81R21701 CLG-D
 
  By: Anchia H.B. No. 1142
 
  Substitute the following for H.B. No. 1142:
 
  By:  Miklos C.S.H.B. No. 1142
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the designation of qualified media production locations
  in media production development zones and to exemptions from the
  sales and use tax for items used for media production facilities in
  qualified media production locations.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subtitle F, Title 4, Government Code, is amended
  by adding Chapter 485A to read as follows:
  CHAPTER 485A. MEDIA PRODUCTION DEVELOPMENT ZONES
  SUBCHAPTER A. GENERAL PROVISIONS
         Sec. 485A.001.  SHORT TITLE. This chapter may be cited as
  the Media Production Development Zone Act.
         Sec. 485A.002.  DEFINITIONS. In this chapter:
               (1)  "Media production facility" means a structure,
  building, or room used for the specific purpose of creating a moving
  image project. The term includes:
                     (A)  a soundstage and scoring stage;
                     (B)  a production office;
                     (C)  an editing facility, an animation production
  facility, and a video game production facility;
                     (D)  a storage and construction space; and
                     (E)  a sound recording studio and motion capture
  studio.
               (2)  "Media production development zone" means an area
  recognized by a nominating body and approved by the office as a
  media production development zone under this chapter.
               (3)  "Moving image project" means a visual and sound
  production, including a film, television program, national or
  multistate commercial, or digital interactive media production.
  The term does not include a production that is obscene, as defined
  by Section 43.21, Penal Code.
               (4)  "Nominating body" means the governing body of a
  municipality or county, or a combination of the governing bodies of
  municipalities or counties, that:
                     (A)  recognizes a qualified area as a media
  production development zone; and
                     (B)  nominates and applies for designation of a
  location in a media production development zone as a qualified
  media production location.
               (5)  "Office" means the Music, Film, Television, and
  Multimedia Office within the office of the governor.
               (6)  "Qualified media production location" means a
  location in a media production development zone that has been
  designated by the office as a qualified media production location
  in accordance with this chapter.
               (7)  "Qualified person" means a person certified as a
  qualified person under Section 485A.201.
         Sec. 485A.003.  JURISDICTION OF MUNICIPALITY. For the
  purposes of this chapter, territory in the extraterritorial
  jurisdiction of a municipality is considered to be in the
  jurisdiction of the municipality.
  [Sections 485A.004-485A.050 reserved for expansion]
  SUBCHAPTER B. OFFICE POWERS AND DUTIES IN GENERAL
         Sec. 485A.051.  GENERAL POWERS AND DUTIES. (a) Except as
  provided by Subsection (b), the office shall administer and monitor
  the implementation of this chapter.
         (b)  The office and the comptroller's office shall jointly
  establish criteria and procedures for:
               (1)  approving a qualified area recognized as a media
  production development zone by a nominating body;
               (2)  designating a qualified location in a media
  production development zone as a qualified media production
  location; and
               (3)  certifying a person as a qualified person under
  Section 485A.201.
         Sec. 485A.052.  RULEMAKING AUTHORITY. The office shall
  adopt rules necessary to implement this chapter.
         Sec. 485A.053.  ANNUAL REPORT. On or before December 15 of
  each year, the office shall submit to the governor, the
  legislature, and the Legislative Budget Board a report that:
               (1)  evaluates the effectiveness of the media
  production development zone program; and
               (2)  describes the use of state and local incentives
  under this chapter and their effect on revenue.
         Sec. 485A.054.  ASSISTANCE. The office shall provide to
  persons desiring to construct, expand, maintain, improve, or
  renovate a media production facility in a qualified media
  production location information and appropriate assistance
  relating to the required legal authorization, including a permit,
  certificate, approval, and registration, necessary in this state to
  accomplish that objective.
  [Sections 485A.055-485A.100 reserved for expansion]
  SUBCHAPTER C. APPROVAL OF MEDIA PRODUCTION DEVELOPMENT ZONE AND
  DESIGNATION OF QUALIFIED MEDIA PRODUCTION LOCATIONS
         Sec. 485A.101.  CRITERIA FOR MEDIA PRODUCTION DEVELOPMENT
  ZONE RECOGNITION. To be approved as a media production development
  zone, an area:
               (1)  must be in a metropolitan area, the principal
  municipality of which:
                     (A)  has a population of more than 250,000; and
                     (B)  has the adequate workforce, infrastructure,
  facilities, or resources to support the production and completion
  of moving image projects;
               (2)  must be recognized as a media production
  development zone by ordinance or order, as appropriate, of a
  municipality or the commissioners court of a county; and
               (3)  will contain a qualified media production location
  within its geographical boundaries that meets the criteria under
  Section 485A.102.
