The road to filming is seemingly paved with good incentives. Tax credits, rebates and the like are emerging in states and municipalities across the country, continuing a trend which represents a dramatic turnaround from the situation of just three-plus years ago when assorted film commissions were facing significant budget cuts, if not outright elimination, due to belt tightening at the state government level.
Many of the incentives in play today include TV commercials and branded content projects as qualifying projects.
The latest major development is chronicled on this week’s front page, the passage of incentives expressly designed for commercial production in the State of New York, which has funded the incentives to the tune of $7 million. Still to be determined is exactly when the tax credits will take effect, the prime options being on July 1, 2006, or by January 1, ’07.
Additionally, the City of New York has set up a matching fund of $3.5 million to encourage spot production in Gotham.
The state funding goes toward three areas:
- A growth credit provision designed to encourage companies to increase the amount of business they bring to the state by providing a refundable tax credit of 20 percent of qualifying production costs solely on newly generated business. The amount will be based on the difference between the total qualified production costs of the current year and the total amount of production costs of the preceding year. The growth credit would be funded by $3 million of the aforementioned $7 million total.
- A downstate jobs credit which looks to retain the existing share of work that is currently being produced in New York. This provision would apportion $3 million in credit funding annually to eligible commercial production companies that conduct filming activities within the Metropolitan Commuter Transportation District. The jobs credit is five percent of the total production costs that exceed $500,000 and would be distributed on a first come, first served basis.
- And an upstate jobs credit which recognizes that spot production regularly occurs outside major metropolitan areas that are considered traditional production centers. This incentive component would provide $1 million annually to all eligible commercial production houses that participate in filming activity outside the Metropolitan Commuter Transportation District. This jobs credit would be five percent of the total production costs that exceed $200,000 and would be distributed on a first come, first served basis.
MASS. APPEAL For Mark Hankey, executive producer of Boston-based Picture Park, an Association of Independent Commercial Producers (AICP)-member company, one of the most important elements of Massachusetts’ recently passed production incentives package is that it applies not only to features and television programs, but also to commercials.
Hankey is a member of the Massachusetts Production Coalition (MPC), which played a key role in helping to bring about this anti-runaway production measure. The MPC is an alliance of production professionals and related groups in the state that are actively engaged in content creation for all media. The mission of the volunteer-driven coalition is to help maintain, promote, increase and expedite the development, creation and production of film, video and new media content in the city of Boston and throughout the state of Massachusetts.
MPC representatives lobbied vigorously for the production incentives, garnering bipartisan support for the initiative in both houses of the state legislature.
Hankey was brought into the MPC fold in early 2005 by Chris O’Donnell, IATSE Local 481 business manager and MPC legislative committee chairman. In a relatively brief span, the MPC has made significant gains.
As reported in December, the principal elements of the incentives package include: a 20 percent wage tax credit on a filming project’s source payroll in Massachusetts; a 25 percent tax credit for qualifying Massachusetts production expenses (excluding payroll); and a sales tax exemption on Massachusetts production costs.
To qualify for the 20 percent tax credit and the sales tax exemption, a producer has to incur at least $250,000 in Massachusetts-based production costs in a year. To be eligible for the aforementioned 25 percent tax credit, more than half of the total production must take place in Massachusetts or more than half of the total production costs need to be spent in the state.
The total credits available for any single production are capped at $7 million. And there’s no appropriations cap on the bill, meaning that funding for the anti-runaway provisions will cover the entire year.
The new measure recently took effect. However, the provisions are retroactive to January 1, 2006.
AICP executive VP Steve Caplan describes the legislation as “ambitious and far reaching….We’re encouraged and pleased to see these incentives enacted–and that they apply to commercials.”
Next on the MPC agenda is to bring about the formation of a state sanctioned film commission under the Massachusetts Executive Office of Economic Development. A full-fledged state film office is needed to help facilitate and administer the new incentives.
O’Donnell relates, “This new law is going to open the floodgates for production in Massachusetts, and we have to become very effective in channeling this new business into our community. The MPC’s sole agenda is to facilitate production in the commonwealth–and we look forward to working with the Office of Economic Development to make this the mission of the new film office as well.”
MONTANA, NEW MEXICO While new pro-filming packages emerge, existing incentives have also been sweetened in other states. An example of the latter is New Mexico. Last month, Governor Bill Richardson (D-New Mexico) signed into law a measure that increased potential tax credits on a film project to 25 percent, a five percent jump over the previous limit.
