Form revised August 4, 2003

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Ted Inkley’s attorney-client comments 9-04-03

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Office of Economic Development	Ben Wolters/4-8591	Janet Credo/4-8687

Legislation Title:

AN ORDINANCE related to film permits; adopting a schedule of fees for film permits; amending Ordinance 118238 and Seattle Municipal Code Sections 3.26.040, 11.23.120, 15.04.074, and 15.35.010, and making certain legislative findings, all in connection therewith.

AN ORDINANCE related to film permits; adopting a schedule of fees for film permits; amending Ordinance 118238 and Seattle Municipal Code Sections 3.26.040, 11.23.120, 15.04.074, 15.35.010, and 22.900F.020; and making certain legislative findings, all in connection therewith. [Change to match the ordinance title]

· Summary of the Legislation:

This legislation establishes a new standard fee of $25 per day for master film permits issued by the City for film and video productions occurring in the City of Seattle. The ordinance will also add the use of City properties, facilities and parks as covered expenses of the master film permit. (Please see attachment 1 to this fiscal note, which reflects the proposed changes from the current fee schedule.)

· Background:

At the Mayor’s request, the Office of Economic Development’s (OED’s) and the Film Office, in consultation with the film community, identified a number of ways the City could better supportencourage [note: I would eliminate all references to “support,” which could be seen as indicating donative intent]. the film industry. The Mayor and Council wish , in an effort to retain and expand indigenous film production, as well as, attract national major motion films to the Seattle area. With this in mind, OEDWe worked with City proceeded in exploring several options with a number of City departments to discuss the issue and develop several recommendations, which are noted later in this fiscal note.. The results of these discussions and our recommendations are outlined below.

Although film production in Seattlethe City has slowed in the last couple of years, the film industry continues to be an important source of economic activity fo herer the City. OED recently completed an economic impact analysis of the film industry for 2001, in conjunction with the State Film Office. Key findings of this study include:

· Film and video production produced 2,266 direct jobs in the City of Seattle; and supported a total of 4,991 jobs as a whole;

· The film industry contributed $207 million in direct economic contribution to the City;

· Out –oof- state film production companies spent $21.3 million in the City; and,

· The average annual salary in the film industry is $41,620.

Competitive Environment

The environment for attracting major film productions has become increasingly competitive. Given the current economic environment and slowdown in the film industry, producers are particularly sensitive to cost. The cost of production and, ultimately, the “bottom line,” are driving production decisions. Canada’s film incentives, in particular, have impacted the City more than some other regions, because of our proximity to Vancouver. British Columbia has strategically identified filming as a valuable economic sector. This spring, the Canadian dollar gained strength against the US dollar and the Province of British Columbia subsequently increased the rebates (cash) they return to studios and production companies by an equivalent percentage.

During a recent promotional trip to Los Angeles in March, we learned that all the major studios and even the smaller independents are seeking ways to reduce their production costs. Studio space, free permits, and free security were common requests. As an example, the City of Philadelphia currently offers free filming on CCity-owned property, and two free police officers for traffic control during filming activity. Similarly, the City of New York provides no-cost film permits for filmmakers.

Past Success in Attracting Major Film Productions

In the past, the OED’s Film Office has successfully attracted major productions by offering City supportincentives. When “Rose Red” (the 2000 Stephen King mini-series) approached the State about filming a mansion in Tacoma, they originally planned to build the film’s sets and stage work in Vancouver. The Film Office negotiated an attractive deal to use the buildings at Sand Point as temporary studios. As a result, the entire production was filmed in Washington, a majority of which occurred in Seattle. At the conclusion of filming, “Rose Red” spent $18 million in the area.

Proposed Package

OED’s and the Film Office areis proposing the following package to support encourage the retention and expansion of the film industry in the City of Seattle in response to the competitive economic environment for film and video production. The proposed legislation would implement the first two proposals of the package, which are listed below:

Offer a standard fee of $25 per day for City film permits. In 1996, Council authorized OEDthe Film Office to issue a master film permit to consolidate fees collected by several City departments for various permits and services, including street use and truck parking permits, parking meter hooding, water hydrant permits, and noise variances. At present, the Film Office charges between $50 and $300 per day for a master film permit, based on the size of the production. The proposed changes to the master film permit fee schedule would reduce the cost of a City film permit to a standard $25 per day. (See Table 1 below for historical revenues collected under the Master Film Permit).

Reducing the master permit fee from a variable $50 to $300 per day to a standard permit fee of $25 per day would result in an annual loss of $9K - $21K in permit fee revenue. As a result, SDOT would forgo approximately $14K in annual reimbursements for staff time. [Can you credibly make a statement here that additional filming would produce revenue or economic benefits to the City? Would help on gifts issue.] OED has determined that it is in the City’s best interest to encourage filmmaking in our area due to the increased revenues and other benefits it provides to Seattle’s government and citizens, alike.

§

§ Provide filmmakers with the use of City property at no chargefor the standard $25 film-permit fee. In the past filmmakers have used Parks, City Light, Fleets & Facilities, and Seattle Center property as filming locations. A great deal of filming occurs on Parks property. The use of City buildings, facilities and parks facilities are being proposed as covered expenses of the master film permit fee, costs not previously covered under the 1996 ordinance. Under this fee structure Parks will forgo between $12K to $33K in annual revenue. Seattle Center will continue to charge separate fees for the use of its properties. (See Table 1 below for historical revenues collected by Parks and Seattle Center).

