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Off-lot production in L.A. falls 6.6%

Trend follows reduction in funds from state tax credits

A softening of off-lot feature production activity in Hollywood has provoked a plea for more state support via incentives for producers to stay in L.A.

Third-quarter stats released Tuesday by nonprofit permitting agency FilmL.A. showed 1,387 days of feature shooting in the Los Angeles area — down 6.6% in the third quarter year over year to 1,387 days amid the ongoing trend of features shooting outside Hollywood, along with the reduction in funds from state tax credits. The agency’s second-quarter stats showed feature activity had jumped 11.5%, due largely to the credits. “We’ve been able to prove the success of our program so, once the election’s over, we have to make an effort to compete against all the other incentives that are available,” said Amy Lemisch, director of the California Film Commission, which administers the credits.

Among projects receiving credits are features “Drive,” “Hirokan,” “Moneyball,” “Project X,” “Red State” and “Dinner for Schmucks” plus FX drama “Justified.”

FilmL.A. president Paul Audley dubbed the state’s program an “undeniable success.” Five-year program began in July 2009 and made $200 million a year in tax credits for film and TV productions available over the first year and an additional $100 million this year.

“With the reduction in available incentive funds, we expected to see a decline in feature production this quarter,” he said. “We hope the state will recognize the program’s ability to create jobs and will give the program renewed funding and life beyond its pending expiry.”

The California Film and Television Tax Credit is significantly smaller and not as sweet as that of other states, with a maximum 25% credit and a total of $500 million in credits over five years for projects filmed in state with budgets of $75 million or less.

Lemisch and Audley both told Daily Variety that California is facing a daunting challenge in the face of the state of New York’s recent commitment to provide $420 million in tax credits annually.

“New York’s the most direct competition because it has post-production facilities and a crew base, but the competition’s gotten so intense,” Lemisch said. “Producers have so many options like Georgia, Louisiana, Michigan, London and Vancouver.”

Lemisch acknowledged that persuading California lawmakers to expand or extend the state program won’t be easy given that Gov. Arnold Schwarzenegger needed more than five years to get the State Legislature onboard to create the program in the first place. Opponents had long contended that the benefits from such subsidies were difficult to quantify and amounted to handouts to the state’s richest residents.

In July, however, Schwarzenegger announced that the $300 million in tax credits had created $2 billion in direct spending in California. That figure included $736 million in wages to crew members, according to data compiled by the state’s film commission.

FilmL.A. reported that TV saw an bigger decline than film in the third quarter, 8.2%, to 4,068 days from a year earlier. TV dramas slid 33.5% while reality rose 24.2%, sitcoms gained 48.8% and pilots plunged 53.6%.

The agency noted that drama permits have declined to an average of 1.3 days per location — well below the historical average of two days per location.

“Some one-hour dramas have relied more on stages as a cost-saving measure,” Audley said. “Additionally, we’ve been told by our industry customers that the drama category’s numbers may have been affected by shows being kept on soundstages as a precautionary measure ahead of a potential work stoppage by Teamsters over a contract dispute with the AMPTP in July. These factors look to have impacted TV drama’s lackluster production figures.”

The commercials category — which had been on the decline in recent years — has picked up steam, rising 21.9% to 1,481 days in the third quarter for a year-to-date gain of 39.3%.

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