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THE FLORIDA FILM FUND

Mr. Grefé is the author of the Florida Film Fund. Legislation that he is advocating in the best interest of the filmmaker. A similar measure based on his writing has already passed in Texas and he is striving to have it passed in Florida. He has left us a copy, which he hopes (with modification) can be pushed for in Illinois. Please read his proposal below and give us your feedback. Mr. Grefé is most anxious to know your thoughts on this proposal.

THE FLORIDA FILM FUND
A Proposal
Submitted to the Attorney General
for the State of Florida
by William Grefé


PURPOSE

The purpose of the Florida Film Fund is three-fold:

1. To stimulate commercial motion picture and commercial television production within the State of Florida by providing state government loan guarantees for film and television production projects;

2. To create more product for theaters, television, cable, and video;

3. To stimulate the Florida economy by generating more revenue for persons and firms in Florida doing business related to the film and television industry.

CREATION

1. The Florida Film Fund (The Fund) will be created by a special act of the Florida State Legislature. This act will authorize the placing of a surcharge of up to five (5%) percent on all tickets sold for theatrical films and pay-per-view television events, and on all video tape sold in Florida. At the same time it will establish a per-subscriber charge for each pay cable service sold by each cable system in the state. In addition, it will establish a special fee to be applied to all video tapes rented in the state of Florida. The surcharge will expire after a fixed period of time, by which time The Fund will be expected to be entirely self sustaining.

2. A special state office (The Fund Office) will be created to administer The Fund and to recommend film and videotape projects to a Special peer review committee for approval. The Fund Office will have professionally qualified, paid state employees whose salaries will come from The Fund's revenue. All management level employees of The Fund Office will have at least five years professional experience in management of commercial theatrical film and/or commercial television enterprises, with the head of The Fund Office having background in both.

3. The special peer review committee (The Committee) will consist of one person each from at least the following groups: theater owners, film distributors, film producers, television producers, upper level television management, film and television support companies, talent organizations, and advertising agencies. Except for the standard state of Florida per diem, these committee members will serve unpaid for one-year terms. The office and expenses of The Committee will be paid for out of the revenue derived from The Fund.

4. The Committee will grant guarantees to those production companies that, because of story, cast. personnel, and other considerations, are deemed to be artistically and commercially secure productions. The Committee will have final and absolute say in the matter of funding. It will be guided strongly by the notion that, however worthy artistically a film or television project may be, if it lacks a significant commercial component, it will not be considered for funding by The Fund during The Fund's formative period. Because The Fund must become entirely self-supporting by a specified date, deriving its revenue from a percentage of the income after expenses for each project it approves for production, it must during its formative period provide guarantees only for projects that hold reasonable prospects for generating income in excess of their costs. In time, after The Fund becomes totally self-sustaining it is anticipated that The Fund will create a grant program to provide some support for experimental production in film and video.

5. During its formative stages and for the foreseeable future, The Fund's financial involvement will not exceed $3 million for any particular project, nor guarantee more than seventy-five (75%) percent of the production cost of a project.

6. The Fund will guarantee up to seventy-five (75%) percent of the production cost up to a maximum of $3 million for the projects The Committee approves. As a result of this guarantee, The Fund will agree to pay in full whatever amount is outstanding plus any outstanding interest of any loan it has guaranteed after three years from the effective date of the loan.

7. Those who avail themselves of The Fund must deal with Florida financial institutions. Because those applying to The Fund must meet specific financial and distribution agreement requirements, it will not be necessary for The fund to place itself in direct competition with Florida's lending institutions by making direct loans to producers of projects deemed by The Committee to be commercially viable. Rather, The Fund will provide guarantees, backed by the full faith and credit of the State of Florida, to Florida banks, Florida thrift institutions, and Florida credit unions (to the extent these latter two choose to participate with the program.)

8. By the same token, because the production loans are 100% guaranteed by the State of Florida and are, therefore, essentially risk free, it is expected that only those financial institutions granting loans at the prime rate or below will be permitted to participate in this program.

APPLICATION

It is not anticipated that the application procedure will be a particularly easy one. Because The Fund will be bearing the risk of up to 75% of the costs of the production, it must make its decisions based upon the maximum amount of information the producer or production company (The Producer) can supply. Therefore, The Producer must fill out a standard application form and must submit at least the following:

1. A $500 dollar, non-refundable application fee that will go partially to defraying costs of servicing this application to determine whether or not it is feasible to grant a guarantee for the project submitted.

2. A final draft of the screenplay with a synopsis of the screenplay.

3. A detailed budget.

4. A Letter of Commitment from a recognized distribution company. Unless otherwise approved by The Committee, the distribution company shall have been in business for the last five years. This requirement will provide reasonable assurance that the distribution company can do what its Letter of Commitment promises. It will also provide a company history that can be assessed.

5. A Non-revocable Letter of Credit or other bonafide proof that The Producer has on hand at least twenty-five (25%) percent of the proposed project's budget.

6. Detailed professional resumes of all key individuals connected with the project. These will include, but not necessarily be limited to, at least the following: The Executive Producer(s), the Producer(s), the Director, Production Manager, the Line Producer (if different), the Director of Photography, the Screen Writer, the principal Sound and Lighting Directors, the principal Film or Tape Editor, and the Art Director.

7. A detailed shooting schedule including all locations, talent, calls, weather and other contingencies, and all other matters that can affect the final wrap date.

8. The cast of characters and name actors under consideration.

9. Copies of any agreements, contracts, deal memos, letters of understanding, or any other documents that have a bearing upon production.

