The Texas Moving Image Industry Incentive Program in 2012
by Shameer A. Soni, Esq.
The Texas Moving Image Industry Incentive Program (the Incentive) was established in 2007 in response to similar incentive programs enticing ‘runaway productions’ from Hollywood to other states and Canada. The Incentive was revised in 2009 when the Texas legislature realized that the 2007 Incentive did not generate the results originally anticipated.
The Incentive is a “grant program for production companies that produce moving image projects in [the] state.” To qualify for the Incentive, a production company must meet the following thresholds: (i) a minimum of $250,000 in in-state spending for a film or television program, or $100,000 in in-state spending for a commercial or series of commercials, education or instructional video or series of education or instructional videos, or a digital interactive media production (Video game); (ii) at least 70 percent of the crew, actors and extras for the project must be Texas residents (unless waived by Music, Film, Television and Multimedia Office [the “Film Commission”]); (iii) at least 60 percent of the project must be filmed in Texas and (iv) the production company must submit an expended budget to the Film Commission evidencing satisfaction of the aforementioned requirements. The measures vary based upon the type of project, but the intent of the aforementioned milestones is common.
An eligible production company shall receive one of the following grants that vary based on total in-state spending: (i) for feature films and television productions, either up to 15 percent of the total eligible in-state spending, or up to 25 percent of the eligible Wages paid to Texas residents; (ii) for Video games, up to 15 percent of eligible in-state spending, and (iii) for commercials, educational or instructional videos, and reality television programs, up to 5 percent of eligible in-state spending. If a production company spends at least 25 percent of a project’s filming days in an underutilized and economically distressed area, the project is eligible for an additional grant in an amount up to 4.25 percent of the total production company’s in-state spending for the project. An underutilized and economically distressed area is one that the Film Commission determines (i) receives less than 15 percent of the total film and television production in this state during a fiscal year, or (ii) has a median household income that does not exceed 75 percent of the median state household income.
For the 2012 fiscal year (which runs September 1st through August 31st) and the 2013 fiscal year the legislature has allocated $15 million per fiscal year for the Incentive. Approximately $10 million in unused incentives from the 2010-2011 biennium carried over to the 2012-2013 biennium, adding to the Incentive pool for 2012-2013. This budget allocation will be shared among each of the Incentive segments; however, the legislature introduced a novel restriction to the allocated funds in the budget rider for the 2012-2013 biennium by stating that no more than 40 percent of the total allocated funds of $40 million shall be expended on one particular segment for the combined fiscal years 2012 and 2013. This language has been interpreted to mean that there is a $16 million cap on each sector over fiscal years 2012 and 2013, when taken together.
Based on the Film Commission’s statistics, the 40 percent cap will have the most substantial impact on television which, for the 2012-2013 biennium, has accumulated a grant amount of $12,138,507 over 13 applications through to October 31, 2012. Feature film is second, over the same time period, with a grant amount of $6,920,725 over 13 applications, and Video games are third with a grant amount of $6,033,072 over 31 applications. From a geographic perspective, Incentive dollars are concentrated in the Dallas and Austin metropolitan areas with Dallas receiving $9,983,383 in Incentive dollars and Austin receiving $14,530,965. A vast majority of the in-state Incentive spend in Dallas is concentrated in feature film ($29,608,671 for 2012-2013 biennium through October 31, 2012) and television ($22,673,359 for 2012-2013 biennium through October 31, 2012), whereas a majority of the in-state Incentive spend in Austin is concentrated on Video games ($42,013,570 for 2012-2013 biennium through October 31, 2012).
The Incentive has been a boost to Texas feature film, television, video game commercial and education video producers. With total grants of over $26 million in the 2012-2013 biennium through October 31, 2012, the Incentive keeps the Texas moving image industry competitive with the nation’s leading incentive programs in Louisiana (up to 30 percent of in-state spend) and in Georgia (up to 30 percent of in-state spend). Those looking to take advantage of the Incentive should contact the Texas Film Commission at (512) 463-9200 or firstname.lastname@example.org.
Shameer A. Soni is a senior associate attorney at The Patel Law Group, PLLC practicing entertainment, technology and business law and can be reached at email@example.com.