Amid rising optimism about California’s status as a production center, producers returned to California last year in a big way as the state became the top site for major feature films with 22 of the top 106 projects, according to a new Film L.A. study.
The number of California-made projects — 18 live action and four animated — jumped 47% from 15 in 2013. California was far and away the top shooting state for features, leading New York with 13, the U.K. and Canada with 12 each, Georgia with 10 and Louisiana with five as the Bayou State saw production plunge from its leading number of 18 in 2013.
It was the second year in which non-profit agency FilmL.A., which works to improve location shooting details for producers, has issued the report and it came five weeks before California’s sweetened tax incentive program goes into effect for the next five years. FilmL.A. said the 22 projects filmed in California in 2014 brought an estimated $1.11 billion in total production spending to the state, followed by $762 million in the U.K., $520 million in New York and $475 million in Canada.
California legislators approved more than tripling the size of the tax credits last August following extensive lobbying by the industry focused on the issue of job retention. Backing by lawmakers and Gov. Jerry Brown has helped fuel optimism that California can put the brakes on the industry’s flight to incentive-rich locations elsewhere.
The report noted that the lion’s share of feature production spending in California came from six films — $590 million from the four animated titles (“Big Hero Six,” “How to Train Your Dragon 2,” “Penguins of Madagascar,” “Mr. Peabody and Sherman”), $177 million for “Captain America: Winter Soldier” and $166 million for “Interstellar.”
“This report once again highlights the economic impact of the entertainment industry,” said Los Angeles Mayor Eric Garcetti. “Hollywood is the bedrock of our middle class in L.A., and our new tax credit and the productions it will bring back to California will support tens of thousands of jobs and billions of dollars of economic activity. It’s not just about the people and businesses the entertainment industry directly employs, but the businesses they support in their neighborhoods.”
Among the 18 live-action features included in the study, eight were shot in the state thanks to the California Film and Television Tax Credit Program and generated $241 million in local production spending.
Of the eight, Clint Eastwood’s “Jersey Boys” was the top spender with $58.6 million, followed by “Horrible Bosses 2” with $57.3 million, Eastwood’s “American Sniper” with $54 million and Mark Wahlberg’s “The Gambler” with $31 million. “Earth to Echo” spent $12.3 million, followed by “The Purge: Anarchy” with $10.6 million, “Paranormal Activity: The Marked Ones” with $9 million and “Ouija” with $7.9 million.
California’s current incentive program, enacted in 2009 and about to expire, is significantly smaller than many others with a $100 million annual limit on total tax credits, with feature film projects with budgets of more than $75 million not eligible. Selections were made by lottery each June.
The new program launches July 1 with $330 million in tax credits available annually with projects selected based on a jobs creation ratio. FilmL.A. President Paul Audley said the expansion will mean more projects being shot in California.
“The report underscores how essential it is that California compete for this business,” Audley said. “The value of the California Film and Television Tax Credit is already evident. And, with the program set to more than triple in value this summer, we look forward to seeing more bigger-budget projects return.”
The program expansion, enacted last year by California lawmakers, covers five years and $1.65 million in tax credits. The legislation established the allocation to each category: 40% will go to new TV dramas, movies of the week, miniseries, and recurring TV series; 35% will got to features; 20% will go to relocating TV series; and 5% will go to independent features.
The credit is set at 20% of production costs with an additional 5% “uplift” if producers shoot outside the Los Angeles zone, commit to music scoring or music track recording in state or to do visual effects in California. The study showed that California-based VFX houses captured the majority of work for just seven of the 24 big-budget live-action films and that less than one half of the 106 films surveyed performed musical scoring in California.
The 22-page study also showed that government funding outside California is a formidable lure with “substantial uncapped film incentive programs” in Louisiana, Georgia, the U.K., British Columbia, Ontario and Quebec. “The Hobbit: The Battle of the Five Armies” was the top recipient in that measure with $41 million from the New Zealand government, followed by “The Edge of Tomorrow” with $31.3 million from the U.K., “Dawn of the Planet of the Apes” with $26.4 million from Louisiana and “Maleficent” with $22.3 million from the U.K.
“The top filming locations outside California are recognized production centers with modest to robust film industry infrastructure and talent,” the report said. “That said, the concentration of industry infrastructure and industry talent still places California far ahead of its rivals.”
Those factors were reasons why California was the only location able to attract non-incentivized productions. “Indeed, while California hosted 15 such productions (4 animated and 11 live-action), none of the top five competing locations outside the state hosted even a single surveyed film without offering a generous subsidy,” the report said.
The report also notes California remains well below the production levels of the peak year of 1997, when 64% of the top 25 movies at the box office were filmed in California. Runaway production has hit hard in the intervening period and that figure was 16% last year.