Incentives have turned state into top production hub

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In and outs of shooting | Michigan shoots

At a time when Michigan’s hard-hit industrial economy continues to sputter, the klieg lights are on for the state’s new growth engine: entertainment. But while filming in the state has experienced an unprecedented boom, some wonder how long that growth can be sustained.

The basic facts are upbeat. In the short span of 2 1/2 years since Michigan initiated an alluring film incentive program with rebates ranging up to 42%, the highest in the country, more than 100 film and television shoots have flocked to the state. At one point last summer, a dozen movies were filming simultaneously, mostly in and around Detroit, making Michigan one of the busiest production centers in the country.

The shoots include high-profile projects like DreamWorks’ “Real Steel,” starring Hugh Jackman. The futuristic tale about boxing robots is said to be budgeted at about $90 million, making it the most expensive film ever shot mainly in the state. “LOL,” a mother-daughter comedy starring Miley Cyrus and Demi Moore, has been filming in Detroit and Grand Rapids.

Other recent shoots include “Vamps,” a horror sendup with Sigourney Weaver; “Machine Gun Preacher” (starring Gerard Butler) and “The Double,” with Richard Gere. With so many stars in town, Twitter is atwitter with Detroit celebrity sightings.

On the television front, “Detroit 1-8-7,” a cop drama that recently debuted on ABC, is the first network series to be shot entirely in the Motor City. “We’re helping them to get an industry going, and the look and feel of the show is more authentic because we’re doing it here,” says exec producer David Zabel. The series employs 150 local crew members and plans to spend $27 million in Detroit for the first 12 episodes, $50 million if there’s a full season.

Overall production spending within the state has climbed geometrically since the rebate program went into effect in April 2008, rising from $125 million two years ago to $225 million in 2009. Spend projections for 2010 are in the range of $400 million-$500 million. “I don’t know if we’ll get to a half-billion-dollars this year, but we’re definitely on our way,” says Carrie Jones, head of the Michigan Film Office. She notes that in the first two-thirds of 2010, last year’s total has already been surpassed.

What accounts for the explosive growth? “Producers seem more comfortable with the program — that it’s for real and that people are being paid,” she says.

Jones is new to the job, having taken over in late July as the successor to Janet Lockwood, who retired after 19 years as head of the stage agency. She has no film-industry experience and was previously a fundraiser for Michigan Gov. Jennifer Granholm. “I’ve been on a steep learning curve, but Janet has been extremely helpful in getting me up to speed,” says Jones, who joined the film office in January as a deputy.

The centerpiece of Michigan’s incentive program is a hard-to-resist 40% rebate for qualified spending in the state by film and TV shoots. The break rises to 42% for expenditures in 103 “core” communities, including Detroit. The top incentives also apply to wages for workers who are Michigan residents. Because there aren’t yet enough trained local crews, there’s a 30% rebate for crew and other labor brought in from out of state.

Credits are also available for salaries of actors, directors and other above-the-line participants, with a $2 million cutoff. And there is a 50% break for on-the-job training of Michigan residents during a shoot.

Separately, the state offers a 25% incentive for entertainment-related infrastructure investments. That has triggered a spate of plans for new studios.

Despite the overwhelming success so far of Michigan’s film incentives program, there are lingering doubts about its long-term sustainability. An overriding concern is that politicans could cut back the 42% tax break. “The program is still in its infancy, and it would be premature to tamper with the rate anytime soon,” declares John Bails, an executive with Film Production Capital, a firm specializing in state film incentive financing programs. “That could be detrimental, significantly reducing the number of productions that are interested in coming to Michigan now.”

Says Jones: “At this point we’re working as if there isn’t going to be any change in the incentives at all.”

Critics of the program charge that it’s too generous, especially at a time when the state is cutting back on other essential programs. Others view the credits as a giveaway to Hollywood fat cats. A recent report from Michigan’s Senate Fiscal Agency said the incentives cost the state double what it gets back, and that each job created comes at a price to taxpayers of $190,000.

The subject of film incentives has even surfaced as an issue in the campaign to succeed Granholm as governor. Because of the state’s term-limit law, she’s not running for re-election. Republican candidate Rick Snyder, who leads in the polls, earlier this year called the incentives “dumb” and said he’d like to eliminate them. Lately, he has dialed down his rhetoric and opposition. One reason may be the overwhelming popularity of the entertainment incentives with the public. In a Detroit News/WXYZ survey conducted in 2009, 70% said they favored the incentives and only 21% said they were opposed.

To go beyond just brandishing big rebates to attract hit-and-run shoots, many in Michigan understand that the state needs to develop a solid infrastructure and crew base. An important step in that direction came this summer when ground was broken for the $75 million Raleigh Michigan Studios in Pontiac, on the 22-acre site of a former GM complex.

