California lawmakers moved a step closer to approving a five-year extension of the state's popular film tax credit program.
The Assembly Revenue and Taxation Committee unanimously voted to support a bill that would give funding to California' s film tax credit -- which expires next year -- through July 1, 2018.
“I’m pleased my bill to extend the Film and Television Tax Credit Program has continued to move through the Assembly with another unanimous vote today,” said Assemblyman Felipe Fuentes (D-Sylmar), author of the bill, known as AB 2026. “With our state facing a 12% unemployment rate, it’s critical to extend this program which is a demonstrated job and revenue generator.”
California sets aside $100 million annually for dozens of projects applying for credits between 20% and 25% of qualified production expenses for movies and TV shows.
Lawmakers first enacted the program in 2009 in an effort to compete with nearly 40 states that offer tax incentives and rebates to filmmakers.
The Assembly could vote on the bill this month, and the Senate is expected to take up a similar bill this summer.
The director of two movies shot on Cape Cod has been sentenced to a maximum of three years in state prison after admitting he exaggerated expenses when he applied for Massachusetts film tax credits.
Daniel Adams pleaded guilty last month to larceny and making a false claim when he applied for state film tax credits for the 2008 movie "The Golden Boys," with Bruce Dern and the late David Carradine, and "The Lightkeepers," a 2009 movie starring Richard Dreyfuss and Blythe Danner.
Prosecutors said Adams overcharged the state by $4.7 million for expenses related to those movies. A Boston judge on Thursday ordered Adams to pay nearly $4.4 million in restitution and serve 10 years on probation after his prison sentence.
This case is one of several scandals nationwide involving abuses of film tax credit programs.
In January, filmmaker Harel Goldstein of Calabasas pleaded guilty to defrauding Iowa's now-defunct film tax credit program. Former Iowa Film Office Director Tom Wheeler was convicted last year of one count of misconduct over his handling of state film tax credits. And in 2009, a former top film office official in Louisiana was given a two-year prison sentence for steering tax credits to a local producer.
Annette Bening, Al Pacino, Ed Harris and several other celebrities helped power a surge in feature film shoots on the streets of Los Angeles last month, but film industry officials were hardly star struck.
Thanks to a flurry of low-budget celebrity-packed pictures, location shoots jumped 74% in April over last year, continuing double-digital gains from the first quarter of the year, according to data from FilmL.A. Inc., the nonprofit group that handles film permits for the city and county.
But the welcome news was tempered by the fact that most were features costing less than $20 million that don’t pack the same economic punch as big studio movies that mostly film in Louisiana, Georgia and other states with richer incentives.
California offers a credit of up to 25% of qualified production expenses, but the credit applies only to movies with budgets lower than $75 million.
What’s more, feature film activity, while up by double digits this year, remains a fraction of what it was during its peak more than a decade ago. And in a development that is more worrisome for Los Angeles, location filming for television shows — long a key driver of economic activity in the entertainment sector — continued to decline.
Production days for television shoots dropped 17% in April, after a 9% falloff in the first quarter, a trend that industry officials attributed to competition from states like New York, which hosted more than a dozen pilots this year. New York allocates $420 million annually to TV and movie production — four times as much as California.
“It’s a continuation of a trend we’ve seen for a long time," said FilmL.A. Inc. President Paul Audley. “The truth is California has put its toe in the water but really hasn’t become fully competitive to bring back the large features and TV dramas that produce the most spending and the most number of jobs for Californians.”
Audley said the California Legislature’s decision last year to extend the state tax credit by only one year instead of five sent the wrong message to the industry. A bill to extend the program five more years will be taken up by lawmakers this month.
“We need to see them make a true commitment to the industry," Audley said of the state lawmakers. “New York Mayor Michael Bloomberg routinely brags about how much business New York is taking from California.”
Although limited in scope, California’s program is having some effect in spurring local filming. Two of three new feature films that began filming in L.A. last month — the Lakeshore Entertainment comedy “Stand Up Guys” and the independently produced “The Look of Love” — each received approval for a state film credit.