[Note: the next two items aren’t in the ordinance. But both raise gift issues, especially free use of on-duty officers. We should talk about this tomorrow morning.]Provide location scouts with parking permits. SPD has agreed to allow the Film Office to issue these passes to location scouts. We anticipate issuing approximately 40 daily free permits on an annual basis. This action will help to facilitate scouts’ identifying locations and, in turn, bring additional filming revenue to the City.

§ Offer Seattle Police Department (SPD) assistance to low-budget independent filmmakers at no charge. SPD dedicates a Police Officer to assist OED on an as-needed basis when certain filming occurs within the City limit. OED has agreed to assign its dedicated officer to provide security (not including traffic control) and assistance toSPD has agreed to provide its designated lead officer to independent filmmakers at no-charge for up to 4 hours during the officer’s regular shift. The assistance by the officer will be limited to security (and will not include traffic control). Such assignmentsThis assistance will be limited to 12 times a year.

[Substantial gift issue.]

OED and departments also discussed ways that We consulted the Law Department on the legality and constitutionality of offering City support to the film industry as described above. The Law Department has advised us to identify ways the industry can provide additional public benefits (in addition to its economic contributions) in exchange for the above incentives. Ideas generated include educational opportunities for school-aged children to expose them to job opportunities in the film industry, and the development of pro-bono promotional and marketing materials for the Parks Department. As an example, a national car commercial, filming on Park property, recently agreed to pave the parking area they are utilizing, at a cost of $9,000.

Table 1: Filming Revenue Collected by City of Seattle

1999 2000 2001 2002

Film Office (Permit Fees) 25,264 33,412 35,569 17,360

Parks Film Permits 19,896 20,847 18,870 10,214

Sand Point Location Fees 2,220 49,180* 15,918 2,652

Seattle Ctr. Location Fees not avail. not avail. 1,110 3,400

Totals: $47,380 $103,439 $71,467 $33,626

*Note: In 2000, Sand Point received an additional $350,000 of in-kind spending for building improvements by the producers of “Rose Red”

· Please check one of the following:

____ This legislation does not have any financial implications. (Stop here and delete the remainder of this document prior to saving and printing.)

_X__ This legislation has financial implications. (Please complete all relevant sections that follow.)

Appropriations: (Please only reflect the dollar amount actually appropriated by this legislation.)

Fund Name and Number	Department	Budget Control Level*	2003 Appropriation	2004 Anticipated Appropriation
TOTAL

* This is line of business for operating budgets, and program or project for capital improvements

Notes:

Anticipated Revenue/Reimbursement: Resulting From This Legislation:

Fund Name and Number	Department	Revenue Source	2003 Revenue	2004 Revenue
Transportation Fund 10310	SDOT	Street Use Permit		$(6,000) to $(14,000)
Park & Recreation Fund 10200	DPR	Facilities Permit		$(12,000) to $(33,000)
General Subfund 00100	General Fund	Master Film Permit	$(1,000) to $(4,000)	$(3,000) to $(7,000)
Design, Construction and Land Use Fund 15700	DCLU	Noise Variance		$(100) to $(500)
Water Fund 4531000	SPU	Water Permit	0	$(100)
TOTAL			$(1,000) to $(4,000)	$(21,200) to $(54,600)

Notes:

Total Regular Positions Created Or Abrogated Through This Legislation, Including FTE Impact:

Position Title*	Part-Time/ Full Time	2003 Positions	2003 FTE	2004 Positions**	2004 FTE**
TOTAL

· Fund Name and Number: _________________________________________

· Department: ___________________________________________________

* List each position separately

** 2004 positions and FTE are total 2004 position changes resulting from this legislation, not incremental changes from 2003.

· Do positions sunset in the future? (If yes, identify sunset date):

Spending/Cash Flow: (Please complete this section only in those cases where part or all of the funds will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects.)

Fund Name and Number	Department	Budget Control Level*	2003 Expenditures	2004 Anticipated Expenditures
TOTAL

* This is line of business for operating budgets, and program or project for capital improvements

Notes:

· What is the financial cost of not implementing the legislation?

The legislation is part of a broader package of actions designed to promote the expansion of the film industry in Seattle. It is difficult to project how much new film business in Seattle that contributes tax revenue will be generated by implementing this legislation. In 2001, film and video production contributed directly $207 million in spending to the City’s economy. The purpose of this legislation is to increase that spending in Seattle.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives?

This legislation and the proposed package of actions to promote growth of film and video production in Seattle is based on the exploration of several options with a number of City departments that issue permits as part of the master film permit process. Other options were not selected because of their impact on the budget, operational concerns raised by the City Departments, or legal issues. Other options not selected include eliminating the fee for parking meter hoods paid by film crews or charging a one time only $25 fee for a master film permit.

· Is the legislation subject to public hearing requirements: No

· Other Issues: No other issues.

Attachment 1: Strikeout Version of Fee Schedule