Archive for the ‘State/Government Production Incentive News’ Category

http://michiganmessenger.com/41634/snyder-not-a-fan-of-film-tax-credits

By ED BRAYTON

Republican candidate for governor Rick Snyder is not a big fan of the generous tax credits — up to 42 percent of the total costs — used to attract Hollywood production companies to make movies in the state of Michigan. The Detroit Free Press reports:
When asked whether Snyder supports or opposes the tax breaks, his spokesman, Bill Nowling said: “He thinks the program in the long term is not financially sustainable. Having said that, he recognizes there are businesses in the state that have made investments based on those (tax) credits.”

Nowling said Snyder believes the tax breaks need to be looked at because of Michigan’s budget woes and the candidate is concerned that other states could offer bigger incentives. Snyder is willing to meet with industry representatives, Nowling said.

His opponent, Lansing Mayor Virg Bernero, took a slightly different tack:

Democratic candidate Virg Bernero wants to give the tax breaks more time and then see whether they are making the state money, said Cullen Schwarz, Bernero’s spokesman.

“We’re in a global economy. Other states are using these tools to attract jobs and economic development,” Schwarz said. “We can’t make Michigan play with one hand tied behind its back.”

The film tax credits, and the use of tax credits in general, have become a political issue because state revenues continue to decline while the state gives away more than $30 billion a year in tax credits, more than the total annual tax revenue. Most experts say that the state needs to have some means of determining which tax credits are worth keeping and which are not.

http://www.thedurhamnews.com/2010/09/04/203399/how-the-film-tax-credit-works.html

Canaan Huie, a tax authority on the N.C. General Assembly staff, on how the state’s film-production tax credits work:The process for claiming the production company credits is fairly straightforward. At the end of a production company’s fiscal year, the company files a North Carolina tax return. In order to claim the credit, the company must also submit an additional form describing the production, the counties in which the production was filmed, and a listing of qualifying expenses.

The Department of Revenue then processes the return. Unlike most returns, the department audits every claim for a production company credit to ensure that the production itself qualifies for the credit and that the amount of credit claimed is appropriate.

If the credit is greater than the total amount of any taxes the production company owes the state (as is usually the case with this credit), the excess is refunded to the production company, resulting in a net loss to the state. The refund is made only after the audit has been completed.

http://www.ktbs.com/news/24884576/detail.html

Today Mayor Cedric B. Glover announced the implementation of the City of Shreveport’s film industry incentive program and the awarding of the first sales tax rebates under the ordinance.

Passed by the City Council by Resolution 86 of 2009, the program provides sales tax rebates on production expenditures including lodging within Caddo Parish to qualifying film projects. District A Councilman Calvin Lester Jr. sponsored the legislation and Arlena Acree, the Mayor’s Director of Film and Entertainment, provided advice and guidance to see the ordinance through to passage.

The first two film projects to take advantage of this program are Straw Dogs and Drive Angry, two productions based in Shreveport earlier this year. Together, they spent $5,515,089 in eligible production expenses and paid $252,069.99 in total sales taxes (parish plus city). Under the incentive program, the projects received $137,877.23 in total rebates representing the 2.5% paid in city sales tax.

“We are proud and pleased to be implementing this film industry incentive program,” said Mayor Glover. “We recognize and firmly believe that the name of the game in this industry is “competition,” and we also firmly believe that these innovative local tax incentives will make Shreveport and the surrounding area even more competitive in attracting investments and future film projects. I want to thank Arlena Acree on my staff who continues to work tirelessly to promote and expand the film industry here in Shreveport, as well as the City Council for their vision and determination in working to keep this exciting, high-growth industry here in Shreveport.”

As of September 1, Shreveport has hosted 13 film (movie or television) productions so far this year with total budgets of more than $170 million. These projects have logged 450 production days and created 1,241 positions for crew. The industry has also provided a healthy boost to the local economy, with film projects responsible for 30,553 hotel room nights and 730 round trip airline tickets purchased between Los Angeles and Shreveport or Dallas Fort Worth.

http://www.freep.com/article/20100905/BUSINESS06/9050486/1318/Half-of-films-dont-get-Michigans-tax-breaks

24% of projects rejected

Michigan offers the most attractive movie tax breaks in the nation, but that doesn’t mean it’s giving away money to every filmmaker who shows up at its door. Only about half of all productions that have applied for these incentives were approved.

