Committee tables anti-film incentive bill

by Megan Kamerick, New Mexico Business Weekly.

The Labor and Human Resources Committee in the New Mexico House of Representatives has tabled House Bill 19, which proposed to kill the state’s film incentive program.

That effectively means it’s dead in the water. The vote was 5 to 4 along party lines, according to the Greater Albuquerque Chamber of Commerce. The Chamber had opposed the bill, but does support greater transparency in the film incentive program.

Sen. Tim Keller, D-Albuquerque, has introduced a bill that would require the Economic Development Department to collect and track statistical information in order to assess the effectiveness of the film production tax credit. According to the fiscal impact report, the bill would formalize reporting and tracking requirements and allow for greater transparency.

About 60 people testified in opposition to HB19, introduced by Rep. Dennis Kintigh, R-Roswell, including Sandy Levinson, owner of Aquila Travel in Albuquerque, who said she employs 10 people with full benefits and that’s mostly due to the work her firm gets from the film industry. Getting rid of the tax incentive would kill her business, she said.

“I would, without a doubt, close my doors,” Levinson said.

Under the program, productions can get a 25 percent rebate on qualified expenditures in New Mexico after they submit their paperwork to the Taxation and Revenue Department following completion of filming.

Committee Chairman Miguel Garcia, D-Bernalillo, said he sees the impact of the industry every week in his South Valley district where film crews are often working. They eat in local restaurants and shop locally, he said. And his son has picked up jobs in the industry, after being laid off from a call center.

To read the full article, click here!

NM paid out $181 million in film tax credits over nearly three years

by Trip Jennings

New Mexico can be found a lot on the big and little screen these days. Watch AMC’s critically acclaimed Breaking Bad, featuring two-time Emmy winner Bryan Cranston, and there are the Sandias. It’s hard to tell, but, yep, there’s Galisteo in Legion, a thriller with a God-is-angry-with-humanity-so-here-comes-the-apocalypse storyline that was released earlier this year.

That steady activity of film and TV shoots is raising New Mexico’s profile in Hollywood as several films or TV series shot here have racked up Oscar and Emmy awards in recent years. But the bigger profile is also raising the amount of money New Mexico is paying out to film and TV productions through a controversial tax credit program.

Over the past 33 months, 118 film and TV productions were paid $181 million through the program, including $60 million this fiscal year, state documents show.

This year’s payout appears likely to eclipse the $61,464,418.56 New Mexico doled out last year. This year’s total –$60,519,012.63 — was through April 14, more than two months shy of June 30, the end of the fiscal year, documents show.

The film tax credit program is wearing a bigger bulls-eye these days as New Mexico’s lagging economy, and a strained state budget, add urgency to critics’ calls for an end to the program.

Citing pared-down state services, higher unemployment and forced state worker furlough days — most state workers took their fifth, and final, furlough day of the fiscal year Friday, opponents say 2010 isn’t the time to be handing out money.

“We’re cutting services, furloughing state employees. And we’re sending tens of millions of dollars to Hollywood. That ain’t right. It’s wrong,” said first-term Rep. Dennis Kintigh, R-Roswell.

Kintigh, along with two top Senate Democrats, has emerged as a vocal critic of the program, citing worries about the state paying an industry to do business here at a time when New Mexico is hurting.

“We’re told if we don’t provide these incentives they will pack up and leave. If that’s the case the industry doesn’t have any roots here,” Kintigh said. “We don’t do that for the newspapers or the TV business.”

Doing away with the program is short-sighted, advocates say. The tax credits go toward reimbursing a portion of money production companies already have spent here in New Mexico, not to subsidize Hollywood.

To read the full article, click here!

Bill to Kill the New Mexico Film Incentives is DOA

Here's the latest news on the New Mexico Film Incentives - from the New Mexico Independent!

Before discussion of a bill in committee, it’s normal for the chair to ask the audience who is there in support and who isn’t. After Chairman Garcia asked that question on Tuesday, Rep. Dennis Kintigh, R-Roswell, knew he was alone.

After a lot of testimony, a change to a bigger room and some emotional words, the House Labor and Human Resource Committee tabled the bill by a vote of 5 to 2. The bill aimed to end the tens of millions of dollars worth of tax incentives New Mexico gives to film companies to make movies here. Last year, Rep. Kintigh says the state gave out $82 million dollars in those incentives for a creation of about 2,000 direct jobs.

“We have a moral and ethical obligation to be good stewards of the states money,” Kintigh said in his opening statement.”I’m convinced we are not being good stewards if we continue this program.”

The committee had to switch rooms in the Roundhouse to accommodate the large crowd that turned out over the issue. And that large crowd was 100 percent against the bill.

“This bill is out there, it’s headline-grabbing, but its not sensible,” one commenter told the committee.

Comment after comment poured in to the committee, asking them to kill the bill. One came from a representative of the Enterprise car rental company, who pointed to the 50-60 cars rented for one month per production. Another told of a residential construction career revived by building movie sets. Over all about 20 people from the crowd spoke to the committee.

To read the full article, click here.

