Incentive program aims to halt production exodus

California, though home to Hollywood, has been late to enter the derby of states offering hefty entertainment tax incentives to nab film and television productions. But the five-year, $500 million program of 20% to 25% tax credits, signed into law earlier this year by Gov. Arnold Schwarzenegger, is off to a running start since it kicked into action July 1.

Unlike other state incentive programs, which are meant to lure shoots, California’s tax- credit program is designed to stop productions from fleeing the Golden State to take advantage of tax breaks available elsewhere.

As a result, several shoots are under way in the Los Angeles area and a number of others are set to begin this month and next.

“We struggled and spent so much time planning every little part of the application process,” says Amy Lemisch, head of the California Film Commission, which is administering the program, “but everything has gone very smoothly, and we’ve processed and approved most of the 60 applications that we’ve received.”

A concern that the money would run out almost instantly hasn’t proved true, and there are still funds in the till for new applicants, per Lemisch.

Helping is the fact that the initial allocation comes to $200 million, not $100 million, because it happens to span two legislative fiscal years. Meanwhile, worries that a few big-budget productions would quickly soak up most of the tax credits have proved unfounded. A variety of projects, ranging from small independent movies to star-studded studio productions and even one foreign film, have been approved, as have TV series.

The reaction of producers who have made the cut ranges from enthusiastic to euphoric.

“It was the first time I was involved in a production where we could actually apply for California incentives,” says Andy Fickman, producer and director of “You Again,” a Disney comedy about graduates of a small-town high school who remain at crossed swords.

The film, which recently wrapped after shooting in Pasadena, Malibu and the San Fernando Valley, stars Kristen Bell, Sigourney Weaver, Jamie Lee Curtis, Betty White and Victor Garber. “They were astonished when they learned we were filming in Los Angeles,” says Fickman. “They thought it would be someplace like North Carolina or New Mexico. When I said California, they thought I was lying.”

To express their gratitude, 114 members of the cast and crew wrote a letter to the governor and the state Legislature that stated: “Without the incentive some of us would be working in another country or state, far from our families. Many more of us would not be working at all.”

“The incentives program really levels the playing field so it’s again possible to budget a picture for California,” says Glenn Gainor, a senior veep for Screen Gems, who was one of the first to qualify a production for the new tax credits.

He is also the producer of “Priest,” about a Catholic clergyman fighting vampires. It filmed in Trona and Victorville, two towns within easy driving range of Los Angeles that feature the desolate locations required by the plot.

“Without the tax credits, the movie could have been made in New Mexico or Morocco or elsewhere –whichever turned out to be the cheapest,” Gainor declares. “There are a lot of places in the world with deserts.”

A number of films had penciled in other locations in case they didn’t qualify for the California incentives. “Christmas in Beverly Hills,” the latest installment of a long-running Italian franchise that each year is set in a different part of the globe, was thinking about going to Arizona as an alternative. “Beverly Hills Chihuahua 2,” a direct-to-DVD sequel, was initially skedded for Vancouver.

Whether the tax-credit program eventually gets renewed in Sacramento in 2014 will be judged by its effectiveness in bolstering production and keeping jobs in Hollywood.

“Usually you start thinking where am I going to film a movie, knowing there are so many cash opportunities and tax breaks elsewhere, but if you start thinking how can you keep this business in California, I think it’s great,” says producer Fickman. “I really hope the governor and the state Legislature keep this program alive.”

Lemisch, who gets credit for her careful vetting of each application, says the California Film Commission plans to put into place rigorous auditing procedures to verify that all spending claims for tax credits are valid.

“I think all of that will build confidence and help the longevity of the program,” she says.

TIP SHEET

California On Location Awards (COLA)

When: Sunday

Where: L.A. Marriott Downtown

Web: californiaonlocationawards.com

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