Legislature(2011 - 2012)BARNES 124
02/17/2011 10:15 AM House ECON. DEV., TRADE & TOURISM
| Audio | Topic |
|---|---|
| Start | |
| HB120 | |
| HB67 | |
| Overview: Committee Calendar Program | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 120 | TELECONFERENCED | |
| += | HB 67 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HB 67-FILM PRODUCTION TAX CREDIT
10:26:41 AM
CHAIR HERRON announced the next order of business would be HOUSE
BILL NO. 67, "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."
10:26:47 AM
ANDREW OKPEAHA MACLEAN, writer and director of the movie On the
Ice, expressed his support of HB 67, which will extend tax
credits for the film industry. He said his film was shot
entirely in Barrow with the support of the Alaska Film Office
(AFO), Division of Economic Development, Department of Commerce,
Community & Economic Development (DCCED), and the tax credits
offered by the state were instrumental to the making of the
film.
10:27:45 AM
CARA MARCOUS, producer of the movie On the Ice, said the tax
credit incentive was crucial in finding their first cash
investor, because the investor knew that one-half of his
investment "would be coming back to him at a certain point for
sure." After the initial investment was found, other investors
became comfortable, and completed the budget for the film. Ms.
Marcous observed that the impetus for the commitment from the
first investor was the incentive, and that was the catalyst for
the project.
10:28:37 AM
MR. MACLEAN added that he was born and raised in Barrow and
Fairbanks, and the film was shot entirely in Alaska, using
almost all Alaskan actors. Much of the crew was from Barrow,
and some were flown in from Anchorage. The film was premiered
at the Sundance Film Festival and he and Ms. Marcous are in
Berlin to show the film at the Berlin International Film
Festival. In response to Chair Herron, Mr. MacLean said the
movie has been seen by several thousand people at both the
Sundance and Berlin events.
MS. MARCOUS noted that the audiences "have no awareness of
Alaska and the diversity within the state, so it's really
fascinating for them."
10:30:31 AM
CHAIR HERRON presented two clips from the movie. After the
presentation, he asked for the most interesting comments from
the Berlin audience.
10:33:00 AM
MR. MACLEAN relayed that people are curious about growing up in
a small town in rural Alaska, and about the environment of the
state. The film provides an opportunity for others to see what
life is like; in fact, two of the Barrow actors are in Berlin
speaking about their experiences.
MS. MARCOUS offered that audiences are also curious about
language and communication.
REPRESENTATIVE FOSTER asked for the location of the film.
10:34:37 AM
MR. MACLEAN said the film was shot on the Arctic Ocean and in
and around Barrow.
REPRESENTATIVE TUCK asked whether the language spoken by the
grandmother in the film was scripted.
MR. MACLEAN said the scenes played by Rosabelle Rexford were
improvised around the theme of language between generations.
10:36:01 AM
REPRESENTATIVE FOSTER moved to adopt Amendment 2, labeled 27-
LS0356\A.2, Bullock, 2/14/11, which read:
Page 2, following line 5:
Insert a new bill section to read:
"* Sec. 4. AS 44.33.235(c) is amended to read:
(c) In determining the amount of the tax credit,
the percentage provided by (b) of this section shall
be increased by the film office based on the following
criteria:
(1) an additional 10 percent of qualified
expenditures that are wages paid to Alaska residents;
(2) an additional four [TWO] percent of
qualified expenditures made in a rural area; and
(3) an additional two percent of qualified
expenditures made in the state between October 1 and
March 30."
Renumber the following bill sections accordingly.
10:36:57 AM
REPRESENTATIVE TUCK objected for discussion purposes.
REPRESENTATIVE FOSTER explained that Amendment 2 increases tax
credits for filming in rural areas from 2 percent to 4 percent
in order to encourage filming in remote and rural Alaska, even
though there are high fuel costs and logistical issues.
10:37:49 AM
REPRESENTATIVE TUCK agreed that filming in rural areas has the
challenge of additional expense, but it is important to share
Alaska's culture with the rest of the world. He expressed his
concern about the public's perception that increasing the total
tax credit from 44 percent to 46 percent "sounds like a big
number." He removed his objection. There being no further
objection, it was so ordered.
10:39:29 AM
REPRESENTATIVE OLSON moved to adopt Amendment 3, labeled 27-
LS0356\A.3, Bullock, 2/14/11, which read:
Page 3, following line 9:
Insert a new bill section to read:
"* Sec. 5. AS 44.33.239(7) is amended to read:
(7) "rural area" means a community with a
population of 1,500 or less or a community with a
population of 6,500 [5,500] or less that is not
connected by road or rail to Anchorage or Fairbanks."
Renumber the following bill sections accordingly.
10:39:43 AM
CHAIR HERRON indicated there being no objection, it was so
ordered.
10:40:19 AM
DEBORAH SCHILDT, Co-Founder and Program Administer, Alaska Crew
Training, Inc. (ACT I), provided a PowerPoint presentation
titled, "Training Alaska's Workforce for Film Production". She
informed the committee that her training program would not exist
except for the success of Alaska's film incentive legislation.
Ms. Schildt gave her background in the film industry and said
she is now based in Alaska, and was one of two casting directors
on the feature film Everybody Loves Whales. A few years ago she
helped form the Alaska Film Group, Alaska's film and video trade
association, which saw a need for training a larger workforce,
and in 2009, co-founded Alaska Crew Training, Inc. (ACT I). She
displayed a slide titled, "The Film & TV Production Dynamic,"
and described Alaska-based reality programming that has been
broadcast since 2005. Film- and TV-induced tourism is a
measurable fact, as noted by the increased visits to sites
sensationalized by movies or TV. In fact, last month
Discovery's latest reality series about Alaska garnered 2.6
million viewers. Ms. Schildt stated that no other state has
more cable TV shows per capita, and said, "We've entered our
next gold rush, and this one isn't taking any resources out of
the ground." However, to support the TV and film industry
Alaska still needs a film office with a website that works for
producers, a sound stage, and a larger, trained workforce. The
workforce needs a basic understanding of how film productions
work and on-the-job training, in order to earn the generous
salaries paid to background extras and others. Alaska Crew
Training has focused its courses on feature films because they
hire the most crew. For example, incomes for those working on
Everybody Loves Whales varied from minimum wage to $2,000 per
day, and most skills needed are not found in a typical
university curriculum. Her company based its program on
successful training programs that could grow with Alaska's
workforce needs, but did not offer classes until there was an
opportunity for placement, thus it launched "Production 101
Bootcamp" in 2010.
10:45:06 AM
MS. SCHILDT indicated that ACT I has offered six courses, and
almost 100 students have completed the program. In 2011, her
company hopes to offer online Level 1 and Level 2 classes to
communities beyond Anchorage. Besides training a successful
workforce, ACT I has trained others such as those working in the
visitor industry and at Native corporations. Several examples
of the successes of some of her students were given, and she
pointed out that ACT I focuses on training markets for both
rural and urban areas; in fact, 2,471 residents from 50 towns
and villages were employed as extras for Everybody Loves Whales.
Another benefit from the tax credit incentive may be to bring
back to Alaska those who have migrated out of the state for jobs
and training in the film industry. Ms. Schildt further
described the courses available from ACT I, from entry level to
above, with the hope to expand a seasoned and experienced
workforce that can support two large feature films
simultaneously. Alaska Crew Training has been recognized by the
AFO as a training resource and she encouraged anyone with an
interest to contact her office.
