From the dawn of a new tax credit era in Nevada to a Big Sky Film Grant in Montana and expanded incentives in Hawaii, the lensing marketplace has been marked by the increased prevalence of economic initiatives designed to attract producers of short and long-form fare.
This was reflected on the exhibit floor and in dialogue at the Association of Film Commissioners International’s (AFCI) annual Locations Show in June at the Los Angeles Convention Center. SHOOT caught up with film commissioners there, putting a finger on the incentives’ pulse as well as identifying related developments and projects. Here’s a rundown of what we uncovered:
A 12-year wait Charles Geocaris, director of the Nevada Film Office, recalled drafting his first incentives program for the state a dozen years ago. That draft and subsequent others stalled until this past legislative session, capped in June by Gov. Brian Sandoval signing an initiative into law that will take effect in January 2014. This is the first incentives package for Nevada and its centerpiece is a transferable tax credit that applies to a wide range of projects from features to TV, commercials and branded content.
Qualifying projects–which meet the minimum spend of $500,000 and with 60 percent of costs incurred in the state–can earn a transferable tax credit equal to 15 percent of the cumulative eligible expenditures. The first $750,000 of wages or salaries of each resident (15 percent tax credit) and nonresident (12 percent) providing services in Nevada qualify.
The overall base 15 percent transferable tax credit can go as high as 19 percent. There are two prerequisites which can bump up the tax credit. An additional two percent can be realized if more than 50 percent of the below-the-line personnel are Nevada residents. Two more percent can be earned if more than 50 percent of the filming days occur within a Nevada county that’s been under-utilized for filming over the prior two-year period.
The new incentives program will carry a $6 million cap per project. The state program’s annual cap is $20 million.
At press time, Nevada was in the regulatory process to better define details of the program. Geocaris told SHOOT that among the areas to be addressed is whether commercials can qualify for the tax credit based on cumulative expenses during the course of a full year–or if the incentive would only cover those single spot projects with a minimum $500,000 spend.
Geocaris noted that the incentives program figures to be especially important for Nevada communities outside of the marquee Las Vegas area. He acknowledged that incentives in place in neighboring New Mexico and Utah have hurt Nevada, which will level the playing field a bit with the enactment of its transferable tax credit. Reno/Tahoe could benefit significantly, he conjectured, adding that a number of producers in California have already approached the Nevada Film Office to discuss what the new incentives program could mean for them. Being in such proximity to California–where incentives are limited–could bode well for Nevada starting in January.
As for what made the difference this time around in Nevada’s successful bid to establish a filming incentives program after falling short in previous years, Geocaris credited the lobbying efforts and good work from the community at large–hotels, motels, restaurants and labor unions, supported by the ongoing push by the film office which assumed a lower profile so that the private business sector could be better heard.
L.A. Film Festival Winter In The Blood–from directors/writers Alex and Andrew Smith–made its world premiere at the Los Angeles Film Festival in June. A couple of screenings were added to meet demand as the film broke to critically favorable reviews. Based on James Welch’s novel of Native American life, this movie, described as “hauntingly beautiful,” follows a young Blackfoot Indian’s alcohol-fueled search for his wife, his rifle, his identity–and redemption.
The Montana Film Office held a reception at the L.A. Festival for Winter In The Blood, which was filmed in Montana and the recipient of funds from the state’s Big Sky Film Grant. Some $25,000 in Big Sky Grant money was put toward finishing the Smith brothers’ film. Instituted this past fiscal year, the Big Sky Grant—which champions filmmaking projects for Montana–carries annual funding of $1 million. A production company may earn up to 25 percent of Montana expenditures if the project shoots at least 50 percent of principal photography in the state.
“We are an independent film place,” said Deny Staggs, film commissioner at the Montana Film Office. “The Big Sky Film Grant reflects this. We have been part of the L.A. Film Festival–which is geared towards independent film–for many years.”
The Smith brothers are Montana natives–Andrew teaches film at the University of Montana–and well regarded independent filmmakers with credits that include The Slaughter Rule, which was nominated for the Grand Jury Prize at the Sundance Film Festival as well as for the John Cassavetes Award at the Film Independent Spirit Awards.
