Film industry leaving N.C.


JOSEPH RODRIGUEZ

GREENSBORO — Dan Kelly loves his career and loves living in Greensboro.

Until last month, he and his wife planned to raise their 5-year-old daughter here and enjoy their church community long into the future.

But Kelly, who works in the film industry, is moving to Atlanta because movie companies are leaving North Carolina now that lawmakers have allowed the state’s competitive incentive program to expire.

Conservatives in the General Assembly have opposed the incentives for years, and they’re likely to leave a much smaller grant program in this year’s budget.

“This year, we just couldn’t hang on by our fingernails anymore,” Kelly said.

Industry experts say the state will lose at least 4,000 jobs for people like Kelly and hundreds of millions of dollars, many of them in the Piedmont Triad, that producers spend every year for high-profile movies and TV shows.

Kelly has to make a living, and the future is bright in Atlanta.

But it’s not all about the money.

His small child doesn’t know anything about the hard business of Raleigh politics and film production costs. But she will feel the loss.

“It’s heartbreaking for her to say goodbye to her school friends,” Kelly said. “It’s harder for me watching her say goodbye than it is for me.”

***

The film industry has been good to Guilford County and North Carolina during the past 15 years.

In 2014, actress Kate Beckinsale and company shot “The Disappointments Room” on location in downtown Greensboro and other locations in Rockingham and Randolph counties.

But the loss of film incentives will be a blow to the state by any measure, people in the film industry said.

Tony Grazia, the producer of the Beckinsale movie, which will be released later this year, said, “You have to have an incentive to lure (films) there. It’s part of how they build the financing for movies.”

Since 2004 in Guilford County alone, seven feature film productions have spent $26.5 million directly for local services, hotels, equipment rental and salaries, according to the Piedmont Triad Film Commission.

“Most of these state representatives don’t understand,” Grazia said. “It’s just amazing how much money you really, really do infuse into the economy.”

But the good times likely are finished, thanks to a decision by the General Assembly that allowed North Carolina’s lucrative film tax incentive program to expire on Jan. 1.

Guilford County commissioners cut their annual $50,000 grant to the Piedmont Triad Film Commission this year from the 2015-16 budget, although Winston-Salem and Forsyth County raised their allocations.

The film commission’s budget for 2015-16 will drop from $133,188 to $101,800.

***

North Carolina has a long history with the movie industry — think “Bull Durham,” “Dirty Dancing” and the Jessica Lange version of “King Kong” — with producers turning to the Tar Heel state to find the perfect scene.

The recent cuts run counter to the industry’s success in the past 10 years.

Across the state, film companies found the rich history and beauty of the mountains, Piedmont and coast to be perfect for every kind of movie.

“The Disappointments Room,” “Iron Man 3,” “Junebug,” “The Hunger Games,” “Safe Haven,” “Max” and scores of other films and TV series have made North Carolina one of the nation’s top film states.

They came not only for scenery but for an aggressive state Production Tax Incentive program that refunded 25 percent of the qualified money a production company spent in the state.

Between 2007 and 2012, a study by the North Carolina film industry shows, the industry spent $1.3 billion in the state. After audits, the state paid $112 million to those production companies through the incentive program.

Even after the rebate, the study reported, the state earned tax revenue of $58.3 million from film productions during those years.

The program meant that each film production could get up to $20 million for qualified expenses — such as wages, goods and services — spent in North Carolina.

But in its 2014 session, the General Assembly allowed the program to expire, substituting a far more limited grant program that has film companies headed for such states as South Carolina and Georgia, which offer tax credits of up to 30 percent.

“It’s kind of sad,” Grazia said. “It’s so political”

North Carolina’s grant program, which now provides a total of $10 million, allows for a grant of no more than $5 million for part of a production’s spending.

Until the General Assembly signs its budget for the next year, the current $10 million pot already is promised to only two productions: the “Under the Dome” television series produced in Wilmington and an independent feature to be produced later this year.

The state is feeling a significant impact, according to Guy Gaster, the director of the N.C. Film Office.

In mid-2014, when the 25 percent credit was going strong, 40 productions had spent $268 million and employed 19,000 people. In mid-2015, Gaster said, 13 productions have spent $70 million.

Gaster, who works for the nonprofit Economic Development Partnership of North Carolina, said the legislature cut the program to cut state spending.

