State attempts to bring back production

The state of California has long refused to get on the incentives bandwagon — and it shows. According to a mid-April report released by nonprofit permitting org FilmL.A., on-location feature film production days in the L.A. area slumped by 56.3% in the first quarter of this year compared with 2008 (although the bad news was partly offset by an increase in on-location TV production, which rose 76.4% in the same period, a jump due in part to the upsurge in scripted programming following settlement of the WGA strike).

Well before the recent bad news, spurred by fear of continued hemorrhaging as the state’s unemployment rate was finding its way past the 10% mark, the California Legislature OK’d a five-year, $500 million tax-break plan for the entertainment industry, with an annual $100 million limit. Gov. Arnold Schwarzenegger, long a proponent of helping Hollywood (where of course he became a top star), signed the bill in late February.

But now that California has a subsidy program, the question is: How successful will it be? Will it actually attract new production, or will it simply slow the stampede out of town?

There really won’t be a definitive answer for a year. July 1 is when the first incentives are to be handed out, with applications accepted on a first-come, first-served basis; winners will be determined by a daily lottery.

Honchos at other production centers with significant tax subsidies downplay any impact the effort will have on their own film and TV activity. “I think the California government passed the entertainment incentives to send a message that we would like you to stay here, and I think it achieved its purpose,” says Alan Suna, chief executive of Silvercup Studios in Queens, the biggest production facility in New York. “But I don’t think it’s going to be a game-changer.”

In recent years, tax subsidies have come to trump other considerations when producers make a decision on where to locate a shoot, according to Mary Nelson, chairman of the Assn. of Film Commissions Intl. (AFCI). “Where it used to be location, quality of the crew and infrastructure, now the first factor everyone considers is how much money is it going to cost me and what kind of break can I get for filming there,” she says.

One factor that helped push the recent passage of the California tax credit was last year’s move by ABC hit “Ugly Betty” from Los Angeles to New York. This caused quite a stir in Hollywood.

Another impetus came when the local industry found it wasn’t even in the running for many projects because it lacked a tax incentive program.

“When people stopped even doing a comparison budget for California, that’s when you had to stop and say, hey, we’ve really got to do something about this,” says Amy Lemisch, the executive director of the California Film Commission, who will administer the program.

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