10:49:04 AM
ROBIN KORNFIELD, Vice-President, Communications & Marketing,
NANA Development Corporation, Northwest Arctic Native
Association (NANA) Regional Corporation, stated that NANA
Development Corporation (NANA Development) is the business arm
of NANA Regional Corporation, which is owned by 12,500 Inupiaq
people originating in Northwest Alaska. She stated NANA
supports HB 67 because this legislation will create a new
renewable resource industry for Alaska. Ms. Kornfield noted
that NANA Development's board of director's extensive study of
the film industry supports its investment in infrastructure for
the industry; therefore, NANA Development supports the expansion
of the tax credit incentive that will lead to private sector
jobs and the expansion of the economy. The investment by NANA
Development in the film industry is compatible with its focus on
Alaska, and the creation of training opportunities and jobs for
its shareholders, and with its expertise in the development of
new industries. In partnership with Evergreen Films
(Evergreen), NANA has formed a new company called Piksik which
will provide one-stop shopping for companies that are making
movies in Alaska by providing catering, security,
transportation, logistics, construction, and lodging; all these
are fields that are necessary to the film industry, and with
which NANA has success. During the making of a three-
dimensional (3-D) movie called Walking With Dinosaurs,
WHPacific, one of NANA Development's engineering companies,
invested in Light Detection And Ranging (LIDAR) technology used
in the film. The system surveys the background for movie
animation, and is now being marketed by WHPacific.
10:54:02 AM
MS. KORNFIELD displayed a slide titled, "Industry Overview" and
relayed that NANA's extensive research has found that the
domestic consumer film expenditures have grown, even during
recession years, and international markets are expected to
outpace domestic growth. For example, in Vancouver, British
Columbia, movie production values have grown from $400 million
to $1.2 billion, and more than 20,000 jobs have been created.
Because of their belief in the future of Alaska's film industry,
NANA, Evergreen, and other private sector partners, are
investigating the possibility of developing a soundstage in
Anchorage, which would include production offices and a "green
screen." She opined the construction of a soundstage, combined
with the extension of the tax credits, will encourage more
producers to film in Alaska, and ensure continued growth in the
industry. She displayed a slide titled, "Film Timeline" which
indicated it took five years to produce Walking With Dinosaurs
from development through release, and pointed out that the
extension of the tax incentive program to 36 months is
warranted. Also, the increase in the dollar limit on tax
credits will allow the industry to grow with the infrastructure
and provide private industry jobs. Ms. Kornfield observed that
NANA's mission is to improve the quality of life for its people
through investment in companies with potential for growth, and
by providing opportunities for training and jobs for its
shareholders. The tax credit program has provided the
foundation for the growth of the film industry, and the future
success of the industry is dependent upon producers choosing
Alaska, over other states and countries, for film production.
She concluded by noting that the contribution to Alaska's
economy from the production of Everybody Loves Whales totaled
over $4 million for wages to residents, and over $7.5 million
for goods and services, and she restated NANA's support for the
legislation.
REPRESENTATIVE GARDNER asked whether the legislature will be
asked for funding for the construction of the soundstage.
10:59:48 AM
MS. KORNFIELD answered that NANA and its partners are planning
on building the soundstage.
10:59:59 AM
JOHN RENSE, Senior Operations Manager, NANA Development
Corporation, Northern Arctic Native Association (NANA) Regional
Corporation, added that certainty about the duration of the
period of time was critical "to start to put some of these
investments in place." In further response to Representative
Gardner, he said the 10-year extension is important,
financially, to investments with a high risk.
11:00:45 AM
BOB CROCKETT, President, Alaska Film Group (AFG), stated that HB
67 is important to the economic future of the film industry and
the state. The Alaska Film Group is a non-profit trade
association, with a diverse statewide membership, that began in
1992. His organization provides a voice for the film and video
industry of Alaska, conducts educational forums, promotes Alaska
as a film and video destination, and creates economic
opportunities for its membership and all Alaskans. Since the
inception of the tax incentive, AFG has increased its membership
by 40 percent. Mr. Crocket observed that the film industry
brings the following to Alaska's economy: employment of the
local workforce; local purchases of materials and supplies; room
rentals; increased business for caterers, restaurants, hotels,
and retail venues; increased transportation services and
shipping; increased tourism; increased local tax revenues. He
opined Alaskans' goals for the state are progress, productivity,
and putting Alaskans to work, along with continued progress in
attracting productions to Alaska, crew training, job growth,
education, and growth of infrastructure for the film industry.