         Sec. 485A.102.  CRITERIA FOR QUALIFIED MEDIA PRODUCTION
  LOCATION DESIGNATION. To be designated a qualified media
  production location, a location must be land or other real property
  that is in a media production development zone and will:
               (1)  be used exclusively to build or construct one or
  more media production facilities;
               (2)  if the real property is a building or other
  facility, be renovated solely for the purpose of being converted
  into one or more media production facilities; or
               (3)  if the real property consists solely of one or more
  media production facilities, be improved or renovated for that
  purpose or will be expanded into one or more additional media
  production facilities.
         Sec. 485A.103.  MAXIMUM NUMBER OF ZONES AND LOCATIONS
  THROUGHOUT STATE. (a) There may not be more than five media
  production development zones under this chapter in a region at any
  one time.
         (b)  Each media production development zone may not contain
  more than three media production locations at any one time.
         (c)  For purposes of Subsection (a), the office shall divide
  the state into regions consisting of geographical boundaries
  prescribed by office rule.
         Sec. 485A.104.  NOMINATION OF QUALIFIED MEDIA PRODUCTION
  LOCATION. (a) The governing body of a municipality or county,
  individually or in combination with other municipalities or
  counties, by ordinance or order, as appropriate, may nominate as a
  qualified media production location a location within its
  jurisdiction that meets the criteria under Section 485A.102.
         (b)  The governing body of a county may not nominate
  territory in a municipality, including extraterritorial
  jurisdiction of a municipality, to be included in a proposed
  qualified media production location unless the governing body of
  the municipality also nominates the territory and together with the
  county files a joint application under Section 485A.106.
         Sec. 485A.105.  NOMINATING ORDINANCE OR ORDER. An ordinance
  or order nominating a location as a qualified media production
  location must:
               (1)  describe precisely both the media production
  development zone in which the location is to be included and the
  proposed location by a legal description or reference to municipal
  or county boundaries;
               (2)  state a finding that the location meets the
  requirements of this chapter and that the media production
  development zone in which the location is to be included has been
  recognized as a zone by ordinance or order, as appropriate, by the
  nominating body;
               (3)  summarize briefly the local financial incentives,
  including tax incentives, that, at the election of the nominating
  body, will apply to a qualified person;
               (4)  contain a brief description of the project or
  activity to be conducted by a qualified person at the location;
               (5)  nominate the location as a qualified media
  production location; and
               (6)  contain an economic impact analysis from a local
  land use or economic development expert.
         Sec. 485A.106.  APPLICATION FOR DESIGNATION. (a) For a
  location in a media production development zone to be designated as
  a qualified media production location, the nominating body, after
  nominating the location as a qualified media production location,
  must send to the office a written application for designation of the
  location in the zone as a qualified media production location.
         (b)  The application must include:
               (1)  a certified copy of the ordinance or order, as
  appropriate, nominating the location as a media production
  location;
               (2)  a certified copy of the ordinance or order, as
  appropriate, recognizing the zone in which the location is to be
  included as a media production development zone;
               (3)  appropriate supporting documents demonstrating
  that the location qualifies for designation as a qualified media
  production location;
               (4)  an estimate of the economic impact of the
  designation of the location as a qualified media production
  location on the revenues of the governmental entity or entities
  nominating the location as a qualified media production location,
  considering the financial incentives and benefits contemplated;
               (5)  an economic impact analysis of the proposed
  project or activities to be conducted at the proposed qualified
  media production location, which must include:
                     (A)  an estimate of the amount of revenue to be
  generated to the state by the project or activity;
                     (B)  an estimate of any secondary economic
  benefits to be generated by the project or activity; and
                     (C)  any other information required by the
  comptroller for purposes of making the certification required by
  Section 485A.109(b); and
               (6)  any additional information the office requires.
         (c)  Information required by Subsection (b) is for
  evaluation purposes only.
         (d)  The economic impact analysis required by Subsection
  (b)(5) must also be submitted to the comptroller.
         Sec. 485A.107.  ADVISORY COMMITTEE.  (a) The media
  production advisory committee is composed of the following members:
               (1)  the director of the Texas Film Commission division
  of the governor's office;
               (2)  one representative of the comptroller's office,
  appointed by the comptroller; and
               (3)  subject to Subsection (b), nine representatives of
  the media production industry appointed by the comptroller.
