Chapter 122:21-2 | Ohio Film and Theater Capital Improvement Tax Credit

Rule 122:21-2-01 | Ohio Film and Theater Captial Improvement Tax Credit - Definitions.

• Effective: December 20, 2024
• Promulgated Under: 119.03

(A) "Applicant" means a production company, as defined in section 122.85 of the Revised Code, that has or will complete a project.

(B) "Application period" is the period beginning October fifteenth and ending December first of each state fiscal year in which tax credit may be allocated under section 122.852 of the Revised Code.

(C) "Baseline year taxes" means the amount of sales tax, state income tax, and property taxes generated at the project site in the twelve months immediately preceding the commencement of the construction period.

(D) "Broadway theatrical production" has the same meaning as the term is defined in section 122.85 of the Revised Code.

(E) "Completion period" is the period beginning on the date immediately following the last day of the construction period and ending on the date that is one year from that date.

(F) "Completion report" is a report containing documentation sufficient to determine a project is substantially complete, including, but not limited to, certificates of occupancy, certificates of completion, or other documentation sufficient to demonstrate the project has been performed.

(G) "Construction period" is the commencement date of any construction or installation and fabrication of equipment activities needed to complete the project through the last date of all construction or installation and fabrication activities needed to complete the project.

(H) "Director" means the director of the Ohio department of development.

(I) "Direct economic impacts" means those impacts caused as a direct result of the project from the total estimated amount of qualified expenditures for the project; the estimated number of permanent, full-time equivalent jobs created at the project location in the motion picture and broadway theatrical industries; the total estimated amount of new eligible payroll generated at the project location in the motion picture and broadway theatrical industries; and, the estimated amount of new sales tax, state income tax, and property tax generated by the project at the project location during the completion period.

(J) "Equipment" means equipment purchased in this state with a minimum depreciable useful life of five years for the primary use in the production and postproduction of motion picture or broadway theatrical production industries at a location in this state.

(K) "Increase in tax collections" means the difference in the amount of sales tax, state income tax, and property taxes derived from direct economic impacts in the completion period minus the amount of baseline year taxes.

(L) "Motion picture" has the same meaning as defined in section 122.85 of the Revised Code.

(M) "New, permanent jobs" means the number of full-time equivalent jobs created directly by the project at the project site in the motion picture and broadway theatrical production industries. Full-time equivalent jobs are the estimated number of hours for which wages will be paid to Ohio residents employed at the project location divided by two-thousand eighty.

(N) "New eligible payroll" means the estimated amount of compensation used to determine the withholding obligations in division (A) of section 5747.06 of the Revised Code and estimated to be paid by the applicant to a new employee of the applicant who is a resident of Ohio or an employee who is not a resident of Ohio and whose compensation is not exempt from the tax imposed under section 5747.02 of the Revised Code pursuant to a reciprocity agreement with another state under division (A)(3) of section 5747.05 of the Revised Code as a result of the project.

(O) "Project" means a capital improvement project, as defined in section 122.852 of the Revised Code, that consists of qualified expenditures.

(P) "Qualified expenditures" has the same meaning as that term is defined in section 122.852 of the Revised Code and further described in the application materials. Qualified expenditures include land acquisition, building acquisition, site improvements, demolition of building or structures, earth work, site utilities, new construction of buildings or structures, renovation of buildings or structures, leasehold improvements, architectural and engineering fees, certified public accountant reporting fees, equipment, fabrication and installation of equipment, and other costs directly related to the project.

Qualified expenditures do not include exligible expenditures for which a production company received a tax credit under section 122.85 of the Revised Code.

(Q) "Sufficient evidence of reviewable progress" means the affirmatively begun or accomplished steps or tasks leading to completion of a project demonstrated by objective evidence requested by the director. For example, the applicant can evidence progression, completion, and, if applicable, commencement of particular steps listed in the application project schedule or evidence of expenditures paid or incurred for qualified expenditures listed in the application qualified expenditures budget.

Sufficient evidence of reviewable progress includes, but is not limited to, an updated project schedule and documentation to evidence secured financing, site plan approval, local permits obtained, purchases made for qualified expenditures, construction commencement, temporary certificates of occupancy, certificates of occupancy, certificates of completion, and other documentation sufficient to suupport reviewable progress.

Last updated December 20, 2024 at 7:48 AM

Supplemental Information

Authorized By: 122.852
Amplifies: 122.852
Five Year Review Date: 12/20/2029

Rule 122:21-2-02 | Ohio Film and Theater Capital Improvement Tax Credit - Application Eligibility.

• Effective: December 20, 2024
• Promulgated Under: 119.03

(A) Application submission. An eligible applicant may submit an application to the director during an application period on a form to be published by the director on its website prior to each application period. The director will include on the application form, at minimum, the information set forth for applications by section 122.852 of the Revised Code.

