While much attention has been paid to federal anti-runaway legislative efforts, they have thus far borne no fruit. As referenced in this Special Report’s lead story (see p. 25), whether the proposed federal wage tax credit bills in the U.S. Senate and House of Representatives will gain passage is debatable.
Considered even more of a long shot is the proposal calling for imposing countervailing tariffs on U.S. films produced in Canada with Canadian government subsidies. Supporters of the tariff petition have withdrawn it—at least for the time being—from consideration by the U.S. Department of Commerce, the U.S. Trade Commission and the International Trade Administration (SHOOT, 1/18, p. 19).
Additionally, many significant segments of the industry have expressed opposition to the proposed tariff, deeming it counterproductive to the anti-runaway cause and contending that it could actually damage the chances for the aforementioned federal wage tax credit measure.
However, there’s much anti-runaway movement afoot on state levels. The Film California First (FCF) program has gained favorable reviews from users in the commercialmaking and longform production communities (SHOOT, 8/10/01, p. 1). FCF provides reimbursements of certain film-related costs incurred by qualified production companies when lensing on local, state or federal public property in California.
Also scoring positively with producers has been California’s State Theatrical Arts Resources (STAR) partnership, which like FCF is overseen and administered by the California Film Commission (CFC), headed by Karen Constine. The STAR system makes designated state-owned and -controlled surplus property and unused real estate assets available to producers for no or a low-cost contract fee. Gov. Gray Davis (D-Calif.) recently made more than three dozen surplus state properties part of the STAR program, including the 10-story State Building in Downtown Los Angeles, numerous historic houses throughout Pasadena, and the Metropolitan Hospital in Norwalk. The latter venue could prove attractive to producers, saving them as much as $5,000 in daily location costs as compared to a comparable site (SHOOT, 11/23/01, p. 1).
In an informal survey of film commissions throughout the U.S., SHOOT got an overview of other incentives that are either in the works or fully up and running.
ILLINOIS
After working aggressively for years in an effort to attract film, TV and commercial projects to shoot in the state, Illinois Film Office (IFO) director Ron Ver Kuilen is passionate about the issue of runaway production. "We have a great product here," says Ver Kuilen, who is also a board member and former second national VP of Film US, an organization of nearly 200 U.S. state and city film commissions formed to keep production in the country. "The problem is that we are so priced out of reality. As we’re losing the business, the infrastructure is being built up in other countries. Soon, it won’t be runaway production. It’ll be gone-away production in very short time if nothing is done here."
With regard to Illinois, statewide film revenues have increased for four of the past six years; however, according to Ver Kuilen, the last two years have seen a drop of 40 percent.
Illinois has instituted several programs meant to help counter runaway production, albeit primarily in the feature realm. Just launched in December 2001, "Lights, Camera, Illinois" is run through the State Treasurer’s office and can fund projects—in the form of loans—of up to $10 million. The plan gives borrowers 18 months to pay back the principal. "The trouble," relates Ver Kuilen, "is that you have to have appropriate letters of credit—collateral—equal to the sum you’re borrowing. It would work well for smaller companies … that don’t want to put up their own monies."
Another initiative available since spring ’01 is the Illinois Development Finance Authority (IDFA), which has a participation loan program funded to $500,000. Ver Kuilen notes that this program represents a viable option, for instance, for independent filmmakers who need finishing funds (i.e., to get their film made into a 35mm print). "The state has allotted five hundred thousand dollars in the first year, and they’d rather see five projects get made at one hundred thousand dollars apiece than one project."
Additionally, Ver Kuilen says that the IFO is attempting to initiate a wage rebate through the Illinois legislature by lobbying to have film-related productions (including features, commercials and corporate videos) included under the Illinois Economic Development for a Growing Economy (EDGE) program. Intended to help level the playing field between Illinois and its neighboring Midwestern states when competing for jobs, EDGE is administered by the Illinois Department of Commerce and Community Affairs (DCCA), and provides tax credits to qualifying applicants.