         (b)  In making appointments to the advisory committee under
  Subsection (a)(3), the comptroller shall provide for a balanced
  representation of the different geographic regions of this state.
  Each of the following types of companies or organizations must be
  represented by at least one member serving on the advisory
  committee:
               (1)  animation production companies;
               (2)  film and television production companies;
               (3)  labor or workforce organizations;
               (4)  equipment vendors;
               (5)  the video gaming industry; and
               (6)  commercial production companies.
         (c)  The director of the Texas Film Commission division of
  the office of the governor serves as the presiding officer of the
  advisory committee. The advisory committee shall meet at the call
  of the presiding officer.
         (d)  The advisory committee, through review of applications
  submitted under Section 485A.108, shall make recommendations to the
  office for designation of qualified media production locations
  under this subchapter. The office may provide administrative
  support to the advisory committee.
         (e)  Section 2110.008 does not apply to the advisory
  committee.
         Sec. 485A.108.  REVIEW OF APPLICATION. (a)  On receipt of an
  application for the designation of a qualified media production
  location, the office shall review the application to determine
  whether the nominated location qualifies for designation as a
  qualified media production location under this chapter.
         (b)  The office shall consider recommendations submitted by
  the media production advisory committee with respect to
  applications received by the office.
         Sec. 485A.109.  DESIGNATION. (a)  If the office determines
  that a nominated location for which a designation application has
  been received satisfies the criteria under Section 485A.102 and on
  recommendation of the media production advisory committee, the
  office may designate the nominated location as a qualified media
  production location unless the office determines that the
  designation request should be denied for the reasons specified by
  Section 485A.110.
         (b)  A designation of a qualified media production location
  may not be made under this section until the comptroller, based on
  an evaluation of the economic impact analysis submitted under
  Section 485A.106(b)(5), certifies that the project or activity to
  be conducted at the designated location will have a positive
  economic impact on this state.
         (c)  On designation of the first qualified media production
  location in a media production development zone recognized by the
  nominating body for that purpose, the office shall simultaneously
  approve the media production development zone.
         Sec. 485A.110.  DENIAL OF APPLICATION; NOTICE. (a) The
  office shall deny an application for the designation of a qualified
  media production location if:
               (1)  the  office determines that the nominated
  location does not satisfy the criteria under Section 485A.102;
               (2)  the office determines that the number of media
  production location designations or number of approved media
  production development zones at the time of the application are at
  the maximum limit prescribed by Section 485A.103; or
               (3)  the comptroller has not certified that the
  proposed project or activity to be conducted at the location will
  have a positive economic impact on this state.
         (b)  The office shall inform the nominating body of the
  specific reasons for denial of an application under this section.
         Sec. 485A.111.  PERIOD OF APPROVAL OR DESIGNATION. (a) An
  area may be approved by the office as a media production development
  zone for a maximum of five years after the date the last qualified
  media production location was designated within the zone's
  boundaries.
         (b)  A location may be designated as a qualified media
  production location for a maximum of two years.
         (c)  Except as provided by Section 485A.112, a media
  production development zone approval and qualified media
  production location designation remains in effect until September 1
  of the final year of the approval or designation, as appropriate.
         Sec. 485A.112.  REMOVAL OF APPROVAL OR DESIGNATION. (a) The
  office may remove the approval of an area recognized as a media
  production development zone if the area no longer meets the
  criteria for that recognition under this chapter or by office rule
  adopted under this chapter.
         (b)  The office may remove the designation of a location as a
  qualified media production location if the location no longer meets
  the criteria for that designation under this chapter or by office
  rule adopted under this chapter.
         (c)  The removal of a designation or approval does not affect
  the validity of a tax incentive granted or accrued before the
  removal.
  [Sections 485A.113-485A.150 reserved for expansion]
  SUBCHAPTER D. ADMINISTRATION OF MEDIA PRODUCTION LOCATION
         Sec. 485A.151.  ANNUAL REPORT. (a) For purposes of this
  section, the governing body of a qualified media production
  location is the governing body of the municipality or county, or the
  governing bodies of the combination of municipalities or counties,
  that applied to have the location designated as a qualified media
  production location.
         (b)  Not later than October 1 of each year, the governing
  body of a qualified media production location shall submit to the
  office a report in the form prescribed by the office.