“Part of the issue with lawmakers was reducing spending — they have done that,” he said.

***

“I really thought with everything we had worked to recruit and the economic impact, (the General Assembly) would support us,” said Rebecca Clark, the executive director of the Piedmont Triad Film Commission. “I’m very disappointed.”

Clark is the ultimate multitasker. Her job includes scouting locations for film companies, finding services and crew members for shoots, acting as a virtual producer’s assistant when something goes wrong, and providing 24-hour access on her cellphone.

She does all this from her small office near downtown Winston-Salem.

The window behind her desk has a perfect view of the UNC School of the Arts School of Filmmaking, where Kelly and many other professionals got their educations.

The grant fund, she said, is “not enough to provide work for the people we’re training.”

The General Assembly has no plans to reinstate the 25 percent tax credits, and it’s unclear whether legislators will increase the $10 million grant fund in this budget.

N.C. Senate leader Phil Berger (R-Rockingham) did not return a telephone call inquiring about the budget.

Clark is like any other economic development recruiter, she said, but she doesn’t find land for industry, she finds sites and businesses where film companies can spend their millions.

“The Disappointments Room” spent $10 million in Greensboro.

“Film projects don’t just fall into my life,” she said. “They’re going to go anywhere to spend their millions.”

And they spend them with local businesses, large and small. Lumber companies, dry cleaners, restaurants and other services all earn lots of money when a production is in town, she said.

Production workers need hotel rooms, for example, and “The Disappointments Room” alone booked the equivalent of 1,268 rooms at just the Sheraton Four Seasons Hotel during its four-month shoot.

Still, Clark said, she can’t persuade some elected leaders that the figures add up.

“They don’t realize how much money these feature film companies have,” she said.

The state isn’t throwing its money away, she said. The N.C. Department of Revenue does a thorough audit of each claim for tax credits before granting any rebate.

“Is this something I made up? No. If someone doesn’t meet the criteria the Department of Commerce sets, they don’t get the money,” she said.

“It’s not like we’re throwing money at these Hollywood millionaires,” she said.

***

Jeff Phillips, the vice chairman of the Guilford County Board of Commissioners, said the board cut its $50,000 grant to the film commission because commissioners are taking a harder look at where they spend economic development money.

And Phillips said the film commission did not make a presentation to lay out its impact this year.

“To my knowledge, none of the commissioners were contacted by anyone from the Triad film commission during the budget process to inform us or educate us,” he said.

Clark filed a detailed grant request, however, explaining everything her office accomplishes each year.

And former County Commissioner Linda Shaw, who left office in December, has a different story.

Shaw is also the chairwoman of the Piedmont Triad Film Commission.

When she left office, she said, she told her fellow commissioners to support the film commission.

“I tried to make the case and that was the last thing I asked them when I went out in December,” Shaw said. She touched base again during the budget process.

“I did send them a text, and I asked them to look out for it — they can’t say that no one advocated for it,” she said.

Shaw said she believes her fellow Republicans in Raleigh are wrong when they dispute the value of film incentives.

Television series, for example, helped to beef up the state’s industry from Wilmington to Charlotte.

“They weren’t here for four months; they were here for several years — South Carolina and Georgia have welcomed them with open arms,” Shaw said. “I don’t blame my governor on this at all, but it was the legislators who took it away statewide and it was my commissioners.

“What in the world is wrong with our Republicans?” she asked. “I just don’t think they know enough about it to understand what we accomplished here and where we were heading.”

***

With jobs dwindling, Clark said, “there has been a mass exodus of our crew (base). They’re all going to Atlanta. Atlanta’s getting their taxes. Atlanta’s getting their income. Atlanta’s booming, and they are ecstatic we cut the film incentive.”

As if to answer Clark, Georgia Gov. Nathan Deal announced Thursday that 248 film and television productions shot in Georgia during the 2014-15 fiscal year spent $1.7 billion in the state.

And Georgia makes a point of saying its law does not include an expiration date on the incentives.

Kelly worries that producers will avoid North Carolina, even if a future legislature restores the incentive credit.

Grazia is more optimistic.

“I had nothing but great experience there,” he said. “I would go back to North Carolina in a heartbeat.”

http://www.greensboro.com/news/with-incentive-program-to-expire-film-industry-leaving-n-c/article_e770d432-2837-11e5-8f61-2f48d17423c2.html

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