Governor Murphy today signed into law amendments to the Garden State Film and Digital Media Jobs Act, P.L. 2018, c. 56 (the “Program”). Below is a summary of the key changes to the Program:
- Term: Extends the Program to the year 2039; currently the Program expires in 2034.
- New Jersey Film-Lease Partner Facility: Adds a new definition “New Jersey film-lease partner facility” for developers constructing a film production studio of 250,000 sf or more, whose tenants can then take advantage of the New Jersey film-lease production company designation.
- No more than 3 New Jersey film-lease partner facilities are allowed in the State.
- Tenants of a New Jersey film-lease partner facility could be designated either: (i) a New Jersey film-lease production company; or (ii) a New Jersey studio partner, if the film production company executes at least a 10-year lease for 250,000 sf or more from a New Jersey film-lease partner facility, provided the film production company otherwise complies with the eligibly requirements of the Program.
- Above The Line: Allows both New Jersey film-lease production companies and New Jersey studio partners to include “highly compensated individuals” (k.a. above the line) in its qualified film production expenses in capped tiers not to exceed $60M-72M respectively.
- Tax Credit Percentage for Labor: Adds that a taxpayer designated as a New Jersey studio partner or New Jersey film-lease production company shall be eligible for 40% of qualified film production expenses on labor, including highly compensated individuals, of the taxpayer during a privilege period; currently it is 35% as a rule of general applicability.
- Tax Credit Percentage for Services Performed and Tangible Personal Property Purchased for Use Within 30 Miles of SAG: Adds that a taxpayer designated as a New Jersey studio partner or New Jersey film-lease production company shall be eligible for 35% of qualified film production expenses of the taxpayer during a privilege period that are incurred for services performed and tangible personal property purchased for use at a sound stage or other location that is located in the State within a 30-mile radius of the intersection of Eighth Avenue/Central Park West, Broadway, and West 59th Street/Central Park South, New York, New York; currently it is 30%.
- New Jersey Studio Partners Allocation Bucket:
- Increases the New Jersey studio partner bucket to $150M as of right starting in 2024 and adds $400M in discretionary money at the discretion of the EDA starting in 2023 and all subsequent years of the Program;
- Adds a mandatory sweep of the discretionary money in the amount of $250M in each years 2023, 2024, and 2025 into the New Jersey studio partner bucket so there will be $750M in discretionary money in that bucket on top of the as of right allocation, which equals a total of $1.15B as of the end of fiscal year 2025;
- New Jersey Film-lease production companies Allocation Bucket:
- Increases the New Jersey film-lease production company bucket to $150M as of right starting in 2024 and adds $250M in discretionary money at the discretion of the EDA starting in 2023 and all subsequent years of the Program;
- Adds a mandatory sweep of the discretionary money in the amount of $250M in each years 2023, 2024, and 2025 into the New Jersey film-lease production company bucket so there will be $750M in discretionary money in that bucket on top of the as of right allocation, which equals a total of $1.15B as of the end of fiscal year 2025;
- Roll Forward Provision: Allows the EDA to approve a project in the year it applies even if the allocation for that year has run out, but not issue the tax credit certificate until the subsequent year the credits are authorized from. The roll forward language is a safe harbor to assure production companies can plan to produce in New Jersey - even if they have to wait to receive their credits until a subsequent year.
- $10M EDA Equity: Allows EDA to contribute $10M in equity to New Jersey film-lease production company projects on commercially reasonable and customary terms and conditions as agreed to by both parties.
For illustrative and summary purposes only; not intended as legal advice.