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Bringing Filming Back To California: Is It Worth The Money?

Olivia Niland |
January 24, 2014 | 8:41 p.m. PST

Staff Reporter

Flickr/Glen Scarborough
Flickr/Glen Scarborough
In 2013, a record 42.2 million tourists flocked to Los Angeles County, populating Hollywood Boulevard with sightseers and indicating that the film industry is still a significant draw for outsiders, according to the Los Angeles Tourism & Convention Board. 

While tourism in L.A. is booming, on any given day, filming in California is being outpaced by production in New York, Toronto, and states across the South, which has many wondering whether Hollywood still holds allure for insiders.

Hollywood's loosening grip on the film industry it once monopolized isn't new, but so-called “runaway production” has spiked in recent years, causing Los Angeles Mayor Eric Garcetti to declare a “State of Emergency” in August. The mayor has vowed to address the problem, namely by offering tax incentives to compete with other states and countries luring production away, and in October signed a measure waiving fees for television pilots filmed in L.A. 

The mayor has also collaborated with California Gov. Jerry Brown to address state-wide runaway production. He also appointed Film Czar Tom Sherak, who has created an informal committee of industry executives and workers to generate a plan of action, and has publicly vowed to “cut the red tape” to increase further filming tax incentives in the state. 

These measures are all intended to stem runaway production that takes a toll on “below the line” workers—or those whose livelihoods are dependent on when, where and if filming occurs —but there remains the debate over whether delegating more money to the problem will be enough to bring back filming and whether doing so is in the best interest of cash-strapped California. 

Set designer Camille Bratkowski, who has worked on productions including “Mad Men,” “Glee” and “Twilight,” has spent her career mainly in Hollywood despite runaway production, but was relocated to Chicago for six weeks last year to work on the Kelsey Grammer drama “Boss” before a local set designer became available, a practice which she sees as increasingly prevalent and worrisome. 

“For a while now we’ve been seeing an evolving culture of 'migrant film workers,'” said Bratkowski, who has been a set designer since the mid-nineties. “It can be fun to work in another city, but in many cases families are split up. Some people have even moved their entire families to other cities just to work on four month projects.”

The rise of runaway production has been largely fueled by the increase of other states and countries offering production companies sizable tax breaks. And though such incentives have certainly been effective, Bratkowski noted that these booms almost always lead to busts. 

“What's interesting to note is that as soon as cities and states realize the revenue they're losing by offering incentives, they roll them back, and the productions move to another state or back to California,” said Bratkowski. “This leaves them high and dry, with infrastructure they invested in thinking that film producers would stay once they lost those perks.”

California began offering filming tax incentives in 2009 with a $100 million a year tax credit program, but has struggled to compete with states like Georgia, Louisiana and New York, the latter of which boasts $420 million in tax credits annually, according to the New York City Office of Film, Theatre and Broadcasting.

Furthermore, California's lottery, formally known as the California Film & Television Tax Credit Program, excludes features with budgets under $1 million and over $75 million. This overlooks the smaller indie-flicks and big-budget blockbusters attempting to bring filming back to the state, according to the California Film Commission (CFC).

The tax incentive program's two-year extension by Gov. Jerry Brown in 2012 was hailed as a victory in the fight against runaway production. But it isn't a perfect—or particularly effective—system, according to some film industry insiders. 

“California's filming incentives are extremely modest compared to everyone else,” said Adrian McDonald, Research Analyst at FilmL.A. Inc., a non-profit organization which provides permits for filming in the city. “It's helped to stop some of the bleeding, but once that $100 million is exhausted—usually within the first few hours it’s available—the supply isn't available to meet the demand.”

According to the California Film Commission, which orchestrates the state's tax incentive lottery, the system is “the most fair and transparent” solution to addressing California's $100 million annual cap on filming incentives. 

“We accept applications for the tax incentive program on June 2 of every year,” said Leah Medrano, Film & TV Tax Credit Program Coordinator with the CFC. “This is because our fiscal year begins on July 1 of every year, and applications must be submitted at least 30 days prior to distribution of funds.”

But the research McDonald has conducted for FilmL.A. Inc. shows that the system could be fairer, he said. According to McDonald, only 30 percent of the incentives were used for new productions.

“The lottery makes the selection process fairer, but the problem is that if a show gets the tax credit once, they get it every year after," said McDonald. "The system could be tweaked so that a TV show could get the credit only for the first couple of seasons, because shows don't usually relocate after a few years. It would be unpopular with studios, but if you want to free up money, that's what you've got to do.

He also highlighted that decisions about tax incentives for movies affect the funding available for other pressing issues, and mentioned that people are seeing it as a "race to the bottom."

“There isn't a state that isn't cash-strapped, and yet places like Georgia or Louisiana are giving production companies $300 million in public money," he said. "At some point you have to ask, should you really be financing a third 'Anchor Man', or addressing healthcare?”

The economics of stemming runaway production have become contentious in recent years, as California attempts to compete with states seemingly desperate to host production at any cost. 

“Companies are treating production like a commodity, and just go wherever it's cheapest to make movies,” said Mitchell Block, Adjunct Associate Professor in the USC School of Cinematic Arts. “Is it really worth the tax-payers' money to subsidize these for-profit companies who are shooting here? Should we allow production to take place wherever, or is there an obligation from the state to try and keep it here?”

These are questions which Block, though a filmmaker himself, says are important for taxpayers to ask and politicians to consider.

“You can always stem economic change by offering incentives, but it's become a question of who has the deepest pockets,” said Block. “If production is dependent on bribing producers, it's not a sensible or sustainable model. The film studios aren’t going to move because of subsidies, but production will, and California has to decide on a state level what they want to do to keep it here.”

A better solution, Block suggested, might be to spend money bringing other industries to California.

“If we could get the Boeing plant that Washington state is losing, maybe something like that would be better for the economy,” said Block. “It would certainly help below the line workers because when production moves, the people who are the least skilled and most interchangeable are the ones who lose jobs.”

Despite unease about public spending on tax incentives from both inside and outside the film industry, politicians such as Gov. Brown, Mayor Garcetti and Councilman Paul Krekorian, who co-authored October’s television pilot measure, remain optimistic about the current plan of attack against runaway production. Gov. Brown has, however, been “somewhat skeptical” about increasing incentives, according to Garcetti. 

For now, Hollywood still holds the upper hand in the film industry, but just how much further the city and state are willing to go to keep this advantage remains to be seen. The informal committee overseen by Film Czar Sherak is expected to present Mayor Garcetti with a runaway production plan of action this month, and a new bill is also being presented this month to extend and expand the tax credit program.

Reach Staff Reporter Olivia Niland hereFollow Olivia Niland on Twitter @olivianiland.



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