On September 1, 1995, the management of the Alabama Film Office shall be vested in a director who shall be appointed by the Governor and shall serve at his or her pleasure. The salary shall be established by the Governor at an amount not to exceed forty-eight thousand dollars ($48,000) annually and adjusted thereafter consistent with general cost-of-living adjustments approved for state employees. In fixing the salary, the Governor shall give due consideration to the salaries of comparable positions in other states in the southeast. The director shall have the same rights, privileges, benefits, and membership status in the Employees' Retirement System as other unclassified employees in the state service.

All other employees necessary to carry out the duties and functions of the Alabama Film Office shall be employed subject to the provisions of the Merit System law. The State Personnel Board, with the assistance of the Director of the Alabama Development Office, shall establish positions as needed in the classified service for the employees of the Alabama Film Office.

If the director or a classified employee of the Alabama Film Office has previously served as an independent contractor of the Alabama Film Office, and desires to purchase prior service credit for time in the Employees' Retirement System after becoming an active and contributing member of the retirement system under this chapter, he or she shall pay to the Secretary-Treasurer of the Retirement System in a lump sum within five years from August 9, 1995, the full cost of the employer and employee contributions necessary to purchase the prior service credit as determined by the actuary for the retirement system based on the current compensation or final average compensation of the employee, whichever is greater.

The following is hereby found and declared by the Legislature of Alabama:

(1) Although Alabama is filled with attractive natural resources, a viable workforce, and other resources attractive to the film making industry, Alabama has not developed its potential in terms of attracting the production of motion pictures to the state by offering production incentives.

(2) Film production incentives offered by other states attract large film making projects which stimulate the local economy, use local manpower thus offering employment opportunities for state residents, and provide public awareness of the natural resources available in the state.

(3) Because Alabama does not offer viable incentive packages to motion picture production companies, it does not actively compete with other states for motion picture projects and those projects locate elsewhere.

(4) The Alabama Film Office and Alabama Film Task Force have studied and recommended to the Governor and the citizens of this state that industry specific production incentives are immediately necessary for Alabama to compete nationally for the location and production of large film projects and to build a growing film industry in Alabama.

(5) The Alabama Film Office is uniquely qualified to establish a procedure for a production company to apply for approval for a film project in Alabama wherein the office would receive, process, and approve the application as a qualified project to apply to the Department of Revenue for certain industry specific tax incentives related to standard approved costs of the project.

(6) The Legislature recognizes and confirms the planning and promotion of the film industry is of viable importance to the economic development of the state just as the recruitment, expansion, and retention of industrial development within the state and the promotion of the film industry shall be included as a part of any comprehensive economic development strategy plan promoted by the state and state agencies.

For purposes of this article, subdivision (46) of subsection (a) of Section 40-23-4, subdivision (35) of Section 40-23-62, and item (iii) of subsection (b) of Section 40-26-1, the following terms shall have the following meanings:

(1) AGREEMENT. A written agreement entered into between the Alabama Film Office, or its agent, and an approved production company with respect to a film project.

(2) APPROVED COMPANY. A company or those directly involved in production decisions for an organization certified by the Alabama Film Office as approved to produce a film project in Alabama primarily using available state resources.

(3) APPROVED COSTS. Expenses of an approved company that are precleared by the Alabama Film Office as those costs directly related to and essential to the production of an approved film project, which may include any or all of the following:

a. The cost of acquiring real property or rights in real property in connection with an approved film project and any costs incidental thereto, including the materials for construction, equipping, and installation of necessities for the location of a film project.

b. The cost of acquiring vehicles, equipment, supplies, props, and other necessities for the film project.

c. The costs required to replace, restore, recycle, or return to the owner equipment, props, and other property, including real property, that was used or altered in the process of the film project.

d. The costs required for the installation of utilities in connection with a film project, including, but not limited to, water, sewer, sewage treatment, gas, electricity, and communications, and including off-site construction of utility extensions paid for by the approved company.

e. Any other costs deemed unique and essential by the Alabama Film Office for the approved film project.