Further reflecting the indie film allure of Montana are two recent features lensed in the state: Jimmy P directed by Arnaud Desplechin (his first English-language film); and Nebraska helmed by Alexander Payne. The former was nominated for this year’s Palme’ d’Or at the Cannes Film Festival. And Nebraska was in Billings and Laurel for a week-plus, spending just under $400,000 during its Montana stay. Nebraska was the film Payne directed following his acclaimed The Descendants for which he won the Best Adapted Screenplay Oscar in 2012. The Descendants also earned Academy Award nominations for Best Picture and Best Achievement in Directing.
Staggs noted that Montana maintains a refundable tax credit–nine percent of in-state spend, and 14 percent on qualified in-state labor. Producers can file a simple form at the end of the year and get a check cut back to them at tax time. The tax credits, with no annual cap, apply to features, TV, commercials, music videos, documentaries, shorts–pretty much any project as long as it’s not sponsored by tobacco.
Commercials have been on the upswing in Montana with projects for Chevy, Lamborghini and Chrysler being lensed in the state. Chrysler Dodge Ram Truck’s “Farmer” made a major impact. The two-minute Super Bowl spot–from The Richards Group, Dallas–tapped into the “So God Made a Farmer” speech made by famed radio broadcaster Paul Harvey in 1978 at the National Future Farmers of American Convention. The eloquent remarks became even more poetic and lyrical when played against a backdrop of images capturing U.S. farm life for this commercial. Noted photographers were commissioned to chronicle this slice of Americana in still shots, most notably William Albert Allard of National Geographic fame and noted documentary photographer Kurt Markus.
“Farmer” was widely cited as this year’s best Super Bowl spot.
Incentivizing the Islands Hawaii–which played host to The Descendants–has enacted a five percent enhancement on its existing incentives program. Thus the 15 percent refundable production credit on all qualified expenditures incurred on the island of Oahu has been increased to 20 percent And what had been the 20 percent production credit on all qualified expenditures incurred on any of the neighbor islands–Maui, Molokai, Lanai, Kauai and the Big Island of Hawaii–has been bumped up to 25 percent.
The refundable production credits span features, TV, commercials and branded content, among other projects.
Furthermore, the per production credit cap has been increased from $8 million to $15 million.
And Internet-only distribution productions now qualify for Hawaii’s package of incentives.
Cast & Crew The developments at Hawaii, Montana and Nevada were among those cited by Joe Bessacini, VP, film & TV production incentives for Cast & Crew Entertainment Services. Bessacini moderated a panel discussion at AFCI’s Locations entitled “Production Incentives Experience: The Long View.”
Bessacini noted that the last legislative session alone saw more than 20 changes in incentive programs throughout the country, most of which enhanced existing incentives or created new ones.
Among the examples he cited were:
• Alaska replenished funding of its incentives program with $200 million to cover refundable and transferable tax credits through June 30, 2023. The tax credit for resident labor was increased from 10 to 20 percent.
• Arkansas’ refundable rebate increased from 15 to 20 percent.
• Minnesota upped its annual cap to $10 million and increased its rebate by five percent
• New Mexico instituted an additional five percent tax credit, raising it from 25 to 30 percent on qualifying production expenditures for TV series shooting at least six episodes in the state.
• New York has extended the reach of its state tax credit for movies or TV series to now also apply to talk and variety programs that relocate to NY after having filmed at least five seasons in another state. The talk or variety show must also have a studio audience of 200 or more people and either incur at least $30 million in annual production costs in the state or at least $10 million in qualified capital expenditures at a qualified facility. The tax credit is equal to 30 percent of production costs and proved integral to the recent move of NBC’s America’s Got Talent from New Jersey to Radio City Music Hall. The expanded scope of the incentive is dubbed by some as the new Jimmy Fallon tax credit, a reference to The Tonight Show on NBC moving to NY from Burbank, Calif., next year when Fallon takes the hosting reins from Jay Leno.