“Stand Up Guys,” which stars Pacino and Christopher Walken in a story about aging con men, received approval for a $2.4 million credit, according to the California Film Commission.
“The Look of Love," a romantic comedy with Bening, Harris and Robin Williams, received an $800,000 credit. The production, which began its 26-day-shoot early last month, has filmed in multiple locations, including Mar Vista, La Canada Flintridge, Bergamot Station in Santa Monica and Aliso Beach in Orange County.
The crew will film in Venice this week, said Mike Fantasia, a veteran location manager who has worked on big-budget movies such as “Indiana Jones and the Kingdom of the Crystal Skull” and “Green Hornet.”
“The movie is set here so it would have been hard to film anywhere else," said Fantasia, mulling offers to work on films in North Carolina and Florida. “It’s great to be working at home.... All the big boys are filming out of town.”
Photo: Al Pacino, seen holding an Emmy Award in 2010, is starring in a "Stand Up Guys," a movie filming in Los Angeles. Credit: Lawrence K. Ho / Los Angeles Times.
Where the cameras roll
Sample of neighborhoods with permitted TV, film and commercial shoots scheduled this week. Permits are subject to last-minute changes. Sources: FilmL.A. Inc., cities of Beverly Hills, Santa Clarita and Pasadena. Thomas Suh Lauder / Los Angeles Times
Feature film activity on the streets of Los Angeles rebounded in the first quarter of this year, but the gains were offset by a continued falloff in television shoots in the region.
Location filming for movies generated 1,019 production days in the first quarter, up 16% over the same period a year ago as the city and county benefited from several smaller movies, including Millennium Films' and Eclectic Pictures' "Lovelace," starring Amanda Seyfried and James Franco in a story about the late porn star Linda Lovelace.
That was a welcome turnaround from the fourth quarter of 2011, when feature production dropped 26%, according to data from FilmL.A. Inc., which handles shooting permits on behalf of the city and county. Commercial production continued to grow, rising 11% in the quarter.
But the increase in features and commercials wasn't enough to prevent a 2% drop in overall location filming. TV dramas and reality TV each fell 19% in the quarter, which also saw an 11% drop in pilot activity. The pilot season typically runs from February through April and has been slower than normal.
Fox and CBS have ordered fewer pilots this year because their schedules are more stable and they need fewer replacement shows. The slowdown also comes as L.A. continues to lose business to rival locations, especially New York. That state, which allocates about $400 million a year in film tax credits -- four times as much as California -- had a record year for film production in 2011, with 23 prime-time series. About 13 pilots are expected to be filmed in New York City this year.
"We continue to feel the sting of last year's loss of television dramas and a softening in the reality production segment overall," FilmLA president Paul Audley said in a statement.
Photo: James Franco will play Hugh Hefner in a film biopic about Linda Lovelace entitled “'Lovelace.” Credit: Mark Mainz / Getty Images
Where the cameras roll
Sample of neighborhoods with permitted TV, film and commercial shoots scheduled this week. Permits are subject to last-minute changes. Sources: FilmL.A. Inc., cities of Beverly Hills, Santa Clarita and Pasadena. Thomas Suh Lauder / Los Angeles Times
From “Blue Velvet” to “Bull Durham,” North Carolina has a long filmmaking tradition. With the release of this weekend’s much-anticipated debut of “The Hunger Games,” state film officials are hoping the state will re-emerge as one of the top shooting destinations outside of California.
The post-apocalyptic tale based on the first of three bestselling novels by Suzanne Collins is expected to be one of the highest grossing movies of the year -- a major selling point for the state that hosted the production last summer.
“The Hunger Games,” starring Jennifer Lawrence, is one of the biggest productions North Carolina has hosted. With the film’s budget exceeding $80 million, Santa Monica studio Lionsgate spent an estimated $60 million in the state, employing 180 crew members and more than 4,000 extras.
