SENATE BILL NO. 23 "An Act relating to transferable film production tax credits; and providing for an effective date by amending the effective dates of secs. 3 and 4, ch. 63, SLA 2008." 9:53:22 AM Senator Ellis welcomed MATT MOSER, STAFF, SENATOR ELLIS. 9:53:49 AM AT EASE 9:53:55 AM RECONVENED 9:54:31 AM Senator Ellis presented the PowerPoint Presentation, "Senate Bill 23: Extending the Film and Television Production Tax Incentives." He stated that welcoming the multi-billion dollar film and television production industry to Alaska was a rare opportunity to grow and develop a new industry in the state. It would create jobs for Alaskans and diversify the economy. He stated that the legislation would continue the growth and success of Alaska's developing film and television production. He stressed that the private sector was needed to ensure the incremental capital investments. He felt that this legislation would offer the private sector the certainty that Alaska is open for business. 9:55:11 AM Senator Ellis stated, "The film tax credit passed by the legislature in 2008 is largely responsible for the recent growth in this industry. Since their inception in 2008, 15 productions have received tax credits. These 15 productions filmed in Alaska for a total of 910 days and had a total Alaska spend of nearly $15 million dollars. As of January, 2011 there are an additional 28 productions that are pre-qualified for Alaska Film Incentives. If all these productions are completed they will have an estimated additional projected Alaska spend of nearly $85 million dollars. This brings the total projected potential boost to Alaska's economy since 2008 to nearly $100 million dollars." 9:56:31 AM Senator Ellis presented slide 4. He stated that the projected boost to the economy since 2008 was nearly $100 million. 9:57:02 AM Senator Ellis presented slide 5, and stated "This $100 million dollars translates in to thousands of jobs, opportunities for businesses large and small. We have already seen the benefits of recent multi-million dollar productions. There were hundreds of Alaskans working as cast and crew, in jobs as varied as electricians, carpenters, truck drivers, caterers, security guards and plumbers. Mr. Chairmen, filming and production has taken place in 35 communities all over our state." Senator Ellis presented slide 6, and stressed that many small business were positively affected by the legislation, including ocean cargo shipping, rental cars and RV's, to property rental, construction work, hotels, restaurants and engineering firms. 9:57:55 AM Senator Ellis presented slide 7, and explained that there were many exciting projects in progress. He also stressed that there was potential for training and education in film and television production. He pointed out the infrastructure around the industry was so booked with shoots, that they did not have crew enough to meet the demands. 9:58:51 AM Senator Ellis presented slide 8 and stated that the legislation would extend the film and television production tax for ten years, and offered and additional $100 million dollars in tax incentives for each five-year period. 9:59:38 AM Senator Ellis presented slide 9, and pointed out the legislation would continue to bring new money to Alaska's economy; keep our businesses busy and put Alaskans to work; and diversify our economy and grow and develop this new and multi-million dollar business in Alaska. 10:01:25 AM Senator Ellis presented slide 10, and noted that the legislation would create diversification of the economy; new private sector jobs; new opportunities for large and small businesses; infusion of construction dollars; public relations; opportunities in rural Alaska; and tax credits for Alaska corporations. 10:02:05 AM Co-Chair Stedman referred to two fiscal notes from the Department of Revenue and Department of Commerce, Community, and Economic Development. 10:02:49 AM MAYA SALGANEK, UNIVERSITY OF ALASKA, FAIRBANKS (via teleconference), spoke in favor of SB 23. She felt that the passing of the legislation would encourage further study and training in film and television production. 10:07:23 AM WANETTA AYERS, DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT, presented PowerPoint Presentation: "Alaska Film Office Program Overview" (copy on file). She stated that there was a desire to develop Alaska as a preferred film destination. 10:08:17 AM Ms. Ayers discussed slide 2, and stated that the Alaska Film Office had five mandates: 1. cooperate with organizations in the private sector for the expansion and development of the film production industries in the state; 2. promote Alaska as an appropriate location for film production; 3. provide production assistance through connecting film directors and makers, and producers with Alaska location scouts and contractors, including contractors providing assistance with permit applications; 4. certify Alaska film production internship training programs and promote the employment of program interns by eligible productions; and 5. in cooperation with Department of Revenue, administer the Alaska Film Production Incentive Program. 