House panel votes to end Michigan film incentives

By Kathleen Gray, Detroit Free Press Lansing Bureau

LANSING – There are three Cs that are essential to making any movie: Cost, convenience and creativity.

California beats Michigan out for convenience. But Michigan has the other two of those down cold, said Vans Stevenson, senior vice president for state government affairs at the Motion Picture Association of America: incentives for the film industry to hold down the cost of productions and a geography – ranging from urban nightlife to rural landscapes — that can creatively adapt to any script.

But the state is on the verge of losing one of those advantages since the House Tax Policy Committee voted Wednesday to end the incentives on Oct. 1, signaling the beginning of the end of a robust presence of movie, TV and media productions in the state. The full House and Senate still must vote, but the political winds seem to blowing against the industry.

Passage of the bill would likely spell an end to any chance of a permanent role for Michigan in the Warner Bros. franchise of future DC superhero movies. While director Zack Snyder of “Batman v. Superman: Dawn of Justice” has expressed a desire to return to metro Detroit for future spin-offs, the unofficial law of Hollywood is that big-budget projects go where the incentives are.

Ending the program, however, would have the biggest impact on the local film community, which is still fighting to keep alive the original goal of using the incentives to keep creative young people in Michigan and building an infrastructure and crew base to rival those of leading hubs like Louisiana and Georgia.

“Cost is the major factor in determining where a producer is going to locate a major motion picture,” Stevenson said. “In the United States, there are 40 states that have incentives, 30 are competitive. And Michigan is on that list.”

But perhaps not for long. The incentives never delivered on the promise of a permanent workforce dedicated to making movies in Michigan, said Trisha Kinley of the Michigan Chamber of Commerce. And the money spent on incentives came at the expense of a budget already strained by a host of other businesses cashing in tax incentives and blowing a $325- million hole in the state budget.

“The film subsidies send much of the $50 million allocated to them, out of state — to Hollywood millionaires and billionaires,” said former state Rep. Tom McMillin, a leading opponent of the incentives. “A lot more jobs will be created by keeping that money in Michigan and employing Michigan workers to fix roads or keep the money in the pockets of business owners across the state, so they can hire more employees.”

The incentives cost the state about $425 million since they were introduced in Michigan in 2008. But they also generated $1.3 billion in spending by producers on everything from wages and salaries to services ranging from lumber yards, to sound and lighting technicians, carpenters and electricians to food and lodging, according to annual reports filed with the Michigan Film Office.

“I’ve done seven or eight films here and tried to bring in other filmmakers to help employ people here,” says Lance Kawas, director and screenwriter of small independent films like “Fractured” with Eric Roberts. “(If the incentives end) I would have to go to other states to work rather than bring that business here.”

While big movies with big-name stars get much attention for coming to Michigan, the incentives are vital to local filmmakers, investors and crew members from numerous trades, not to mention local restaurants and hotels, says producer Eddie Rubin, who’s based in West Bloomfield.

“I’ve worked to shoot everything I do in Michigan, so I can make this my home, be with my family and put money back into the economy here,” says Rubin, who graduated from the University of Michigan in 2009 and has produced films like “Love and Honor” with Liam Hemsworth. “At the end of the day, state pride can only take you so far. You’ve got to provide for yourself and your family.”

Rubin already is seeing the impact of Wednesday’s vote on social media. “Just today, I’ve seen texts and Facebook posts saying, ‘Alright, it looks like it’s time to head out of here.’<TH>

Before the incentives began, the state attracted a few movies a year and there were big ones in there, including: “Anatomy of a Murder,” “Somewhere in Time,” “Hoffa,” “Road to Perdition,” “Beverly Hills Cop,” “GrossePointe Blank,” “8 Mile,” “Out of Sight,” “The Upside of Anger,” “Dream Girls,” “Presumed Innocent” and “Die Hard II.”

But once the incentives were put in place, 30, 40 and even more movies and TV series were being produced in the state every year. Even when the incentives were revamped under Gov. Rick Snyder in 2011 and capped at $25 million or $50 million a year, blockbusters still came to the state, including “Batman v. Superman: Dawn of Justice,” last year.

“They keep saying we need to reinvent ourselves in Michigan and this is a good way to do that,” said Patrick Kelly, a carpenter from Pontiac who has created a career working on many of the biggest movie and TV productions in metro Detroit in the past few years. “Without these, a lot of jobs are going to be lost.”

The incentives survived and even increased in recent years thanks, in part, to former Senate Majority Leader Randy Richardville, R-Monroe, who was the chief cheerleader for the film perks. Since he’s gone from the Legislature because of term limits, the film incentives are at real risk.

Various legislators have tried to defund the incentives every budget year without success. But with strong Republican majorities in both the House and Senate, the incentives face the first concrete effort to end them. Snyder has included the $50-million allocation in his 2015-16 budget, but he’s taking no position on ending the program.

And that’s leading to producers getting itchy and scratching Michigan off their list of movie locales.

“The instability is having an impact. When we keep talking about it, the industry suffers,” Kelly said.

And Stevenson said the uncertainty hurts.

“Our companies like producing in Michigan and want to continue to produce in Michigan. That’s evidenced by what’s happened in the last several years, even with the program changes under Gov. Snyder,” he said. “But with something like this, certainly there would be pause because producers need to have certainty. Right now, this kind of legislation creates a lot of uncertainty.”

The incentives were extended last year to last until the end of 2021, but state Rep. Dan LauwersR-Brockway, sponsored a bill to end the incentives and got the support from some businesses, conservatives and many GOP legislators during a hearing last week on the plan. A large contingent of union members, actors and film industry supporters spoke in favor of hanging on to the incentives to ensure the movie momentum doesn’t stall in the state.

About a dozen people put in cards to testify on the bill Wednesday — many union workers opposed to ending the incentives — but committee chairman state Rep. Jeff FarringtonR-Utica, said testimony was taken last week and the committee voted 8-3 to end the incentives without any debate. Two members passed on voting on the legislation.

In fiscal year 2014, some 27 projects were approved for nearly $64 million in film incentives on a projected $245 million in in-state spending. They were expected to generate almost 2,200 hires with a full-time equivalent of roughly 1,300 jobs.

The largest project to film here last year was “Batman v. Superman,” the big-budget superhero movie starring Ben Affleck and Henry Cavill in the title roles. It was shot in and around Detroit and East Lansing and used Pontiac’s Michigan Motion Picture Studios as a filming site and home base.

“Batman v. Superman” was given the OK for $35 million in incentives on an anticipated $131 million in Michigan spending.

The State of Michigan Retirement Systems, which manages the pension funds of state employees, teachers, police officers and judges, guaranteed $18 million in tax-exempt bonds that helped finance the building of the Pontiac studio. With the film incentives gone and movie productions potentially waning, the state would be on the hook to repay those bonds.

That fact was apparent during a post-2011 filming slump for the studio, which wound up defaulting on several six-figure bond payments that had to be covered by the state.

The film credits have been a point of contention almost since they were passed by the Legislature in 2008. The generous rebates — up to 42% — were revamped in 2011 after Snyder took office and he had hoped to phase them out entirely. The incentives have been capped at either $25 million or $50 million since 2011.

Kelly said he has started a petition drive to save incentives and has already gotten 1,700 signatures.

“You can support your family on this job, you have a pension,” he said, noting that no job in the film industry is a typical full-time job. “There are gigs every year, there’s a different production. There’s nothing traditional about the industry.”

The bill now moves to the full House for consideration and, if passed, it will go to the Senate.

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