New Mexico Movie News #3 - Now Live

Check out all the latest news on what's happening in the world of New Mexico film! Click here to read the third edition of the New Mexico Movie News, full of information on the leading cast, crew, and vendors in the NM film industry. Plus great articles on Production Insurance, Small Business Marketing, and film real estate, and tips for networking in the industry.

If you'd like to be featured in the news, call us at (505) 930-0443.

Enjoy!

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.

Article/Interview With crewnewmexico.com!

The following interview appears on the Albuquerque Examiner online news site.

by Juanita Lee, Albuquerque Examiner
ALBUQUERQUE, N.M. -- Whether you are interested in making a name for yourself in the film industry or are on the production side looking for talent, crew, a location, industry-supporting vendors, or the best place to house your actor while they are on a shoot, you need look no further. New Mexico's premier film industry resource, crewnewmexico.com, is where you can find all your answers.

Home to a booming film industry, New Mexico offers locals many opportunities to shine in a variety of movies and television productions. For example, the film "Let Me In" will need over 500 background extras, meaning job opportunities for many people. In addition, most movies need around 100 on-set crew members, and the support of dozens of companies and hundreds of individuals that provide services to that particular film.

Founder of crewnewmexico.com, Daniel Taras, recently provided more insight, not only into the industry as a whole but also to what other opportunities are coming for New Mexicans that would like to work in the film industry.

You are the founder of crewnewmexico.com. How did you get into this industry?

I’ve always had an entrepreneurial life, but also a creative one. Photographer, professional writer and editor, traveler, safari guide, documentary cameraman.

When I started working in New Mexico film, I kept hearing the same question: “How do I get involved in the film industry.” Another big question – this one from the production side - was “Where can we find who and what we need to make this movie?” I decided to answer both questions at the same time, in a really cool way.

I felt that if we were to grow into the major film destination that’s been envisioned for New Mexico, we needed to have a production resource commensurate with the scope of what was happening. Since the film industry is largely here due to tax funded film incentives, I also wanted to ensure that the citizens of New Mexico have a way to feel informed and involved in the industry that’s right in their backyard. In a state that is as large as New Mexico, with a population spread so far and wide, I also saw a great need for networking and connectivity.

In just one year, we’ve added over 600 New Mexico individuals and businesses to our directory, receive around 10,000 site visitors per month, and send out our New Mexico Movie News industry newsletter to 8,000 filmmakers. Based on those numbers, I know we’re doing it right.

What sets crewnewmexico.com apart from other similar companies?

crewnewmexico.com was built from the ground up as a dynamic and interactive online tool that takes advantage of how business and networking are done in the year 2009. There have been print directories in the past, but they are expensive to publish and use a lot of natural resources to deliver a final product that is often out-of-date.

crewnewmexico.com is built on sustainable principles. We use very few natural resources. We only use digital format in all of our communications. No printed mailings, no print-outs, no fax machine. We can telecommute. We had a visit from an office supply salesman who wanted to set up an account for us. I said, “Nothing personal, but we don’t use office supplies.” You’d be amazed at how it helps minimize overhead and lessen environmental impact. All those paper clips come from somewhere.

In two years since the inception of crewnewmexico.com we’ve used a total of 5 packs of printer paper and a few ink cartridges. I never go to Staples. I have 3 printers collecting dust in the closet if you want one.

What has been your best experience, thus far, in the film industry?

The amazing interaction I have with such a wide variety of New Mexico film people and businesses – that’s the most rewarding. In one day, I can be doing business with an actor, caterer, grip, realtor, lawyer, location, hotel, producer and ice-delivery man. It’s like a Mr. Rogers tour through the economy.

Being in a place where we can bring together such a wide variety of people and services, all with the ultimate goal of helping make great movies and helping keep business flowing – that’s the best experience. Our goal is to make sure that anyone considering shooting in New Mexico is fully informed of the amazing array of talent, goods and services available to them. And for local individuals and businesses to have an opportunity to be involved.

I also love seeing people I know on screen or in the film credits. That’s brilliant.

What advice would you give to aspiring actors?

Hone your craft. Follow your heart. Get great headshots. Life is short. Live your passion. If you’re not doing what makes you happy, you’re wasting very precious time. Whatever happens, you’ll be richer for the experience.

What should people who want to get a foot in the door avoid doing?

I always go by the 3 Ps. Be polite, professional and persistent. Oh, and if you do get on a movie set, never run. It looks like you forgot something.

As an extra or a cast member, what should one expect as a typical day?

Days on a set are long, usually never less than 12 hours, up to 16 or more. In New Mexico, weather conditions can swing wildly, so be prepared. If you’re going to be an extra, bring snacks, a book, and a pillow for your bottom because you might spend half the day waiting for your scene.

Making movies reminds me of football games. They spend a lot of time preparing for the next scene, and then there’s only a few seconds of action. Now I know why people drink so much beer on Superbowl Sunday.

What would you like to see happen in the NM film industry in the next few years?

New Mexico is becoming synonymous with film-making, and that’s free advertising for us as a movie-making state. The longer the industry is here, the deeper its financial impact and the more ingrained it becomes into our economic culture.

Productions are here largely because of financial incentives. Keeping the New Mexico film incentives competitive is critical to the ongoing success of the industry, and we need to keep proving to the citizens of New Mexico that having film as an economic backbone for the state is a rare and amazing opportunity. I have 600 people in my directory alone who are involved in film, and a lot of them make a great living.

There’s talk of new film studios, a tentative opening of Santa Fe Studios, and a deepening of the industry to include digital media, gaming, and more post-production. Plus, citizens around the state are rallying to bring production to their cities. That’s all good news.

Is there anything specific coming up that people should know about right now?

There are currently six projects shooting in New Mexico, including Due Date starring Robert Downey Jr., Breaking Bad, starring Bryan Cranston, and Passion Play starring Megan Fox and Mickey Rourke.

You can stay up to date on what’s happening in the New Mexico by reading our New Mexico Film Blog, and our Who’s Filming Now pages.

Of course, using our directory, or contacting us directly, is an excellent way to help you get set-up for a scouting trip or production.

Do you have a favorite scene in a movie or a favorite line from a movie?

Any scene and any line from “When Harry Met Sally.” And, of course, anything made in New Mexico.

Panelists Warn Against Cutting Film Incentives

From the Santa Fe New Mexican

Oct. 7--If New Mexico did away with or substantially reduced its tax incentive program for movies, productions in the state would dry up, according to a veteran production executive speaking Tuesday.

"In 18 to 24 months, you would feel it," said John Hadity -- president and CEO of a self-named company that specializes in production finance and risk management for film and television. He spoke at a panel discussion at a conference for Western state legislators.

Hadity was asked the question by Rep. Brian Egolf, D-Santa Fe, a supporter of the film incentives. Egolf asked Hadity whether he'd send productions to this state if there were no incentives. "No," he said. "Finances drive decision making." Earlier he said that people who make decisions on where to shoot films don't even consider states that don't offer incentives. Only seven states do not offer incentives for film productions.

"If you don't have an incentives program, you're dead," Hadity said.

But because of the ever-increasing state revenue crisis, there might be a move in the Legislature to reduce or eliminate those incentives to help balance the budget.

Gov. Bill Richardson, a champion of the film program, has said while some tax incentives for other industries should be looked at, the movie incentives should be kept in place. But skeptics have questioned whether the benefits of the program, the cost of which could reach about $80 million this year.

The panel discussion was part of the program at the Council of State Governments-West annual meeting, taking place in Santa Fe this week.

Another panelist, Ned Richtor, president of a Massachusetts company that has studied economic development program, noted there is a "pushback" against film programs in several states. "This is a business deal you're bankrolling with taxpayer dollars," he said. "Competition is fierce because so many states (have programs) and accounting is murky."

Another panelist, Eric Witt, who has served as Richardson's liaison with the film industry, was asked how other businesses in the state feel about the film program.

To see the full article, click here.

Michigan Film Incentives May Be on the Chopping Block

Production Tax Incentives, such as New Mexico's 25% rebate to productions, are at the heart of today's film industry. Michigan has the most aggressive incentive program in the country, but its likely not sustainable, as the article below will demonstrate.

We're proud that New Mexico's incentives are designed to be sustainable and increasingly transparent, and while other states may come and go on the film landscape, we're a core part of the industry for some time to come. - crewnewmexico.com

The tax credit bringing many Hollywood studios to Michigan could soon see some major changes.

Senate Bill 404, a bipartisan proposal that would top the film tax credit off at $50 million and reduce the available refunds by 7 percent, is being discussed.

The refundable film tax credits would be cut to 35 percent from their current rate of 42 percent.

The bill was introduced on March 25 and is sponsored by State Sens. Nancy Cassis, R-Novi; Jud Gilbert, R-Algonac; Tom George, R-Kalamazoo; and Mickey Switalski, R-Roseville.

“We recognize that Michigan has a significant, large deficit of $2.8 billion, and part of what’s contributing to that is the giveaway money to Hollywood producers,” Cassis said.

The bill would be keeping the film tax credit at $50 million, which would scale back a little on overly generous giveaway money, she said.

“These movie producers are currently not paying taxes in Michigan, but are still getting money,” Cassis said.

The bill would just restore funds to other areas of the state, such as police, fire and Medicare, she said.
Cassis said the bill also would support commercial ads and more jobs.

“We would be able to provide credit for commercials to be done here, and we would hire 90 percent of Michigan workers first,” she said.

In the long run, Cassis said, Bill 404 would recognize all the refundable credits that are not necessarily vital and giving relief to other businesses.

State Sen. Jud Gilbert said even though the majority is not in favor of the bill, it is still necessary.

“The bill is necessary because films last for a short duration, which means the money will run out before anyone gets the subsidy,” Gilbert said.

He said the bill would divert money into a tax relief.

“If the bill passes, people will see gradual employment increases in small businesses with longer durations,” Gilbert said.

To read the full article, click here.

Gov Bill Richardson Announces New Reporting Policy for Film Tax Credit Program; Tax and Rev Department Creates Special Unit to Handle Film

Press Release

SANTA FE – Governor Bill Richardson today announced that the New Mexico Film Office will implement a procedure to make public specific financial information related to the state’s film tax credit program. New Mexico offers productions a 25% credit for qualified New Mexico expenses, including salaries for local crew, facilities, lodging, construction materials, equipment rentals, and a number of other categories. In addition, the New Mexico Taxation and Revenue Department is in the process of creating a specialized unit to review and process film tax credit submissions.

“The tax credit program has helped establish New Mexico as a leader in film and television production and has brought the state thousands of jobs and billions of dollars in revenue,” said Governor Richardson. “The data provided under this new policy will give taxpayers a detailed look at what film companies spend to qualify for the credits.”

Since 2003, 127 major film and television productions have been made in New Mexico with a resulting economic impact of approximately $3 billion. In the state there are an estimated 10,000 direct and indirect jobs related to the film industry, and over 200 local film-specific businesses and services.

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.

“As a government entity, we have a responsibility to provide to our legislature and taxpayers information which substantiates our belief in the film industry as a major economic driver, and which meaningfully relates to the citizens and businesses of the state the benefits received in return for offering production incentives,” said Eric Witt, Governor Richardson’s Deputy Chief of Staff and Film Policy Advisor. “We believe this policy will protect truly proprietary industry information while fulfilling our fundamental responsibility to the people of New Mexico to provide meaningful, accurate data regarding these programs.”

The new film unit at the state Taxation and Revenue Department will consist of four auditors and a supervisor and is expected to be operating within the next month. The department is recognized throughout the film industry for its competence and professionalism. To continue to meet the agency’s high standards, the new staff will received specialized training in film production practices.

“Our auditors will talk the industry language, visit the sets and understand the complexity of the film and digital media business,” said Rick Homans, Secretary of the New Mexico Taxation and Revenue Department. “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.”

New Mexico’s success with its film incentives has received national acclaim and attention-now 42 other states offer some form of film incentives, many of which are at higher rates than New Mexico.

“The competition is growing, but New Mexico is still at the top of the list when productions look for locations,” added Eric Witt. “The fact is, we have one of the most trusted and respected film programs in the world. And most other states can’t compete with our talented crew base, world-class facilities, and spectacular, diverse locations.”

New Mexico Film Office & IATSE Local 480 Kick Off Tour to Meet with Native American and Hispanic Residents

ANTA FE-The New Mexico Film Office is teaming up with the International Alliance of Theatrical Stage Employees (IATSE) Local 480 for a series of presentations designed to inform Native American and Hispanic residents about potential careers in the movie industry. The first five presentations begin this Thursday, June 11th and will include the personal stories of current employees in the industry, as well as discussions about training opportunities available for New Mexicans.

“We are working to make sure that all New Mexicans have a chance to be a part of this exciting and growing industry,” said Lisa Strout, Director of the New Mexico Film Office. “Through these presentations we are reaching out to interested Hispanic and Native American New Mexicans who may not otherwise be exposed to the opportunities that are available.”

“The state’s efforts to build the state’s movie industry have helped boost the economy and provide good jobs for all New Mexicans,” said Jon Hendry, business manager for IATSE Local 480. “Our members are giving back to their communities by educating others about the business and helping to keep the momentum going.”

The first series of these presentations will be held in communities across central and northern New Mexico:

Thursday, June 11th 2:00p - Navajo Nation visit @ Shiprock | PHIL Theatre
Friday, June 12th 2:00p - Acoma/Laguna visit @ Sky City Cultural Center
Saturday, June 13th 2:00p - Espanola visit @ NNMC Nick Salazar Center for the Arts
Wednesday, June 17th 7:00p - Navajo Nation 2nd visit @ NMSU-Grants Martinez Hall
Friday, June 19th 3:00p - South Valley visit @ Nat’l Hispanic Cultural Center

Ernst & Young: NM film Incentives = Good ROI

by Megan Kamerick, NMBW Staff

The film industry and its supporters in New Mexico are most likely breathing a sigh of relief.

The long-awaited study by Ernst & Young on the economic return by the state’s film and media incentives found that for every $1 extended in state tax credits, state and local governments received $1.50.

Gov. Bill Richardson made the announcement Friday and said the state’s incentives to attract film and television productions have created high-quality jobs, health coverage and benefits for New Mexico workers.

To read the full article, click here!

Highlights of the New Mexico Film Tax Incentive Program Study

crewnewmexico.com is proud to relay the following press release from the office of Governor Bill Richardson. We told you. . .

New Study of Film Industry Incentives Show Strong Job and Revenue Creation for New Mexico

SANTA FE- A new study released today shows that New Mexico’s film industry tax incentives are delivering impressive economic and fiscal results for the state and its workers. The study, using the year 2007 as a base measure, was conducted by Ernst & Young, one of the world’s largest professional service firms. Results showed that combined New Mexico’s state and local governments garner a positive 1.5 return on investment on the tax credits extended to companies producing films in the state, or $1.50 for every $1 extended in state tax credits.

“I am pleased at the results of today’s study. Not only are we are seeing a net gain to state and local tax revenues as a result of these incentives to attract these film and television productions, but we are also creating high quality jobs with health coverage and benefits for the people of our state,” Governor Bill Richardson said. “This is a successful initiative worthy of our continued support, especially in these difficult economic times.”

According to the Ernst & Young study:

· New Mexico has a 1.5 return on investment on combined state and local taxes.
· Film production activities in New Mexico created 2,220 direct film and media jobs in 2007
· 3,769 direct jobs from capital expenditures and projected film tourism spending were attributable to productions in 2007.
· 5,989 direct jobs attributable to the film production tax credit in 2007 created a total of 9,210 total jobs in New Mexico
· Average annual salary of film technicians: $49,000
· Average annual salary of New Mexicans just over $30,000
· Over 200 new film-specific businesses established in New Mexico since 2003, directly attributable to the film production tax credit.
· Over 600 additional New Mexico businesses are benefiting from film activities.

The film production incentives were expanded in 2003 at the urging of Governor Bill Richardson, who predicted at the time that it would create good jobs for New Mexicans and diversify our state’s economy.

The Quantitative Economics and Statistics (QUEST) of Ernst & Young authored the study of New Mexico’s film production incentives. This multidisciplinary practice combines business and industry experience with capabilities including federal, state, and local tax policy analysis and revenue estimation; economic development strategy and targeting; and economic and fiscal impact modeling. QUEST also provides analyses to effect legislation and regulatory change, relying on its team of respected tax economists and statisticians to produce quantitative studies of a variety of federal and state issues.
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crewnewmexico.com is New Mexico's Premier Film Industry Resource. Click here for information about the New Mexico Film Incentive Program. For our comment, contact crewnewmexico.com at (505) 930-0443, or info@crewnewmexico.com

New Mexico Film Tax Incentive Study is Ready

The State of New Mexico "Economic and Fiscal Impacts of the New Mexico Film Production Tax Credit" report is ready.

The State Film Office, the film unions, and film professionals agreed last year to conduct an intensive study on the fiscal impact that the film incentives, and the resulting production, have on the State. This report is now ready.

It was our contention that the Tax Incentives are an economic boost to the state, and this study has confirmed just that. Please read, and let us know if you have any questions. We'll be following up with a more detailed commentary.

The report is available by clicking here.

Florida's Star is Dimming as More States Lure Movie Studios

Hollywood studios are finding better incentives elsewhere
By Sarah Talalay - South Florida Sun-Sentines
December 24,2008

When Marley & Me, starring Owen Wilson and Jennifer Aniston, opens in theaters across the country on Christmas Day, South Florida moviegoers can enjoy picking out local landmarks from Las Olas Boulevard to Dolphin Stadium.

South Florida is as much a character in the film as Marley, the story's unruly Labrador. The two months spent shooting the film in the region this spring pumped more than $10 million into area businesses and paid wages for nearly 1,400 local film industry workers.

But Florida is beginning to fall off studios' radar. A fund the state provides to attract big film productions was slashed from $25 million last year to $5 million as the state struggled with its fiscal crisis.

Now in its fifth year, Florida's budget for incentives is being dwarfed by other states, such as Louisiana, New Mexico and Michigan.

Read the full article here

Good Article on Film Incentives from Forbes.com

We like to make sure everyone stays aware of what's happening in the world of film incentives. Many states are extremely eager to capture their share of the film biz with grand give-aways and incentives. New Mexico's program is the model for all other states to follow. It is successful, sustainable, and has spawned the crew, infrastructure, talent, and industry-supporting businesses needed to make keep the industry here for the long-term. Eric Witt, director of media arts development for the New Mexico Governor's Office sums it all up in the last paragraph.

Hollywood's Favorite Cities
Lauren Streib, Forbes Magazine 12.10.08, 1:00 PM ET

What do the upcoming feature films The Curious Case of Benjamin Button, Hurricane Season and Final Destination 4 have in common? They were all filmed in New Orleans, La.

New Orleans was home to 20 film productions in 2008--up from 15 in 2007--with budgets totaling around $275 million. The city estimates that half of that sum was spent locally.

Fifteen hundred miles away is another regional center for film production. In 2008, at least 22 films were created in Albuquerque, N.M. Those productions, which include future big-budget releases Terminator Salvation and The Men Who Stare at Goats, earned the city $130 million.

It isn't art driving the decisions. It's commerce. "It used to be 'What does your city look like?' and now the first thing out of [producer's] mouth is 'what's your incentive?' " says Richard Moskal, director of the Chicago Film Office. "It's made us all very aggressive in our race to be the cheapest place around."

Adds Jennifer Day, the director of New Orleans Office of Film and Video: "The reasons these movies are here, bottom-line, is the incentive package."

But as the recession is fast eroding budgets for projects like roads and schools, many states may come to question how much states are getting in return for their largesse. The entertainment industry is seen as a huge boon to local economies, since productions offer everything from employment for local crew, extended says at nearby hotels and an immediate influx in population to support restaurant and retail businesses.

U.S. states have tried to take advantage of this fast and glamorous cash source in recent years by establishing tax credits and rebates to filmmakers who film in their state. Ten years ago, there were less than a handful of states that offered monetary incentives for filmmakers; now there are 43.

The cost for such competition is getting steeper, however, and the returns are questionable for some locales. Louisiana spent $76 million in revenue in 2007 from film credits, says the governor's Office of Film & Television. According to recent comments by chief economist for the Louisiana state legislature Greg Albrecht, about 25% of that was replaced with state tax revenue generated by the industry. Nonetheless, "We're in it for the long haul," says Chris Stelly, Louisiana's film commissioner.

Michigan, with the highest tax credit percentage at 42%, will receive an estimated $17.9 million in new taxes from the film incentive for this year. The state will net a $110 million loss this year from their credit initiative, a figure which will likely double in 2009, even as the state's budget deficit is expected to reach $600 million. The state's program offers tax credits for non-resident labor and has no cap on the amount of credits it can sell.

"You can be smart or you can be overly aggressive and be short-lived in this industry as a state film commissioner who wants to build up an infrastructure," says David Hutkin, a deputy managing director at Imperial Capital Bank who specializes in film financing. "Michigan is biting off more than they can chew. I get why they're doing it, I just don't think they can afford it."

For state revenues to benefit from film production, the rebates and credits offered need to be at least equal to state and sales taxes that negate the outflow of money. But states count indirect spending from tourism, increased revenue to low-income areas and building valuable infrastructure among the indirect monetary benefits to justify the losses. As well, the states are trying to fend off the threat of runaway productions, or projects that relocate to Canada and Europe in search of cheaper costs. This posed a greater risk before the introduction of the incentives.

The fiscal initiatives are more dangerous to state budgets now, as Hollywood has been forced to become increasingly money hungry. Lenders are more conservative, the foreign resale market is softer and traditional funding markets are drying up. State inducements are uniquely valuable as a form of soft money that can finance a film. While large productions inject large sums of money in short periods of time, it's unclear if the accompanying large economic concessions are really worthwhile to the states.

Some states are cutting back. Rhode Island put a $15 million cap on credits, and Florida cut the governor's film office budget by 80%. Indiana Gov. Mitch Daniels vetoed legislation offering 15% tax credit, but the state legislature overrode his veto. A recent legislative effort to cap the amount of credits Michigan gives at $50 million was unsupported.

"Film production is the economic flavor du jour right now but I don't know that it's such a good fit," says Eric Witt, director of media arts development for New Mexico's governor's office. "If you don't have the infrastructure, it's just money flowing out of your economy."

Great Article from the New Mexico Business Weekly

New Mexico Business Weekly - by Megan Kamerick NMBW Staff

Film and television productions such as “In Plain Sight” are a common sight now in downtown Albuquerque. A new association aims to give the industry a stronger voice in the state legislative arena on issues such as incentives.

During the 2008 legislative session, the state’s film incentives got a brief close-up.

The Legislative Finance Committee raised concerns about how quickly the use of the tax rebates had grown. State Sen. John Arthur Smith, D-Deming, proposed capping the rebates at $30 million annually.

The legislation was never fully introduced, Smith said, because the initial support evaporated.
“At the LFC hearings, I was trying to put a cap on [the incentives],” he said. “The next thing I knew, they had me crucifying Christ.”

But even the mention of revisiting the incentives caught the attention of many people working in film and media here.

“That was something the majority of us in this industry had no clue was happening,” said Lynette O’Connor, owner of The O’agency, which represents actors and models.

While it’s not clear if any similar legislation will come up in the 2009 session, there have been rumblings, including a study critical of the state’s rebates versus the actual financial benefit film productions have brought here.

So O’Connor and others formed the Film Industry Promotion Association, or FIPA, and hired The Rutherford Group LLC to lobby state officials.

“We just felt we need a voice, we need someone walking the hallways [of the Roundhouse] to tell us what’s going on, to organize us so we could speak with one voice,” O’Connor said.

The group has about 50 members so far, and many more volunteers. It’s trying to raise $56,000 to pay for its lobbying efforts, she said. FIPA recently held a meeting at the new prop house in Albuquerque, Film Maker Production Services, that drew about 65 attendees, among them actors, various union representatives, real estate managers, small business owners and tourism and hospitality industry people.

Rutherford Group principal Tom Rutherford has begun doing outreach to industries that benefit from the film business, such as hotels, to get broad-based support for the new coalition. He is also floating the idea of hosting legislators at Film Maker Production Services because it showcases how incentives are helping to build a permanent industry here, he said.

“This is an example of a company that used to exist only in California, so it’s making it easier for the industry to come here,” Rutherford said. “I think the bottom-line big challenge is to be able to demonstrate how deep the industry goes in the state, how many times the money turns over.”

The state is facing a $278 million revenue shortfall, according to the LFC’s October estimates, although December estimates could be greater given the decline in oil prices. The amount of the film tax rebates has grown to about $98 million since the incentives were introduced. However, there are no plans to make recommendations regarding film incentive legislation, said David Abbey, LFC director.

That said, the LFC did contract with New Mexico State University’s Arrowhead Center to produce an economic impact study and the results were not encouraging. It found that New Mexico gets about 14.4 cents in tax revenue for every dollar it spends on a tax rebate for film productions. Smith said the rebates have grown much more quickly than state officials anticipated.

“What I’m understanding now is they’re getting tax credits on whiskey and toilet paper,” he said.

Productions can get a 25 percent tax rebate on qualified local expenditures, but the money has to be spent for New Mexico goods and services. There are also wage subsidies available for productions for certain kinds of crew training.

“Our program design is very specific about what qualifies for a rebate,” said Eric Witt, Gov. Bill Richardson’s deputy chief of staff. “It’s specifically tailored to funnel all money back into the state.”

Critics of the Arrowhead study, including Witt, say the methodology was not comprehensive in capturing all the film industry’s economic activity. Its direct spending since 2003 totals $733 million.

“That’s a 7 to 1 return on investment,” he said.

The state uses a multiplier of three to calculate a statewide economic impact of $2.2 billion since 2003.

Richardson’s office hired Ernst & Young for about $50,000 to do what Witt said will be an independent, comprehensive review of the industry’s economic impact on New Mexico. It’s due to be finished just before the legislative session, which starts Jan. 20.

Ernst & Young surveyed people who make at least 51 percent of their salary in film and media, said Lisa Strout, director of the New Mexico Film Office. It also looked at businesses that are doing a great deal of work for the industry, such as lumber yards, concierge services, hotels and rental car companies.

Smith said he does not have plans to reintroduce legislation to cap the incentives, but added he would not be surprised if legislators revive the effort since the state needs revenue.

mkamerick@bizjournals.com | (505) 348-8323

Movies Being Made in New Mexico! The Book of Eli, Starring Denzel Washington

We'd like to spread the word about one of the newest productions to be film in New Mexico - The Book of Eli, starring Gary Oldman, and two-time academy award winner Denzel Washington.

The Book of Eli will be directed by Albert and Allen Hughes. Its the first film for the Hughes Bros since their 2001 From Hell.

The synopsis? "A lone hero in a not-too-distant apocalyptic future who must fight across America to bring society the knowledge that could be the key to its redemption."

The script was originally written by Gary Whitta (the two new Akira films) and re-written by Anthony Peckham (Clint Eastwood's upcoming The Human Factor and Sherlock Holmes for Warner Bros).

This big-budget film is due to shoot in and around Alamogordo, Albuquerque, Carizozo, and Santa Fe, New Mexico, from Feb-May 2009.

Letter to the Editor on the New Mexico Film Incentives

This letter to the editor of the NY Times was written by Nick Smerigan, COO of Albuquerque Studios. We think its instructive to those who want to understand more about the nature of film incentives. The key thing you'll continually find when it comes to film incentive programs - New Mexico gets the highest marks for the sustainable nature of its program, and its success. Dozens of States have tried to replicate our model, with varying levels of success - some, in fact, with awful results.

One of the reasons the New Mexico incentive program and film industry is so successful is that much of the production money that is spent here, stays here. Productions use local resources, hire local crew, and, increasingly, are able to do post-production work here, all of which contributes to an evolving creative class of individuals and businesses who earn a solid wage, and who have been able to integrate the film industry into their lives and businesses.

If its any testimony to the busy-ness of the industry, crewnewmexico.com has added nearly 140 advertisers to our site in just a few months, and our web traffic come from sources wide and strong.

United States Film Production Incentives

Over the past 4 to 5 years there has been a lot written and discussed in regards to the various tax incentives and rebate programs that many states have offered film and television productions to entice the productions to bring work to their states. The tax incentives and rebates were, to the best of my knowledge, established to create jobs and act as an economic stimulus for the state. To that end, most states have never been able to quantify whether the incentive packages that they offer are actually stimulating their economy or creating new jobs because, to date, there is no clear process by which to determine the impact of the dollars spent. Whether quantifying dollars spent directly by the productions or the multiplying effect of those dollars within the local economy, it has been difficult to measure how that spending is extending into local communities.

The programs do, in fact, keep jobs and production in the U.S. . There's no question about that. But, important questions need to be answered. Are these rebates and incentive programs a rush to compete in the marketplace with little or no thought as to how they are administered or awarded? And, how do these programs ACTUALLY impact the state's economy? In your article you mentioned how successful the New Mexico program has been. One of the major factors in my decision to lend my expertise to a $90M+ infrastructure project in New Mexico was how the New Mexico Film Incentive Program was being executed and how knowledgeable the people are who make the decisions to extend the rebates to the productions.

Many legislators, legal consultants and other political advisers use the argument that states are paying out millions of dollars to production companies and that expenditure does not equal the tax revenue the state is receiving in return. First, how can a state rebate more than the production actually spends? Isn't that impossible? For example, with a 25% rebate in New Mexico , the local taxable spend is always guaranteed to be four times the rebated amount. That spend not only generates sales or gross receipts taxes but also filters through the economy as it multiplies from salaries to home purchases to development and back to salaries, etc, etc. Second, the focus should not solely be about state income tax receipts but about the benefit production activity and spending provide the populace of that state. This is the "economic stimulus" that differentiates these rebate and incentive bills from the other economic development programs mentioned in your article. The question then becomes, "How do we quantify how much the populace is benefiting from the local production generated by the programs?" Shouldn't we focus on the fact that a particular production can inject many millions of dollars into the state economy in a timeframe much shorter than any other industry? Or, that many of the local production support personnel and companies in the state hired by the production would not have otherwise had that job or that business? The production companies are going to make their project somewhere and, without an incentive, a local market has little to no chance of capturing that economic development opportunity.

Truly sustainable incentive programs should be determined by many reasonable factors including location (both look and proximity to the powerbases of Los Angeles and New York ), available local crew and access to equipment and services, to name a few. An incentive program should not be based solely on one state's desire to outdo another. Film and television production is in an intricate business with many moving parts. The people who pen these rebate and incentive programs not only need to understand how each piece of a proposed incentive will impact the local economy but must also understand the production industry and its processes. Each state is different and presents its own advantages and disadvantages to potential production clients. With the appropriate incentives on offer, a state can direct its approach in order to attract specific types and quantities of production. Each incentive program should take this into account and states must craft their legislation to benefit their local economy by capitalizing on these differences.

Albuquerque Studios infused over $91 million of infrastructure into the local economy, without state or local investment, because the structure and administration of the New Mexico rebate program was attractive to our clients. New Mexico had an established production support and crew base and the location was close enough to Los Angeles to make it more attractive. The program is SUSTAINABLE as a result of how it is funded and the way each dollar spent is recycled time and time again through the economy. This investment alone should prove that the right incentive packages work. Glamour has always been Hollywood's calling card but the individuals who create that glamour are hard working people who have created a multi-billion dollar industry – an industry that has created an untold number of jobs and wealth across the world. There should be no doubt that they are business men and women who look to manufacture their product in the most financially beneficial arena. Why shouldn't they? They provide jobs, in most cases high-paying union jobs, to local citizens no matter what their socioeconomic backround. They use services and products from the various locales and put an incredible amount of money into the communities. And, yes, they do pay taxes in those areas.

It can get tiring hearing the same arguments from the same people over and over again. The answer is simple. Without an incentive program there is virtually no chance that you would have attracted any of the production money spent thus far in your state (or any future production business). Whether it is $1 million or $100 million, production spending benefited your local economy by its very nature. If you want to quantify this impact then put together a method by which that can be done – don't just say that it isn't working. New Mexico is in the process of creating such a methodology right now. While a certain incentive program may not be working because it is not crafted to take advantage of a state's particular set of economic and geographical conditions, a wisely crafted, sustainable program DOES work. Films are now being made in America that historically would have been made in other countries, where Americans would not get an opportunity to work on them. Whatever we do going forward, let's start by looking at simple business policies before we just throw a percentage on the table. What is it you are trying to accomplish for your state and communities? What are the benefits to your local work force? How are the local businesses going to benefit and, most importantly, how do you measure the program's impact on your state's economy?

If approached cautiously and intelligently, state-specific production incentive programs are successful. I came to the desert of New Mexico because I believed in the production incentive which provided a "competitive edge" for the Studio. I stay in the desert because I believe that system is working and will continue to provide that "competitive edge" far into the future.

Nick Smerigan
COO
Albuquerque Studios
Albuquerque , New Mexico

What's Up in the Santa Fe Film World

We at crewnewmexico.com wanted to re-post this article from by Peter Debruge in Variety about Santa Fe Studios so that everyone has an idea of what's coming down the pike for the New Mexico Film Industry.

Filmmaking focus shifts to Santa Fe
New studios call for more action in the area
by Peter Debruge

Boasting a major airport, Hollywood-caliber studio facilities and a full third of New Mexico's 2.5 million residents, the Albuquerque area seems like the natural hub for the state's filmmaking operations.

But plans are under way that could shift a significant amount of production to the Santa Fe area, widely recognized as the creative culture center of the Southwest. In addition to the many artists and musicians represented there, the capital (with its relatively modest 80,000 population) is home to nearly half the state's crew base. In the past, those pros have had to commute to Albuquerque (a 45-minute drive) or far-flung outdoor locations like Ghost Ranch or White Sands for work, with gas and lodging eating into production budgets.

That may change thanks to a number of major initiatives in the works. Earlier this month, local government gave the Hool family, established players in the Mexican and independent film scene, the greenlight to proceed with building Santa Fe Studios, their proposed 600,000-square-foot, six-stage facility just south of the city.

In keeping with the style of most Santa Fe architecture, the Hools looked to indigenous traditions as they planned their eco-conscious campus. "It turns out the Anasazi design principles map one-to-one with the lead green principles: orientation of buildings on a north-south axis, take advantage of shade for the summer and passive heating for winter, capture rainwater, things like that," explains Jason Hool, who left a job working with Guy Hands at Terra Firma to assist his father, producer Lance Hool, with the project.

By the time Santa Fe Studios' projected late-2009 completion date rolls around, Angelenos should be able to fly directly into Santa Fe with the same 90-minute terminal-to-terminal convenience currently available between the LAX and ABQ airports.

"American Airlines and Delta are in the process of getting clearance from the FAA," claims Eric Witt, head of Gov. Bill Richardson's media arts development initiative. "They're looking to direct 70- to 100-seat passenger jets from L.A., Denver and Dallas."

To make things even more accessible, construction is already under way on a high-speed "Rail Runner" train between Albuquerque and Santa Fe. At this rate, crews could be commuting effortlessly between the two cities by the end of the year.

Another New Mexico Film Article from the Hollywood Reporter

This article, New Mexico's economic incentives great for filmmakers by Chris Koseluk of the Hollywood Reporter talks more about the financial package offered by the state of New Mexico, and how/why it brings major film production to the State. Includes info on the Film Crew Advancement Program, and the New Mexico Film Investment Loan Program.

Read the article here