Filmmakers return to state thanks to tax breaks

A good offense can be the best defense.

To protect and solidify its role as a motion picture and television center, Illinois at the start of 2009 hiked its film tax breaks from 20% to 30%.

Coming on the heels of two record-setting years, the hike was still considered necessary to keep Illinois in the incentives race with other states and Canada. At the same time, it didn’t feel it had to top other jurisdictions like nearby Michigan, which last year enacted a 42% credit as a way to jumpstart its nascent industry.

“We are definitely competitive at 30%,” says Betsy Steinberg, head of the Illinois Film Office. “There are states where the incentives are a bit flashier, but part of my job is making sure filmmakers know there are financial advantages going to a state with an existing infrastructure and a highly skilled crew base that you can count on.”

That infrastructure will get a major boost following a decision in early November by Toronto-based Cinespace to develop an $80 million studio complex on an industrial site near the heart of Chicago. The project is being touted as the biggest state-of-the-art production facility outside of Hollywood.

Despite Chicago’s long history as a filming hub, the industry there fell on hard times after 2000. Production started fleeing, attracted by increasingly attractive tax incentives popping up in other places. A wake-up call came in 2002 when the producers of the musical “Chicago,” which went on to win the Oscar as best picture, decided to shoot in Toronto instead of in the Windy City namesake. Illinois film industry revenues in 2003 fell to a low of $25 million.

The industry slowly rebounded, and in 2007 production spending in the state hit a record $147 million, aided largely by the three-month shoot for Batman sequel “The Dark Knight,” which accounted for some $40 million. Last year, production spend dropped slightly to $141 million, with “Public Enemies” setting a single-project record of nearly $47 million.

“Our film tax credit is all about Illinois jobs and Illinois business,” Steinberg says. “Illinoisans are the only ones who get the job creation benefits.” She describes the program as “stable, simple and fast.” The 30% incentive covers all production spending in the state and related outlays, including post-production. The same percentage applies to salaries for Illinois residents who are on a shoot, up to $100,000 per worker.

The turnaround time for receiving a tax credit after filing is only about eight weeks, compared with some jurisdictions that take a year and even longer. The tax credits are also transferable, with buyers willing to pay around 90% on the dollar, one of the highest rates in the country.

One important change as part of this year’s package was to make the tax credit permanent, eliminating a sunset provision that required annual renewal by the Legislature. That had made planning difficult, especially for TV series that hope to stay on the air for more than one season. (A&E’s “The Beast” was one of the few that recently filmed in Chicago, but it was canceled after 13 episodes when star Patrick Swayze died in September.)

Hometown loyalty from Chicagoans with industry clout has played a role in locating shoots in the city, notes Rich Moskal, director of the Chicago Film Office. “Public Enemies,” besides being set in Chicago, was helmed by Michael Mann, who hails from the city. And native Vince Vaughn starred in “The Break-Up” and “Fred Claus,” both shot in Chicago.

Producers who are not from Chicago also enthuse about the city. Remake “A Nightmare on Elm Street,” starring Jackie Earle Haley, recently wrapped there. “It’s the third film we’ve shot in the city, and we’re already planning our next film there,” says Andrew Form, a partner with Michael Bay and Brad Fuller in Santa Monica-based Platinum Dunes.

The production company specializes in redos of popular horror classics. “The new incentive definitely plays a part, but Chicago has great crews and is a wonderful place to work,” Form adds.

However, expectations that 2009 could set another Illinois production record, given the incentives increase, are unlikely to pan out. That’s because of an overall slowdown in movie and television shoots this year. “We have a couple of pilots and a couple of large movies circling that are supposed to be landing in the next few weeks, but we’ll have to see,” Steinberg says.

But she remains optimistic about the future: “Some state tax credits are going to flame out once they lose their appeal to taxpayers, and Illinois will be one of the few places in the country left standing.”

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