A Tale of Two Studios

by Dan Mayfield, ABQ Journal

Mom always said life's not fair. The state is chipping in $10
million toward the construction of Santa Fe Studios, while Santa Fe
County stepped in with a $6 million loan for the studios and a $3
million loan for the eight-acre site.

In total, more than $19 million in public money is going toward the
$28 million project just south of Santa Fe.

In contrast, Albuquerque Studios spent $74 million (and $20 million
later) in private money to build stateof-the-art studios at Mesa del Sol
in Albuquerque four years ago.

"Everything is private. No state, federal or city investments," said
Nick Smerigan, chief operating officer of Albuquerque Studios.

Albuquerque Studios is part of the Pacifica Ventures family of
studios, which also has studios in Pennsylvania and Connecticut.

Santa Fe Studios is being built by the Hool family of movie
producers who have made films like "Flipper" and "Crocodile Dundee in
Los Angeles."

Questions about the fairness of the Santa Fe deal have popped up, in
part, because the Hools are longtime friends of the governor. The
Governor's Office and the Hools have said their relationship had nothing
to do with the deal.

Eric Witt, Gov. Bill Richardson's deputy chief of staff, insists
comparing the two studio projects isn't fair.

Witt said the state did a lot for the Albuquerque project located at
Mesa del Sol, including providing a road to Albuquerque Studios.

"That road was a big dang deal," he said, at a cost of $6.25million.
He also mentioned tax breaks and other improvements to Mesa del Sol that
benefited Albuquerque Studios. "I know it's not quite the same thing."

Smerigan has a different view.

"We paid for our own power, water lines. I didn't receive any
benefit with the possible exception of the road," he said. "I have not
gotten one break on anything. I thought that was going to be a benefit
that everyone would appreciate. Every piece of infrastructure on this
lot we paid for ourselves."

Jason Hool, president of Santa Fe Studios, points out that the
public money for his project comes with plenty of strings attached,
which guarantee the project benefits the state. So far, he said, the
Hool family has invested $1million and has raised more capital to finish
the construction.

So how did a California company end up with a project in which
taxpayer money covers more than two-thirds the cost?

Funds allocated

Long before Albuquerque Studios was planned and when the state was
flush with money in 2002, the state started looking at a need for
studios.

The film incentive program was picking up steam, Witt said, and the
Legislature appropriated $10 million for a studio in Santa Fe County,
which was the hub of the film business then.

"The allocation ... was the first one. At that time nobody was in a
position to actually build a soundstage facility," Witt said.

After the Legislature approved the $10 million grant for Santa Fe
County, the Governor's Office removed "Santa Fe" from the bill so the
money could be used statewide in case a project elsewhere was proposed,
Witt said. It never was.

The money was added to Richardson's Media Fund, which has money set
aside for film and media projects like training programs.

At the same time, Santa Fe was working on a media park in an unused
65-acre parcel of land just south of Santa Fe and about a half-mile from
the Bonanza Creek Movie Ranch, where "3:10 to Yuma" and "Young Guns"
were filmed, said Robert Griego, the Santa Fe County planning director.

"It began as an economic development project," he said. "We did an
economic development plan and in our plan we had targeted industries and
one of them was film and media."

Santa Fe County zoned the park a media district and set out to look
for an owner-operator for a studio, Griego said.

About three years ago, the Hools showed up.

"The county says, 'We're ready to move on this thing. Where's our
$10 million?'" Witt said.

By then, two proposals had already come and gone for soundstages.
The Hools had an ambitious project, a green studio designed by a
superstar architect, and came with a heavy-hitting board of directors
who represent Warner Bros., 20th Century Fox, Sony Pictures
Entertainment and Universal Pictures. It just happened, Witt said, that
Conrad Hool and Gov. Richardson were old friends.

The state at the time had the money in two piles, Witt said. The
state used $3.5million in Local Economic Development Act funds, which
are earmarked for projects that create jobs. The rest, $6.5million, came
from the media fund.

The money was given to the county, which is passing it on to Santa
Fe Studios.

Tied to jobs

In addition, the county has agreed to make a lowinterest, 10-year
loan for $6million to the Hools. And it is allowing the studios to buy the land, valued at about
$3million, with five payments. But rather than a monthly payment on the land, the Santa Fe Studios will pay back the loan after it reaches certain milestones in job
creation.

For every 100,000 hours of work, the studio pays the county
$520,000. The land sale is expected to close soon, said Santa Fe County
Attorney Steve Ross, and the Hools will have six years to pay off the
loan.