“This is going to impact us in the way that ‘Dirty Dancing’ and ‘The Last of the Mohicans’ did,” said Aaron Syrett, director of the North Carolina Film Office. “It shows the industry that North Carolina can handle these large films and that we have the talent and resources to make it work.”
The film office has wasted no time taking advantage of the hype surrounding the Lionsgate movie, sending out an email blast to filmmakers proudly touting the locations used in “The Hunger Games.”
Over four months last summer, the crew filmed throughout the Charlotte area, including at an old cotton mill outside of Hildebran that was transformed into a coal-mining village that is home to the movie’s heroine, Katniss Everdeen. They also shot at a former Philip Morris cigarette manufacturing plant in Concord and in the dense forest areas near Asheville and Black Mountain that served as the backdrop for “The Hunger Games,” in which teenagers fight to the death on live television.
“The Hunger Games” contributed to North Carolina having a record year for production in 2011, generating $220 million in film and TV spending, up from $75 million in 2010. Other productions in the state included such TV series as Showtime’s “Homeland” and the CW's young adult drama “One Tree Hill,” as well as several movies, among them “Journey 2: The Mysterious Island,” which filmed partially in Wilmington.
This year, North Carolina will host another big film, Marvel Studios’ “Iron Man 3,” starring Robert Downey Jr. The production, which will soon begin filming, is expected to spend $80 million in the state.
North Carolina’s film office attributes the increase in activity mainly to the decision by the state legislature to beef up its film tax credit in January of last year. The state, which offers a 25% refundable tax credit on qualified production expenses, increased the cap on how much individual projects could receive to $20 million from $7 million.
Although North Carolina provided ideal locations for “The Hunger Games,” the film tax credit was a key factor, said Todd Christensen, the movie's location manager, who also worked on the Oscar-nominated picture “Moneyball,” which filmed in California.
“They hadn’t done a big film in North Carolina for some time, but they had a great attitude toward us as a film crew and letting us do what we needed to do,” Christensen said.
In the 1980s and early 1990s, North Carolina was one of the busiest states for filming outside of California and New York, thanks to a string of movies including the baseball drama “Bull Durham” and Academy Award-winner “The Last of the Mohicans,” which filmed in the Pisgah National Forest among other locations.
Despite its reputation for being film friendly and a so-called right-to-work state where non-union crews are welcomed, North Carolina lost its competitive edge when Canadian provinces and other states such as Georgia and Louisiana began to grab larger shares of the business by offering generous film tax credits. Now the state is enjoying a comeback, industry officials say.
“The industry is seeing us as a serious filmmaking state,’’ said Bill Vassar, an executive vice president of EUE/Screen Gems, which operates a 10-stage production facility in Wilmington that will be rented to Marvel for “Iron Man 3.” “It’s elevating us again.”
Photo: Jennifer Lawrence, left, portrays Katniss Everdeen and Liam Hemsworth portrays Gale Hawthorne in a scene from "The Hunger Games." Credit: Associated Press / Lionsgate, Murray Close
Where the cameras roll
Sample of neighborhoods with permitted TV, film and commercial shoots scheduled this week. Permits are subject to last-minute changes. Sources: FilmL.A. Inc., cities of Beverly Hills, Santa Clarita and Pasadena. Thomas Suh Lauder / Los Angeles Times
Gale Anne Hurd is one of Hollywood’s top filmmakers, having been a producer on such big hit action movies as “The Terminator” and “Aliens” and now AMC’s successful zombie drama series “The Walking Dead.” But Hurd hasn’t worked in California for nearly a decade, largely because of more favorable film tax credits and rebates offered in other locales. A fourth-generation Los Angeles native, Hurd would like to see that change. She’s among many high-profile film and television producers who are hoping California will extend and expand its tax credit to make it more competitive with the likes of Georgia, New York and Illinois. Assemblyman Felipe Fuentes (D-Sylmar) recently introduced a bill that would extend the program, which launched in 2009 and is set to expire next year, through 2018. Hurd, co-founder of the Producers Guild of America’s annual Produced By Conference, spoke to On Location about her views on the state credit and what Sacramento could do to strengthen it.
