Cleveland was center stage of the summer movie season, with the release of Superman. Now in its 15th year, the Ohio Motion Picture Tax Credit has incentivized dozens of productions that otherwise would have been shot in Hollywood studios, or in another state such as Georgia, Mississippi or New Mexico that is attempting to build a film-production industry.
Ohio’s tax credit has evolved over the years, and the next evolution is coming this month, when the state will begin reviewing applications on a “rolling” basis, instead of on a biennial basis. This change will help Ohio compete for more projects, because a greenlit project can expect a quicker determination on the Ohio tax credit, instead of waiting for Ohio’s current twice-a-year selection process to play out.
The amended ORC 122.85 also adds a requirement concerning a producer’s application for the tax credit. It now requires an “investment intent letter” to demonstrate that at least 50% of the budget is committed. This letter must indicate the production being financed, the financier/investor name, and the date when funds will be available to the production company.
Fifty million dollars of tax credits will be available on an annual basis, just as before, thanks to a line-item veto by Governor DeWine of a provision that would have ended the funding after 2027. By producing an investment intent letter, a producer is able to demonstrate that the State of Ohio is not wasting the tax credit by awarding it to a producer who isn’t ready to use it. While it’s true that any credit not awarded in one year will be available in the following year, this concept does not account for the credits awarded but not actually used, because a project lacked financing.
Michael R. Rasor is a business and entertainment lawyer. He has been involved with financing several Ohio film productions, including projects starring Sylvester Stallone and John Travolta. Contact him: [email protected]