Tax credits, film czar: California gets with the program (THR, TW)

By Nancy Tartaglione-Vialatte

With California finally offering a competitive package of tax breaks for local shoots, the question is how the move will impact the overall incentives landscape, opines the Hollywood Reporter. In related news, The Wrap.com reports that the city of Los Angeles is considering appointing a film czar to focus on film industry efforts and relations with the studios.

With applications for big-budget film shoots in the city on a steep decline, city council president Eric Garcetti announced on Wednesday that he would propose the appointment of a film czar who would likely be based in the office of Mayor Antonio Villaraigosa.

Garcetti, TW reports, said he hasn't decided whether the czar will come from the entertainment industry or city government.

Spokeswoman Julie Wong told TW, "We need a pointperson; somebody who can understand the policies and reach out to the studios and producers and tell them how to take advantage. It’s too early to tell who that person might be."

Prior to Garcetti's announcement, he reviewed a report about runaway production that was conducted after "Ugly Betty" moved its production to New York last year.

Now, however, New York's funds earmarked for credits have dried up well ahead of their 2013 expiry date. So, one has to wonder whether shows will be staying in New York at all.

Warner Bros. TV, which produces Fox's "Fringe," recently decided to pick up sticks and head for Vancouver. The show had originally relocated from Toronto to Long Island's Silvercup Studios to take advantage of the tax breaks.

Although California had long sat on the sidelines while other states including New York, Michigan, Massachusetts and Louisiana attracted productions with tax rebate schemes - not to mention its neighbors to the north which has been a haven for so-called runaway production for years - the decision to pass an incentive package now looks quite timely.

The new California plan - $100 million in credits per year over five years - passed on Feb. 19 as part of the state budget. It will allow studio films produced for $75 million or less to apply for a 20% credit (25% for indie productions $10 million and under). Three-quarters of the shooting days or three-quarters of the production budget must remain in the state to qualify.

"My phone has not stopped ringing," Amy Lemisch of the California Film Commission told THR. "People who are in the midst of deciding where they are going to shoot, and have places like Michigan and New Mexico on their list, are stopping in their tracks. This is exactly what we wanted to happen. You will see an almost immediate increase in shooting in the state."

Tucker Tooley, Relativity Media's production president told THR, "It's not on par with some of the other state incentives in terms of percentage, but the California credit does have the advantage in that the majority of talent lives in LA and we have an amazing crew base, so that makes it more competitive. We look at it as a good start."

Some states are concerned about whether their legislatures can continue to compete. New York City still has a separate 5% tax credit and New York City film commissioner Katherine Oliver says, "In light of the current fiscal problems facing the city and state, we are carefully examining how we can improve the program."

In Florida, some fear that the legislature will not set aside money for film and TV productions given financial pressures and the state's requirement to keep a balanced budget, THR reports.

Suzy Spang, chair of the Florida Film and Entertainment Advisory Council, said that California's move may be useful as an argument towards getting Florida the funding it needs. "We have started to leverage that," Spang told THR.

Canada also is responding to the California move. Ontario’s foreign and domestic film tax credits are now permanent but it may be the lower Canadian dollar that seems to be making the numbers work for the Hollywood studios.

Speaking of "Fringe," Silvercup president Stuart Suna told Variety "The funny thing is that the show's set in Boston, and Massachusetts has a tax credit. But the exchange rate has gotten better for shows shot in Canada."

As to whether a film czar would help with migrating production, TW reports that skepticism does exist. "People in the industry will say : what can you give me?" one veteran entertainment executive. "People want tax breaks, and an easy permit process. The big problem here is that you have to hire unions, so anything done in LA is more expensive."

Saving $1 million on a $50 million movie would be welcome, said the executive. "It's nice to have, but it's not going to change your life, or your decision."