In this week’s Border Watch on the Midwest, SHOOT assesses the impact of Illinois’ wage-based tax credit on the state’s commercialmaking community, and takes a look at what’s going on in Minneapolis and Detroit.
Illinois
The Illinois Film Production Services Tax Credit Act, an anti-runaway measure, has received favorable feedback from the commercial production community. The program establishes a 25 percent tax credit, which applies to the first $25,000 in wages per worker per production. (Excluded from the tax credit are the two highest paid Illinois workers on a project.) Workers must be Illinois residents hired for a qualified feature, TV program, commercial or sponsored content piece shot in the state. Projects for advertising purposes (30 minutes or less), including spots and branded entertainment, can receive the tax credit as long as each has a minimum of $50,000 in wages being paid to Illinois residents. For features and TV programs, each production has to spend at least $100,000 on Illinois labor in order to be eligible for the tax credit.
In addition to the filming crew, the 25 percent wage tax credit applies to other Illinois residents, including include editorial labor, acting talent and use fees up to one year, and agency labor (i.e., creative director, art director, copywriter, head of production,
producer) from the time the final storyboard is finished through production and post. The tax credit can additionally apply to the labor costs of other Illinois-based firms, such as a caterer, casting agency or set construction entity.
While initially utilized primarily by feature films, the ad community is now tapping into the tax incentive. “The advertisers are definitely responding to it,” says Mark Androw, owner/executive producer at The Story Companies, which has offices in New York, Chicago and Santa Monica; Androw also serves as national chairman of the Association of Independent Commercial Producers (AICP). “[The tax credit] is significant money on a production, and it’s working out great.” Androw relates that he has one client that has received over $140,000 in tax credits.
Androw, who also serves on the board of the Illinois Production Alliance, said he expected to see more advertisers take advantage of the credit in 2005. “I think now that people are filing their taxes for 2004, and they see the practical effects of it, I think it’s just going to pick up momentum,” he explains.
Earlier this month, the Illinois Film Office released new figures, noting that film production increased to $50 million in 2004, up from $25.6 million in 2003.
Androw reports that production in general is up in the state, something he attributes not only to the tax incentives, but also to a stronger Canadian dollar, which makes locations such as Toronto less appealing to producers.
In late ’04, Androw, along with Steve Caplan, executive VP of the AICP, and representatives of the Illinois Film Office, addressed the Illinois City Management Association about productions coming to their areas. Topics included the distinction between commercials and features, and how to attract production. “For many of these village managers, they looked at [production]as, wow this is a great thing, we can generate all this business activity in our areas,” says Androw. “For others, [hosting productions is] a little bit more of a nuisance. We addressed both issues.”
Minnesota
Kirk Hokanson, executive producer at Voodoo Films, Minneapolis, and president of the Minnesota chapter of the AICP, noted that he has seen an upturn in production. “I believe 2005 is looking really good,” he says. “I’m seeing clients and advertising agencies that have been less active becoming more active. And I’m seeing a better sense that we’re driving out of the valley of slowness. It’s been a tough couple to three years, and I think Minnesota is hit much harder than anywhere else, because when the entire country is slow, the A directors are doing work they normally wouldn’t consider, which causes a vacuum in the Midwest. So I’m seeing that changing a lot.”
While production is increasing, Hokanson reports that the situation for the Minnesota Film Board and TV Board, while improving, is not out of the woods yet. As earlier reported, the office has seen it’s funding severely curtailed by the state legislature. “They cut the majority of the funding to the film board, so that they are in survival mode,” says Hokanson. “They are alive, but they certainly don’t have resources to work with–the [legislature] has actually increased the funding somewhat, but it’s still not enough.”
Hokanson noted that a feature film, Class Action, is currently shooting exteriors in northern Minnesota. Interiors will be shot in New Mexico, which offers incentives. “Maybe our legislators will start to see the economic impact of the film that’s being shot there,” he relates, “and seeing how much [money] it does leave in the community, and realize that by increasing, or providing incentives, [it would attract filmmaking.]
Detroit
The Motor City market continues to do well, reports Stewart Shevin, an editor at the Royal Oak, Mich., office of Mad River Post, which also has facilities in New York, Los Angeles, San Francisco, and Dallas. Shevin also serves as president of the Detroit chapter of the Association of Independent Creative Editors (AICE).
“I see it as being pretty stable,” he says. “[The Detroit market] is not nearly as cyclical as I get the sense of it being in New York or Los Angeles. As a matter of fact, over the years it’s become more consistent–I don’t think there’s more [work] but it’s been more consistent.” Shevin attributes that consistency to car companies–which make up a large part of Detroit-area edit houses’ workload–introducing new models and new campaigns throughout the year, rather than just in the fall, as was the case in the past.
Shevin also notes, that while the market is consistent, work still goes out of town. He relates that the local AICE chapter is working on ways to promote the city and its editorial talent. “We’ve talked about an ad campaign directed at agencies, throwing a party to make people more aware, to be a part of the education process about the importance of the edit house,” he notes. “Sending out information on the Web to ad agencies to keep them informed of the nuts and bolts of technology [is another possible option].” Shevin, who has completed projects for Six Flags and Chevrolet, adds that other editors from the Mad River network also work out of the Royal Oak office, often utilizing Rosedit, the shop’s remote editing system.
“It feels like the world is starting to take a more serious look at Detroit,” says Craig Duncan, VP/general manager at Griot Editorial, Southfield, Mich., which is part of the Grace & Wild family of companies that also includes Postique, รทX, In Gear, hdstudios, and Film Craft Lab. “There’s more of an influx of [talent] from outside our market coming here wanting to work within because it’s a very rich market.”
Duncan notes that Louis Lyne, an editor from Los Angeles, has signed with Grace & Wild, and cites the opening of a Mad River Post office [in Detroit] as positive signs for the market. “It can be great,” says Duncan, “because some of the [editors who come to town] are doing work that might have otherwise left town,” adding that if a project is cut in Detroit, it will likely be finished there, which is good for local facilities.
Current projects at Griot include Chevrolet out of Campbell-Ewald, Warren, Mich., as well as Progressive Insurance and Mazda, out of Doner, Southfield, and Ford for JWT, Detroit.
The local AICE chapter is also working with the national organization on the issue of agencies pulling editing in-house. “It’s a big issue around the country,” notes Shevin, “and it’s also an issue here in Detroit.” He relates that the AICE has begun a dialogue with agencies about the importance of the creative editorial shop, both in terms of talent and ancillary services.