Since the tax credit program’s launch in April 2008, 183 of the 352 applications for the tax breaks have been approved. A quarter of the projects were denied, and nearly 25% of the applicants dropped out of the process.

Projects can be rejected for several reasons, from financing problems to a lack of economic benefits for the state.

Movies that failed to get the tax breaks include both low-budget independent productions like the “The Art of Power” and major Hollywood pictures such as “The Big Valley,” a big-screen adaptation of the 1960s western TV series.

Officials denied a tax credit to “The Big Valley” because it didn’t plan to hire many Michigan actors because of its large star-studded cast, which includes Jessica Lange, Stephen Moyer, Richard Dreyfuss and Aidan Quinn. “It would have been great to be in Michigan,” said director Daniel Adams. “Hopefully we’ll do another movie there.”

On Sept. 20, he and a 150-person crew plan to start filming in Baton Rouge, La., where they obtained a tax credit in less than 48 hours.

Many don’t make the cut

When local filmmaker Adrian Walker set out to make his first movie in early 2009, he mistakenly assumed that obtaining a Michigan film production tax credit would be the least of his worries.

After all, he faced far bigger challenges, such as finding investors and shooting dozens of scenes in more than 50 locations in just 28 days.

Walker persevered, overcoming many hurdles. The 28-year-old screenwriter and producer is now talking to movie theater chains about showing his suspense thriller “The Art of Power,” which wrapped up filming in metro Detroit last summer and may debut this fall.

Much to his surprise and frustration, Walker hasn’t been able to claim any tax breaks. The state denied his application for one.

“It was very disheartening to us,” Walker said, noting that the 30 investors in his movie were counting on the tax incentive.

Walker’s experience isn’t unique. So far this year, the state has rejected about 24% of the 88 projects that have applied for Michigan’s movie tax breaks. That doesn’t happen in rival movie-making states such as Louisiana, New Mexico and Georgia, where projects are rarely denied.

“Michigan is a lot stricter as far as what they want,” said Marco Cordova, director of business development and production planning at Entertainment Partners, a California production management services company.

He noted that filmmakers are often on tight schedules and favor states where it’s easy to get tax credits. But Michigan officials defend its system, saying it helps ensure that only legitimate film companies get taxpayers’ money. Scandals involving film incentives have erupted in other states, such as Iowa and Louisiana.

A money maker

In Michigan, the generous movie tax breaks have generated criticism from some in the business community. So far, the state has paid $62 million to production companies. But that’s been offset by the $348 million that filmmakers have spent in Michigan.

Michigan’s tougher tax credit approval process may be costing the state business. For example, so far this year, Louisiana has received 101 applications from filmmakers compared with 88 for Michigan, even though the southern state offers a lower tax credit and has a higher minimum spending requirement.

“It’s very rare at this point where we will see a project denied,” said Christopher Stelly, Louisiana’s director of film industry development. “We want to be as business-friendly as possible.”

The Michigan Film Office insists it is business-friendly, too, as evidenced by its industry-leading 42% production tax credit. “We are in the business of bringing jobs to the state,” said the agency’s spokesman, Ken Droz. “But it’s not a blank check. It’s not carte blanche.”

In Michigan, officials from the state’s Film Office and its Treasury Department compare every production’s potential benefits to the state with the estimated cost of the credit. Filmmakers must show they have financing for their project and meet other criteria.

The process has left some filmmakers frustrated. Though Andrew van den Houten received a tax credit for his horror movie “The Offspring,” which was filmed in the Muskegon area, he couldn’t get one for its sequel, “The Woman.” That forced him to move production to Massachusetts.