Film and video production is a high-wage industry that employs a
large workforce of skilled and high-paying jobs; in fact,
benefits for skilled workers can include health care and
pensions. He relayed that film industry salaries in 2008
averaged $76,000, which were 72 percent higher than the national
average, and businesses "behind the scenes" include air service,
catering, hotel, retail, transportation and shipping,
maintenance, rental, security, and tourism. Mr. Crockett
provided the financial impact that the filming of a TV series
can have on a community, in addition to the impact of increased
film-induced tourism. Film-induced tourism can be part of a
holiday, a primary travel motivator, or a nostalgic pilgrimage,
and he quoted supporting articles from Alaska publications. He
restated the monetary value to Alaska of Everybody Loves Whales,
and advised that independent films are becoming more popular,
along with digital video disc (DVD) viewing. An increase in the
interest in movies of all types worldwide creates more
opportunities for Alaska to be noticed by the film industry.
11:08:28 AM
MR. CROCKETT listed the gross receipts for recent movies, and
advised the top five were rated Parental Guidance (PG) or
Parental Guidance for Under 13 years of age (PG-13). He noted
that 607 films were released in the U.S. in 2006 at an average
cost of $100.3 million. Implementation of the tax credit
incentive encouraged producers to bring productions to Alaska
beyond its two largest competitors, Vancouver, British Columbia,
and Manitoba. Louisiana and New Mexico have enacted successful
film incentive legislation and both states have experienced an
annual compound employment growth of 23 percent per year; in
fact, film production in Louisiana is third in the U.S. behind
California and New York. In 2009, the average cost of filming a
high-end, union-scale, studio film was $225,000 per day.
Furthermore, addressing the previous trend of shooting films
about Alaska in other states can be changed by making a
favorable business climate here with the extension of the
current tax credit incentive program. Currently, Alaska has
filming locations, midnight sun, year-around access to snow and
ice, good communications and transportation, a well developed
leisure industry, a hospitable business social and environment,
and an economic incentive, but needs skilled professional crew,
filming facilities, soundstages and studios, crew training,
support services, and a long-term assurance of tax credits. Mr.
Crockett cautioned that the future is bright, but will not
continue beyond 2013 without action.
11:13:54 AM
MR. CROCKETT observed that the state has learned how to attract
a multi-million dollar global industry to Alaska and opined
extension of the tax credit incentive for another 10 years will
provide producers with the confidence to plan ahead, allow the
construction of infrastructure, and support the training and
education of crews. The proposed legislation will continue the
successful economic diversification that was begun in 2008, and
he concluded that Alaska is poised to create jobs, stimulate
business, create new businesses, build service infrastructure,
build the economy, increase tourism, and increase its self-
sufficiency.
11:15:50 AM
REPRESENTATIVE THOMPSON recalled a state had to abandon its
program that allowed the sale of tax credits due to a scandal.
He asked how Alaska could avoid this problem.
11:17:48 AM
JOHANNA BALES, Deputy Director, Tax Division, Department of
Revenue (DOR), explained that a scandal in Iowa was a case of
collusion on the part of a producer and the head of the state's
film office to commit tax fraud. In Alaska, there are controls
in place that protect the confidentiality of the corporate
income tax payers that buy the credits, although all of the
information about the production, the amount of the credits, and
the film is available through the film office. She advised that
the amount of the credit does not change when it is transferred,
and the tax division "keep[s] very close track of those."
11:19:10 AM
REPRESENTATIVE THOMPSON appreciated the information.