The incentives cover certain expenses of making a feature film, TV program, national or regional commercial, music video, video game, and documentary shot in New Mexico. A credit of 25 percent of any portion of stand-alone qualified expenditures ranging from set construction and crewmember wages to postproduction work (i.e.–special effects, sound editing) is provided for these projects. The credits take the form of a direct cash refund.
Meanwhile in Montana, new incentives initiated by Gov. Brian Schweitzer (D-Montana) took effect just a few months ago. The initiative applies to feature, TV, commercial and documentary production. The Big Sky on the Big Screen Act provides a 12 percent rebate on hired Montana labor (covering the first $50,000 worth of wages paid per Montana resident) and an eight percent rebate on qualified production budget expenditures including, but not limited to, hotel and lodging, production equipment rental, fuel costs, expendables, lumber/construction materials, vehicle rentals, and food and catering costs. (In addition to these new incentives, Montana has no sales tax.)
“This incentive makes Montana more competitive in the film industry since producers will now get a refundable tax credit on their Montana production expenses,” states Tony Preite, director of the Montana Department of Commerce, which oversees the Montana Promotion Division, of which the Montana Film Office is a part.
Montana also has a newly appointed Montana Film and Television Advisory Council. Created By Gov. Schweitzer, the 28-person body is responsible for promoting Montana to the film and TV industries, and for advising the Department of Commerce’s Film Office, the Governor’s Office of Economic Opportunity, and the Governor’s office. The Council’s members have experience in varied production, spanning, film, video and stills. A key Council priority is to promote the new tax incentives. Additionally, the Council will work with the Department of Commerce to sponsor workshops, seminars and festivals on filmmaking.
Council chair is Bozeman, Mont.-based film producer Patrick Markey. Co-chair is Missoula-based film producer Chris Cronyn.
FOREIGN FARE The initial momentum dating back several years ago for state incentives was generated by film-friendly measures in foreign countries. Illinois’ groundbreaking package, for example, was in response in part to Canadian incentives, which had been luring American production.
International incentives still figure prominently in the mix. The Association of Film Commissioners International (AFCI) lists assorted tax credits, rebates and other perks on its Web site spanning such countries as Australia, Belgium, Brazil, Canada, France, Germany, Ireland, Italy, Jamaica, Netherlands, New Zealand, Spain, Sweden, the U.K., Puerto Rico and Venezuela.
While a fair amount of these incentives don’t include commercials, the prospect of actor talent buyouts in foreign countries has proven attractive to a number of advertisers.
The global scope of incentives will be reflected both on the exhibit floor and in the panel discussion agenda of this weekend’s AFCI Locations Trade Show, April 7-9 at the Santa Monica Civic Auditorium.
On Saturday (4/8), from 10-11:30 a.m. at the Doubletree Guest Suites Hotel in Santa Monica, Locations will present Film Incentives: An Independent View of What Governments are Giving, a roundtable discussion moderated by attorney Vince Ravine, with panelists such as AICP’s Steve Caplan, and Jared Underwood of Comerica Bank.
The day prior to the opening of the Locations Trade Show, an AFCI-related discussion on accessing film and TV production incentives worldwide is scheduled. The session was co-sponsored by Loyola Law School, Los Angeles, the L.A. law firm Thelen Reid & Priest, and the Location Managers Guild of America. Panelists included Franck Priot of French film commission Film France; Rino Piccolo of Italy’s Campania Film Commission, Sue Hayes of Film London, Brenda Sexton of the Illinois Film Office, and Paul Steinke of Walt Disney Pictures.
Meanwhile, representation from international film commissions on the Locations Trade Show exhibit floor continues to build. Among those slated to showcase their wares–including locations, infrastructure, incentives and resources–are such international markets as Australia, the Bahamas, Belgium, Brazil, Canada, Chile, Ireland, Fiji, France, Germany, Hong Kong, Iceland, Ireland, Italy, Jamaica, Japan, Jordan, Kenya, Malaysia, New Zealand, Peru, Puerto Rico, Scotland, South Africa, Spain, Thailand and Trinidad.
Film commissions and support services from throughout the U.S. continue to be mainstay exhibitors. Last year’s Locations drew some 3,400 production industry attendees, including members of the commercialmaking community spanning production houses and ad agencies.
Feedback from exhibitors was positive on the quality of booth traffic, with location decision-makers spanning features, TV, spots and documentaries. This will mark the 21st year of the annual AFCI Locations event, which provides a centralized venue where producers, directors, location managers, agency creatives and other industry artisans can connect with film commission members from around the world.