Film Studio Facility Property Tax Exemption

(a) Definitions. For the purposes of this section, the following definitions apply unless the context clearly indicates or requires a different meaning. Digital Media. Production methods and platforms to create cinematic imagery and content using digital means, including but not limited to digital cameras, digital sound equipment, and computers, to be delivered via film, videotape, interactive game platform, or other digital distribution media. Film Studio Facility. Has the same meaning as defined in § 8-10.35 (a). Film Studio Name. The name associated with the film studio facility. Local Workforce. Workers who have been determined to be residents as defined by the State department of taxation Tax Information Release No. 97-1. Local Workforce Development. Programs conducted in the city that have the primary purpose of assisting members of the local workforce to acquire and retain employment, increase their wages and earning potential, and provide career advancement in the motion picture, film, and digital media industry. Programs include but are not limited to internships, apprenticeships, and other educational endeavors connected to an anchor institution, union or government training program, or nonprofit training program engaged in activities with the State or city. Post-Production. Activities and services conducted at the film studio facility after production of the visual and cinematic imagery has been completed, including but not limited to editing, film and video transfers, duplication, transcoding, dubbing and sound mixing, subtitling, credits, closed captioning, audio production, special effects (audio and visual), graphics, and animation. Pre-Production. The planning process and execution of every task that must occur before the production process begins, including but not limited to forming a new company, locking the script, breaking down the script, hiring key department heads, finalizing the budget, creating storyboards and shot lists for the scenes to be captured, scouting and securing locations, casting actors and hiring the crew, obtaining permits and insurance for the project, scheduling the shoot days, performing a technical scout, and arranging for equipment rentals. Production. A stage in the process, also known as principal photography, in which the media project is captured, including but not limited to a series of activities to create and capture the visual and cinematic imagery that is to be delivered for mass consumption via various methods including film, video, or digital means, either for sale or display. Property Owner or Owner. Has the same meaning as defined in § 8-10.35 (a). Qualified Production. A series of pre-production, production, and post-production activities at a film studio facility, with the primary purpose of creating and capturing visual and cinematic imagery to be delivered via film, video, or digital media for sale, distribution, or display as entertainment, or for the advertisement of products or services for mass public consumption, in which all film, videotape, or digital media produced at the film studio facility display the film studio name as required in subsection (b)(4). (b) Real property that is improved with a film studio facility for qualified production will be exempt from the assessed building value of the film studio facility during the exemption period; provided that: (1) The owner has expended a minimum of $100,000,000 to develop and construct a new film studio facility on real property a minimum of 10 acres in size that is leased or purchased from the United States, State, or city; (2) The owner is registered and in good standing with the State department of commerce and consumer affairs, and holds a general excise tax license under HRS Chapter 237 throughout the exemption period; (3) The film studio facility annually promotes local workforce development in the field of motion picture, film, and digital media by partnering with its film lease production companies, studio partners, and other users of the film studio facility to provide paid on-set, production, or post-production internship programs arranged with local colleges, universities, or vocational schools for their students who are pursuing a degree or career in film or media studies, or to provide on-set, production, or post-production apprenticeships; (4) The owner agrees to: (A) Include the film studio name in the end credits of all film, video, or digital media it produces or creates at the film studio facility during the exemption period; and (B) Include in all contracts with the users of the film studio facility, including but not limited to film-lease production companies, studio partners, and loan-out companies, a requirement that they include the film studio name in the end credits of all film, video, or digital media they produce or create at the film studio facility during the exemption period; (5) The film studio facility facilitates the creation of a minimum of 100 full-time equivalent local film industry jobs annually; (6) To the extent permitted by law, throughout the exemption period, all employees responsible for the maintenance and operations of the film studio facility building and grounds must be paid wages that are no less than: (A) The prevailing wage rates set forth in the current wage rate schedule bulletin posted on the State department of labor and industrial relations website if a wage classification exists for a particular scope of work; or (B) If a prevailing wage rate classification is not listed on the State department of labor and industrial relations wage rate schedule