Jimmy Fallon embraced his surroundings when he brought his "Tonight Show" to Minneapolis last year: he ate hotdish cooked by a suburban family, impersonated native-son music icon Bob Dylan and waved mittens at his exuberant audience while flattering them.

"Well, it's official. You heard it here first. We are moving the show to Minneapolis," Fallon joked in his opening monologue. "That's right, hold on to your tater tots."

It was a publicity score for the state the night the Super Bowl was played a few blocks away. But the local attention wasn't free.

"The Tonight Show" told the state it spent more than $3 million to take the show on the road, including Fallon's six-figure paycheck for the episode. But records indicate it also got nearly $267,000 back through a Minnesota government rebate program amid questions over its eligibility.

Melodie Bahan is executive director of the Minnesota Film and TV Board, a nonprofit entity that needs state signoff to issue rebate checks. She said the show was among the largest budget projects in her couple of years at the helm.

"Anytime that a show comes here that's going to hire more than 100 people — local people — and pay them really good wages, that's a victory," Bahan said.

Minnesota spends millions of taxpayer dollars through the state's Snowbate program. It's aimed at luring productions and fostering local industry talent.

But this wasn't an ordinary project. There was consternation within the film board — and later in the top ranks of a state agency — about providing the subsidy. There was debate about whether Fallon would have made the trek regardless, given that NBC had the coveted Super Bowl rights that year.

Talk vs. variety

At first blush, film board staff told Fallon's crew their "talk show" wouldn't qualify under a plainly worded section of Minnesota law. But that changed after the highly rated late-night program was ultimately classified as a "variety show" that would fit the confines of state law.

And with that, Bahan said, there was no legal footing to hold available money back.

"Once we determined it was a variety show and not a talk show, then, no, we would have had no reason to reject the application," Bahan said in a recent interview.

Officials arrived at that conclusion after considerable back-and-forth, according to emails and other documents obtained by MPR News through a public records request.

The film board first got word that "The Tonight Show" would come to Minneapolis in November of 2017. A message went back to the show's producers that talk shows are excluded from rebates.

Within hours, there was a move afoot to alter that determination. The NBC Universal team got on the phone with Bahan, who decided to pull in advice from the volunteer Snowbate Operations Committee. The advisory panel was told to weigh in within 24 hours. That touched off a flurry of opinions.

"They are coming here anyway because of the event, no further incentive needed," wrote Michelle Caron, a longtime industry consultant. She questioned whether the project would clear an audit and concluded, "the statute is clear and we can't allow this without legislative change."

Caron said in a recent interview that there was never a formal meeting and all of the discussion occurred by email. More than a year later, she said she defers to the decision the board ultimately made because members likely had more information than she did.

There was discussion about whether the one-off nature of the show lived up to the broader mission of the board. Some noted that the program's budget was already tight and argued helping "The Tonight Show" would shove other projects aside. And there was open talk about negative attention that could arise if the entity was seen as bending rules.

"To simply give away funds to a large company that would shoot here regardless, with almost no hope for return isn't responsible on our part, especially when the statute is clear," wrote film producer Michael Tabor, a member of the advisory committee and a current film board member. "The argument shouldn't be on semantics or splitting hairs on what it means but rather what is in the best long-term interest of the Snowbate."

Tabor declined to be interviewed, referring questions to Bahan.

'Program worked'

NBC has aired the Super Bowl twice since Fallon took over as "Tonight Show" host.

In 2015, Fallon took the program to Phoenix for a broadcast the night that city hosted the big game. Arizona didn't have an active TV and film industry tax incentive program.

Bahan said whether "The Tonight Show" would have come with or without the Minnesota money is "not relevant to the program."

"That's not a question we ask," she said. "It's not a requirement in the statute or guidelines."

Others in the advisory group said it wasn't within their power to apply a "but-for" test.

"That it's around the Super Bowl doesn't make it a sporting event," wrote advisory committee member Emily Stevens, referring to a specific exclusion in the law for sports programming. "Just ask all the sex workers coming to MN for that time period. They're not playing football either."

And access to Snowbate was held up as a way to encourage greater use of local hires.

"Productions like this could very easily bring everything with them and pay only location and hotel fees," wrote Brian Simpson, a labor union representative on the film board. "But an incentive gives them a reason to use as many local resources as possible."

