Florida Senate - 2018 SB 1606 By Senator Taddeo 40-01128-18 20181606__ 1 A bill to be entitled 2 An act relating to film and television production; 3 creating s. 288.1259, F.S.; defining terms; 4 establishing the Florida Motion Picture Capital 5 Corporation to encourage the use of this state as a 6 site for scripted productions by providing financing 7 to certain productions; providing powers of the 8 corporation; requiring the board of directors to adopt 9 specified criteria for evaluating a financing 10 application; requiring the production to use a bonded 11 third-party collection account management firm; 12 requiring that certain presales or sales estimates 13 meet a specified minimum value; requiring a production 14 to carry an insurance package meeting certain 15 standards; requiring a production to provide certain 16 proof of funds within a specified period; requiring 17 the lead producer or production company to have a 18 specified sales record or provide a completion bond; 19 requiring that certain items be evaluated and approved 20 by a production expert selected by the board; 21 requiring the production budget to include a certain 22 amount of contingency funds; providing for the release 23 of corporation funds according to a specified 24 schedule; requiring the board to approve the 25 expenditure of certain contingency funds; requiring 26 the board to release corporation funds to a production 27 in a specified manner; requiring the production 28 company to allow the board to inspect and audit 29 certain reports and ledgers within a certain 30 timeframe; requiring the board to give preference to 31 productions that meet specified criteria; authorizing 32 the corporation to charge certain fees; requiring the 33 board to be composed of certain members; providing for 34 the appointment of the initial board, terms for the 35 board, and guidelines for the board; prohibiting a 36 board member from discussing certain pending 37 applications with applicants outside of a board 38 meeting for a specified period; requiring a board 39 member to serve without compensation; authorizing the 40 board members to be reimbursed for certain expenses; 41 requiring the board to adopt bylaws, rules, and 42 policies before the expenditure of funds; requiring 43 the board to hold regularly scheduled meetings; 44 requiring the board to create the Florida Motion 45 Picture Capital Account and maintain exclusive control 46 of the account; authorizing the board to deposit funds 47 with certain institutions and to invest certain funds 48 in permissible securities; requiring that certain 49 dividend payments be redeposited in the account for a 50 specified purpose; requiring that the corporation’s 51 operating expenses be kept to a minimum and funded by 52 appropriations and certain net returns; requiring that 53 a claim against the account be solely paid from the 54 account; requiring the board to appoint a president 55 who meets specified criteria; providing the powers and 56 duties of the president; requiring the corporation to 57 provide certain notice of financing contracts or 58 agreements to the Department of Economic Opportunity 59 and on the corporation’s website for a specified 60 period of time; requiring that the notice include 61 specified information; providing an effective date. 62 63 Be It Enacted by the Legislature of the State of Florida: 64 65 Section 1. Section 288.1259, Florida Statutes, is created 66 to read: 67 288.1259 Florida Motion Picture Capital Corporation.— 68 (1) DEFINITIONS.—As used in this section, the term: 69 (a) “Account” means the Florida Motion Picture Capital 70 Account. 71 (b) “Board” means the corporation’s board of directors. 72 (c) “Corporation” means the Florida Motion Picture Capital 73 Corporation. 74 (d) “High-wage jobs” are jobs that pay at least 120 percent 75 of the median wage for the arts, design, entertainment, sports, 76 and media occupations category as determined by the most recent 77 State Occupational Employment and Wage Estimates for this state 78 published by the United States Department of Labor’s Bureau of 79 Labor Statistics. 80 (e) “In-state expenditures” means the costs of tangible 81 property used in this state and services performed by residents 82 of this state for a scripted production, including preproduction 83 and postproduction, but excluding costs for development, 84 marketing, and distribution. 85 (f) “President” means the chief executive officer of the 86 corporation. 87 (g) “Scripted production” or “production” means a feature 88 film at least 70 minutes in length, whether produced for 89 theatrical, television, or direct-to-video release; a television 90 series created to run multiple seasons having an order for 91 distribution of at least five episodes; or a miniseries, which 92 is produced predominately from a written screenplay or teleplay. 