According to van den Houten, Michigan officials objected to the film’s gory content, questioned its financing and said it wouldn’t promote tourism in Michigan. But the 30-year-old producer said he submitted bank statements showing he had the money to make “The Woman.” He also said the movie planned to show beautiful scenery from Michigan’s Upper Peninsula. Van den Houten believes his film is less offensive than “Hostel 3,” another horror movie that did receive approval for a tax break.

“It doesn’t seem right that a state can violate a First Amendment right,” van den Houten said. “Whatever happened, in my opinion, was very misguided. Michigan really missed out on an opportunity.”

The Film Office said it welcomes van den Houten to bring other movies to the state. But officials thought the gruesome and graphic depictions in “The Woman” were “unlikely to promote tourism or reflect Michigan in a positive light,” Droz said.

In Walker’s case, content wasn’t the issue. He said he couldn’t get anyone to respond to his tax credit application despite repeated phone calls and e-mails to the Film Office. With equipment rentals and actors standing by, he said, he quickly reached a point where he could no longer afford to postpone filming.

After making his movie, Walker still tried to get a response from the Film Office. In March, he finally received a letter denying his application for a tax credit because he had already filmed his movie. Under the state’s rules, production expenses cannot be incurred until after a movie is approved for a tax break.

The Film Office denies applications fall through the cracks, but there are sometimes delays. Walker “shot before we were able to give him an answer,” Droz said.

Second chances

A denial doesn’t always mean a production is out of luck. In several cases, projects have reapplied for the tax credits by providing additional information. For instance, the Film Office initially rejected a tax break for “Ariel & Zoey,” a new children’s variety TV show filmed in Livonia and Ann Arbor that features 11-year-old identical twin sisters Ariel and Zoey Engelbert and their 9-year-old brother, Eli.

Their father, Matthew Engelbert, made some modifications to his application and resubmitted it. In mid-May, the production received approval for a tax credit. The show’s first season will debut the week of Sept. 27 in 46 states on a variety of TV channels, including the Retro Television Network and several NBC-owned stations.

Droz said the Film Office did not realize that “Ariel & Zoey” was going to be nationally syndicated. Productions must be shown in at least two states to qualify for the tax break.

The Engelberts, who live in Ann Arbor, are already planning to film the show’s second season. Without the tax credit, “I don’t know if we would have been able to pull it off,” the twins’ father said.

http://www.bizjournals.com/albuquerque/stories/2010/09/06/story8.html?b=1283745600^3897101

NEW MEXICO BUSINESS WEEKLY - BY Megan Kamerick NMBW STAFF

Anyone who wonders how film incentives have changed the industry landscape need look no further than Warner Bros. Studios in Los Angeles.

“We have not made a movie on that studio lot in three years,” said Gary Credle, who worked as a senior manager at the studio for more than 20 years and continues to serve as an adviser. “Movies are not made in L.A. because of tax incentives; because everyone wants to do it as inexpensively as possible.”

There are still television shows shot there, but not feature films, he added.

Credle was part of a panel of industry experts who spoke at the Hard Rock Hotel & Casino as part of the Albuquerque Film Festival, which wrapped its second year on Aug. 29. In many ways, the industry is in turmoil because of advances in technology, panelists said, but it’s also a time full of opportunity.

That notion was echoed during a panel on women in film by Jo Edna Boldin, a casting director who has worked in Texas and New Mexico for 25 years on films such as “No Country for Old Men.”

“Everything is up in the air and changing and it just doesn’t work the way it used to work,” she said. “People are thinking of ways to do films for a smaller budget and guaranteed distribution. It’s all up for grabs now, so why don’t smart women move in and take over a bit?”

Credle said production is now portable, thanks to the proliferation of incentives; distribution is mobile, usually via a handheld device; and delivery is digital. Consumers are bombarded 24/7 with pleas to spend their time and money in an endless array of ways, from films and magazines to games and websites. He predicts the winner in all this will be Apple.

“I used to have an office and assistants. Now I have this and this,” he said, holding up his iPhone and iPad.

As for the overriding factor in production, it all comes down to incentives, he said.

“If there is not an incentive in New Mexico, this business will dry up and go away,” Credle said.

