Current through Register 2024 Notice Reg. No. 12, March 22, 2024
(a) Upon completion of construction or renovation of the soundstage or soundstages that comprise the certified studio construction project, the soundstage or soundstages shall be continuously operated, maintained, and repaired in accordance with and by a workforce as specified in sections 17053.98(k)(13) and 23698(k)(13) of the Revenue and Taxation Code
(1) The workforce must fulfill the requirements of either paragraph (A) or paragraph (B) below, as applicable:
(A) If the workforce is employed, directly or through a motion picture payroll services company, by the owner of the soundstage or its affiliates or by the Phase B applicant leasing the soundstage, the workforce must be paid at least the general prevailing rate of per diem wages for the type of work and geographic area, as referenced in sections 17053.98(k)(13)(A)(i) or 23698(k)(13)(A)(i) of the Revenue and Taxation Code.
(B) If the workforce is employed by, and services are provided through a third-party vendor, the workforce must be a skilled and trained workforce as defined in Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code.
(2) For purposes of this section, "continuously operated, maintained, and repaired" means ongoing services performed within a soundstage, or externally, if structural, that keep the soundstage in a state fit for operation and use. This includes but is not limited to, non-production related janitorial and security services inside the structure, internal and external structural upkeep, and soundstage systems maintenance and repairs.
(b)
(1) To certify that the soundstages that are part of a certified studio construction project meet the requirements set forth in Revenue and Taxation Code sections 17053.98(k)(13) and 23698(k)(13), the applicant must annually provide one or several third-party Soundstage Workforce Reports, as specified in paragraph (2) of this subdivision, performed by an approved CPA firm, which meets the requirements specified in subparagraph (A) of paragraph (1) of this subdivision, documenting compliance with the requirements of the California Soundstage Filming Tax Credit Program.
(A) The public accounting firm performing the Soundstage Workforce Report for an applicant shall provide documentation that a peer review was administered by the American Institute of Certified Public Accountants ("AICPA") National Peer Review Committee ("NPRC") within the last three years and that the peer review resulted in a rating of "Pass." This documentation shall include the firm's most recent peer review report and the acceptance of that report by the NPRC.
1. An applicant may use the same accounting firm and the same certified public accountant for the Soundstage Workforce Report as the applicant used for the Certified Studio Construction Project Verification Report specified in section 5532. However, the same public accounting firm is not permitted to perform the Agreed Upon Procedures report required pursuant to section 5540 for a Phase B applicant filming on a soundstage or soundstages approved as part of a Certified Studio Construction Project for which the public accounting firm is providing or has provided services related to Phase A.
(2) The applicant must provide one annual report for each Phase B qualified motion picture project filming on the soundstage or soundstages that make up the certified studio construction project during the year under review. The report for one Phase B qualified motion picture project must include all soundstages utilized by that project during the year under review.
(A) The required information for a soundstage that is in use by more than one Phase B project shall be included in all relevant workforce reports and count toward the total sums of all the individual reports in which it is included.
(B) If the certified studio construction project includes one or more certified soundstages that have not been in use by any Phase B qualified motion picture project allocated tax credits under the California Soundstage Filming Tax Credit Program during the year under review, those unused soundstages shall be grouped together in one report.
(3) Each annual report must evidence that the applicant met its statutory obligations, including the percentages as stipulated in sections 17053.98(k)(13)(C) and 23698(k)(13)(C) of the Revenue and Taxation Code.
(A) Each report shall include:
1. The total amount of payments to third-party vendors or qualified wages for operation, maintenance, and repair of the certified soundstage.
2. The amount, and percentage of the total amount, of payments to third-party vendors or qualified wages for operation, maintenance, and repair of the certified soundstage performed by each workforce described in subparagraph (a) of this section.
(B) If the percentage paid to workers employed directly or through a motion picture payroll services company, as described in 5538(a)(1)(A), is certified to be 90 percent or more of the total amount listed pursuant to 5538(b)(3)(A)1. the Phase B applicant shall be entitled to 100 percent of the applicable credit issued for the period.