bulletin, in accordance with the local area standard wage if a standard wage exists for a particular scope of work, unless a prevailing wage rate under a collective bargaining agreement applies; and (7) In the event that public tours are conducted onsite at the film studio facility through the use of motorized or electric vehicles, all tour drivers or tour vehicle operators must be paid wages that are not less than: (A) The prevailing wage rates stated in the current wage rate schedule bulletin posted on the State department of labor and industrial relations website if a wage classification exists for a particular scope of work; or (B) If a prevailing wage rate classification is not listed on the State department of labor and industrial relations wage rate schedule bulletin, in accordance with the local area standard wage if a standard wage exists for a particular scope of work; unless a prevailing wage rate under a collective bargaining agreement applies. (c) An owner that has been allowed an exemption for a new film studio facility’s qualifying construction under § 8-10.35 shall file an initial claim for exemption under this section with the director, on a form prescribed by the director, within 60 days of the earliest of the expiring events in § 8-10.35(c). If approved by the director, the exemption is retroactive to the date the qualifying construction exemption expired. Alternatively, the owner shall file an initial claim for an exemption by September 30 preceding the tax year for which the exemption is claimed. The owner shall include with its claim for an exemption documents evidencing that: (1) The owner has expended at least $100,000,000 to develop and construct the film studio facility; (2) The land on which the film studio facility is located was leased or purchased from the United States, State, or city; (3) The owner is registered and in good standing with the State department of commerce and consumer affairs, and has a general excise tax identification number; (4) A preliminary plan has been prepared to provide incentives to filmmakers and digital media artists who are engaged in the development of film or digital products relating to the history of Hawaii, and local culture, traditions, or customs to promote expansion of the motion picture, film, and digital media industry in the city; (5) A preliminary plan has been prepared for creating and annually maintaining local workforce development programs through film-lease production companies, studio partners, loan-out companies, or other users of the film studio facility; (6) The owner has required, or will require, the film studio name to appear in the end credits of all film, video, or digital media produced or created at the film studio facility by its film-lease production companies, studio partners, loan-out companies, or other users of the film studio facility; and (7) To the extent permitted by law, throughout the exemption period, the owner has required, or will require the payment of prevailing wages to all employees responsible for the maintenance and operations of the film studio facility building and grounds, and all tour drivers or tour vehicle operators of motorized or electric vehicles used for public tours conducted onsite at the film studio facility. If the new film studio facility was constructed on more than one zoning lot or parcel, the owner shall submit a separate claim for exemption for each zoning lot or parcel that has an assigned tax map key number, and a copy of the conditional use permit for joint development and joint development agreement approved pursuant to § 21-5.380 . (d) The notice of assessment serves as the notification of the approval, approval in part, or disapproval of the claim for exemption. If the claim for exemption is disapproved by the director, the claimant may appeal the disapproval pursuant to § 8-12.1 . (e) Upon the director’s approval of the initial claim for an exemption, the exemption will continue for a period of 20 consecutive years; provided that the owner annually certifies that in the preceding tax year, the film studio facility or its users: (1) Promoted local workforce development in the field of motion picture, film, and digital media by partnering with its film-lease production companies, studio partners, and other users of the film studio facility to provide paid on-set production or post-production internship programs arranged with local colleges, universities, or vocational schools for their students who are pursuing a degree or career in film or media studies, or to provide on-set, production, or post-production apprenticeships; (2) Required the film studio name to be included in the end credits of all film, video, digital media, or similar products developed or produced at the film studio facility by its film-lease production companies, studio partners, loan-out companies, or other users of the film studio facility; and (3) To the extent permitted by law, paid prevailing wages to all employees responsible for the maintenance and operations of the film studio facility building and grounds, and all tour drivers or tour vehicle operators of motorized or electric vehicles used for public tours conducted onsite at the film studio facility. (f) In order to maintain continuing eligibility for the exemption during the exemption period, the owner shall file with the director, on a form prescribed by the director, the annual certification and documents by September 30 of each year following the director’s approval of the initial claim for an exemption. The owner shall provide information and evidence from the preceding tax year of: (1) The internship