         (c)  The report must include for the year preceding the date
  of the report:
               (1)  the use of local incentives for which the
  governing body provided in the ordinance or order nominating the
  qualified media production location and the effect of those
  incentives on revenue;
               (2)  the number of qualified persons engaging in a
  project or activity related to a media production facility at the
  qualified media production location; and
               (3)  the types of projects or activities engaged or to
  be engaged in by qualified persons at the qualified media
  production location.
  [Sections 485A.152-485A.200 reserved for expansion]
  SUBCHAPTER E. QUALIFIED PERSON DESIGNATION AND CERTIFICATION
         Sec. 485A.201.  QUALIFIED PERSON. A person is a qualified
  person if the office, for the purpose of state benefits under this
  chapter, or the nominating body of a qualified media production
  location, for the purpose of local benefits, certifies that the
  person, not later than 18 months after the date of the designation:
               (1)  will build or construct one or more media
  production facilities at a location;
               (2)  will renovate a building or facility solely for
  the purpose of being converted into one or more media production
  facilities at a location; or
               (3)  will renovate or expand one or more media
  production facilities at a location.
         Sec. 485A.202.  PROHIBITION ON QUALIFIED PERSON
  CERTIFICATION. If the office determines that the nominating body
  of a qualified media production location is not complying with this
  chapter, the office shall prohibit the certification of a qualified
  person at the location until the office determines that the
  nominating body is complying with this chapter.
         Sec. 485A.203.  DURATION OF DESIGNATION. Except as provided
  by Section 485A.204, the office's certification of a person as a
  qualified person is effective until the second anniversary of the
  date the designation is made, regardless of whether the designation
  of the qualified media production location at which the qualified
  person is to perform its commitments under this chapter is
  terminated before that date.
         Sec. 485A.204.  REMOVAL OF DESIGNATION. The office shall
  remove the certification of a qualified person for state benefits
  under this chapter if the office determines that the construction,
  renovation, improvement, maintenance, or expansion of a media
  production facility has not been completed at the qualified media
  production location for which it has received its certification
  within the period prescribed by Section 485A.201.
  [Sections 485A.205-485A.250 reserved for expansion]
  SUBCHAPTER F. MEDIA PRODUCTION LOCATION BENEFITS
         Sec. 485A.251.  EXEMPTION FROM SALES AND USE TAX. Certain
  items are exempt from the sales and use tax as provided by Section
  151.3415, Tax Code.
         Sec. 485A.252.  MONITORING QUALIFIED PERSON COMMITMENTS.
  (a) The office may monitor a qualified person to determine whether
  and to what extent the qualified person has followed through on the
  commitments made by the qualified person under this chapter.
         (b)  The office may determine that the qualified person is
  not entitled to a tax exemption under Section 151.3415, Tax Code, if
  the office determines that the qualified person:
               (1)  is not willing to cooperate with the office in
  providing information needed by the office to make the
  determination under Subsection (a);
               (2)  has substantially failed to follow through on the
  commitments made by the person under this chapter before the first
  anniversary of the date of the qualified media production location
  designation; or
               (3)  fails to submit the report required by Section
  151.3415, Tax Code.
         SECTION 2.  Subchapter H, Chapter 151, Tax Code, is amended
  by adding Section 151.3415 to read as follows:
         Sec. 151.3415.  ITEMS SOLD TO OR USED TO CONSTRUCT,
  MAINTAIN, EXPAND, IMPROVE, EQUIP, OR RENOVATE MEDIA PRODUCTION
  FACILITIES AT MEDIA PRODUCTION LOCATIONS; REPORT. (a) In this
  section, "qualified person" and "qualified media production
  location" have the meanings assigned by Section 485A.002,
  Government Code.
         (b)  The sale, lease, or rental of a taxable item to a
  qualified person is exempted from the taxes imposed by this chapter
  if the item is used:
               (1)  for the construction, maintenance, expansion,
  improvement, or renovation of a media production facility at a
  qualified media production location;
               (2)  to equip a media production facility at a
  qualified media production location; or
               (3)  for the renovation of a building or facility at a
  qualified media production location that is to be used exclusively
  as a media production facility.
         (c)  A qualified person shall submit an annual report to the
  comptroller regarding the sale, lease, or rental of taxable items
  for which a tax exemption is granted to the qualified person under
  this section. The report must be in the form and manner prescribed
  by the comptroller.
         (d)  The comptroller shall share information from reports
  submitted under Subsection (c), on request, with the Music, Film,
  Television, and Multimedia Office within the office of the
  governor.
         SECTION 3.  This Act takes effect September 1, 2009.