Bahan passed along messages she received from show producers, noting plans for hiring local help and for spending loads of money. Additionally, network officials sent information about Emmy Awards entries that put the show in the variety series category.

Not included in that batch were references to Fallon's program winning "best talk show" honors in other industry contests.

According to some advisory committee members, discord over project eligibility as happened here is rare.

Bahan said "The Tonight Show" request was the only one she's taken to the committee in her tenure. She defends how it all turned out.

"I didn't think that this was a controversial decision," Bahan said. "I am very confident in the process that we followed and that we did everything correctly. And the program worked the way the program is designed to work."

$162,000 paycheck

Bahan said she consulted with and received signoff from an official at the Department of Employment and Economic Development and some legislators before going to her appointed board for approval.

The Republicans who at the time chaired legislative committees that control the Snowbate budget — Rep. Pat Garofalo of Farmington and Sen. Jeremy Miller of Winona — both told MPR News they don't recall being approached.

"I'm pretty certain I would have remembered," Miller said.

Then-Rep. Kelly Fenton, a Woodbury Republican who sponsored film board incentives legislation, said board officials told her "The Tonight Show" was coming but didn't indicate that state money was attached.

"I don't remember ever being asked: 'Do you approve of this?' Because those aren't the decisions legislators make," Fenton said.

A DEED spokesperson said there were internal discussions about the show's eligibility, but a records request specific to that agency turned up little documentation.

Bahan urged the executive committee of her board to approve the subsidy despite acknowledging the advisory committee was leaning toward rejecting certification. Bahan wrote in an email that while "'The Tonight Show' is not part of the long game, an ongoing relationship with NBC/Comcast is."

A week before Christmas 2017, NBC learned the show set for the following February was certified.

As part of the agreement, only certain expenses were eligible for the 25 percent rebate. Documents show NBC had more than $1 million in charges that qualified, resulting in the $266,834.50 check delivered last July. That's more than half of what the Legislature allocated to the Snowbate program in that fiscal year.

The show had to submit detailed records to back up its spending.

Included in the list of expenses was the $162,000 that NBC Universal paid Fallon for his work on the Super Bowl Sunday program. Lodging for the show's staff made up $380,000 of its costs, more than $320,000 went for in-state production personnel and $275,000 was paid to rent the Orpheum Theatre for several days.

Also in the mix were lots of food tabs, including a $139.50 dinner for musician Justin Timberlake and $45 for vitamin water for the pop star, who also performed during the Super Bowl's half-time show. (An alcohol tab attributed to Timberlake was far higher, but booze isn't eligible for reimbursement.)

New guidelines afoot

Even after the show left town, unease over the show's rebate didn't subside.

In a March 2018, DEED Deputy Commissioner Kevin McKinnon was helping prepare then-agency Commissioner Shawntera Hardy for a meeting. In an email, he told her Snowbate was in need of a revamp to base it more about attracting the most-desired projects and less first-come, first-served.

"Example — the Film Board paid 'The Tonight Show' $266,000 for Jimmy Fallon to have dinner with a MN family around the Super Bowl," McKinnon wrote, referencing an internal analysis of various project values. "If we are going to keep it, some guidance in law would be helpful to create threshold investments that are eligible for Snowbate."

McKinnon wasn't made available for an interview.

It was around the time an enticing Disney movie project was in the state's sights. It ultimately would get away.

By then, available Snowbate funds had dipped below $100,000, film board staff had advised DEED. The agency tried to mitigate Snowbate's financial pinch by transferring $500,000 to the program from another economic development account.

The film board's Bahan said she also supports a Snowbate rework and has been lobbying the Legislature — without success — to turn it into a tax credit rather than a straight rebate. She argues that credits go further in attracting bigger projects, based on the experience of other states.

In the meantime, she said new program guidelines are being crafted to emphasize economic impact, level of local hiring and wages paid and how recognizable Minnesota is in the films and shows shot here.

Final guidelines could be released before summer is over. Until then, applications for Snowbate awards are temporarily on hold.

Asked in an MPR News interview if Minnesota has seen any dividends yet from "The Tonight Show," which Bahan thought could occur if NBC was satisfied with the experience:

"Not yet," Bahan said. "But that would be almost entirely due to the fact that we don't have a tax credit or a large enough rebate incentive."

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