11:19:20 AM
WANETTA AYERS, Director, Division of Economic Development,
Department of Commerce, Community & Economic Development
(DCCED), regarding Representative Thompson's question, added
that there is a review committee process looking at applications
before they are advanced to DOR. Furthermore, her division will
implement a pre-qualification process to establish an added
level of scrutiny, although there have not been any concerns
about the process to date.
11:19:57 AM
REPRESENTATIVE THOMPSON questioned whether the legislation
allows sufficient time for the production of a film.
MS. AYERS responded that the length of time is regarding the
marketability of the tax certificate once it has been issued,
and broadens the window for the buyer and seller to find each
other and transact their exchange.
11:21:00 AM
MS. BALES clarified that Representative Thompson was referring
to the 24-month period that is being expanded to 36 months by
the proposed legislation. There is no change in the three-year
time period allowed for the sale of tax credit certificates.
MS. AYERS addressed the additional length of time - from 24
months to 36 months - for the pre-qualification period, and said
that this time is needed to keep track of productions that are
not going to utilize the credits for which they have pre-
qualified, so that the credits are available to other
productions.
11:22:03 AM
REPRESENTATIVE TUCK referred to the slide titled, "Film
Timeline," and further explained that the tax credits apply when
production starts. He opined that lengthening the amount of
time to 36 months will provide "adequacy," because productions
that utilize 3-D and graphic technologies take longer than 24
months. As a matter of fact, the production of Ghost Vision was
a seven-year process.
11:23:18 AM
K'DEE MILLER, Owner, Patina Pictures, stated she was a film
producer and owner of a Los Angeles-based film production
company, Patina Pictures. She grew up in Alaska and moved to
New York to pursue a career in film, which has included the
production of films screened at the Sundance Film Festival, the
American Film Institute (AFI), and a current feature project.
Ms. Miller opined the Alaska tax incentive program has created
an opportunity for her to return to Alaska and continue to work
within the film industry. She expressed her support of
extending the tax credits in order to build the infrastructure
necessary to meet the industry's needs. Regarding the workforce
needed, she described her efforts with Alaskan policymakers,
educators, state agencies, unions, and the private sector to
encourage workforce development; in fact, all of the parties
agree that this is the time to ensure that the film industry
puts Alaskans to work. Ms. Miller stated that training programs
available in other states are joint partnerships between
government, industry, and community colleges. She concluded by
restating her support for HB 67 and offered to "help create this
necessary workforce development component so that our state can
more fully realize the benefits of the investments that they've
already made."
11:26:15 AM
CHAIR HERRON closed public testimony.
11:26:29 AM
REPRESENTATIVE TUCK moved to report HB 67, as amended, out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSHB 67(EDT) was
reported from the House Special Committee on Economic
Development, International Trade and Tourism.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 120 - AGC Support LTR.pdf |
HEDT 2/17/2011 10:15:00 AM |
HB 120 |
| HB 67 LTRS of Support 2.16.11.pdf |
HEDT 2/17/2011 10:15:00 AM |
HB 67 |
| HB 67 Amendments a.2 and a.3.pdf |
HEDT 2/17/2011 10:15:00 AM |
HB 67 |
| HB 67 - Nana Slide Show.pdf |
HEDT 2/17/2011 10:15:00 AM |
HB 67 |
| HB 67 - SB 23 Anch. Resolut Sppt.pdf |
HEDT 2/17/2011 10:15:00 AM SFIN 3/21/2011 9:00:00 AM |
|
| HB 120 AIDEA Questions and Responses.docx |
HEDT 2/17/2011 10:15:00 AM |
HB 120 |
| EDT - AK Crew Training Inc. PP.pdf |
HEDT 2/17/2011 10:15:00 AM |
|
| EDT - AK Crew Training Inc. PP.pdf |
HEDT 2/17/2011 10:15:00 AM |
HB 67 |