Louisiana Internet Software & Technology Association Blog : Louisiana Internet Software & Technology Association : LISTA Blog : LA Technology Law News & Updates

Today, Gov. Bobby Jindal joined the executive team of TraceSecurity Inc. to announce the relocation of two of the company's key operating divisions, software development and national sales, from Dallas and San Diego to Baton Rouge. The relocation creates 15 new, direct Louisiana jobs with average annual salaries exceeding $50,000, plus benefits, for a total of approximately 50 jobs in Baton Rouge. Additionally, the company plans to add more than 30 jobs over the next two years. TraceSecurity's workforce in Baton Rouge is more than doubling within two years as a result of the relocations and planned expansion.

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The State of Louisiana's economic development department has been trying to persuade Electronic Arts to relocate to or open a new game design studio in Louisiana. EA has already located a game testing center at Louisiana State University, and the state would like to expand EA's presence. Louisiana's digital media tax incentives program was originally focused on attracting game development companies to Louisiana like EA.

Unfortunately, the slow down of the national economy has worked against Louisiana's efforts as EA has seen its own business difficulties during the past year. 

Nevertheless if the State of Louisiana wants to remain attuned to EA's vision of the future of video game development, the State should note that EA has just announced its intention to purchase Playfish, a social game company. See the San Francisco Chronicle article on November 10, 2009 entitled, EA buying Playfish in $300 million deal.

If you are not familiar with social games that have grown out of platforms like Facebook, I found a pretty good definition of social games and also a good list of social game developers on The Social Times Blog in an entry entitled, "What are social games?". 

The various economic development arms of Louisiana and its cities should consider efforts to attract social game developers to Louisiana. If they are successful, they might find that EA is not far behind.

Erich P Rapp.

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 The 36th International Conference and Exhibition on Computer Graphics and Interactive Techniques is ongoing in New Orleans from August 3 to 7, 2009.  The Siggraph Conference is being held at the New Orleans Convention Center and details about the program can be found on the web at the conference web site. For more information on Louisiana's digital interactive media tax credit program, please go visit the exhibits presented by the Louisiana Department of Economic Development, Greater New Orleans, Inc. and the Baton Rouge Digital Industries Consortium. 

Erich P Rapp.

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The Wall Street Journal on Monday July 6, 2009 had a Page C-1 story entitled, Venture-Backed Start-Ups Seek Stimulus. The gist of the story was that venture funds like Novak Biddle Venture Partners, RockPort Capital Partners and Flywheel Ventures were directing the start-ups they are investing in to explore the federal stimulus package as a means of finding additional capital.

This story suggests to me that venture capital funds and angel investors would find Louisiana's new digital interactive media tax credit incentive program very attractive. Marketable tax credits are not much different in economic terms than stimulus program grants. A start-up developing a web platform, mobile application or software package can get marketable tax credits equal to 35% of the funds they spend in Louisiana on labor residing in the state and 25% of all other expenditures.

If, for example, a start-up used labor residing in Louisiana to develop a new web platform and in the process spent $1,000,000 in Louisiana. The State of Louisiana would issue tax credits for $350,000 and the start-up could sell the tax credits for $0.85 to $0.90 on the dollar realizing perhaps a little more than $300,000 in extra funds. Thus, a venture capital fund investment of $1,000,000 spent on labor residing in Louisiana becomes an investment of $1,300,000.  That seems like stimulus that a venture capital fund or an angel investor would like to see.

Erich P Rapp.

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Senate Bill 277 concerning digital interactive media has been formally sent to the Governor for his signature on Thursday June 25, 2009. We hope that the Governor will act soon on this important piece of legislation.

Unfortunately, a proposed amendment to the new digital media program allowing a digital media tax credit recipient to have the state convert the tax credit to cash at $0.90 on the dollar did not complete the legislative process on Thursday before the formal deadline for adjournment. This concept was presented to LISTA by the Baton Rouge Area Chamber of Commerce. We felt this option was an excellent addition to the program proposed in SB 277. LISTA regrets that this amendment was not adopted by the legislature as a whole. We will review this concept again in two years at the time of the next Louisiana fiscal legislative session.