or apprenticeship programs provided; (2) The local filmmakers and media artists that used the film studio facility; (3) The number of non-residents, State residents not living on Oahu, and city residents employed by the film studio facility, and employed by any user of the film studio facility; (4) The films, videos, or digital media developed or produced at the film studio facility that included the film studio name in the end credits; (5) To the extent permitted by law, the payment of prevailing wages to all employees responsible for the maintenance and operations of the film studio facility building and grounds, and all tour drivers or tour vehicle operators of motorized or electric vehicles used for public tours conducted onsite at the film studio facility; and (6) Any other information required by the director. (g) If an owner fails to file an annual certification with the required reporting and documentation by the September 30 deadline, the director will mail a notice to the owner at the owner’s address of record stating that unless the annual certification, required reporting and documentation, and a late filing penalty of $1,000 are received by the director by November 15 of the same year, the exemption will be canceled and the owner shall be subject to taxes and penalties pursuant to subsection (j). (h) In the event the owner’s interest in the film studio facility is transferred to a new owner, the owner that held the exemption shall notify the director of the change in ownership as provided in § 8-10.1 (d)(1). The new owner may qualify for a continued exemption; provided that the new owner: (1) Files a claim for a continued exemption within 30 days after the closing of the lease transfer or sale of the film studio facility; (2) Certifies and agrees to comply with the qualifications and requirements set forth in subsections (b)(2) through (b)(7), and (c)(3) through (c)(7); and (3) Understands and agrees to file an annual certification pursuant to subsection (f) on or before September 30 of the preceding the tax year that the film studio facility or its users: (A) Promoted local workforce development in the field of motion picture, film, and digital media by partnering with its film-lease production companies, studio partners, and other users of the film studio facility, to provide paid on-set, production, or post-production internship programs arranged with local colleges, universities, or vocational schools for their students who are pursuing a degree or career in film or media studies, or to provide on-set, production, or post-production apprenticeships; (B) Fulfilled the requirement to include the film studio name in the end credits of all film, video, digital media, or similar products developed or created or produced at the film studio facility, including those created or produced by its film-lease production companies, studio partners, loan-out companies, and other users of the film studio facility during the exemption period; and (C) To the extent permitted by law, paid prevailing wages to all employees responsible for the maintenance and operations of the film studio facility building and grounds, and all tour drivers or tour vehicle operators of motorized or electric vehicles used for public tours conducted onsite at the film studio facility. (i) Administration. (1) The director may prescribe the appropriate forms for the exemption. (2) The director may request supporting documents to verify the owner’s eligibility upon the filing of an initial claim for an exemption. The director may deny the claim for an exemption based on the owner’s refusal to provide any supporting documents requested by the director. (3) At any time during the exemption period, the director may, after giving the owner 30 days advance written notice, inspect the film studio facility and audit the records to verify compliance with the requirements in subsection (e). The owner’s refusal or failure to cooperate, provide a site inspection, or produce all records requested by the director may result in the cancellation of the exemption and subject the real property to the rollback taxes and penalties determined in subsection (j). (4) The director may adopt rules having the force and effect of law for the administration, implementation, and enforcement of this article, including rules that set forth procedures to appeal the denial or cancellation of the exemption. (j) Cancellation of exemption and rollback tax. In the event the director finds that the initial claim for exemption, the claim for continued exemption by a new owner, or the certification for continuing exemption contains false or fraudulent information, or that the owner is not in compliance with the requirements set forth in subsection (e), the director shall cancel the exemption retroactive to five tax years preceding the year of cancellation. The difference in the amount of taxes that were paid, and taxes that would have been due but for the exemption allowed, will be due and payable, together with a penalty in the form of interest at 10 percent per year. The taxes and penalties due will be a paramount lien upon the real property. Editor’s note: In accordance with Ord. 25-1 , §§ 8-10.35 and 8-10.36 apply to tax years beginning July 1, 2026 and ending on June 30, 2036, and will be repealed on July 1, 2036; provided that notwithstanding the repeal, any exemption approved under these sections before July 1, 2036 will continue in effect for the duration of the relevant exemption period in §§ 8-10.35 and 8-10.36, subject to ongoing requirements and the consequences of failing to meet the requirements of these sections.