"We were struggling to structure something that would work for them
but not expose the county," said Ross.

The $10 million state grant - which was approved last week - will be
used for construction. Then, Ross said, the county will offer the Hools
the $6million loan.

If the Hools don't build the studio, they owe the state $10 million.
If the studio can't pay the $6 million loan, the county can foreclose on
the project, said Santa Fe County Attorney Steve Ross.

"We have to build a studio. It's not money in our pockets. We have
to deliver jobs. It we fail, we have to pay the money back," Hool said,
including the state grant. If business booms, Hool said, the studios
will own the land quickly. If business is slow, it could

take the full six years.

Santa Fe County Commissioner Virginia Vigil said construction job
hours will count toward the total.

"The intent was to link those dollars (the loan) to the ability to
create jobs," Vigil said.

Most film crew and actors work more than 40-hour weeks, usually
about 60, which will accelerate the pace of the studios reaching each
100,000-hour milestone.

Two large films, with about 120 film-crew workers, truck drivers,
caterers and more would provide 100,000 hours of work, said Jon Hendry,
the head of the state's film crew union, the International Association
of Theatrical Stage Employees.

The vast majority of state film work is union work, whether that's
with IATSE, the Screen Actors Guild, the Directors Guild of America or
others. Unlike a regular 40-hour workweek, Hendry said film jobs are
based on a 70-hour workweek.

The county estimates that the studios will pay back the entire loan
within the first five years of operation, Vigil said.

"We like this business model," Hendry said. "We told the county we
want to keep their feet to the fire." More About the Jobs

Pay Scale

The jobs created by Santa Fe Studios are expected to pay more than the
average wage for Santa Fe County, which was $42,000 in 2008, according
to the Bureau of Labor Statistics. The average film crew member makes
$48,000 a year, working on three films. DGA and SAG members and others
on set can make considerably more, said Jon Hendry, the head of the
state's film crew union, the International Association of Theatrical
Stage Employees.

An entry-level IATSE member can make $23 an hour, Hendry said.

Unemployment Benefits

Like any company, film productions must pay into the state unemployment
insurance benefits package, said Jason Lewis, chief of staff for the
Workforce Solutions Department.

Since the average film worker works 45 weeks a year, he or she is
eligible for state unemployment benefits when not working that can last
26 weeks and up to 86 weeks with new federal programs, Lewis said. Film
workers, who work on and off, are treated much the same way seasonal
workers are, Lewis said, and are not an additional strain on the
unemployment insurance program.

Health Care

A union member must be covered by a health plan to be eligible to work
and the health-care plans vary from a simple, highdeductible
$100-permonth plan to an $800-per-month plan that covers an entire
family. So film workers are not a drain on the state Medicaid system,
says Hendry.

Governor’s Council on Film and Media Industries to Hold Town Hall

(if you're interested in the film industry, we highly recommend you attend this meeting.)

SANTA FE – The Governor’s Council on Film and Media Industries will host a Town Hall for New Mexico businesses, local governments, neighborhoods and any other interested parties to gather input on the future of the state’s burgeoning film and media industries. The Town Hall will take place Saturday, September 27th at the State Capitol Building.

“This is a great opportunity for the public to have input in updating the Governor’s strategic plan for developing media opportunities and industries here in New Mexico,” said Council Chairman Michael Kaye.

The Town Hall will focus on three areas: Education and Career Training for film and digital media; Impact on Communities - Location Concerns & Entrepreneurial Opportunities; and Incentives and Economic Impact.

The Town Hall is free. Registration is required. You can register on the day of the town hall or pre-register online here.

WHEN: Saturday, September 27, 2008
TIME: 9:30am-4:00pm
WHERE: State Capitol, Santa Fe, New Mexico!
If you have any questions please contact Executive Director, Rochelle Bussey at rochelle@nmfilm.com or call 505-476-5604

New Mexico Film Industry Explodes

This is a great article - a must read. It's actually posted on the filmidaho.org website -- the official film website for the State of Idaho. It gives a lot of background on why New Mexico is doing so well in the film world and, why, for example, Idaho isn't. Provides a lot of detail about the NM Film Industry, Incentives, Governor Bill Richardson, Wild Hogs, and Madrid, New Mexico, and more. Thanks, Idaho!

