Despite staggering budget deficits in cities and states throughout the country—which have resulted in reduced funding for and in some cases the outright elimination of film commissions—there’s still some room, albeit the exception to the rule, for economic incentives designed to keep and attract lensing.
The most significant example comes in Illinois where the legislature has passed a bill that establishes a wage-based tax credit for eligible shoots in the state, including commercials. The thumbs-up for the Film Production Services Tax Credit Act represents a major victory for the anti-runaway movement in Illinois—and for that matter, in the U.S.
The 25 percent tax credit took effect on Jan. 1. It applies to the first $25,000 in wages per worker per production. Workers must be Illinois residents hired for a qualified feature, TV program, commercial or sponsored content piece lensed in the state. Projects for advertising purposes (29 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, each production will have to spend at least $100,000 on Illinois labor in order to be eligible for the tax credit.)
Since the measure passed, the Illinois Department of Commerce and Economic Opportunity (DCEO) has ironed out key working details of the measure. "[Productions] qualify if the wage requirements are met," says Brenda Sexton, director of the Illinois Film Office. "There are certain types of productions that are not included. This tax credit is really meant for commercial, TV and film production." Productions that do not qualify for the tax credit include talk shows, game shows, sporting events and news programs.
"You don’t have to be an Illinois-based company, or affiliated with one [to take advantage of the tax credit]," explains Sexton. "This is really meant to lure people here [from out of state]. We want the people in the state to still produce here, but the whole intent is to bring production to Illinois." Sexton notes that several productions, including some commercials, have already applied for the tax credit.
The tax credit is an after-the-fact incentive, meaning that no credit is made until after an Illinois citizen is employed for a production occurring in the state. Credits are based directly on payroll tax records.
"The commercial industry is clearly important to the state and the fact that commercials and branded entertainment projects are covered in this bill demonstrates that," relates Mark Egmon, president of the Midwest chapter of the Association of Independent Commercial Producers (AICP), and founder of Chicago-based branded entertainment and development company, Outer Radius.
"It is monumental," continues Egmon, "that our industry got our incentive through the Illinois legislature when no other incentive made it and countless others were cut to help eliminate the [state’s] five-billion deficit."
Egmon is also a founder of the Illinois Production Alliance (IPA), a group formed in ’02 to make the state more competitive for filming, content creation and development. IPA membership includes representatives from production and post companies, talent and craft unions; support and service companies; and industry-related governmental, educational and professional institutions.
The IPA had a hand in helping to bring the tax incentive about. As earlier reported (SHOOT, 1/17/03, p.1), the IPA began forging strong connections in the government sector late last year, including with the transition team of then governor-elect Rod R. Blagojevich (D-Ill.). Gov. Blagojevich went on to spearhead the lobbying effort for the tax credit (SHOOT, 5/23/03, p. 1) and his support proved instrumental in the bill’s passage.
The Illinois tax credit will be in effect during the full ’04 calendar year. The state legislature has kicked off a new session and will address the incentive—in terms of possibly fine-tuning it and more importantly deciding at some point whether to extend it beyond ’04. Fine-tuning could include considering payment coming in the form of a rebate check instead of the current issuance of tax credit.
Film Permits
While perhaps not as wide-ranging as the tax credits in Illinois, two cities—Dallas and Seattle—have made filming easier through the streamlining of the permitting process. The city of Seattle has passed legislation that reduces the city’s film permit fees from more than $300 a day to a flat rate of $25 per day. The legislation also streamlines the permit process and provides access to city property, including Sand Point, a former Naval Air Force base, which has in the past hosted such films as Sleepless In Seattle and Assassins. Use of any city property, including parks and facilities such as Sand Point, is covered by the $25 flat rate. "We did an economic impact study that showed that this is a big business, and when people come into shoot, they spend a lot of money," notes Donna James, director of the Seattle Mayor’s Office of Film and Music. "We all know that, but quantifying it, saying ‘this is how many jobs we have, this is how much tax revenue we’ve been able to generate’ really made a difference with the city council and the mayor. [Mayor Greg Nickels] looked at the numbers and said ‘OK, we need to increase this business. How can we do that?’" According to the study, filmmaking brought $207 million in direct economic contributions, and $471 million in total economic contributions in 2001.
As a result of the study, and talks with the mayor’s office, James’ office brought together a film advisory committee, which worked to find ways in which Seattle could make itself more attractive to commercial, television and feature productions. "Almost every project that comes to Seattle uses the parks system," says James, citing the appeal of the flat rate. "To be able to give these buildings as part of our $25 a day is a huge savings. It means that you can come here and you can shoot and build for a huge cost savings." James notes that Seattle, with the help of the Washington State Film Office, actively seeks commercial projects—James and Suzy Kellett, director of the state office, visited several Los Angeles-area production shops last December to promote city and state incentives.
Meanwhile, Dallas has instituted a new one-stop-shopping permitting policy. Per the new system, all permit requests are funneled through the Dallas Office of Special Events. "They coordinate everything. An application is made to them, which outlines what city properties, traffic control, pyrotechnics, or special effects, or any of that kind of stuff that is necessary to a film," explains Janis Burklund, director of the Dallas Film Commission. "Prior to this system, anything related to a film that would require a permit or use of city property would go through different departments. Now it all goes through one department. They have a policy of then turning that back out to the departments that are effected, and getting a response back from then with in 24 hours, so a permit can be issued within 48 hours." Burklund notes the basic fee for a permit has not changed, but that additional fees have been reduced, and vary depending on the project. "It’s in anybody’s budget to shoot in Dallas," she notes.
Burklund was named director of the film commission in Nov. ’03; she began working at the commission upon its formation in Oct. ’02 as a project manager; prior to that, Burklund worked in the local film and television industry, including as a location manager for Walker: Texas Ranger. Recent projects in Dallas include the NBC movie Saving Jessica Lynch, as well as an upcoming shoot for Hub, an NBC pilot that centers around the inner workings of an airport.