New Mexico offers a 25 percent tax rebate on qualified production expenditures, as well as rebates for training local crew in certain positions.

Ryan Piers Williams, who directed “The Dry Land,” said at the festival screening of the film that the New Mexico incentives were key to him completing the project, which had a budget of less than $1 million. The feature film is about an Iraqi veteran who comes home with post-traumatic stress disorder.

Brian Goldman, vice president of operations and music publishing of Here Media, said one of his staff people spends half his time tracking where incentives are around the world. And New Mexico’s incentives are one of the reasons ReelzChannel moved its headquarters to Albuquerque last year, said Steve Holzer, executive producer of original programming for the company.

“We send all our footage here and edit here, so we get the credit for editing in New Mexico,” he said. “The operating expense just to move to New Mexico was a huge, huge savings.”

Holzer said he ran into Republican gubernatorial candidate Susana Martinez recently and mentioned the film incentives, which have become an annual battle in the Legislature.

The remarkable advances in technology have intersected with the economic meltdown to make this a particularly disruptive time in the film industry, panelists said. Reelz did a story recently about some young filmmakers who shot, scored and edited their entire short film on an iPhone, Holzer said, which caught the attention of Gus Van Sant, the iconic indie film director.

The pressure to find revenue is intense, and no one has quite figured out the magic bullet on getting paid via digital distribution. (Apple gets it, but they’re not sharing it, Credle added.) Part of that shift is demographic. Young people have grown up online, and they’ve become accustomed to not paying for much of their entertainment.

Panelists turned a young attendee at the panel into an impromptu focus group of one, asking him about his own habits. His friends might pirate videos online, but they also claim that they’ll buy it if they like it, he said. However, if they don’t like it in the first 10 minutes, they’ll move on.

One of the most notable recent changes has been the loss of video stores, although panelists did note that RedBox, which has self-serve kiosks, mostly at grocery and drug stores, has exploded.

Tony Ventura, who recently launched Rivercoast Distribution, said RedBox’s success has much to do with how grocery stores operate. RedBox takes up about four feet and requires stores to do almost nothing. And all the children’s films are at kids’ eye level. He thinks similar models will grow, such as Blockbuster NCR, but Credle predicts the RedBox model will cease to exist in three years.

The demise of the video store model is just one reason financing has gotten increasingly difficult for filmmakers, said Goldman. Producers once could get money from Blockbuster, with a script and stars in hand, and make a film, since Blockbuster was counting on revenue from rentals. That doesn’t happen anymore.

“You used to be able to go to an investment bank — God, I miss those days,” Goldman said.

Now, with a $10 million budget, you go to a bank and they might lend you $1 million if you find the rest.

“It’s why smaller films have a better chance,” he added.

http://www.kcrg.com/news/local/Culver-Doesnt-Plan-to-Restart-Film-Tax-Credits-for-New-Projects-102187799.html

By Rod Boshart, Reporter

DES MOINES, Iowa – Gov. Chet Culver said Friday he does not plan to restart the state’s troubled film incentive program for new applicants once the obligations have been met for projects that received initial approval for tax credit awards before he halted the program nearly one year ago.

“As far as I’m concerned, they had their opportunity. It was exploited and I’ve got no interest and I don’t think the Legislature has much of an appetite for doing anything beyond what we’ve already committed to do,” Culver said in an interview.

“Iowans aren’t going to be taken for suckers and we’re going to hold those individuals accountable that did try to exploit the program.

But we’re moving on,” he added. “That has never been a focus that really makes a difference in terms of job creation and economic development.”

Also, State Auditor David Vaudt, a Clive Republican who Culver asked to scrutinize the film program last year, said he expects to issue his findings by the end of the month or early October – a drawn-out process that Culver, a West Des Moines Democrat facing a tough re-election battle against Republican Terry Branstad, says may carry political motivation as the Nov. 2 election approaches.

State officials announced last week they have resumed issuing tax credits to qualifying film projects, awarding financial incentives to two films from the Iowa Department of Economic Development using a revised process that includes a full audit of the project before state tax credits are issued.