The existing structure is being renovated, and a new building will contain seven state-of-the-art soundstages and two television studios. The project — backed by shopping-mall tycoon Alfred Taubman, William Morris Endeavor chief Ari Emanuel and local Detroit investors — is projected to house some 3,000 entertainment industry workers and temporarily employ 500 construction workers.

Two other studio clusters are moving forward more slowly, awaiting final financing: Unity Studios in Allen Park and at Ford Field in Detroit, and Wonderstruck Entertainment, which specializes in digital animation.

Meanwhile, the main investor at a fourth studio, Hangar42, was indicted by the state attorney general for allegedly quadrupling the cost of the site to get a bigger infrastructure rebate. The incident embarrassed the film commission — Lockwood had publicly touted the project — but the filing was never approved. Michigan state Sen. Nancy Cassis, head of that body’s finance committee, has introduced legislation calling for more transparency in the film incentive program. “I think they should put the financial details of each project on the Internet so the public can know what’s going on,” she says.

The film office these days is doing more sifting, looking for shoots that promise the biggest bang for Michigan’s buck, especially when it comes to creating well-paying jobs. Red flags can go up if a project’s qualified spend is top-heavy in salaries for producers and other above-the-line participants.

The application process has also been streamlined, if not simplified. Last year, Michigan’s Treasury Dept. took over the auditing task, staffing up with specialists in the industry. “In addition to having the most aggressive incentives in the country, we also have one of the most rigorous application and audit programs,” says Jones.

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The in and outs of shooting in the Wolverine State
Location scouts, managers sing the praises of Michigan
By Justin Kroll

An aggressive incentives program has made Michigan one of the nation’s top production centers.
Here’s what some location scouts and managers have to say about the state.

Tom Jacob
“Real Stree”
Pros: “The vast amount of locations in this state are untapped and are very film friendly. That is one of the best things. For the first time in a long time, we can show these areas off.”
Con: “Michigan used to be a non-permit state. Now the hard part is everybody has (to deal with) permit fees and rules. Ten years ago this wasn’t as much of a problem.”

Dave Rumble
“Transformers 3″
Pro: “Very easy access to a lot of big properties around here … various lakes and farmlands, and decent downtowns — something you can’t always find in one state. One example I can think of: ‘Scream 3′ used the University of Michigan campus to shoot a lot of the film. You can’t find a campus like that in just any state.”
Con: “Running into the issue of a lot of films wanting to shoot in the same place. Everybody wants to shoot in Detroit when there are so many other great places to shoot around the state.”

Tarrance Alfred
“The Karate Kid”
Pro:“(In Michigan) you have people that are totally excited. In L.A., its like pulling teeth to get people to let us use their place or homes without charging top billing.”Con: “The flip side of this is that people in Michigan people will look at you and won’t believe a film will be shot there. You really have to prove to them you are about to shoot a movie in their area.”

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Michigan shoots
Features, cable and net productions all view for crews
By Justin Kroll

Features, cable and net productions all view for crews as they benefit from incentives.

“Detroit 1-8-7″
ABC
Logline: Follows the operations of Detroit PD’s homicide division.
Cast: Michael Imperioli
Shooting Locations: Detroit
Release Date: Began first season this month.

“The Double”
Hyde Park Entertainment
Director: Michael Brandt
Logline: An FBI agent comes out of retirement to help a young agent solve the mystery around a senator’s recent death.
Cast: Richard Gere, Topher Grace, Stephen Moyer
Shooting Locations: Detroit
Release Date: TBD

“Hung”
HBO
Logline: Story revolves around a middle-aged male high school teacher who moonlights as a prostitute.
Cast: Thomas Jane, Anne Heche, Jane Adams
Shooting Locations: West Bloomfield, Detroit, Commerce
Release Date: Recently completed its second season on HBO.

“Real Steel”
Disney
Director: Shawn Levy
Logline: Set in the near future when 2,000-pound robots have replaced humans in the boxing ring. Pic follows a struggling promoter who feels he has found the next champion in a discarded robot.
Cast: Hugh Jackman, Kevin Durand, Anthony Mackie
Shooting Locations: Detroit, Mason
Release Date: Nov. 18, 2011

“Scream 4″
Weinstein
Director: Wes Craven
Logline: The latest installment in the horror franchise, with Sidney Prescott revisited by the Ghostface killer once again.
Cast: Neve Campbell, Courteney Cox, David Arquette
Shooting Locations: Ann Arbor, Livonia, Northville
Release Date: April 15, 2011

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