(B) Application completeness. An application is complete and eligible for scoring and ranking pursuant to section 122.852 of the Revised Code if it meets the following requirements:

(1) The application is submitted in the manner directed by or before the end of the application period. No late applications will be accepted by the director for any reason other than impossibility due to state network error.

(2) The application fee set forth in section 122.852 of the Revised Code is paid in full prior to the end of the application period.

(3) The application includes the name, address, telephone number, and taxpayer identification number of the applicant.

(4) A detailed description of the project is provided that includes the location of the facilities or equipment involved in the project and an explanation of how those facilities or equipment are intended to be used in the production or postproduction of motion pictures or broadway theatrical productions in Ohio.

(5) A schedule of expected or actual commencement, progression, and completion of the project. The schedule will be used to help assess sufficient evidence of reviewable progress within ninety days after January thirty-first of each state fiscal year, as applicable. The applicant is to include the following in the schedule:

(a) Identification and description of dates for project milestones, metrics, or particular steps to accomplish or to be completed within ninety days after January thirty-first of each state fiscal year.

(b) The anticipated date an independent certified public accountant, or an accounting firm registered under Chapter 4701. of the Revised Code, will issue a report to the director meeting the requirements set forth in division (F) of section 122.852 of the Revised Code.

(c) The date the applicant anticipates submitting a completion report and tax certificate request in accordance with paragraph (B) of rule 122:21-2-04 of the Administrative Code.

(6) The amount of qualified expenditures that have been incurred or the estimated amount of qualified expenditures that will be incurred by the applicant in completing the project, including identification of all funding sources and uses along with an itemization of the actual or estimated qualified expenditures.

(a) If the project is not complete at the time of application, the application is to include documentation of secured financing equal to at least fifty per cent of the total estimated qualified expenditures.

(b) If the project is complete at the time of application, the application is to include sufficient documentation of secured and closed financing equal to or greater than the total amount of qualified expenditures or a report certified by an independent certified public accountant, or an accounting firm registered under Chapter 4701. of the Revised Code.

(7) The estimated tax credit amount.

(8) The estimated economic impact of the project in Ohio as a whole, and in any community in Ohio in which the facilities or equipment involved in the project are or will be located.

Last updated December 20, 2024 at 7:48 AM

Supplemental Information

Authorized By: 122.852
Amplifies: 122.852
Five Year Review Date: 12/20/2029

Rule 122:21-2-03 | Ohio Film and Theater Capital Improvement Tax Credit - Application Process.

• Effective: December 20, 2024
• Promulgated Under: 119.03

(A) Application round. There is one application round in each state fiscal year. An eligible applicant may submit an application to the director at any time during the application period. Applicants are to submit applications to the director electronically in the manner directed in the application materials. The director will publish the application materials on the program website for each application period prior to the opening date of each application period.

(B) Application fee. An applicant will pay the application fee in the amount set forth in section 122.852 of the Revised Code to the director prior to the end of the application period.

(C) Application eligibilty review. Following the close of an application period, the director will review applications for completeness and eligibility for scoring and ranking.

(1) If the information submitted in an application is complete, the applicant will be notified by electronic mail that the application is eligible to be scored and ranked in acccordance with paragraph (D) and paragraph (E) of this rule.

(2) If the application on review requires additional information for the director to be able to determine it complete and eligible for scoring and ranking, the director may request clarification or supplemental information about the project. The director will provide the applicant with an established deadline to respond with clarifying or supplemental information.

(a) If the applicant provides the requested information within the deadline and the information provided by the applicant results in an application being complete, the applicant will be notified by electronic mail that the application is eligible to be scored and ranked in accordance with paragraph (D) and paragraph (E) of this rule.

(b) If an applicant does not provide the requested information by the established deadline, the director may determine the applicant's application incomplete and not sufficient for evaluation for tax credits in that round. If the director determines an applicant's application is insufficient for evaluation of tax credit eligibility, the applicant is not restricted from reapplying for in subsequent rounds.

(3) If the information submitted in an application is insufficient, meaining it requires more than basic clarifications or supplemental information to be able to be evaluated, the director will notify the applicant by electronic mail that its application is incomplete and will not be evaluated for scoring and ranking. An applicant who has submitted an incomplete application is not restricted from reapplying in subsequent rounds.

(D) Scoring applications. For each application round the director will score and rank all complete applications based on the project's likely positive economic impact and effect on developing a permanent workforce in motion picture or theatrical production industries in the state as a whole, and in any community in the state in which the facilities or equipment involved in the project are or will be located in accordance with section 122.852 of the Revised Code.

(1) Qualified expenditures (ten points possible). The direct economic impacts of total estimated qualified expenditures is scored and ranked as follows:

(a) The application in each round with the highest amount of total estimated qualified expenditures is assigned a score of ten.