93 The term does not include a commercial, an infomercial, or a 94 political advertisement; a reality show; a game show; an awards 95 show; a music video; an industrial or educational film; a 96 weather or market program; a sporting event or sporting event 97 broadcast; a gala; a production that solicits funds; a home 98 shopping program; a political program; a documentary; a 99 gambling-related production; a concert production; a local, 100 regional, or Internet-distributed-only news show or current 101 events show; a sports news or sports recap show; a video game; a 102 pornographic production; or any production deemed obscene under 103 chapter 847. 104 (h) “Television” includes broadcast, cable, and Internet 105 television. 106 (2) CORPORATION.—The Florida Motion Picture Capital 107 Corporation is created as a nonprofit corporation, to be 108 incorporated under chapter 617 and approved by the Department of 109 State. The corporation shall be organized on a nonstock basis. 110 The purpose of the corporation is to encourage the use of this 111 state as a site for scripted productions by providing financing 112 to such productions. 113 (3) POWERS AND LIMITATIONS.— 114 (a) The corporation is authorized to provide financing to 115 scripted productions in this state pursuant to the criteria, 116 bylaws, rules, and policies adopted by the board, which must 117 include the following: 118 1. The corporation shall provide financing to productions 119 that it estimates will generate the greatest economic impact to 120 this state. 121 2. The amount of financing provided to a production must 122 not exceed the amount of the production’s in-state expenditures 123 for that production. 124 3. The financing provided to a production must rank and 125 remain pari passu with the highest class of ownership in the 126 production, such that, in the event of liquidation or 127 bankruptcy, the corporation’s investment shares the highest 128 priority with other preferred shareholders. 129 4. Any financing provided under this section must be less 130 than one-half of the cost of the production’s total shares or 131 other ownership interest. 132 5. The amount of financing provided to any one production 133 must not exceed 12.5 percent of the sum of the remaining amount 134 of uncommitted funds in the account plus the amounts of all 135 outstanding investments in other productions. 136 6. The corporation may not have any voting rights, creative 137 control, or management authority over a production receiving 138 financing under this section. 139 7. The corporation shall limit the return on its 140 investments by establishing variable limits on returns that 141 account for time value and reduce returns in exchange for a 142 production’s early buyout of financing positions. For a 143 production exercising an early buyout, the corporation shall 144 limit its return on investment to the minimum that is 145 actuarially measurable and credible and sufficiently related to 146 actual and expected losses to ensure the corporation’s self 147 sufficiency and preservation of the state appropriations 148 provided for the investment. 149 8. The corporation shall establish an application process 150 and conduct at least two application periods per fiscal year, 151 providing no more than 40 percent of the total funds in the 152 Florida Motion Picture Capital Account for the fiscal year to 153 productions in any one application period. 154 (b) The board shall adopt objective criteria for evaluating 155 applications for financing scripted productions in this state. 156 1. The criteria must require: 157 a. The production to use a bonded third-party collection 158 account management firm to ensure that the corporation receives 159 all funds due from sales proceeds in accordance with a waterfall 160 agreement included in the corporation’s investment terms. 161 b. Presales or sales estimates from a sales agency that has 162 sold at least $50 million in feature films which are based on 163 the cast and script of the production and which reflect a value 164 of at least 1.5 times the exposure of the corporation. 165 c. The production to carry an insurance package from an 166 insurance company rated “A” or higher by A.M. Best Company which 167 must include general liability insurance, workers’ compensation, 168 and key cast and director insurance that covers the costs of 169 disruption or replacement downtime in the event of illness or 170 other loss of services from such individuals. If at least 75 171 percent of the production’s filming schedule occurs after June 1 172 and before November 30, the production’s insurance package must 173 include hurricane coverage. 174 d. The production to provide proof of funds for the 175 remaining budget within 60 days after application approval and 176 place the remaining budget in escrow before the release of 177 corporation funds. 178 e. That the lead producer or production company has 179 completed, sold, and delivered at least five feature films, or 180 the production must provide a completion bond. 181 f. That the production’s budget, script, and filming 182 schedule have been evaluated and approved by a production expert 183 selected by the board. 