Section I-1611 - Additional Program Provisions - Infrastructure (Louisiana Code of Regulations)

§ I-1611. Additional Program Provisions - Infrastructure

A. Tax credits may be granted only for infrastructure projects directly related to the acquisition and construction of a film, video, television, or video production or postproduction facility and shall not apply to any infrastructure project such as a hotel or lodging facility, golf course, or retail shopping facility or other facility which the department and the division deem unrelated to such purposes.

1. If an infrastructure project may be used for other purposes unrelated to the production or postproduction activities, tax credits may be granted for that portion of the project that is deemed by the department and the division to be necessary to support or secure production or postproduction activities.

2. In the case of immovable assets deemed related, an applicant must provide assurances that:

a. such assets will exclusively support the initially certified film infrastructure project; and

b. that the applicant will not divert the use of the assets to purposes that do not promote or provide for the productions within the state of Louisiana.

3. In the case of movable assets deemed related, an applicant must provide assurances that:

a. the moveable assets shall remain in Louisiana, for as long as specified in any agreements pursuant to § 1611. A.4 below;

b. be used in the production of motion pictures or other visual media productions within the state of Louisiana; and

c. used for not less than 80 percent of the asset's useful life.

4. Assurances may be secured by appropriate agreements, including, but not limited to the following terms and conditions:

a. a requirement of approval prior to sale of such assets;

b. a requirement for a minimum number of years before such assets may be transferred to a different owner;

c. limitations on transferability of the tax credits for current or future holders;

d. a reserve fund that may be re-captured by the state; and/or

e. a structured release of tax credits.

5. Any conditions to meet the requirements of this Subsection shall be explicitly stated in the initial certification issued for the project.

a. In the event an applicant fails to meet the conditions, as specified in the certification letter, any such acts, omissions or failures shall constitute a default, and the office shall retain all rights to modify the terms and conditions of the certification, and to reclaim disbursed credits in an amount commensurate with the scope of the unmet performance objectives and the foregone benefits to the state. Reclamation shall not begin unless the office has determined, after an analysis of the benefits of the project to the state and the unmet performance objectives, that the state has not satisfactorily or adequately recouped its costs through the benefits provided by the project.

B. For infrastructure applications received prior to August 1, 2007:

1. the applicant shall have 24 months from the date of approval of the rules or January 1, 2008, whichever is earlier, in which to qualify for the 40 percent tax credits earned on expenditures;

2. a minimum of 20 percent or $10,000,000 of the total base investment (as provided for in the initial certification) that is unique to film production infrastructure shall be expended before any infrastructure tax credits can be earned.

3. payment of tax credits earned may be structured over the course of two or more tax years, and may be made after the year expenditures are made, as provided for in the initial certification.

C. For infrastructure applications received after August 1, 2007 and before January 1, 2009:

1. the tax credit shall be 40 percent of the base investment expended in this state on projects, provided that:

a. the total base investment expended in this state, exceeds $300,000;

b. the total tax credit allowed shall not exceed $25,000,000;

2. if all or a portion of an infrastructure project is a facility which may be used for other purposes unrelated to production or postproduction activities, then no tax credits shall be earned on such multiple-use facilities until the production or postproduction facility is complete;

3. construction of the infrastructure project shall begin within six months of the preliminary certification;

4. credits may not be earned until 25 percent of the total base investment, provided for in the preliminary certification of an infrastructure project, has been certified as expended;

5. no tax credit shall be allowed for expenditures made for any infrastructure project after December 31, 2008, unless 50 percent of the total base investment provided for in the initial certification of the project has been expended prior to that date. The expenditures may be finally certified at a later date;

a. transactions qualifying toward he 50 percent expenditure requirement include, but are not limited to, an arm's length transaction in which the obligation is secured by the subject of the transaction and the maturity date for such obligation occurs after December 31, 2008, if such transaction was executed on or before December 31, 2008. However, such transactions shall not qualify to earn tax credits, or otherwise be deemed to be expenditures, until actual payments are made and the transaction meets the definition of expenditure provided in § 1605. B above;

6. expenditures shall be certified by the department, office and division and credits are not transferable until such certification;

7. for purposes of allowing tax credits against state income tax liability and transferability of the tax credits, the tax credits shall be deemed earned at the time expenditures are made, provided that all requirements of this Subsection have been met and after the tax credits have been certified;

8. the department, office and division may require the tax credits to be taken and/or transferred in the period in which the credit is earned or may structure the tax credit in the initial certification of the project to provide that only a portion of the tax credit be taken over the course of two or more tax years;

9. the credit shall be allowed against the income tax for the taxable period in which the credit is earned or for the taxable period in which initial certification authorizes the credit to be taken.

(Promulgated by the Department of Economic Development, Office of Business Development, Office of Entertainment Industry Development and the Office of the Governor, Division of Administration, LR 36:56 (January 2010).)

AUTHORITY NOTE: Promulgated in accordance with R.S. 47:1125.1.

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