HF 4249

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/29/2024 03:49pm

A bill for an act
relating to tourism; establishing Explore Minnesota Film; amending Minnesota
Statutes 2022, sections 116U.26; 116U.27, subdivisions 5, 6; Minnesota Statutes
2023 Supplement, section 116U.27, subdivisions 1, 4; proposing coding for new
law in Minnesota Statutes, chapter 116U.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [116U.255] EXPLORE MINNESOTA FILM.
new text end

new text begin Subdivision 1. new text end

new text begin Office established; director. new text end

new text begin (a) Explore Minnesota Film is established
as an office within Explore Minnesota.
new text end

new text begin (b) The director of Explore Minnesota shall appoint the director of Explore Minnesota
Film. The director of Explore Minnesota Film must be qualified by experience with issues
related to film and television production and economic development.
new text end

new text begin (c) The office may employ staff necessary to carry out the duties required in this section.
new text end

new text begin Subd. 2. new text end

new text begin Duties. new text end

new text begin The director of Explore Minnesota Film is authorized to:
new text end

new text begin (1) administer the film production jobs program and the film production credit program;
new text end

new text begin (2) promote Minnesota as a location for film and television production;
new text end

new text begin (3) assist in the establishment and implementation of programs related to film and
television production, including but not limited to permitting and workforce development;
new text end

new text begin (4) improve communication among local, state, federal, and private entities regarding
film and television production logistics and best practices;
new text end

new text begin (5) coordinate the development of statewide policies addressing film and television
production; and
new text end

new text begin (6) act as a liaison to production entities, workers, and state agencies.
new text end

Sec. 2.

Minnesota Statutes 2022, section 116U.26, is amended to read:

116U.26 FILM PRODUCTION JOBS PROGRAM.

(a) The film production jobs program is created. The program shall be operated by deleted text begin the
Minnesota Film and TV Board deleted text end new text begin Explore Minnesota Film new text end with administrative oversight and
control by the deleted text begin commissioner of employment and economic development deleted text end new text begin director of Explore
Minnesota new text end . The program shall make payment to producers of feature films, national television
or Internet programs, documentaries, music videos, and commercials that directly create
new film jobs in Minnesota. To be eligible for a payment, a producer must submit
documentation to deleted text begin the Minnesota Film and TV Board deleted text end new text begin Explore Minnesota Film new text end of expenditures
for production costs incurred in Minnesota that are directly attributable to the production
in Minnesota of a film product.

deleted text begin The Minnesota Film and TV Board deleted text end new text begin Explore Minnesota Film new text end shall make recommendations
to the deleted text begin commissioner of employment and economic development deleted text end new text begin director of Explore
Minnesota new text end about program payment, but the deleted text begin commissioner deleted text end new text begin director new text end has the authority to make
the final determination on payments. The deleted text begin commissioner's deleted text end new text begin director's new text end determination must be
based on proper documentation of eligible production costs submitted for payments. No
more than five percent of the funds appropriated for the program in any year may be expended
for administration, including costs for independent audits and financial reviews of projects.

(b) For the purposes of this section:

(1) "production costs" means the cost of the following:

(i) a story and scenario to be used for a film;

(ii) salaries of talent, management, and labor, including payments to personal services
corporations for the services of a performing artist;

(iii) set construction and operations, wardrobe, accessories, and related services;

(iv) photography, sound synchronization, lighting, and related services;

(v) editing and related services;

(vi) rental of facilities and equipment;

(vii) other direct costs of producing the film in accordance with generally accepted
entertainment industry practice;

(viii) above-the-line talent fees for nonresident talent; or

(ix) costs incurred during postproduction; and

(2) "film" means a feature film, television or Internet pilot, program, series, documentary,
music video, or television commercial, whether on film, video, or digital media. Film does
not include news, current events, public programming, or a program that includes weather
or market reports; a talk show; a production with respect to a questionnaire or contest; a
sports event or sports activity; a gala presentation or awards show; a finished production
that solicits funds; or a production for which the production company is required under
United States Code, title 18, section 2257, to maintain records with respect to a performer
portrayed in a single-media or multimedia program.

(c) Notwithstanding any other law to the contrary, deleted text begin the Minnesota Film and TV Board deleted text end new text begin
Explore Minnesota Film new text end may make reimbursements of: (1) up to 25 percent of production
costs for films that locate production outside the metropolitan area, as defined in section
473.121, subdivision 2, or that incur a minimum Minnesota expenditure of $1,000,000 in
the metropolitan area within a 12-month period; or (2) up to 20 percent of production costs
for films that incur less than $1,000,000 in Minnesota production costs in the metropolitan
area within a 12-month period.

Sec. 3.

Minnesota Statutes 2023 Supplement, section 116U.27, subdivision 1, is amended
to read:

Subdivision 1.

Definitions.

(a) For purposes of this section, the following terms have
the meanings given.

(b) "Allocation certificate" means a certificate issued by the commissioner to a taxpayer
upon receipt and approval of an initial application for a credit for a project that has not yet
been completed.

