While fiscal woes and budget shortfalls are ongoing in assorted states–and for that matter, globally–the tide has turned in one respect as the belt tightening that had been impacting various filming incentives seems to have loosened in various jurisdictions. Indeed in several cases the incentives ante has been upped–in terms of funding and/or the expansion of incentives, thus heightening the competition as states and countries aggressively compete for business.
The most dramatic example came late last month when New York Governor Andrew Cuomo signed into law a bill that triples that state’s postproduction tax credit from 10 to 30 percent (35 percent for upstate New York). The increased incentive takes effect immediately, building upon a program that was enacted back in 2010.
The Empire State Film Post Production Credit is a fully refundable 30 percent tax credit on qualified post costs paid in the production of a film at a qualified post facility in New York State. To be eligible, at least 75 percent of the total post expenditures must be incurred in New York. The initiative covers such projects as theatrical feature films, episodic television series, TV pilots and presentations, telefilms and television miniseries. (Commercials, documentaries, sport shows or events, daytime soap operas, news or current affairs programs, reality programs and talk/interview shows are among the projects that do not qualify for the incentive.)
Qualifying post costs include “traditional, emerging and new workflow techniques used in postproduction for picture, sound and music editorial, rerecording and mixing, visual effects, graphic design, original scoring, animation, and musical composition; but shall not include the editing of previously produced content for a qualified film.”
Projects do not have to be shot in New York State in order to take advantage of the post tax credit. The incentive is designed to help get producers to bring their postproduction business to the State of New York no matter where production took place. Productions are required to submit the Post Production Tax Credit application before the last day of principal photography.
The postproduction incentive program is believed to be the first of its kind in the U.S. The program is completely separate from the New York State Film Production tax credit initiative, which benefits qualifying projects shot in the state, offering an aggregate credit of 30 percent covering production and post. Producers filing for this incentive are not able to also apply for the stand-alone postproduction tax credit program.
The impact of the tripled post tax credit is already being felt. The independent feature The Butler, directed by Oscar nominee (Precious: Based On The Novel “Push” By Sapphire) Lee Daniels, is already planning to tap into the post credit. (Daniels is repped for commercials by Epoch Films.) Producer Pam Williams said from the New Orleans-based set of the film, “We look forward to bringing The Butler to New York to take advantage of world class postproduction talent.”
Good Universe will be filming Spike Lee’s film Oldboy in New Orleans this fall and is slated to bring postproduction to New York. Matt Leonetti, head of physical production for Good Universe, said, “This tax credit signals that the New York postproduction community is about to expand by leaps and bounds. We love bringing our shows to New York to post and will be able to bring many of them there because of this credit.”
Jeremy Kipp Walker, head of production at Wayfare Entertainment, indicated that several of his company’s internationally based productions plan to return to New York for postproduction now that the post incentive is 30 percent.
“Nothing like this credit exists anywhere else in the United States,” Walker shared. “It will really help independent filmmakers get access to great talent and facilities available in New York and it will certainly mean a huge increase in vocations in postproduction for New York State.”
Marcelo Gandola, senior VP of Deluxe Creative Services, said of the increased post tax credit, “The wheels of New York State government are turning in a direction that will bring thousands of new jobs to our state.” Gandola is president of the Post New York Alliance (PNYA), an association of film and TV post facilities and labor unions operating in New York. PNYA’s agenda includes encouraging business in New York, marketing the talent and resources of the New York postproduction community, and fostering and nurturing talent throughout this industry.
PNYA lobbied successfully for the initial 10 percent post credit but it clearly wasn’t enough to make a significant difference. Only some 20 applications were filed for the original 10 percent incentive, said Gandola, noting that PNYA spent the past year working with local and state legislators to realize a more impactful program, raising the tax credit without increasing the state’s funding for the program which had been largely untapped at the original 10 percent return.
Gandola explained that much of PNYA’s work on the tax credit front entailed educating legislators, state and local officials and the public at large about the industry.
For example, he cited that theatrical feature film production on average takes five to six weeks. Postproduction, though, can involve a minimum of 32 weeks.
“The other part of our effort is educating people outside the business that this isn’t really an incentive but a jobs growth bill,” affirmed Gandola. In that vein, the tax credit results in significantly more money being spent in the state on postproduction, including visual effects.
“This creates more jobs and the need to train a workforce,” continued Gandola. “Our schools build a base of students who want to learn about the visual effects industry and postproduction as a whole,” said Gandola, observing that this amounts to growing the industry out from the schools, creating a considerably deeper talent pool and infrastructure.
PNYA board member Yana Collins Lehman, managing director of Trevanna Post, added, “The film and television industry is one of our economy’s fastest growing exports. Our New York State elected officials broke new ground with the passing of this postproduction incentive, and the Post Alliance plans to expand the entertainment industry throughout the great State of New York.”
Alaska Far removed geographically from the Big Apple yet cut from the same cloth in terms of expanding incentives is the State of Alaska, which plays host to a mix of features, TV and commercials. On the latter front, when news that a Taco Bell was going to open in Bethel, Alaska, turned out to be a local hoax, the restaurant and its agency Draftfcb Orange County, Calif., responded with an initiative to try to do right for the town which is accessible only by river or air.
The client and advertising shop went for the latter route, airlifting via helicopter a Taco Bell truck into Bethel with enough Doritos Los Tacos to comfortably feed the remote town’s 6,000-plus residents.
The airlift operation–highlighted by the serving of some 10,000 tacos–was captured on film by The Malloys (Brendan and Emmett), the directorial duo at HSI Productions, with post handled entirely by Optimus.