(4) APPROVED PROJECT. An Alabama film production to be undertaken by an approved company using Alabama resources to the extent possible.

(5) DEPARTMENT. The Alabama Department of Revenue.

(6) FILM. Includes, but is not limited to, in film or digital form, the following types of production: Motion picture, videography, music video, and televisions (all of which may be for commercial or non-commercial exploitation and distribution), and commercial advertising for television that is intended to promote specific products, brands, ideas, or positions, as well as ancillary services to the above named productions such as music for the production and animation added to the production are included. Film does not include productions not intended for public distribution or viewing, such as family or personal productions, recurring news, or current events shows, nor does it include the staging of music concerts to which tickets are sold and where a music video may be filmed as an ancillary activity to the staging of the concert.

(7) FINAL APPROVAL. The action taken by the Department of Revenue authorizing an approved company to have the tax incentives provided in this article and Sections 40-23-4, 40-23-62, and 40-26-1.

(8) INCENTIVES. Tax exemptions and inducements provided in this article and Sections 40-23-4, 40-23-62, and 40-26-1 to an approved company in the film industry.

(9) OFFICE. The Alabama Film Office.

(a) The Alabama Film Office shall establish a procedure and qualification standards, based upon industry standards and competition with other states and locations, for a company to apply for approval for each film project to qualify for any of the incentives provided by this article. The office may certify a company as an approved company and authorize the undertaking of a project by entering a written agreement with the company regarding the project. The agreement with the office and an approved company for a project and the approval of certain costs by the office shall be required for the Department of Revenue to consider it for the incentives offered by this article.

(b) With respect to each company applying and each project described in the application, the office shall make inquiries and request materials of the applicant that shall include, but shall not be limited to, marketing plans for the project; a description and desired location of the project; capital and other anticipated expenditures for the project that indicate the total cost of the project and the sources of funding therefor; the anticipated employment and wages to be paid to employees and contractors for the project; plans which indicate the approximate number of days in a year in which the project will be in operation; and the anticipated revenues and expenses generated by the project.

(c) The office shall analyze the application data supplied and collect and analyze additional information as necessary to determine that the project complies with all of the following:

(1) It shall have a significant and positive economic impact on the state.

(2) It shall produce sufficient revenues and public demand to cover the costs of production in Alabama.

(3) It shall utilize to the extent reasonable under the circumstances, Alabama resources, including, but not limited to, employees, contractors, equipment, materials, and supplies.

(4) The film project will further the purposes of this article.

(d) The agreement between the office and the company shall not be a binding contract of the State of Alabama agreeing to make provisions for the company, including incentives. The agreement may contain language regarding the expectation of the parties in regard to a specifically identified project.

The department shall establish standards for final approval of the tax incentives provided by this article by the promulgation of administrative regulations in accordance with the Alabama Administrative Procedure Act. Included in the regulations shall be a method for the office, on behalf of the approved company or project, to appeal the department's denial of the incentives.

(a) Upon granting an approved company final approval for the tax incentives provided by this article, the Department of Revenue shall provide the approved company with forms and instructions necessary to claim those incentives.

(b) The department may require proof of qualified expenditures if the approved company claims a refund on expenditures of approved costs.

(c) No tax refund shall be issued for any approved costs claimed after the expiration of two years from the date the project is completed.

(d) The department may obtain any information necessary from the approved company and the office to verify that the approved company has received the proper amounts of incentives authorized by this article.

(e) The department shall demand the repayment of any incentives in excess of that allowed by this article.

(f) Any approved company receiving the benefits contained in this article that has failed to comply with the conditions for the incentives, shall be disqualified from receiving future benefits and upon audit shall be liable for payment of additional tax liability as may be due, plus interest.

(g) If the department or office determines that an approved company no longer qualifies to receive the benefits of this article, it shall notify the company immediately and the company shall not receive further benefits under this article.

(h) By April 1 of each year, the department shall certify to the Governor the total amount of the tax incentives issued pursuant to this article during the preceding calendar year.