The
explosion of production incentives around the U.S. is a big boost to producers
looking for soft financing that's closer to home. From Providence to Phoenix,
it seems many state legislatures can't pass film incentives fast enough.
But even
though the bounties are there for the taking, they've also got their limits.
Some
states offering generous tax credits or rebates can also have very low annual
caps on how much money they can actually give away. When the well runs dry,
producers are out of luck until next year. Missouri offers a whopping 50% tax
credit, a number that rivals Canada's spoils. The catch? The program is capped
at $1.5 million.
"The
places that have caps and waiting lists and all that stuff, financially we've
avoided them just because of the bureaucracy of it and the lack of certainty
they are giving you in terms of whether you are going to qualify or not,"
says 2929 Prods. prexy Mark Butan.
When
2929 scouted locations to shoot Uma Thurman starrer "In Bloom," they
were looking to tap into the New York program because Thurman lives in the city
and wanted to be close to home. Then Connecticut passed a 30% tax credit with
no annual cap, and they decided to move the production north. "We could
still get Uma home to New York every night, plus Connecticut aesthetically was
better for this movie and the financial deal was better," says Butan.
"People
have to do their homework," says entertainment attorney Peter Dekom, who
is the film adviser to the New Mexico State Investment Council and one of the
principal architects of the New Mexico structure. "There are profound
numbers of benefits all over the United States. All you have to do is call the
film office of the state or visit their Web site and start with that. The
states go out of their way to make life a little bit easier for
filmmakers."
Dekom has
a laundry list of ways to fully take advantage of these incentives and avoid
some of the pitfalls filmmakers run into.
For
example, sometimes the tax credits or rebates are so enticing that other,
seemingly minor incentives are overlooked, such as free use of buildings and
municipalities. "That may not be a big deal," Dekom says, "but
if you're shooting 'The Longest Yard' and the state of New Mexico gives you a
free prison, it's a huge deal. And that's exactly what happened. And I'm sure
that's true in other states and other venues where they are willing to do
that."
Even
when the focus is just on the tax credit, there is a big distinction between a
transferable tax credit and a refundable tax credit. If it's the former,
producers have to find somebody, a broker, for example, to access the money. If
it's a refundable tax credit the state writes producers a check directly. Case
in point: Louisiana has a 25% transferable tax credit, so Element Films prexy
Adam Rosenfelt found an innovative way to tap into the state's incentive
program. He helped found a film fund in 2003 called LA Squared that became the
first company to utilize the tax credit. LA Squared recently announced an
extension of its relationship with New Orleans-based Lift Films to shoot up to
15 pics in Louisiana over the next three years.
"The
film fund is unique in that it actually has the state of Louisiana as an equity
investor with us in the fund," says Rosenfelt. "So not only do we
utilize the tax incentives, we also utilize pure equity from the state as an
investment vehicle. So that's unique and proprietary to us."
While it
is up to the producers to educate themselves about which states offer the best
incentives, what crews are available to use and other logistical
considerations, the film commissions are hard at work to make the process
easier.
"We've
tried to make it a very producer-friendly, business-friendly atmosphere,"
says Alex Schott, exec director of the Louisiana Office of Film & Television
Development. "We knew that dealing with bureaucracy is not conducive to a
business environment. So, if we had relatively simple guidelines for getting
your incentive, in the end it would speak volumes about our program."
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TIPS
Pointers
from the pros on how to navigate Stateside production rebate programs: