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Location Hollywood-Style

States are vying to woo film entertainment production away from international markets- as well as from Hollywood.

Richard J. Maturi (April/May 06)
(page 2 of 3)
Arizona commissioned ESI Corp. to perform an analysis of its film and video industry. The report showed that employment in Arizona's film industry declined more than 26 percent between 2000 and 2003. ESI recommended a comprehensive plan establishing collaborative partnerships in the film industry, facilitating and promoting local film-making, establishing incentives with a return on investment, developing a marketing and promotion strategy, and creating a film office website.

"Arizona was experiencing a drain of industry talent, making it difficult to attract projects," reports Judie Scalise, president of ESI Corp. in Phoenix. "The Arizona Film Commission realized its efforts to attract business could not alone turn the tide. They needed legislature help to create an incentive and job training package to rebuild the state's film infrastructure. Incentives alone don't do the job," she stresses. "There must be a strong educational focus in all facets of multimedia production."

"The film and television industry has a firm basis in technology and entrepreneurship, thereby making it an economic catalyst," says Arizona Film Commission Director Harry Tate. "Incentives have supplanted locations as the number one consideration for many production projects, after scripting considerations. In fiscal year 2003, the film industry generated over $200 million in total economic activity and supported more than 1,700 direct and indirect jobs in Arizona."

With new legislation signed into law by Governor Janet Napolitano in October 2005, Arizona seeks to rebuild its declining work force and increase film industry revenues. In order to qualify for tax credits, production companies must hire a required percentage of its crew in-state.

"We had to reverse the trend," says Michael McGinn, president of the Arizona Film & Media Coalition. "Arizona not only lost industry jobs and revenues, we lost tourism dollars. With the new legislation, we are in a better competitive situation to increase film industry interest in the state. While it's still too early to assess the impact, we are excited about the future."

"New Mexico's success started a rush of states to recapture productions outsourced overseas," says Michelle Hartly, executive producer of FilmWest Productions in Tucson. "In order to help states determine industry needs and to help producers learn about incentive programs, the USA Committee of the Producers' Guild of America invited all state film commissioners and representatives for a July 2005 forum in Los Angeles. Getting the film producers and state film people on the same page is a big step in the right direction."

Not all incentive programs have moved along smoothly. Louisiana has had to regroup twice since instituting incentives that include sales and use tax exemptions for production expenditures, employment tax credits, and transferable investor tax credits.

"We were convinced that we could attract a lot of the overseas production activity to Louisiana's Hollywood South," says Tommy Kurtz, senior vice president of Jobs Development for Greater New Orleans, Inc. "As a result of the 2002 legislation, $20 million of film production business grew to $400 million this year. This has rebuilt our film industry work force with quality, high-paying jobs. Incentives are the hook, but you need a trained work force, great locations, and the supporting sound/edit stage infrastructure." Kurtz points out that "one of the features that makes Louisiana's incentive program stand out is the transferability of credits, allowing production companies unable to use all of their credits to effectively sell those credits to companies that have the ability to use them."

In 2005, Louisiana rolled back some of the credits and tightened requirements that the credits apply to the work performed in Louisiana. "We recognized that we were too generous in rewarding film production work performed outside of the state and brought those provisions back in line with the state's desire to build our film industry infrastructure," Kurtz says.

Hurricane Katrina forced the evacuation of film productions from New Orleans and other locations. State film people worked hard to convince film production people that the whole state was not submerged.

"Film industry people have been very receptive to moving to other state locations. Our film crews are busy and we are determined to keep as many productions in Louisiana as we can," says Alex Schott, director of the Governor's Office of Film and Television.

The efforts are paying off. The production company for Warner Bros.' The Reaping, starring Hilary Swank, moved to Baton Rouge to finish shooting. "Before we chose Louisiana for filming The Reaping we looked at a number of world settings," says Herb W. Gains, producer of The Reaping. "Louisiana gave us a look far superior to other locales. The right combination of financial incentives and creativity sealed the deal. After Katrina we had a lot of thoughts about leaving. We did a damage assessment and looked at options and came to the conclusion to stay in Louisiana to keep people employed and working."

Long a favorite location for feature film and television production companies, New York City fights for market turf against Canadian and overseas locations. As a result of 2004 legislation, qualified film and television productions that meet a 75 percent requirement of work performed in New York can avail themselves of a refundable tax credit (10 percent from the state and 5 percent from the city).

To further enhance its competitive position, Mayor Bloomberg initiated a 2005 "Made in NY" incentive program with a 15 percent tax credit for qualified productions, a marketing credit for free advertising on city-owned media equal to 1 percent of New York production costs, and a production company discount card for hotels, car rentals, banking services, and goods and services from other participating vendors.

"New York City's film and television production industry employs 100,000 New Yorkers and generates $5 billion for our economy on an annual basis," says Kara Alaimo of the NYC Mayor's Office of Film, Theatre and Broadcasting. "The `Made in NY' incentive program has seen over $300 million in new film and television production business since January 2005, with employment of 6,000 New Yorkers.


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