Most California Tax Credit Program Projects Seek “Force Majeure” Extensions – Deadline

EXCLUSIVE: Half of the 46 projects currently in California’s film incentive program have filed “force majeure” applications seeking waivers to extend their mandated start date requirements due to the ongoing Writers Guild strike, according to the Commission California Film Company, which administers the tax credit program. . The number of approved film and television projects seeking force majeure delays is expected to rise as the strike, now in its 25th day, progresses.

“Due to the WGA strike, this allocation period may be delayed until the strike is resolved,” the film commission notes on its website. For recurring and relocated TV series, that allocation period begins next month.

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The state statute that authorized the tax credit program defines force majeure as “an event or series of events not within the control of the qualified taxpayer, including death, disability, disfigurement, or default on the part of the motion picture director or the main cast. member, an act of God, including, but not limited to, fire, flood, earthquake, storm, hurricane, or other natural disaster, work interruption, terrorist activity, or government sanction.”

The 23 projects that have requested extensions due to force majeure include ongoing television series in various stages of production and pre-production. The primary term they are seeking to extend is the 180-day start date requirement, which begins on the date of issuance of a Letter of Credit Assignment. The mandates require that productions must begin principal photography within 180 days of receipt of the Letter of Credit Assignment. Approved projects with a qualifying spending budget of $100 million or more have 240 days to start filming. Projects must also complete production within 30 months.

Once a force majeure submission is deemed valid, the California Film Commission will effectively stop the clock on timeline requirements and resume them when productions are able to resume filming operations.

The movement of production companies seeking force majeure protections during the WGA strike is similar to that in the early days of the Covid pandemic, when the vast majority of projects that were eligible for state tax credits requested extensions of Force Majeure. The film commission noted that on March 27, 2020, it published a production alert that “established the impact of Covid-19 on film production as a force majeure event. This allowed productions to apply for and receive exemptions for all time-sensitive parameters in the tax credit program, thus alleviating fears that projects would lose their tax credit pool if they were unable to start or complete their projects to program requirements. ”.

RELATED: Comprehensive coverage of the Deadline strike

According to the film commission, film and television production supports more than 700,000 jobs and nearly $70 billion in wages for California workers. California offers $420 million a year in movie incentives, but that’s not enough to support all the movies and TV shows that want to shoot here.

The WGA strike began on May 2 after negotiations with the Alliance of Motion Picture and Television Producers failed to reach an acceptable agreement. The guild’s core issues include significant increases in compensation, minimum staffing, length of employment, establishing viewer-based broadcast residuals, and restrictions on the use of artificial intelligence to create scripts.