With only three days to shoot and edit the spot, everyone involved had to be on their game. Optimus editor Nathan Cali worked closely with the production team for a week prior to shooting to ensure everyone was on the same page, which was critical to the project’s success.
The Bethel commercials were edited with remarkable speed. The team shot July 1, screened and began editing on the red-eye back to Los Angeles, had a marathon edit session on July 2, and finished on July 3. The 30-second spot broke on ESPN in early July, with a :60 shortly thereafter hitting cinema theaters.
A longer form video went online. While the :30 shows the airlifting of the Taco Bell truck into a town more than 400 miles away from the nearest Taco Bell restaurant, the video provides even more backstory, replete with interviews of Bethel’s mayor and various residents.
While Bethel being in a somewhat remote location was central to the Taco Bell storyline , there are additional perks to being in a remote rural area of Alaska–currently an additional two percent tax credit as part of the state’s filming incentives program, and when the new program kicks in on July 1, 2013, that increases to six percent.
Actually Bethel wouldn’t qualify for the rural tax credit at present in that it applies to only those towns off the road system with a population of 5,500 or less. But the town of Bethel could conceivably earn the additional six percent come next year when the population restriction goes up to 10,000 people or less.
That hike from two to six percent is only a small taste of how Alaska’s incentives package will grow starting in July 2013. The state legislature passed a measure that will extend the program for an additional 10 years, from July 1, 2013 through June 30, 2023. That new lease on life for lensing incentives will see $200 million in tax credits available over that decade, the current transferable tax credit become a transferable/refundable tax credit, and while the base rate on Alaska ground spend will remain as a 30 percent tax credit, Alaska-resident wages will merit a tax credit jump from 10 percent to 20 percent. The latter when coupled with the base 30 percent brings the potential tax credit benefit to 50 percent (up from the current 40 percent). The aforementioned rural credit can add six percent to that as could an ongoing off-season filming credit of two percent.
The tax credit program will also become more accessible with the minimum spend decreasing from the current $100,000 to $75,000 effective July 1, 2013.
The Alaska incentives continue to apply across the board to features, TV, commercials and other varied forms of media content.
Dave Worrell, film development specialist for the Alaska Film Office, told SHOOT he’d like to attract more commercials and branded content to the state, which he thinks is ideal particularly for automotive and other vehicular shoots.
In that vein, Worrell noted that Alaska played host to this year’s Audi Quattro “Ahab” commercial from ad agency Venables, Bell & Partners in San Francisco, in which a tow truck driver bemoans the big “whale” that got away, the four-wheel drive Audi Quattro that easily treads through snow and forms of inclement weather. The tongue-in-cheek, “Moby Dick”-themed spot was directed by Daniel Kleinman via Epoch Films. (Kleinman is now repped stateside by Rattling Stick, which has since opened a stateside office to complement its London headquarters.)
As for longer form fare shot in Alaska, notable films include Big Miracle shot a couple of years ago, and Frozen Ground (starring Nicholas Cage and John Cusack) with an anticipated release in late fall. Frozen Ground is based on the true story of a serial killer in Alaska.
Nonfiction television also is ongoing in Alaska with such shows as Ice Road Truckers and Deadliest Catch.
Ohio Meanwhile Ohio has doubled the funding for its ongoing fully refundable tax credit which is 25 percent of eligible expenditures and nonresident wages, and 35 percent of wages for Ohio residents.
Effective back on July 1, the state’s fiscal year funding cap for the incentive program doubled from $10 million to $20 million. (The per project cap remains $5 million.)
Feature films, TV, commercials, music series, web series, video games, virtually any media project is eligible for the tax credit.
Gail Mezey, liaison for the Ohio Film Office, noted that in fiscal year 2011, the full $10 million allocation got used up rather quickly, thus underscoring for legislators the need to significantly increase funding.
Adding to a compelling case for this increase has been the return on investment as reported by the Ohio Film Office. For example, since fiscal year 2010 to the end of the recently concluded fiscal year 2012, some $32 million in tax credits have been registered for projects that collectively spent an estimated $130 million plus in the state.
Among the notable contributors was The Avengers, which shot in Cleveland and Wilmington.
That superhero box office blockbuster earned $6.5 million in Ohio Motion Picture Tax Credits while spending $21 million in the state.
Puerto Rico Gov. Luis Fortuno recently signed a revamped package of tax breaks aimed at luring more lensing activity to Puerto Rico.
Whereas Puerto Rico continues to maintain a 40 percent tax credit for qualifying resident talent, the new incentives now provide a 20 percent credit for non-resident above-the-line talent such as directors, executive producers, writers and actors.
Furthermore, the incentives now expand beyond feature motion pictures to more fully include television programs and for the first time open up the savings to commercials as well as music videos, among other production disciplines.
Serving to make it easier for spots and other independent projects to gain eligibility has been a lowering of the minimum spend from $1 million to $100,000.
Additionally, Puerto Rico provides hurricane insurance to select projects during hurricane season which runs from June through November.
Incentives in place since March 2011 have helped bring some 30 productions to the island which have generated about $80 million in revenue, according to Mariella Perez Serrano, film commissioner of the Puerto Rico Film Commission.
Among the high-profile projects have been episodes of Showtime’s The Big C, USA Network’s series White Collar and Royal Pains, the pilot for ABC Television’s The River, and the theatrical feature motion picture Runner, Runner which stars Ben Affleck and Justin Timberlake.
And though she wasn’t at liberty to discuss specifics, Perez Serrano noted that a major television pilot is slated to come to Puerto Rico in the fall.