You live in L.A. but rarely shoot here. Why not?
I film my TV series [“The Walking Dead”] out of state and have not filmed in California since I produced “The Hulk” in 2003. As much as I would like to sleep in my own bed at night and employ many of the incredibly talented California-based crew members, I have filmed instead in Georgia, Toronto and Detroit and many other [places] with much higher incentives. I have a project that’s about to shoot in New York that’s called “Very Good Girls” [a feature starring Elizabeth Olsen and Dakota Fanning].
So is California’s film tax credit not effective?
It’s fantastic that we have a program, but it can’t be viewed in a vacuum because producers and financiers look at all of the available options and the pros and the cons and you want to limit the number of cons that you have.
If you had a message to send to California lawmakers, what would it be?
The film and television industry is one of the most productive businesses in California, and employs thousands of residents as crew, cast and in executive positions. We pay taxes, we shop locally, send our children to school here and keep allied businesses [restaurants, dry cleaners, retail stores, car dealerships] in profit. The impact from lost production to other states and countries amounts to billions of dollars. With a competitive tax credit, California can reclaim its position as the entertainment capital of the world. Currently, our tax credit is not on par with those of New York, Georgia, North Carolina and New Mexico, among others.
In what way?
There are so many restrictions. The tax credit is not a transferable credit [except for independent projects with budgets under $10 million]. You can’t sell it like you can in other states like Georgia. You have to apply by June 1 and even if you are awarded the credit you have to start rolling your cameras 180 days after you're notified [of an approval]. But if your cast member isn’t available until January or February, then it doesn’t work.
As a producer, you have to go with a known commodity. That means shooting where you know you will be qualified so you can keep very precious finance, cast and budget schedules intact. To me, the tax credit should be a rolling situation like it is in most states, so that when you have your project together, you can submit it and be considered. That would be a first step.
What else would you like to see changed?
Raising the limit [on the annual tax credit allocation] from $100 million to $200 million a year is a minimum when you consider New York has $420 million a year. When you think about the number of people working in the industry, there are far more people based in California than in New York, but New York right now has more than four times the incentive.
Skeptics would say California can’t afford such an expansion. What do you say to that?
If you look at the impact that the industry has on the state in terms of taxes paid, in terms of the multiplier effect for each dollar that’s spent, I think it’s ridiculous... Part of what they’re saying is that projects will shoot here anyway, but that’s simply not true. ["The Incredible Hulk," the 2008 Marvel reboot of the big green guy's franchise that Hurd also produced, was filmed mainly in Canada.]
Why did you select Georgia as the location for shooting “The Walking Dead?”
The series is based on a comic book that is set in the South. Georgia [also] has a 30% tax credit. It was absolutely essential. For many independent financiers, their financing is incumbent upon tax credits or rebates. It’s part of their business plan. Those financing entities cannot shoot where they cannot be guaranteed a tax credit.
Photo: Gale Anne Hurd , CEO of Valhalla Entertainment, poses for a portrait at Valhalla Entertainment in Los Angeles on March 13 with a model of a zombie from the AMC series' "The Walking Dead," for which Hurd is the executive producer. Credit: Anne Cusack / Los Angeles Times
Where the cameras roll
Sample of neighborhoods with permitted TV, film and commercial shoots scheduled this week. Permits are subject to last-minute changes. Sources: FilmL.A. Inc., cities of Beverly Hills, Santa Clarita and Pasadena. Thomas Suh Lauder / Los Angeles Times
With an assist from "The Help," the Magnolia State is vying to become more attractive to filmmakers by expanding its movie incentives program.
A bill that would raise incentive caps was passed by Mississippi’s House Ways and Means Committee this week and is expected to go before the full House next week.
