Backers lobby lawmakers to keep Michigan film incentive

Supporters, worried about wariness in Lansing, emphasize jobs, economic impact

Nathan Hurst / The Detroit News

While the public debate has quieted, backers of Michigan's fledgling film industry continue lobbying Lansing lawmakers to retain special tax incentives intended to lure them to the state.

Producers, directors and other industry leaders have met with politicians in recent weeks, making their case to keep the tax breaks.

While they say there's wiggle room in the percentage offered to qualifying productions and firms, the industry representatives say it's imperative to maintain Michigan's claim to the nation's most aggressive tax incentive program for filmmakers.

"This is a situation in which the future of our economy, and the budding of a valuable industry for Michigan workers, is at stake," said Jeffrey Spilman, a partner at Ferndale-based S3 Entertainment Group, a company that helps coordinate productions in Michigan.

"Besides employing talent, production crews and people directly involved with filming, Michigan businesses such as hotels, restaurants and dry cleaners are all reaping the benefits of an increased customer base. The reach of the film incentives extends far beyond film itself."

Spilman and producers of "The Wannabes," a television show slated for syndication next year, met with lawmakers last week to discuss how the incentives are helping to bring steady business to Michigan.

Some fiscal conservatives said the financially strapped state can't afford the program, which offers a refundable tax credit of between 30 and 42 percent for in-state costs for qualifying productions.

Backers succeeded in convincing legislators that Michigan's tax incentives, the nation's most aggressive, hadn't had enough time to encourage industry developers to build essential infrastructure projects.

Revisions under consideration include a reduction in the rebate percentage for qualifying productions, and an increase in the amount given to infrastructure projects such as studios and post-production facilities. A 25 percent incentive is offered to such projects under the current package.

Michigan Film Office spokesman Ken Droz said nearly 50 projects have received a green light this year, spending about $216 million.

New Accounting Rules for the New Mexico Film Incentive Program

On September 11, 2009, Governor Bill Richarson's office announced the introduction of a new program to help provide greater transparency in the New Mexico Film Incentive process. In light of some recent abuses of incentives in Iowa, these come at a newsworthy time.

New Mexico has the most trusted and stable incentive program in the country, and these new changes show the confidence we have in our current procedures.

Under the new guidelines, production companies that request a tax credit will be required to provide the New Mexico Film Office with detailed information regarding the expenses submitted to qualify for the credit. Previously this data had only been provided to the New Mexico Taxation and Revenue Department where by law it must be kept confidential. Under the new policy, the film office will provide aggregate totals in specific categories for all film and television productions on a fiscal year basis.

By providing aggregate totals, proprietary industry information will remain confidential while still providing the public greater insight into how the tax credits are being applied, and to show the validity of the credit requests.

To enforce the new rules, the New Mexico Tax and Revenue Department is creating a new film unit consisting of four auditors and a supervisor who will receive specialized training in production practices and terminology.

Says Rick Homans, Secretary of the New Mexico Taxation and Revenue Department, "Our auditors will talk the industry language, visit the sets and understand the complexity of the film and digital media business. The goal is to be open and friendly to the film industry and, at the same time, maintain accountability and a clear set of rules and expectations.

The reporting categories are as follows:

1. Total dollar amount spent in New Mexico (including NM labor)
2. Total dollar amount spent in NM on:
a. NM Crew (all NM crew: director, producers, writer, technical crew, security)
b. NM Talent (principals and background)
c. New Mexico facility/property rental: stage space, production office, location fees
d. NM lodging/accommodations
e. NM food (catering, craft service, other)
f. NM rental vehicles/non-film vehicles
g. NM "rolling equipment" rentals (trucks, trailers, cranes, picture cars)
h. NM film equipment rentals (grip, lighting, camera, other)
i. NM construction costs (lumber, hardware, supplies, other)
j. NM set dressing
k. NM wardrobe
l. NM special effects/props.

New Mexico kicks in $10 million to build Santa Fe movie and TV studio

By Richard Verrier, LA TIMES

December 10, 2009

New Mexico is determined to stay in the Hollywood limelight.

Much to the chagrin of California, New Mexico has emerged as a major draw for movies and TV shows in recent years. Credit a generous 25% film production rebate, favorable climate and an aggressive film office.

Now the state that bills itself as "Hollywood's Newest Home" is ratcheting up the competition. With the support of a $10-million economic development grant from the state, developers are about to break ground on a major production studio just outside Santa Fe, the state's capital.

The $25-million project, called Santa Fe Studios, will include two 18,000-square-foot sound stages and 27,000 square feet of warehouse space. It will be the state's second major sound stage facility after Albuquerque Studios, which has eight sound stages and has helped fuel the state's film growth since opening in 2007. The studio is home to the TV series "Breaking Bad" and the cable channel Reelz, which relocated from Los Angeles last year. It also has hosted production of such movies as "Terminator Salvation."

"We feel positively about the future of the film business here," said Jason Hool, president of Santa Fe Studios, which is owned by Hool's family. "There is plenty of film work to go around." The new facility is targeted to open next fall.

New Mexico drew almost $267.9 million in direct film spending in the fiscal year that ended June 30, about flat compared with the same period a year earlier, but up from $150.8 million in fiscal 2007, the New Mexico Film Office said.

The new sound stages will draw more business to the state, local film promoters predict. "We have the opportunity to get the stage work that doubles or triples the amount of time that a production is working within our state," said Lisa Strout, director of the New Mexico Film Office.