The passage of a tax credits measure designed to help keep and attract more commercial production in New York State represents a major victory for the spotmaking community. As chronicled by SHOOT in recent weeks, the incentives package entails $7 million in funding from New York State. It is slated to take effect in January 2007.
Ironically this advancement for the entire ad industry sprung out of what at the time seemed a significant setback–namely when the Empire State Film Production Credit measure passed in 2004, covering theatrical features and TV programs but excluding commercials. The lesson learned from that failure to get spots into the incentives mix proved valuable.
Those tax credits for theatrical films and TV shows came out of what Matt Miller, president/CEO of the Association of Independent Commercial Producers (AICP), describes as “a PAC [political action committee] of many people all jockeying for different things. At the end of the day, their [film and TV people’s] objectives were not in line with ours. The clear lesson we learned when we got cut out of the incentives was the only way to deal with it is to do it yourself–There are times when coalition building is important. But there are also times–in this case–where you need to go it alone and carry your own water.”
So the AICP did just that. At its December ’04 meeting, the AICP board approved the hiring of a savvy lobbying firm–Wilson, Elser, Moscowitz, Edleman & Dicker–which helped open some doors in Albany, enabling AICP officials such as Miller and executive VP Steve Caplan to present the industry’s case to legislators regarding the importance of commercialmaking to the New York economy.
Bipartisan support was drummed up in both the New York Assembly and Senate, to the point where there was a real chance to have a spots-only bill pushed through in ’05. While that didn’t come to pass, the foundation had been laid for another bid, which has now born fruit.
Miller points out that AICP actions which predate the disappointment of the Empire State Film Production Credit helped to make the spots-only incentives a reality. He cites the AICP decision to form political action committees years ago as key. Other subsequent proactive measures included the AICP membership survey which documented the economic impact of commercialmaking–“without that, we couldn’t make a strong case to legislators,” says Miller–and the AICP’s role in contributing creative and professional services to the NYC2012 campaign, bolstering the bid for New York to be the host city of the ’12 Summer Olympics. (London ultimately garnered the Games.) The NYC2012 campaign, relates Miller, showed public officials that the ad industry is indeed an asset to the community at large.
Financially it’s an asset that needs to be recouped, underscoring the need for the new incentives package. Miller recently cited a leading industry payroll company’s finding that New York’s share of overall nationwide payroll in commercials has plummeted from 45 percent in ’90 to around 18 percent in ’04. In today’s dollars, this equates to a decrease of $406 million in below-the-line payroll expenditures for the State of New York from its level in ’90. That translates into a loss of nearly $1.4 billion in direct economic impact from spot production in the New York region.
STATE PACKAGE
The recently passed New York State incentives initiative consists of three prime components:
- 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 is funded by $3 million of the aforementioned $7 million total. The intricacies of the growth credit–such as coming up with the best way to verify total qualified production costs of the prior year as compared to the next–will be addressed in regulations that will be formulated in the coming months. These regulations governing how the incentives are to be applied will be drafted by the New York State Department of Budget, and the Governor’s Office for Motion Picture and Television Development.
- A downstate jobs credit which addresses the misconception about the commercials industry that there is a fixed amount of work that will occur in a certain location regardless of economic circumstances. This is clearly not the case in that every spot lensing job is considered up for grabs prior to being filmed. The rationale for this downstate jobs credit is that it’s important not to take this business for granted and to make efforts to retain the existing share of work that is currently being produced in New York. For this provision, $3 million in annual funding is being apportioned for 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 provides $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.
NYC
Meanwhile there’s the possibility that New York City will launch a companion spot incentive program with some $3.5 million in funding–but that would require approval from the Mayor’s Office and the City Council.
When asked about prospects for the counterpart city initiative, commissioner Katherine Oliver of the New York City Mayor’s Office of Film, Theatre and Broadcasting, says, “We are committed to seeking legislation that supports the commercial industry in a way that makes sense for the City, and look forward to reviewing the proposed program.”
The city has a companion measure to the aforementioned Empire State Film Production Credit firmly in place, with both programs helping to boost feature and TV production in both the state and municipality. Thanks in large part to the incentive package, Oliver relates that last year New York City posted 31,570 location shooting days, “our highest number on record.”
DOMINO EFFECT
The increased business in New York has had a domino effect on assorted sectors–a prime case in point being the “special effect” the incentives have had on rhinofx, New York. In ’03, rhinofx brought senior executive producer Camille Geier on board to help diversify the shop into feature visual effects. She had an extensive movie pedigree that was attained during her former tenure at Industrial Light+Magic (now in San Francisco). Among Geier’s credits is producing the visual effects for Gangs of New York.
The plan was to extend rhinofx’s base beyond its ongoing core business of high-end commercials, explains the house’s partner/managing director Rick Wagonheim. Last summer, the initiative gained momentum with scripts coming in for films with such stars attached as Nicole Kidman, Uma Thurman and Richard Gere. Though rhinofx didn’t get those jobs, an important initial step was taken. And recently rhinofx broke through, landing effects duties on Perfect Stranger, starring Halle Berry and Bruce Willis, which recently wrapped principal photography in New York, and The Nanny Diaries, starring Scarlett Johansson and Paul Giamatti. The latter is in the midst of principal lensing in New York.
Several factors came into play for rhinofx’s successful diversification–Geier’s expertise and contacts, the studio’s high-profile effects work and reputation in spots, and the Empire State Film Production Credit measure.
“More feature business coming to New York as a result of the incentives has helped us tremendously,” relates Geier. “Directors and companies shooting here want to have a New York visual effects house at its beck and call. We’ve been seeing a lot more scripts as a result.”
While Geier’s feature studio contacts helped garner Perfect Stranger, she notes that rhinofx’s participation in the Mayor’s Office of Film, Theatre and Broadcasting’s “Made In N.Y.” program proved to be a factor in winning the plum effects assignment for The Nanny Diaries. The Made In N.Y. card has grown to include 500 New York City vendors offering discounts to the production industry. Geier said that being a Made In N.Y. vendor provided an additional stamp of legitimacy for rhinofx in the eyes of the feature client. Once that door was opened and rhinofx got the chance to show what it could do, the effects job followed.
Now with the prospect of the state having commercialmaking incentives up and running in January, Wagonheim is optimistic the dynamic that helped New York businesses on the feature/TV front will do the same in the spot arena, further advancing rhinofx’s longstanding core business.
“The domino effect of a state and city having incentives that welcome production is tremendous for companies,” observes Wagonheim. “We’ve picked up momentum–and significant business–as a result, and to have a commercials incentive package next year, which has been long overdue, bodes well for all of us.”
SILVERTRUCKS
Concurring is Alan Suna, CEO of Silvercup Studios, Long Island City, N.Y. “If the impact on commercials is just even half of what incentives legislation has done for feature and TV work in New York, the results will be unbelievably positive,” says Suna. “…We’ve had six new TV series come to New York–before the incentives legislation, a great year might see two new series.”
Unlike the features/TV incentives, there’s no studio/stage shoot requirement to qualify for the benefits in the commercials package, points out Suna. “This should translate into a nice healthy increase in [spot] location shooting in New York, which is good for our Silvertrucks [location lighting, grip and rental equipment] division.”
Suna adds that in anticipation of this increase in ’07, Silvercup plans to step up its investment in the Silvertrucks operation, bringing in more equipment and resources to be made available to the production community at large. “That demonstrates our confidence in what these incentives potentially mean for New York.”