How the film industry fell for the Land of Enchantment
BY KEVIN MAX

About 25 miles south of Santa Fe, residents of the dusty old mining town of Madrid (they say MAD-rid) woke up one day on the set of the Hollywood feature film Wild Hogs. John Travolta, William H. Macy, Martin Lawrence, Tim Allen, Ray Liotta, and the film’s crew became Madrid’s honorary, if temporary, citizens. If you added them all together—the well-heeled of Hollywood and the boot-heeled of the burgeoning artist enclave—the population swelled to more than 400, in an increasingly common scene in this southwestern state.

The film’s crew painted buildings, put in grass and white picket fences, and compensated just about any of the town’s 350 residents for the inconvenience and loss of business. Some Madrid residents also requested that their town’s name be used instead of the fictional one written into the script, and the director, Walt Becker, obliged. All in all, Madrid came out ahead.

“How many towns have $200 million worth of advertising spent on them?” says Honore Hackett. The Madrid resident and her husband own two Southwestern and American Indian jewelry stores in town. But they were more than smitten locals for Wild Hogs. They became vested partners, surrendering their empty lot so crews could build from the ground up Maggie’s Diner, the remote desert battleground where Woody (Travolta), Bobby (Lawrence), Doug (Allen), and Dudley (Macy), as middle-aged suburbanites turned “hardened” biker gang, defended their turf and Madrid against the Del Fuegos, a real bike gang led by Jack (Liotta).

Since Wild Hogs wrapped last year, the Hacketts have used Maggie’s Diner for storage, but the vestiges of Hollywood remain. Tourists have started streaming into town to take photos in front of the building. Director Adam Marcus is also in the area filming the Val Kilmer movie Conspiracy. And all this shooting centers on a single tiny town in New Mexico.

Meet the new face of Hollywood, what Hackett calls “Hollywood Southwest.” The state has stolen more than 80 feature films and television projects from mighty Tinseltown, adding more than $1.2 billion dollars over four years to the economy. That’s up from a meager $8 million just five years ago. The industry created 3,000 new in-state jobs. The crew base in the state shot up from 60 technicians in 2003 to more than 1,400 today. At the time of this article, there were about a half dozen feature films being shot in New Mexico and a couple had just wrapped. The alkali salt flats outside Lordsburg served as the setting for the nowhere-to-hide final confrontation between Pierce Brosnan and Liam Neeson in Seraphim Falls. The Gilman Tunnels, blasted through the Jemez Mountains in the 1920s for logging trains, “collapse” behind a fleeing Russell Crowe and Christian Bale in 3:10 to Yuma. The 1957 version of 3:10 was shot on the Warner Bros. Ranch in Burbank and in Tucson, Arizona; it’s a one-movie indicator of Hollywood’s decline and New Mexico’s rise. And then to Galisteo—a small town in the cradle of the Cerillos Hills and the Jemez Mountains and Sangre de Cristo Mountains—where Gulf War veteran Kilmer looks for the marine who saved his life in Conspiracy. “As directors realize the diversity in New Mexico,” says Lisa Strout, director of the New Mexico Film Office, “they see it as a canvas to make their films come alive.”

Hollywood has always loved the beauty and culture of New Mexico in a nice-place-to-visit sort of way. Just a short flight from Los Angeles, actors like Kilmer, Julia Roberts, Gene Hackman, Jane Fonda, Alan Arkin, and Dennis Hopper have flocked to the state. Dozens more actors appreciate arts culture, the sabor of Spanish and American Indian cuisine, the warmth of the Southwestern sun, and the comforts of luxury spas in Santa Fe. “It is kind of an idyllic, quaint, and sophisticated place with great food and a big art community and spas and horseback riding,” says Strout. “This is the type of place that people fall in love with.”

But the latest Hollywood influx is not about pleasure. It’s about business. And much of it happened because of one man: Governor Bill Richardson.

Richardson came into office in 2003, telling New Mexicans that the state needed to attract new businesses and making the film industry a priority growth target for the state. Then he convinced the state government to roll out an incentive package for filmmakers. Today, as many as 32 states offer similar perks, but few are as established or as generous as New Mexico’s. They include a 50 percent reimbursement of wages for on-the-job training of state residents, a tax rebate of 25 percent on all direct costs and labor (or no sales tax on most production costs), and a film investment loan program that offers no-interest loans for up to $15 million.

“It was natural for us,” Governor Richardson says. “We’re close to Hollywood, so logistically and cost-wise it’s easy for productions to be here. We have a tremendous climate and natural beauty, rich cultural traditions, and the most progressive production incentive program in the country. What’s not to love?”

The state started small, chasing low-budget indie films before moving into bigger productions that had been shooting abroad and finally courting repeat films and longer series TV productions. At all times, one constant guided the state: “We approached it like a business,” says Eric Witt, director of media arts and industries for the governor. “It had to make money for New Mexico.