10:08:54 AM Ms. Ayers discussed slide 3, and stated that the Alaska Film Office approached private sector collaboration in a variety of different ways. She explained that their website was a portal for a variety of information about the program and interacts with the Alaska Film Office. She stated that the Alaska Film Office was engaged with industry organizations, trade associations, and allied groups; and engaged in outreach through speaking engagements, targeted contacts, and fielding daily inquiries. 10:09:51 AM Ms. Ayers discussed slide 4, and stated that there was a variety of print advertising in magazines, directories, brochures, and websites to promote Alaska. Ms. Ayers displayed slide 7, and stated that it was an example of a customized program brochure that outlined the production incentive and the advantages of filming in Alaska. Co-Chair Stedman asked about Alaska Hire provision, and how it was implemented. Ms. Ayers replied that there was an additional 10 percent credit for the wages that were expended in Alaska for Alaska residents. 10:11:21 AM Ms. Ayers discussed slide 8, and stated that the Alaska Film Office provided assistance by responding to daily inquiries about filming in Alaska; conducting follow-up and outreach with contacts developed through advertising, trade show and other promotional activities; meeting with producers and providing introductions to states and local contacts; explaining the Incentive Program and assisting producers with the application process; providing alternatives and creative solutions to production challenges; and working with Alaskan businesses, community representative and other stakeholders regarding prospective projects. 10:12:08 AM Ms. Ayers looked at slide 9, and stated that the Alaska Film Office wanted to increase hiring of Alaskans. She stated that hundreds of Alaskans had been employed in Alaska. She stated that they were working with the Department of Labor with regard to some apprenticeship programs that could lead to technical careers in the film industry. She furthered that the University of Alaska would provide the academic programs that lead to certificates and degrees recognized by the film industry. She stated that private sector efforts would provide on-the-job training. 10:14:02 AM Ms. Ayers detailed Slide 10 and explained the process for the review of the final applications. She stated that there was a pre-qualification process, which required the Alaska Film Office to work with producers. She stated that once the pre-qualification was approved, the production process ensued. Once the production expenses were incurred in Alaska, there was an audit, and final application and approval of the process. A review committee that looked at the final application and advances a notification to the Department of Revenue that the final application was approved, and the Department of Revenue would take over for issuing a tax credit certificate. Co-Chair Stedman surmised that there was an audit before approval. Ms. Ayers responded that there was a requirement for the production company to hire and Alaskan Certified Public Accountant to audit the Alaska production costs. Co-Chair Stedman asked if the audits were current. Ms. Ayers answered yes. 10:15:27 AM Ms. Ayers discussed slide 11, and stated that the displayed chart summarized experience-to-date with regard to pre- qualifications that were approved by fiscal year since the implementation of the film production incentive program. She furthered that slide 12 displayed a summary based on pre-qualification. 10:16:05 AM Ms. Ayers looked at slide 13, and stated that there were two staff positions in the Alaska Film Office with additional support provided by the state. Ms. Ayers displayed slide 14, and explained that at the implementation of the program conceived $275,000 per fiscal year. She stated that in the current year, there was $283,000 added, but it did not include estimation of additional support costs. She stated that there was an unallocated overhead cost of $27,800 for a total of $310,800. 10:16:49 AM Ms. Ayers showed slide 15, and stated that the film industry was rapidly evolving. She explained that there were a number of productions that were ready to produce in Alaska. Co-Chair Stedman wondered if the Department of Commerce, Community, and Economic Development supported SB 23. Ms. Ayers replied yes. 10:18:54 AM JOHN RENSE, SENIOR OPERATIONS MANAGER, NANA DEVELOPMENT CORPORATION, spoke in support of SB 23. He stated that the bill would encourage economic diversity. 10:23:23 AM BRICE HABERGER, TRADESMAN, JUNEAU, spoke in favor in SB 23. He stated that he provided scouting services for the film industry. 10:25:31 AM DAVID GREATHOUSE, PRODUCER, WARP FILMS (via teleconference), spoke in favor of SB 23. 10:29:55 AM CINDY DRAPER, ABC MOTORHOMES (via teleconference), spoke in favor of SB 23. She stated that they provided business for the film, "Everybody Loves Whales." 10:31:00 AM Senator Ellis expressed excitement for the discussion regarding SB 23. He looked forward to working towards a committee substitute 10:31:19 AM Senator Olson wondered if it was a surprise how successful the original legislation had become. Senator Ellis remarked that it was surprising. He pointed out that there were some skeptics, but the legislation had been successful. Co-Chair Stedman remarked that Alaska was in an economic upturn, while other states were experiencing economic trials. SB 23 was HEARD and HELD in committee for further consideration.