• South Carolina has upped its supplier rebate from 15 to 30 percent.
• Tennessee has set its grant program to be equal to 25 percent of qualifying production expenditures.
• As for overseas programs, the U.K. created a refundable tax credit for high-end television.
• Connecticut was the exception to the rule in terms of incentives, putting a two-year moratorium on its feature film tax credits. According to Bessacini, TV, commercials and digital media incentives will not be impacted.
Panelists
Bessacini’s rundown came during the alluded to Locations discussion session which included panelists Kevin Bennett, VP, estimating & financial administration, Warner Horizon Television; Danielle Dajani, sr. VP, production operations, Raleigh Studios; Andrew Golov, production executive, River Road Entertainment; Jay Roewe, sr. VP, production finance, HBO; and Mylan Stepanovich, sr. VP, physical production, Walden Media.
Bennett noted that he was fortunate enough have two TV series–Rizzoli & Isles and Pretty Little Liars–qualify in 2010 for California’s film tax credit program. Since then, though, not a single project from his company has been able to tap into the incentives initiative. During that span, he submitted 29 projects, eight of which got put on a waiting list. Indeed the $100 million in annual California tax credit funds are awarded in lottery fashion. This year 31 film and TV producers gained access to those limited funds; there were 380 applicants.
Plus when factoring in returning TV series commitments (like Rizzoli & Isles), a significant portion of the $100 million in funding each year for the California incentives program has already been allocated.
Indeed crew people from California have accordingly moved to gain employment. Stepanovich noted he was involved in projects for which 10 artisans relocated to Pennsylvania and another 10 to 15 relocated to Georgia in order to get working gigs. HBO’s Roewe added that Oregon has seen an influx of talented crew people as well, adding to that state’s infrastructure.
Dajani noted that Raleigh’s work in California comes predominantly from TV, including series, reality shows and commercials. No longer prominent on the radar are big tentpole theatrical features.
Golov related that if California had an incentive that could be counted on, he and most other producers would look at California first for prospective lensing projects. Producers would like to stay close to home whenever possible. But if you can go to a different state and tap into incentives that translate into five to 10 more shooting days, it’s hard to resist that opportunity. Golov noted that an upcoming River Road Entertainment project, the feature Love & Mercy, is being shot in Los Angeles due to the subject matter–the story of iconic band The Beach Boys.
On a separate front, Roewe paid tribute to Pat Swinney Kaufman, long-time executive director of the N.Y. Governor’s Office for Motion Picture & Television Development. Kaufman recently stepped down from that film commissioner role, succeeded by Gigi Semone who had most recently served as executive VP of national publicity for Sony Pictures Entertainment. Roewe said that the industry will miss Kaufman who made many contributions to the industry, both in NY and with the AFCI.
New York State’s overall film and TV tax credit has recently been extended through 2019. Key provisions include: increasing the amount set aside for the stand-alone postproduction credit from $7 million to $25 million (effective from the 2015 allocation onward); and boosting upstate production by setting aside $5 million per year to be used for an additional 10 percent credit on below-the-line labor costs incurred in specific upstate counties (effective 2015-2019).
For productions that film in New York State and qualify for the film production tax credit, new wrinkles include: eliminating the 75 percent threshold on postproduction costs so that all qualifying post costs incurred in-state are credit-eligible (effective immediately); and providing an additional 10 percent credit for below-the-line labor costs incurred in specific upstate counties for both production and postproduction (effective 2015).
For projects that did not film in New York State or only apply for the postproduction tax credit, recently passed legislation does the following: Separates VFX and animation from all other postproduction costs and creates a lower threshold for this category of costs, so films that incur either 20 percent or $3 million of all their VFX and animation qualified costs in the state can receive a credit on this category (effective immediately); maintains the threshold for postproduction costs excluding VFX and animation so that these “traditional” post costs qualify if 75 percent of the qualified costs in this category are incurred in the state (effective immediately); and provides an additional 10 percent credit on postproduction labor costs incurred in specific upstate counties (effective 2015).