(C) If the percentage paid to workers employed directly or through a motion picture payroll services company, as described in 5538(a)(1)(A), is certified to be less than 90 percent of the total amount listed pursuant to 5538(b)(3)(A)1. but greater than or equal to 75 percent of that amount, the Phase B applicant shall be entitled to 50 percent of the applicable credit issued for the period.
(D) If the percentage paid to workers employed directly or through a motion picture payroll services company, as described in 5538(a)(1)(A), is certified to be less than 75 percent of the total amount listed pursuant to 5538(b)(3)(A)1. the Phase B applicant shall not be entitled to any credit issued for the period.
(4) Annual reports are required:
(A) Throughout the certified studio construction project's period of certification; or,
(B) Until the total amount of credits authorized under Revenue and Taxation Code sections 17053.98(k) and 23698(k) has been allocated by the CFC, if that occurs prior to the timeframe outlined in paragraph (A) above; or,
(C) Throughout the production period of any Phase B project allocated credits under the California Soundstage Filming Tax Credit Program and filming on a certified soundstage or soundstages that is part of the certified studio construction project, if that extends beyond the timeframes outlined in paragraph (A) or paragraph (B) above.
(5) Each annual Soundstage Workforce Report must be submitted to the California Film Commission no more than thirty (30) calendar days after the anniversary date of the issued Soundstage Certification Letter or Letters, Form SCL (August 12, 2022), hereby incorporated by reference, for the soundstage or soundstages included in the report.
(A) Applicants shall submit the report or reports electronically to SoundstageIncentive@film.ca.gov.
(6) A Phase A applicant who leases a certified studio construction project in its entirety and for the duration of the period of certification to a producer of qualified motion pictures and who has delegated all operation, maintenance, and repairs of the soundstages in the certified studio construction project to that producer may also delegate the responsibility of submitting the annual Soundstage Workforce Report to that same entity.
(A) The declaration of delegated responsibility must be made by the Phase A applicant in writing on company letterhead and submitted to the CFC.
(B) The declaration of delegated responsibility must include as an attachment a statement of accepted responsibility, on company letterhead, signed by a representative of the entity to which the responsibility is delegated.
(C) The declaration of delegated responsibility and statement of accepted responsibility must be submitted within ninety (90) calendar days following certification of the studio construction project.
(c) Pursuant to subdivision 17053.99(b)(2)(E) of the Revenue and Taxation Code, if not all contractors and subcontractors performing work on the Phase A Certified Studio Construction Project are subject to a project labor agreement that requires compliance with the skilled and trained workforce requirement, copies of monthly reports demonstrating compliance with Chapter 2.9 (commencing with section 2600) of Part 1 of Division 2 of the Public Contract Code are required to be submitted while the project or contract is being performed.
(1) An applicant required to submit copies of monthly compliance reports in accordance with this subdivision shall submit them to the CPA firm engaged by the applicant to verify compliance with the Soundstage Filming Tax Credit Program.
(d) If the Phase A applicant and the Phase B applicant are separate entities, the Phase A applicant is required to fulfill approved applicant responsibilities for a soundstage or soundstages on which a Phase B applicant films its qualified motion picture project and shall furnish the Phase B applicant with any certified studio construction project information that may impact the application process or the tax credit certification process for the Phase B applicant or that is necessary for the Phase B applicant to fulfill its requirements and responsibilities.
Note: Authority cited: Sections 17053.98(k)(10) and
23698(k)(10), Revenue and Taxation Code; and Section 11152, Government Code.
Reference: Sections 17053.98(k)(1), 17053.98(k)(13), 17053.99(b), 23698(k)(1)
and 23698(k)(13), Revenue and Taxation Code; and Section 14998.1, Government
Code.
Note: Authority cited: Sections
17053.98(k)(10)
and
23698(k)(10),
Revenue and Taxation Code; and Section
11152,
Government Code. Reference: Sections
17053.98(k)(1),
17053.98(k)(13),
17053.99(b),
23698(k)(1)
and
23698(k)(13),
Revenue and Taxation Code; and Section
14998.1,
Government Code.