Launched in 2004, the program reimburses filmmakers for 25% of production expenditures and offers an additional 5% rebate for hiring state residents. The proposed legislation would double the annual cap on incentives to $40 million and would increase the limit for a single production to $10 million from $8 million. It would also broaden the rebate available for individual hires — including actors and directors — to $5 million per person, up from $1 million.
The sought-after increase was spurred by the success of DreamWorks' production of "The Help,” last year’s civil rights era movie about black maids in Mississippi, said Ward Emling, manager of the Mississippi Bureau of Film and Cultural Heritage.
The film, for which Octavia Spencer won this year's Oscar for supporting actress, cost $25 million to make and received $3.5 million in incentive rebates.
"The Help" was shot almost entirely in the small town of Greenwood, 100 miles north of Jackson, and resulted in an estimated $13 to $15 million in direct spending for the state, while generating $207 million in global ticket sales.
“It was the first time in a long time that we had a film focused in one community,” said Emling. “It was a really great test sample for everyone to see the impact.”
Other recent productions in Mississippi include the History channel’s new series “Full Metal Jousting,” which was filmed on a horse farm in Jackson; and Relativity’s “Act of Valor,” the Navy SEALs movie now in theaters, which was partially shot at the John C. Stennis Space Center in the southern part of the state.
Mississippi attracts mostly small-budget and independent movies, and the proposed bill does not significantly threaten Southern production strongholds like Louisiana and Georgia, which have uncapped programs and higher incentives. Nonetheless, Emling expects the higher caps to make Mississippi a more enticing film destination.
"Our locations are now in play," Emling said. "We may not have deserts, mountains, or a big city but we have plains, the Gulf Coast, the Delta, the Mississippi River — a lot of really great water locations."
California's film tax credit program would be extended five more years under legislation introduced in Sacramento on Thursday.
With the support of a coalition of industry groups, including the Motion Picture Assn. of America, Assemblyman Felipe Fuentes (D-Sylmar) introduced a bill that would extend the state's film and television tax credit through 2018.
Launched in 2009 in an effort to curb runaway production, the program gives filmmakers a 20% to 25% film tax credit toward certain production expenses. The credit can be applied to any business tax liability filmmakers have with the state.
Last fall, state lawmakers approved a one-year extension of the program, which is set to expire in July 2013. The state allocates $100 million a year to the program. While that is a relatively small amount compared to what other states such as New York offer -- about $400 million annually -- supporters say the tax credit has kept jobs from leaving the state and is necessary to keep California competitive.
"By creating tens of thousands of jobs and pumping billions into our economy, the film and television tax credit program has truly been a statewide economic stimulus package,'' Fuentes said in a statement. "With the state's unemployment rate hovering around 12%, we need to extend this targeted incentive to help keep Californians employed."
While California's film tax credit is providing an economic benefit to the state, it may not be providing as much of a return to taxpayers as an earlier study claimed.
That's one of the main conclusions from a new study conducted by UCLA's Institute for Research on Labor and Employment about a program the state adopted in 2009 to help curb runaway production. The state sets aside $100 million annually for the program, under which filmmakers can receive a credit of 20% to 25% of qualified production expenses (salaries of actors are excluded). They can apply the credit to offset any sales or business tax liability they have with the state.
The UCLA study concludes that the California tax credit "is creating jobs and is likely providing an immediate economic benefit to the state," but finds that some claims about the program's value have been exaggerated.
In particular, the study takes issue with some aspects of a report by the Los Angeles County Economic Development Corp. and financed by the Motion Picture Assn. of America that found that for every $1 the state allocated in a tax subsidy, the state recouped as much as $1.13 in spending.
That LAEDC estimate assumes that all productions applying for a subsidy will leave the state if they don't receive one. However, the UCLA researchers found that some of the productions that didn't get a credit, which is awarded on a lottery basis, still opted to shoot their films in California. Taking those projects out of the mix reduces the fiscal impact to as much as $1.04 per $1 of tax allocated, not $1.13, according to the UCLA report.