"We’re trying to hitch our star to its wagon," says Ver Kuilen, who said that, if the effort is successful, it would amount to 25 percent on the first $25,000 of wages paid to Illinois hires, per project. He relates that, in the spring, his boss, DCCA director Pam McDonough, will present the issue to the different finance and revenue committees.
Runaway production, of course, has become a problem of epidemic proportions on a national level—a trend that was exacerbated by the drawn-out actors’ strike. Ver Kuilen observes that, some 20 years ago, shooting in Canada "didn’t exist." But that country gradually evolved into a popular filmic destination due to the favorable exchange rates and governmental incentives; the latter, instituted in ’97, were what really drove people to shoot there, says Ver Kuilen.
Ver Kuilen voices his desire to see legislation on U.S. wage tax credits passed on a federal level but, as he observes, this has proved a difficult task. "In the political arena, how a bill becomes a law is daunting—on a federal and a local level. Most legislators will see the huge box office figures for a movie like Harry Potter and read about all the Hollywood stars who are paid millions of dollars; they think that [legislative relief] amounts to corporate welfare for Steven Spielberg."
It is, of course, the crew members—"the people who work twelve to thirteen hours a day pulling cables to make an end product," says Ver Kuilen—who are most hurt by runaway production. And, he emphasizes, it is this group of people who need to make their voices heard to governmental officials. "They need to let the people that represent them know what challenges they’re facing. If they choose not to do that, you cannot ask the government to help you out.
"People in government don’t want to hear me railing [about runaway production]," Ver Kuilen continues. "They want to hear it from the industry. There needs to be pressure put to bear on them [legislators]. It is incumbent on the federal and local government to make product cheaper so we can compete in this business. If they don’t, then they’re going to let this business slide away [from the U.S.]. The film industry can go the same way as the auto-making, steel-making and electronics industries if the government chooses not to support this."
While legislation would provide a measure of relief, Ver Kuilen believes that, ultimately, a fundamental shift in thinking and priorities is called for if there is to be meaningful change. This notion of supporting one’s own community may find greater support than it has in the past, particularly in the wake of the Sept. 11 attacks.
"The film industry should allocate funds in an effort to re-educate people who need to understand that profit is not the end-all, be-all," Ver Kuilen says. "There has to be a certain amount of fairness [involved in conducting business]. They need to consider, ‘Do you want your state, your community, to make a fair wage?’ There has to be [someone to serve the role of] a coach, who understands there is a fairness to let all the players play, not just the favorites. It may be pie-in-the-sky, but I think the industry has got to set some standards."
FLORIDA
Prompted by the economic downturn since Sept. 11, the Florida Governor’s Office of Film & Entertainment (OF&E) has teamed with the American Advertising Federation (AAF), District 4-Florida, to launch the Production Partners program, a local anti-runaway production initiative.
The Production Partners program consists of a series of joint meetings geared to help Florida’s film, entertainment and advertising industries build relationships and foster interaction in order to increase awareness of local resources available. The program’s goal is to encourage business ties between both groups, and to ultimately strengthen Florida’s economy by keeping business in Florida through a grass roots local collaboration.
As announced at the program’s launch last month, the initiative will initially focus on 14 major urban and rural areas of Florida that contain both local film offices and AAF District 4 chapters. Per the initiative, the OF&E has agreed to commit up to $300 for each film office to help sponsor the first round of casual networking meetings. Plans call for a representative from the OF&E and the 4th District AAF board to attend each initial event to speak to the importance of this new collaboration, and to distribute information about the financial incentives for the industry.
Rebecca Dirden Mattingly, the Governor’s Office Commissioner of Film & Entertainment, observes, "The advertising and production industries are sister industries, but yet they haven’t really networked and communicated. This program is an effort to bring the two industries together in a more collaborative, communicative way, to let them know there are resources here."
Mattingly relates that, to date, initial meetings have taken place in both the Miami and Orlando regions, while others are now being planned for the Naples and Tampa/St. Pete areas. While the OF&E has spearheaded the effort to start a dialogue between the advertising and production sectors, Mattingly adds, "We’ll keep a hand in, but we’re not going to micromanage this. We’re the wholesale cheerleaders."