Four years after Richardson launched his program to bring the film industry to the state, his epiphany came through the smoke rings of a cigar. “During the production of Wild Hogs, I had some of the cast and crew up to the governor’s mansion for dinner,” he says. “After the meal we’re sitting out on the back lawn overlooking a magnificent New Mexico vista, having a cigar, and I look around and see John Travolta, William Macy, Tim Allen, and Walt Becker laughing and having a good time. And I think to myself, I can’t even get a table at McDonald’s in L.A., and I’ve got all these people right here at my house. This is all right!”

Los Angeles might disagree, and it’s easy to see why. For decades, film production has become more competitive and cost-conscious. Film producers, hoping to make a profitable film in this tougher environment, started looking for tax incentives, rebates on labor, and kickbacks on production costs. Canada was one of the first to come through, starting in the late ’80s. British Columbia stepped up with a raft of incentives that drew millions of dollars of film production to the Great White North, with total production investment spiking in 2003 to $1.24 billion Canadian. Canada’s gain was Hollywood’s loss. But by last year, B.C.’s numbers had trailed off to $950 million in foreign film production. Experts peg that decline to powerful incentives coming from states like New Mexico.

Even so, a film takes a short time to make and leaves little more than memories and photo ops like Maggie’s Diner. Until the industry matures, the local jobs lifted from Hollywood won’t last long. Recognizing this stark economic reality, all of the states and countries courting the industry hope to build a self-sustaining film culture, from homegrown filmmakers in high schools to professional digital animators. But New Mexico figured that out first.

The state’s original incentive package offered $200,000 in “film boot camp grants” for college and high school campuses. New Mexico also partnered with Comcast and National Geographic in a Governor’s Cup competition for local film projects, including screenplays and documentaries. Meanwhile, both Disney and Sony Pictures Imageworks rolled out academic programs for high school students and undergraduates alike. Sony brought its Imageworks Professional Academic Excellence (IPAX) program to the University of New Mexico. The IPAX curriculum aims to nurture the next generation of digital artists. Thanks to the program, the University of New Mexico joins 10 other schools—including Carnegie Mellon, Stanford University, and the University of Southern California—that graduate IPAX-certified digerati.

Farsighted programs like these, says Bill Lindstrom of the Association of Film Commissioners International, show New Mexico’s ability to “think outside the box.”

Whether conducted outside the box or otherwise, the future of filmmaking in New Mexico looks bright. The state already recognizes the benefits of the exposure a film gives to local economies. A scene or two shot in small New Mexico towns like Madrid, Galisteo, and Lordsburg act as an inexpensive national marketing campaign, adding dollars to the tills of local merchants. So the aggressive raft of incentives state legislators passed four years ago will probably stick around for some time. And over the next couple of years, the part of the plan designed to create bricks-and-mortar facilities will finally bear fruit.

That started last year with Pacifica Ventures, managing partner in the famed Culver Studios in Culver City, California (think Citizen Kane and Gone with the Wind). Citing New Mexico’s incentives as a key element in their decision, Pacifica announced its plans to build Albuquerque Studios, a 500,000-square-foot, state-of-the-art film studio. The studios opened in January this year, and value-minded filmmakers began laying plans to use the new resource in their adopted state. Sony Pictures Imageworks—the digital talent behind films like Surf’s Up, Ghost Rider, and Spider-Man 3—announced in May that it would build a 100,000-square-foot digital studio in connection with Albuquerque Studios. The new digital lab will create another 300 jobs for the state.

Hollywood recognizes that these facilities will compete against its own. But like a Mom-and-Pop storeowner who shops at Wal-Mart, the industry can’t resist the value pricing. “One of the main drivers of this industry is cost, and the incentives afforded from New Mexico are great,” says Imageworks president Tim Sarnoff. “The fact is that we, in L.A., were losing work to the rest of the world. New Mexico and other states have stepped up to the plate.”

Of course, New Mexico and the other places courting value-minded moviemakers (see “The Next Hollywood?” on page 132) will never displace Tinseltown. Its concentration of money, production assets, and creative talent will allow L.A. to remain the entertainment capital of the world. But with a raft of incentives, a growing band of industry pros, state-of-the-art facilities, and a topography that runs from frozen tundra to scorching bleakness, the Land of Enchantment could become “Hollywood Southwest.” Expect fewer film crews to wrap with martinis in L.A. and more to celebrate with margaritas in New Mexico.