184 g. The production budget to include contingency funds in an 185 amount equal to at least 5 percent of the total budget. Up to 40 186 percent of the contingency funds may be expended during 187 production without the approval of the board. The remaining 188 contingency funds may only be expended with prior approval of 189 the board. 190 h. The board to release corporation funds to a production 191 in the following manner: 192 (I) Fifty percent of corporation funds shall be released on 193 the first day of principal photography. 194 (II) Twenty-five percent of corporation funds shall be 195 released upon completion of principal photography. 196 (III) Twenty-five percent of corporation funds shall be 197 released after final picture lock, as that term is generally 198 understood in the production industry. 199 i. The production company to provide the board with the 200 right to inspect and audit the weekly cost reports and general 201 ledger of the production throughout preproduction, production, 202 and postproduction. 203 2. Preference shall be given to: 204 a. Productions that will generate the greatest comparative 205 economic impact for this state. The corporation shall make a 206 determination of each project’s comparative economic impact to 207 this state by comparing the project budgets submitted during the 208 application period and determining which projects create the 209 greatest number of high-wage jobs for state residents and 210 propose the most significant in-state expenditures as a 211 percentage of total production expenditures. 212 b. Productions in which the proposed financing by the 213 corporation is lowest as a percentage of the production’s total 214 shares or other ownership interest. 215 c. Productions with the quickest deployment, in which the 216 production’s in-state expenditures will begin soonest after the 217 corporation commits to financing. 218 d. Productions by companies with a verifiable track record 219 in producing successful productions. 220 e. Productions by production companies based in this state 221 or by producers, writers, or directors who are residents of this 222 state. 223 f. Productions expected to significantly increase tourism 224 to the state by using a screenplay or teleplay based on a 225 Florida story or including recognizable locations in this state. 226 g. Productions whose development demonstrates the 227 likelihood of success, including, but not limited to, having a 228 recognized director, actor, or other creative talent attached to 229 the production. 230 h. Productions in which the corporation’s financing is 231 matched from local sources, including, but not limited to, 232 county or municipal agencies, local film commissions, or other 233 community resources. 234 (c) The corporation may charge fees, including, but not 235 limited to, application fees from productions seeking financing 236 under this section, but such fees may not exceed the reasonable 237 estimated cost of the activity for which the fee is charged, 238 such as the cost of processing an application. 239 (4) BOARD OF DIRECTORS; POWERS AND DUTIES.- 240 (a)1. The board shall consist of seven members who are 241 permanent residents of this state. Minority and gender 242 representation must be considered when making appointments to 243 the board. The board shall be composed of the following: 244 a. Two members who have experience in investment banking 245 and funds management focused on feature film and television 246 production. 247 b. Three members who have recent experience and are 248 recognized leaders in the production of feature films or 249 television in this state. Such members may include, but are not 250 limited to, producers, directors, production managers or 251 supervisors, or similar persons in positions of production 252 leadership. 253 c. One member who represents businesses that provide 254 supplies for feature film and television production in this 255 state, such as small businesses through which productions buy or 256 rent equipment, house and feed cast and crew, purchase supplies 257 and raw materials, or build production infrastructure. 258 d. One member who represents this state’s feature film and 259 television workforce. 260 2. The initial board shall be appointed as follows: 261 a. The Florida Venture Forum and the Florida Chamber of 262 Commerce shall each appoint one member pursuant to sub 263 subparagraph 1.a. 264 b. The Governor, the President of the Senate, and the 265 Speaker of the House of Representatives shall each appoint one 266 member pursuant to sub-subparagraph 1.b. 267 c. The department shall appoint one member pursuant to sub 268 subparagraph 1.c. 269 d. The Congress of Motion Picture Associations of Florida 270 shall appoint one member pursuant to sub-subparagraph 1.d. 271 272 To establish staggered terms, the initial members appointed by 273 the Florida Chamber of Commerce and the Congress of Motion 274 Picture Associations of Florida shall be appointed to 1-year 275 terms; the initial members appointed by the President of the 276 Senate and the Speaker of the House of Representatives shall be 277 appointed to 2-year terms; and the initial members appointed by 278 the Governor, the department, and the Florida Venture Forum 279 shall be appointed to 3-year terms. 280 3. Board members shall serve for a term of 3 years and are 281 eligible for reappointment. Vacancies shall be filled by the 282 board within 30 days after the date of the vacancy. A vacancy 283 that occurs before the scheduled expiration of the term of a 284 member shall be filled for the remainder of the unexpired term. 285 (b) Board members are subject to the Code of Ethics for 286 Public Officers and Employees as set forth in part III of 287 chapter 112. A board member must abstain from voting and comply 288 with the disclosure requirements of s. 112.3143 if there appears 289 to be a possible conflict under s. 112.311, s. 112.313, or s. 290 112.3143. This paragraph does not prohibit any principal by whom 291 a board member is retained, as defined in s. 112.3143(1)(a), 292 from applying for or receiving financing under this section. 293 (c) A board member must, with respect to an application for 294 financing which is currently pending before the corporation or 295 which the board member knows or reasonably expects will be 296 submitted to the corporation within 180 days, refrain from 297 commenting on or discussing the application outside of a board 298 meeting with the applicant or any person retained by the 299 applicant. 300 (d) Board members shall serve without compensation but may 301 be reimbursed in accordance with s. 112.061 for all necessary 302 expenses in the performance of their duties, including attending 303 board meetings and conducting board business. 304 (e) The board shall: 305 1. Before the expenditure of funds from the Florida Motion 306 Picture Capital Account, adopt bylaws, rules, and policies that 307 are necessary to carry out the corporation’s responsibilities 308 under this section. 309 2. Hold regularly scheduled meetings, at least once per 310 application period, in order to carry out the objectives and 311 responsibilities of the board. 312 (5) ACCOUNT.— 313 (a) The board shall create the Florida Motion Picture 314 Capital Account for the purpose of receiving state, federal, 315 county, municipal, and private financial resources, and the 316 returns from productions financed by allocations from those 317 resources, and for the purposes of this section. The account 318 shall be under the exclusive control of the board. 319 (b) Appropriations provided to the corporation for 320 financing productions shall be deposited into the account. 321 (c) The board may deposit the funds of the account with 322 state or federally chartered financial institutions in this 323 state and may invest any funds not allocated to a production 324 during a fiscal year in permissible securities as described in 325 s. 560.210(1). 326 (d) Dividend payments received from the investments made by 327 the corporation shall be redeposited into the account to be used 328 for the purposes of this section. 329 (e) The corporation shall keep its operating expenses to 330 the minimum amount necessary. Such operating expenses shall be 331 funded by appropriations provided for that purpose and from net 332 returns from financing provided under this section. 333 (f) Any claims against the account shall be paid solely 334 from the account. Under no circumstances shall the credit of the 335 state be pledged other than funds appropriated by law to the 336 account, nor shall the state be liable or obligated in any way 337 for claims on the account or against the corporation. 338 (6) PRESIDENT OF THE CORPORATION.— 339 (a) The board shall appoint a president. The president must 340 be knowledgeable about private and public financing of feature 341 film and television projects. 342 (b) The president shall serve at the pleasure of the board 343 and shall receive a salary and benefits as fixed by the board. 344 (c) The president shall administer the programs of the 345 corporation and perform such duties as delegated by the board. 346 (d) The president shall provide support staff to the board 347 as requested. 348 (e) The president shall submit an annual budget to be 349 approved by the board. 350 (7) PUBLIC NOTICE OF FINANCING.—The corporation shall 351 notify the department upon final execution of each contract or 352 agreement by which the corporation provides financing to a 353 production. The corporation shall also publish and maintain a 354 copy of the notice on the corporation’s website while the 355 financing remains outstanding. To provide adequate notice to the 356 businesses and workforce that supply feature film and television 357 production in this state, the notice must include, but need not 358 be limited to, a brief description of the production, the name 359 of the production company, and, to the extent available, the 360 names of the director, cinematographer, production designer, 361 costume designer, and transportation coordinator. 362 Section 2. This act shall take effect July 1, 2018.