Production Partners, according to Mattingly, is an extension of a local PSA campaign created last year in the wake of the Sept. 11 attacks in order to promote business in Florida. The PSA, titled "Get Back to Life," was an initiative of the Florida chapter of the Association of Independent Commercial Producers (AICP), which produced the PSA (directed by Egan Stephens, Jr., of Native Films, Miami), and the Miami Dade Mayor’s Film Office. The AICP invited ad agencies to submit proposals for the PSA campaign; the selected submission came from Publicis/ Sanchez & Levitan, Miami. That endeavor, chronicled in SHOOT’s 11/23/01 Florida Special Report, sought to reassure in-state consumers that Florida is a flourishing, pro-growth, pro-technology state.
Paul Meena, VP/general manager of Orlando-based Universal Studios Florida Production Group, is the vice chair of the Florida Film & Entertainment Advisory Council. "Since the events of Sept. 11, there has been a slowdown that has put fear in people," he states. "The idea of Production Partners is to share names and contacts as a way to generate more business. To have local film commissioners sitting with people from ad agencies, the idea is to encourage a sharing of resources and knowledge. Someone can say, for instance, ‘We just got a spot for such-and-such, and we need this,’ and be told where they can find a certain camera or a great production company."
OTHER DEVELOPMENTS
Here’s a rundown of activity at several other states:
•Georgia has unveiled a point-of-purchase state sales tax incentive to benefit production companies that choose to locate their projects in the state. The tax break for eligible companies applies to a wide range of materials and services, including motion picture film and film processing, special effects suppliers, costumes, construction materials, and lighting, sound and camera equipment. Producers can save between five and seven percent on most below-the-line materials purchased, rented or leased in Georgia. Eligible productions include features, TV movies and series, commercials and music videos. All productions must have an intended distribution outside of Georgia. To participate in the program, production companies need to apply for certification from the Georgia Film, Video & Music Office.
•Under discussion in New Mexico is a proposal to offer producers up to a 15 percent wage tax incentive on the cost of producing a film. The rationale is that the jobs and revenue generated by the production would more than offset the cost of the incentive. The New Mexico Film Office hopes the state legislature will consider this and other possible anti-runaway measures—one being an investment program benefiting a production company that meets certain requirements, including shooting the majority of a project in the state.
New Mexico already has in place an up-front tax credit (instituted in ’96) at the point of sale for a variety of direct production expenditures (e.g., animal handlers and wranglers, artwork, camera equipment and rental, prop rental/purchase).
•Montana is putting together an incentive program that’s slated to soon be submitted to the state legislature, according to Stan Iversen, director of the Montana Film Office. Details of the anti-runaway package were not yet finalized at press time.
•For commercial production, Minnesota continues to offer an exemption on state sales tax.
•This month New Hampshire started its "Visiting Television & Film Producer Program." Via this initiative, the New Hampshire Television and Film Office encourages local film and tourism industry partners to offer support through complimentary and/or discounted products and services, as well as in-kind assistance in return for possible inclusion in the stories, publicity and business produced as a result of the visit.
Jay Brenchick was hired in November as New Hampshire’s first full-time Film Office director. Among his responsibilities is to research and help develop various programs, initiatives and incentives that can help the state attract lensing.
•And the film commissions of Arizona and Sonora, Mexico, have entered into a partnership that will promote their location filming assets and enable production companies to coordinate work on both sides of the border, cross back and forth with ease, and access logistical support and resources from both jurisdictions. The two film commissions contend that the resolution is the first and only bi-national film partnership of its kind involving the U.S. (SHOOT, 11/30/01, p. 8).
Arizona Film Commision director Linda Peterson Warren says that the arrangement broadens the resource offerings and locations for the two jurisdictions. For instance, Sonora offers an ocean, as well as historic haciendas, not available in Arizona. "There’s a whole array of cultural differences," she adds. "Sonora’s small towns are very different than our small towns, and often projects need both."
Kathy DeSalvo, Millie Takaki and Sarah Woodward contributed to this story.