10. A letter from a recognized bonding company indicating its willingness to issue a completion bond on the film.

11. Any other information The Fund Office or The Committee may require. (The nature of this additional information will become clear when The Fund Office becomes operational, and its necessary procedures and policies are in place.)

The staff of The Fund Office will review the submitted application package for completeness and evidence of professional competence on the part of The Producer. If the package meets basic, pre-established criteria, and if the appropriate fee has been paid, the proposed project will be submitted to The Committee for Peer review and evaluation.

If The Committee determines that the project meets the criteria for approval, an irrevocable Letter of Guarantee will be issued to The Producer by The Fund.

GENTRAL INFORMATION CONCERNING THE GUARANTEE

1. When The Fund approves a production, The Fund will grant the Producer an instrument of guarantee that will pay to any lender the balance of the loan if the loan is not fully repaid on or before the third anniversary date of the loan.

2. With a guarantee from The Fund, The Producer will be able to borrow up to seventy-five (75%) percent of the Project budget from a Florida bank or other Florida lending institution.

3. The lending institution, working from an approved detailed budget, will pay all bills and invoices on a basis similar to that of a construction loan. While the lending institution may not withhold payment for any bill or invoice submitted to it that is in the approved detailed budget, It will submit regularly to The Committee without comment a listing of all expenses incurred in the name of The Producer.

4. The Distributor shall pay all monies collected on behalf of The Producer directly to the lender to pay off the loan and interest. If the loan is not repaid within three years, then all monies shall continue to be paid into The Fund to protect its guarantee and all rights of any nature to the film shall revert to the Committee on behalf of the State of Florida until such time as 150 percent of the amount of the loan has been paid into The Fund.

5. The 25 percent of the budget secured by the producer will have a second chattel mortgage on the film. The lender and The fund will hold the First mortgage.

6. If within three years the loan is not paid off in full, The Fund will pay the lender the amount principal and interest of the loan still due. Thereafter, The Fund will receive all revenue from all sources, and will account quarterly to The Producer. All revenue shall accrue to the benefit of The Fund until the amount of the guarantee and interest his been satisfied plus an additional ten (10%) percent of the original loan amount as an administrative contingency fee. For example, if the Project budget is $1 million, The fund will guarantee a loan of $750,000 and will hold a first mortgage on the Project. The Producer will hold a second mortgage on the Project of $250,000. If after three years the film has generated $600,000, all of which will have been paid to the lender, The Fund will then pay the lender the remaining $150,000 plus interest. The fund will then collect $150,000 plus interest to recover its payment to the lender plus an additional $75,000 (administrative contingency fee) from all revenues until $225,000 plus interest his been paid. Revenues will then be used to retire the Producer's second mortgage. Thereafter, quarterly, The Fund will file an accounting with The Producer, paying over to The Producer at that time portion of the Project s net revenues from whatever source those revenues may come.

OTHER CONSIDERATIONS

The Producer will be required to do the following:

1. Produce the film on 35 or 70 millimeter film or, if not intended for theatrical use, on video tape at prevailing professional/broadcast standards.

2. Seventy-five (75%) percent of all personnel including crews and talent must be Florida residents of at least one year's duration.

3. Seventy-five (75%) percent of all costs of equipment must be incurred with a Florida company doing business in the state of Florida for at least one year.

4. Seventy-five (75) percent of all lab costs and finishing must be secured from a Florida lab doing business in Florida for at least one year.

5. Ninety percent (90%) of the finished film must have been shot within the State of Florida.

6. On the finished film, The Producer will give credit similar to: "Produced in Florida with the Cooperation of the Florida Film and Television Fund."

7. After all production costs are recovered, The Fund pays quarterly to The Producer eighty-five (85%) of all revenues from the Project received from any source. The Fund retains in perpetuity a 15% stake in all rights pertaining to The Project and all revenues derived from the rental, lease or sale of those rights and any royalties or other revenues that shall accrue as a result of those rights. Five (5%) of The Fund's revenues shall go to cover the cost of administering The Fund. The remaining ten (10%) shall go to building The Fund for future production investments.

SUMMARY

This Fund will be paid for only by people who wish to go to paid admission places of entertainment or who pay for entertainment in their homes or work places. It will not require the development of any new tax structure, only the placement of an extremely small surcharge on existing taxes and only then for an extremely limited period - certainly no longer than seven years, and in all probability less than that.

The Fund is a matter of the entertainment industry supporting its own growth, in particular building and strengthening production for film making and television.

Carefully drawn criteria will determine which projects The Committee will consider for Fund guarantees. Those criteria will dictate, among other things, that only projects that will carry G, PG, or R ratings - or their equivalent for television - will be eligible for Fund guarantees.

The application fee, $500, is deliberately high. It is designed to discourage those who are not really professionally qualified to carry through with the responsibilities that approved Projects will demand. At the same time, the high Florida content requirements will open doors to Floridians to provide them with opportunities for experience that would generally be denied to them in the nations other two production centers. The Fund is not a grant program nor is it a loan program designed for amateurs and opportunists. It is a funding program for commercially feasible film and television projects, and it will grow in direct proportion to the quality of its judgment concerning those projects. Those who qualify for funding should expect to undergo - and will undergo - close scrutiny before, during and after the production.

This outline for the Florida Film Fund is preliminary and doubtless in need of considerable refining or even modification. Nevertheless, the concept of such a fund is sound, as demonstrated in several foreign countries. Government participation in private enterprise in the United States has a long and successful history - and we need look no farther than the space, military, and agriculture industries.