile" formula, the applicant pool is first ranked from lowest to highest value in each of the three categories, where 1 corresponds to the first lowest rank. The formula then finds the rank n associated with each percentile cut-off as follows:

n = P/100 x (N + 1)

P is the percentile of interest. If there are ten possible point ranges for example, then P = 10 would correspond to the 10th percentile, P = 20th to the 20th percentile, and so forth, until the 100th percentile has been calculated. N is the total number of applicants in the current applicant pool.

The formula then uses a standard rounding and conversion procedure to turn the rank n into a monetary cut-off value. The Excel function PERCENTILE automatically does this calculation according to the same NIST formula (see citation: http://www.itl.nist.gov/div898/handbook/prc/section2/prc262.htm) The CFC shall use this Excel function to determine initial cut-offs, and then choose final cut-offs within +/- 10 percent of what the formula produces, such that the ranges can be rounded. Ranges may be adjusted for future application periods based on the data collected from previous application periods.

(d) Ranges to establish the points for the above criteria shall be posted on the CFC website prior to any application period.

(e) The jobs ratio calculation shall not include any increase to the tax credit from work outside the Los Angeles zone, qualified visual effects or qualified expenditures related to music scoring or music track recording incurred in California as set forth in Section 5512(d). It also shall not include any increase to the tax credit from expenditures relating to a contingency or completion bond.

(f) The jobs ratio multiplied by (total points [acquired in (b)(1)-(4)] x 1/100) + 1 shall be the adjusted jobs ratio which shall be utilized to rank qualified motion pictures within each category during the application process, pursuant to Section 5509(i).

(g) This process shall be automatically calculated on the online application, based on the information provided by the applicant.

(h) If information submitted by an applicant is overstated on the application, the applicant will be penalized as provided in Revenue and Taxation Code Sections 17053.95(d)(2) and 23695(d)(2).

1. New section filed 4-13-2015 as an emergency; operative 4-13-2015 (Register 2015, No. 16). A Certificate of Compliance must be transmitted to OAL by 10-12-2015 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 10-15-2015 as an emergency; operative 10-15-2015 (Register 2015, No. 42). A Certificate of Compliance must be transmitted to OAL by 1-13-2016 or emergency language will be repealed by operation of law on the following day.
3. New section refiled 1-7-2016 as an emergency, including amendment of section heading and subsections (b)(2)-(3); operative 1-7-2016 (Register 2016, No. 2). A Certificate of Compliance must be transmitted to OAL by 4-6-2016 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 1-7-2016 order, including further amendment of section, transmitted to OAL 3-29-2016 and filed 5-11-2016; amendments operative 5-11-2016 pursuant to Government Code section 11343.4(b)(3) (Register 2016, No. 20).

Note: Authority cited: Sections 17053.95(e) and 23695(e), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.95 and 23695, Revenue and Taxation Code; and Section 14998.1, Government Code.

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