(b) All other applications are given a score determined by calculating the total estimated qualified expenditures in Ohio directly associated with the applicant's project divided by the highest estimated qualified expenditures for an applicant project in that application round and multiplying the resulting quotient by ten. For example, in an application round where the highest amount of estimated qualified expenditures of all applicants is one million dollars and an applicants estimated qualified expenditures is eight hundred fifty thousand dollars, the applicant would receive a score of eight and one half for qualified expenditures.

(2) Workforce development (ten points possible). The direct economic impacts on developing a permanent workforce in the motion picture or broadway theatrical industries is scored and ranked as follows:

(a) First, by the number of new, permanent jobs created in the motion picture and broadway theatrical production industries.

(i) The number of new, permanent jobs created by the project at the project site is derived by calculating the quotient resulting from the total estimated hours for which wages will be paid to Ohio residents at the project site as a result of the project divided by two-thousand eighty.

(ii) The application with the highest number of new, permanent jobs created in a round is given a score of five. All other applications are given the score calculated by dividing the number of new, permanent jobs created by the project by the highest number of new, permanent jobs created for applications in the round and multiplying the resulting quotient by five. For example, if an applicant project has twenty-five new, permanent jobs created and the project with highest number of new, permanent jobs created in that round is one hundred, the applicant project receives a score of one and one quarter for new, permanent jobs created.

(b) Second, by the amount of new eligible payroll added by a new, permanent workforce created by the project at the project site in the motion picture and broadway theatrical production industries.

(i) For purposes of this section, new eligible payroll means the estimated amount of compensation used to determine the withholding obligations in division (A) of section 5747.06 of the Revised Code and estimated to be paid by the applicant to a new employee of the applicant who is a resident of Ohio or an employee who is not a resident of Ohio and whose compensation is not exempt from the tax imposed under section 5747.02 of the Revised Code pursuant to a reciprocity agreement with another state under division (A)(3) of section 5747.05 of the Revised Code as a direct result of the project.

(ii) The application with the highest amount of estimated new eligible payroll is given a score of five. All other applicants are given the score calculated by dividing the applicant project's total new eligible payroll by the highest amount of total new eligible payroll for a project for the round and multiplying the resulting quotient by five. For example, if an applicant project has three hundred thousand dollars of total new eligible payroll and the highest amount of total new eligible payroll for a project in that round is one million dollars the applicant project is given a score of one and one half for new eligible payroll.

(3) Increase in tax collections (five points possible). The direct economic impacts on sales tax, state income tax, and property taxes.

(a) The increase in tax collections is derived by subtracting the amount of baseline year taxes from the amount of estimated direct economic impacts to annual sales tax, state income tax, and property taxes.

For purposes of this section, the direct economic impacts to annual amount of sales tax, income tax, and property taxes are derived from analysis and projections provided in the application by the applicant.

(i) The application in the funding round with the highest estimated increase in annual sales tax, state income tax, and property tax is given a score of five.

(ii) All other applications are given a score determined by calculating the total estimated increase in tax collections in Ohio directly associated with the applicant's project divided by the highest estimated increase in tax collections by an applicant's project in that application round and multiplying the resulting quotient by five. For example, in an application round where the highest amount of increase in tax collections of all applicants is five hundred thousand dollars and an applicant's estimated increase in tax collections is two hundred fifty thousand dollars, the applicant would receive a score of two and one half for economic impact.

(4) Geographic distribution of credits (one point possible). Each application will be scored based on the sum of the scores derived in paragraph (D)(1), paragraph (D)(2), and paragraph (D)(3) of this rule. The application with the highest score from each county in an application round will be given one point. The remaining applications from the same county will receive a score of zero for geographic distribution of credits.

(E) Ranking of applications. Applications will be ranked in descending order based on total score calculated under paragraph (D) of this rule with the application receiving the highest total score ranked first.

(F) Funding applications. Applications will be funded in descending order starting with the first ranked down until the amount of funds available for allocation in that funding round have either been exhausted or are insufficient to allocate tax credits for the total estimated tax credit amount for the next highest ranked project in that round, as determined by the director.

County allocation limits. If the amount of tax credits requested for any county exceeds five million dollars, then applications in that county will be funded in descending order against all other applications in the funding round until the sooner of the amount of funds available for allocation in that round have either been exhausted or are insufficient to allocate tax credits for the total estimated tax credit amount for the next highest ranked project in the round or funds up to but in no event in excess of five million dollars have been awarded to projects in that county, as determined by the director. Remaining applications in that county will not be considered for tax credits in the funding round but may reapply in subsequent rounds.

(G) Award notification. The director will send notice of eligibility for tax credit awards to awarded projects by electronic mail by January thirty-first of each fiscal year.

Last updated December 20, 2024 at 7:48 AM

Supplemental Information

Authorized By: 122.852
Amplifies: 122.852
Five Year Review Date: 12/20/2029