Nonetheless, the study, which included a survey of filmmakers, highlights the important role that state tax credits play in determining where they choose to shoot.
"Even though there is likely a small benefit to the state, I think the California film and television tax credit is a worthy program because, without it, in the long run, California is likely to lose dominance in an industry that is very important to the state's economy," said Lauren Appelbaum, research director for the Institute for Research on Labor and Employment.
The UCLA study was commissoned by Headway Project, a new think tank headed by former magazine publishing executive Michael Kong. In a separate report he authored, Kong makes several recommendations to improve the state tax credit program, including removing restrictions that forbid the sale or transfer of tax credits to third parties (except for low-budget independent movies) and doubling the funding of the current credit to $200 million a year.
[UPDATE: Christine Cooper, author of the LAEDC report, said she and her colleagues had made a “reasonable assumption” that the productions that received the tax credit wouldn’t have occurred without the incentive. “We are happy to see that the UCLA study confirms our finding of a net positive fiscal impact,’’ Cooper added. “While we can quibble over pennies -- $1.04 versus $1.13 in net positive fiscal impacts -- states like Louisiana are setting production records at our expense.”]
The stars continue to align for the Bayou State. Showing signs of continued robust growth, Louisiana’s film industry is gearing up for another busy year, with movies starring Leonardo DiCaprio, Morgan Freeman, Harrison Ford and Russell Brand set to begin filming in the state early this year.
Summit Entertainment’s “Now You See Me,” a crime caper starring Morgan Freeman, Jesse Eisenberg, and Woody Harrelson, began filming in New Orleans last month. This month, the city will host another Summit movie called "Ender's Game," based on Orson Scott Card's popular sci-fi novels and starring Harrison Ford, as well as a portion of the Weinstein Co.’s “Django Unchained,” Quentin Tarantino’s spaghetti western starring Leonardo Dicaprio.
In early March, Diablo Cody -- screenwriter of "Juno" and "Young Adult" -- will begin filming her directorial debut for Mandate Pictures, a yet-to-be-titled comedy starring Julianne Hough as a conservative woman who suffers a crisis of faith and Russell Brand as an unlikely companion who helps her on her path to self-discovery.
"We are starting 2012 on a high note,'' said Chris Stelly, executive director of Louisiana's Office of Entertainment Industry Development. Films and television shows such as MTV's series "Caged" and Columbia Pictures' "21 Jump Street” have Louisiana on track to break 2010’s record of more than 100 projects filmed in the state, Stelly said.
Production expenditures for 2011 are estimated to reach $1.4 billion, compared with the nearly $900 million figure estimated for 2010, Stelly added. From July 2010 to June 2011, Louisiana paid $180 million in tax credits for movie projects alone, according to Greg Albrecht, chief economist with the Louisiana Legislative Fiscal Office, up from $156 million the prior year.
At a time when film incentive programs around the country are being scrutinized and, in some cases, scaled back, productions continue to flock to Louisiana, which launched its program in 2002 before dozens of other states followed suit. The state offers a tax credit of up to 35% on in-state expenditures and, unlike California's program, has no annual or per-project cap.
That's why Louisiana continues to attract large-budget productions such as Paramount’s “G.I. Joe 2: Retaliation,” which was filmed in New Orleans last summer. Its 2009 predecessor, “G.I. Joe: The Rise of Cobra,” was filmed in both California and the Czech Republic.
Louisiana made its tax credit permanent in 2009 -- a move that allowed production in the state to prosper, along with investments in sound stages, post-production facilities and a strong crew base, Stelly said.
Mike McHugh, business agent for Local 478 of the International Alliance of Theatrical Stage Employees, which represents crew members in Louisiana, said membership in the trade union has grown from 850 in 2010 to approximately 1,000 in 2011 to accommodate the influx of productions.
“You ask any rank and file member and he worked more days [in 2011] than in previous years,” McHugh said.