In the coming weeks, the original members of LISTA will meet to discuss the future direction of the organization. One of my first proposals to the membership will be opening membership up to a broader group of interested people and companies. The original members were asked to make substantial financial contributions in order to get the organization started. I will now propose to the membership that the average cost of membership be reduced significantly and that the organization make efforts to enlist many new members.

As with any government sponsored business incentives program, the new digital media program will not survive unless it is beneficial to the state as a whole. Determining whether the program is successful requires an expert in economics and financial analysis to review and analyze all of the available relevant data. I would like to see LISTA join with other economic development agencies and organizations in Louisiana to sponsor a university professor's effort to track all available data on the digital media industry in Louisiana from July 1, 2009 and forward to determine whether the digital media act is fulfilling its potential for the state.

I would also like to see LISTA and such a university professor track the geographical distribution of the beneficiaries of the digital media act in the state. Our goal at LISTA is to encourage and support growth of digital interactive media businesses throughout the state. We thus want to know the extent to which this goal is being fulfilled.

The new digital media program will also lead to the adoption of related rules for the administration of the program by the Louisiana Department of Economic Development. LISTA and its members will actively participate in and comment on the development of such rules. 

Additionally, LISTA and my law firm, Kean Miller, will undertake a series of presentations inside and outside of the state on the use of the digital media tax credit program. Further still, LISTA and Kean Miller will begin offering educational seminars on topics of interest to the digital media community. 

Again, I offer my thanks to all of the people who assisted with the adoption of SB 277. It has been an educational and ultimately gratifying experience for me.

Erich P Rapp.   

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The Louisiana Senate has concurred on the amendments to Senate Bill 277 from the House of Representatives. The formal legislative process is complete.  SB 277 now goes to the Louisiana Governor for his signature. Please send messages and make phone calls to the Louisiana Governor's office urging the Governor to sign SB 277.

Assuming that Governor Jindal signs SB 277, the new digital media program is a game changing event in the history of the Louisiana economy. I suggest to you that the impact of this event on the Louisiana economy over the next ten years will rival the impact of sugar and cotton agriculture in the early 1800's and the discovery of oil in Louisiana in the early 1900's.

Louisiana is about to enter the digital media revolution in a dramatic way.

Erich P Rapp.

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The Louisiana House of Representatives passed Senate Bill 277 re digital interactive media tax credits today. The bill must now return to the Senate for a concurrence vote on the House amendments. If the Senate concurs on the House amendments, the bill will be sent to the Governor for his signature.  Thankfully, Senate Bill 277 received a favorable vote in the morning.

The successful passage of SB 277 will allow a wide array of software and web platform development projects to earn 25-35% marketable/transferable tax credits on the cost of production of such software and web platforms. This program will likely result in a material increase in the value of software and web platform development in Louisiana. SB 277 is authored by Senator Ann Duplessis and supported by the Louisiana Internet Software and Technology Association (LISTA), Greater New Orleans, Inc. (GNO, Inc.) and Baton Rouge Area Chamber of Commerce (BRAC).

In the mid-afternoon after SB 277 had successfully passed the House, a small group of House members unhappy with the governor's proposed budget cuts began an effort to slow consideration of other bills on the agenda. This effort successfully prevented about 20 bills scheduled for debate from being considered and many more bills on the agenda subject to call from being considered. 

At 6 PM today, the legislature reached a Constitutionally mandated deadline for considering bills that have not yet been voted on favorably by both houses. Thus, the bills remaining on the docket at 6 PM will die unless both houses simultaneously vote to allow consideration of any given bill. Some effort to get a two-third vote on some of the remaining bills will be taken tomorrow morning. It remains unknown how successful this effort will be.

One victim of this work slowdown and the hard 6 PM deadline was an amendment to the digital interactive media bill allowing the program users to choose between tax credits and a discounted tax rebate in cash. The successful passage of this bill contemplated for SB 199 would have been to put a minimum value on the tax credits in the market. LISTA, GNO, Inc. and BRAC all supported this amendment which was contemplated to be amended into SB 199. SB 277 in the form passed by the House and the Senate only provides for the issuance of marketable/transferable tax credits. It is also unknown if this bill will ultimately be considered in this session by suspension of the rules by two-thirds vote. The effectiveness of the effort to suspend the rules and allow further bills to be considered will likely be known by  the middle of the day on Tuesday.

A further report will follow tomorrow.

Erich P Rapp.

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