The latest projects are part of a pool of applicants that received initial DED approval for tax credit awards before the program was suspended in September 2009 by Culver after an internal review found incomplete and inaccurate recordkeeping, altered contractual terms, questionable expenditures, use of pass-through entities, and broker fees in the management of a program.

The suspension was partially lifted last November for projects that had contracts with the state or had registered under the program. The program isn’t taking new applications, but those that had been approved before Sept. 18, 2009, are being allowed to negotiate contracts with the Iowa Film Office. The Legislature suspended any new applications until July 1, 2013.

Iowa’s tax credit program provides a 25 percent tax credit for production expenditures made in Iowa and a 25 percent tax credit for investors for projects that spent at least $100,000 in Iowa. But the Iowa Attorney General’s Office has clarified the program to indicate that producers could qualify for a maximum 25 percent credit for qualified expenditures made in Iowa.

Culver halted the state’s film tax credit program last September following revelations that some of the credits were used in the purchase of luxury vehicles and other potential abuses. Five people lost their jobs due to problems associated with the administration of the film tax credits, including the resignations of the state’s two top economic development officials and the dismissal of the director of the state’s film office.

Criminal charges since have been filed against the office’s former director, as well as production company officials for allegedly inflating expenses.

The criminal investigation began after Culver asked Iowa Attorney General Tom Miller, a Democrat, and Vaudt to look into troubled program last September.

In an interview, Vaudt said this week that his office has completed its fact-finding activities and is working on a draft report that could be issued by the end of this month.

“We’re working hard and as fast as we can,” he said. “We’ve gotten through the records and now we’re accumulating the findings and the results and drafting a report. I would hope maybe by the end of September or so we might be ready to issue a report. We are making good progress.”

However, Culver questioned the timing by Vaudt, who endorsed Branstad’s candidacy before Branstad won a three-way GOP primary in June.

“I’m sure he’ll wait as long as he can so it’s as politically sensitive as he’d like it to be,” Culver said Friday. “He has clearly demonstrated, especially in the last couple of months, that he is much more interested in partisan politics. I think the people of Iowa regret the fact that we have a rabidly partisan auditor who for three and a half years has had one goal in mind and that is to discredit in a partisan way our administration and I’m sure he’ll try to do that again but people won’t pay any attention to him because he’s got no credibility.”

Branstad has taken aim at the state Department of Economic Development in recent weeks, calling it “dysfunctional and scandal-ridden” and hurling allegations of government corruption at the Culver administration in likening the situation to Illinois rather than Iowa.”

Culver went on CNBC-TV Friday to tout Iowa’s success in attracting wind-energy projects and jobs to Iowa, its favorable ratings among national business measures and financial houses, and its balanced budget with $300 million in reserve.

The governor later said his administration has worked with 251 companies in the last 36 months to bring 20,000 jobs and $5.2 billion of economic development activity to Iowa, but Branstad’s negative portrayal on the campaign trail is hurting Iowa’s image among business interests.

“Terry Branstad is personally attacking me and my administration. The idea that there’s any culture of corruption is out of bounds and flat-out wrong and he needs to be careful about what he says. When he says that our economic development efforts aren’t working, that is tearing down the state of Iowa and that is wrong,” Culver said.

“Terry Branstad would like people to think that the film office is 98 percent of the Department of Economic Development, and he’s just flat-out wrong. It’s about 1 percent of everything they do over there,” Culver said. “In a political way, he and his campaign are trying to overstate the impact that that has had on our economic development efforts. It’s had zero impact on our state’s ability to recruit companies to create jobs and I would put our record of 20,000 jobs and 251 companies and $5.2 billion investment in our state up against any governor in America in the last 36 months.”

http://www.oregonlive.com/movies/index.ssf/2010/09/leverage_crew_says_theyre_80_p.html

Kristi Turnquist, The Oregonian

It’s not as if Portlanders are getting completely blasé about TV crews filming here. But on a recent Wednesday, the stars and crew of“Leverage” were able to film all morning at a downtown park block without much interference from passers-by.

And that’s just how they like it.