(c) "Application" means the application for a credit under subdivision 4.

deleted text begin (d) "Commissioner" means the commissioner of employment and economic development.
deleted text end

deleted text begin (e) deleted text end new text begin (d) new text end "Credit certificate" means a certificate issued by the commissioner upon receipt
and approval of the cost verification report in subdivision 4, paragraph (e).

new text begin (e) "Director" means the director of Explore Minnesota.
new text end

(f) "Eligible production costs" means eligible production costs as defined in section
116U.26, paragraph (b), clause (1), incurred in Minnesota that are directly attributable to
the production of a film project in Minnesota.

(g) "Film" has the meaning given in section 116U.26, paragraph (b), clause (2).

(h) "Project" means a film:

(1) that includes the promotion of Minnesota;

(2) for which the taxpayer has expended at least $1,000,000 in any consecutive 12-month
period beginning after expenditures are first paid in Minnesota for eligible production costs;
and

(3) to the extent practicable, that employs Minnesota residents.

new text begin Television commercials are exempt from the requirement under clause (1).
new text end

(i) "Promotion of Minnesota" or "promotion" means visible display of a static or animated
logo, approved by the deleted text begin commissioner and lasting approximately five seconds deleted text end new text begin director new text end , that
promotes Minnesota within its presentation in the end credits deleted text begin before the below-the-line crew
crawl deleted text end for the life of the project.

Sec. 4.

Minnesota Statutes 2023 Supplement, section 116U.27, subdivision 4, is amended
to read:

Subd. 4.

Applications; allocations.

(a) To qualify for a credit under this section, a
taxpayer must submit to the deleted text begin commissioner deleted text end new text begin director new text end an application for a credit in the form
prescribed by the deleted text begin commissioner deleted text end new text begin director new text end , in consultation with the commissioner of revenue.

(b) Upon approving an application for a credit that meets the requirements of this section,
the deleted text begin commissioner deleted text end new text begin director new text end shall issue allocation certificates that:

(1) verify eligibility for the credit;

(2) state the amount of credit anticipated for the eligible project, with the credit amount
up to 25 percent of eligible project costs; and

(3) state the taxable year in which the credit is allocated.

deleted text begin The commissioner must consult with the Minnesota Film and TV Board prior to issuing an
allocation certificate.
deleted text end

(c) The deleted text begin commissioner deleted text end new text begin director new text end must not issue allocation certificates for more than
$24,950,000 of credits each year. If the entire amount is not allocated in that taxable year,
any remaining amount is available for allocation for the four following taxable years until
the entire allocation has been made. The deleted text begin commissioner deleted text end new text begin director new text end must not award any credits
for taxable years beginning after December 31, 2030, and any unallocated amounts cancel
on that date.

(d) The deleted text begin commissioner deleted text end new text begin director new text end must allocate credits on a first-come, first-served basis.

(e) Upon completion of a project, the taxpayer shall submit to the deleted text begin commissioner deleted text end new text begin director new text end
a report prepared by an independent certified public accountant licensed in the state of
Minnesota to verify the amount of eligible production costs related to the project. The report
must be prepared in accordance with generally accepted accounting principles. Upon receipt
and approval of the cost verification report and other documents required by the
deleted text begin commissioner deleted text end new text begin director new text end , the deleted text begin commissioner deleted text end new text begin director new text end shall determine the final amount of eligible
production costs and issue a credit certificate to the taxpayer. The credit may not exceed
the anticipated credit amount on the allocation certificate. If the credit is less than the
anticipated amount on the allocation credit, the difference is returned to the amount available
for allocation under paragraph (c). To claim the credit under section 290.06, subdivision
39, or 297I.20, subdivision 4, a taxpayer must include a copy of the credit certificate as part
of the taxpayer's return.

Sec. 5.

Minnesota Statutes 2022, section 116U.27, subdivision 5, is amended to read:

Subd. 5.

Report required.

By January 15, 2025, the commissioner of revenue, in
consultation with the deleted text begin commissioner deleted text end new text begin director new text end , must provide a report to the chairs and ranking
minority members of the legislative committees with jurisdiction over economic development
and taxes. The report must comply with sections 3.195 and 3.197, and must detail the
following:

(1) the amount of credit certifications issued annually;

(2) the number of applications submitted, the number of allocation certificates issued,
the amount of allocation certificates issued, the number of reports submitted upon completion
of a project, and the number of credit certificates issued;

(3) the types of projects eligible for the credit;

(4) the total economic impact of the credit in Minnesota, including the calendar year
over calendar year percentage changes in the number of jobs held by Minnesota residents
in businesses having a primary North American Industry Classification System code of
512110 as reported to the commissioner, for calendar years 2019 through 2023;

(5) the number of taxpayers per tax type which are assignees of credit certificates under
subdivision 3;

(6) annual Minnesota taxes paid by businesses having a primary North American Industry
Classification System code of 512110, for taxable years beginning after December 31, 2018,
and before January 1, 2024; and

(7) any other information the commissioner of revenue, in consultation with the
deleted text begin commissioner deleted text end new text begin director new text end , deems necessary for purposes of claiming and administering the
credit.

Sec. 6.

Minnesota Statutes 2022, section 116U.27, subdivision 6, is amended to read:

Subd. 6.

Appropriation.

Beginning in fiscal year 2022, $50,000 is annually appropriated
from the general fund to the commissioner of revenue for a transfer to deleted text begin the Department of
Employment and Economic Development deleted text end new text begin Explore Minnesota new text end for costs associated with
personnel and administrative expenses related to administering the credit. This subdivision
expires on June 30, 2025.