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The Many Benefits of Film Tax Incentives

February 24, 2011

In my last post on the cost of dramatic television, I referenced the attractive tax incentives used by Canada to lure many television productions north of our border.  This arrangement not only brings much needed capital into Vancouver and Toronto, it also helps employ many Canadians in front of and behind the camera. Somehow, we have failed to create an equally successful federal program here in the USA.  And it doesn’t take the mind of Lawrence O’Donnell to surmise that our current political and economic climate doesn’t make it likely we will be moving in that direction anytime soon.  It will continue to fall to the states and even to individuals to lead the way.

Despite Hollywood being located in California, that state only offers between 20%-25% back on films shot primarily within her boundaries (only for films based outside of California).  By comparison, Michigan currently offers up to a 42% tax credit as well as low-interest loans for productions with a high enough budget.  Ann Arbor recently got to play the title role in the film “Cedar Rapids” because the Iowa film production tax credit couldn’t touch this.  Michigan’s Governor Jennifer Granholm confirms what many entertainment professionals know: it isn’t just the production companies that benefit.  “That (money) … is people who are staying in hotels or renting houses, eating meals at local restaurants or who are sending their clothes to the dry cleaners.” One of the best illustrations of this phenomenon took place in California’s Gold Country in the 1980s.  The crew was given $2 bills to spend and that local vendors could see exactly how many of them had profited from the shoot.  And let’s not dismiss the possibility of attracting tourism when our area is presented in the right spotlight.  Those “Sex and the City” Hotspots Tours practically sold themselves.

Personally, I cringe when I see Pasadena filling in for San Francisco or (worse!) a sound stage pretending to be Manhattan.  I guess New York doesn’t like it either, because they now offer a 30% tax credit and get to stand in for Chicago on “The Good Wife.”  While not going as far as NYC, what they’re doing in San Francisco is definitely a step in the right direction. According to Susannah Greason Robbins, Executive Director of the San Francisco Film Commission, all of the fees that are paid to the City of San Francisco — including police, fire, the port, and the department of water and power — are eligible for a tax refund up to $600,000 as long as 65% of filming takes place there.   Additionally, “Scene in San Francisco” lists vendors who are offering discounts directly to crew members and production company representatives working in the area.  These include the obvious hotels, restaurants and dry cleaners, but also optical care, spas, moving and storage companies and other services.

In part as a result of these new policies, film production is on an upswing in the Bay Area.  Recently, Steven Soderbergh’s “Contagion” was on location in downtown, Mission Bay and around Candlestick Park.  The pilot of “Alcatraz” was shot partially on Nob Hill.  An episode of the Style Network’s “Clean House” spent a week in town.  And (rejoice, Clive Owen fans), HBO’s “Hemingway & Gellhorn” will be there through May.  In all, filming was up 54% percent in January compared with the same time last year, with features alone bringing in an estimated $2 million to city coffers according to the “San Francisco Chronicle”.

Admittedly, not everyone is in favor of these programs.  An analysis completed by the non-partisan Michigan Senate Fiscal Agency last year was somewhat discouraging. Rather than generating a rallying cry to keep production here in America, their report concluded that while many of the benefits of the tax breaks, discounts and loans are seen on a private level, the cost of the incentives is to the public.  But as I hope I’ve now proven, the public can also profit from a production coming to town if they are brought into the conversation.  It is, therefore, imperative for those in the entertainment community to keep educating the public about the rewards of supporting local film and television production.  Let’s do what we can to keep these jobs and the added revenue right here.

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