“We love it here,” says Dean Devlin, the show’s executive producer. Instead of being cranky and jaded by the presence of film crews around town — as Los Angeles residents often are, for example — Portlanders are invariably polite, Devlin says. “People are here so nice.”

On this particular Wednesday, the “Leverage” team is in its last week of shooting the third season of the TNT series. But TV viewers won’t see these episodes until December. In TNT’s curious scheduling, season three has a “midseason” finale, which airs Sunday night. The three-part season finale won’t air until winter.

“Leverage,” a lighthearted series about reformed crooks-turned-do-gooders, filmed its first season in Los Angeles and moved its production for its second season to Portland in 2009, driven in large part by Oregon’s incentive program for film-related projects. The incentive program rebates 20 percent of money spent on Oregon-based goods and services, with an additional cash payment of up to 16.2 percent of wages paid to production personnel.

“Leverage” has been renewed for a fourth season by TNT, and Devlin says, “We’re pretty certain we’re going to be back” in Portland to film it. “We’re 80 percent sure.”

Devlin’s company, Electric Entertainment, produces the series for TNT, so it’s his call to make. Outgoing Gov. Ted Kulongoski has been a supporter of the incentive program and developing the state’s film industry.

“We’re waiting to see what happens in the election” in November, Devlin says. Assuming the new governor and the Legislature don’t cut the film incentive program, Devlin says “Leverage” will return. “We’re big believers” in Oregon, he says. “It just needs to be competitive” with other locales that offer incentives to attract film projects, such as Louisiana, New Mexico and Vancouver, B.C.

John Rogers, co-creator and executive producer, says he hopes “Leverage” comes back to Portland to shoot. “I really prefer to shoot in a city with a bookstore like Powell’s.” But on a more serious note, Rogers says that people who complain about incentives programs are missing the point.

“You’re not giving us money,” he says. “It’s basically an accounting trick.”

With the state suffering a severe revenue shortfall, that may be a hard case to make, however.

Rogers says film projects like “Leverage” are an industry that brings jobs without making many demands on the city’s infrastructure. “We show up, we give a lot of people jobs, and we sweep up when we leave. We’re manufacturing, but we’re manufacturing media.”

Devlin says last season “Leverage” created about 150,000 hours of work for Oregonians, and that this season, that may wind up being closer to 200,000 hours.

Now it’s time to get back to work on the scene they’re shooting. Director Marc Roskin, Devlin and Rogers all hunch down to watch the monitors that show what the cameras are seeing.

Stars Timothy Hutton and Christian Kane are having a tense exchange having to do with Kane’s character, Eliot, and his connection with an evil financier, Damien Moreau, the “Leverage” gang has been chasing. They confront each other in the middle of one of the park blocks near the Portland State University campus. Co-stars Aldis Hodge, Gina Bellman and Beth Riesgraf sit on park benches on either side of Hutton and Kane, watching them uneasily.

The actors nail their lines. But Devlin spots something unplanned in the image on the monitor and points it at it, smiling — it’s a squirrel, zipping around, oblivious to the confrontation taking place nearby.

Hutton and Kane finish the scene, and there’s a break before the actors do another take. Hutton says he has come to feel at home in Portland, and admits to a fondness for Powell’s and El Gaucho and the RingSide restaurants.

The actors take their places again, and just as the sound recording begins, a loud blast from a passing truck erupts. They continue. But before long, some high-volume birds start squawking.

Another break. Hutton whistles the theme from “The Andy Griffith Show.” Bellman gives him a skeptical look.

“You can’t whistle,” Hutton teases her. “That’s a British thing, right?”

“I can’t whistle in tune,” says Bellman, who was born in New Zealand but later moved to London.

The actors take their places to do another take. Devlin is hungry, and someone goes across the street to a hot dog shop to buy him a hot dog.

He takes a bite, and watches the monitor again.

As the morning goes on, a small crowd gathers on the sidewalk to watch the filming. Others walk by, not turning their heads, but heading instead for the Wednesday farmers market a few blocks down.

And the filming goes on.

– Kristi Turnquist