Puerto Rico Overcomes Economic Woes With Generous Production Incentives

Some would say Puerto Rico is an economic basket case. The territory is weighed down by a debt of more than $70 billion, and it’s reeling from a decade-long recession. Unemployment remains sky-high.

More recently, publicity over the mosquito-borne Zika virus has cast another shadow over the tropical island.

Yet despite all obstacles, Puerto Rico’s generous film incentives are as robust and popular as ever. The Caribbean territory offers producers a 40% tax credit on local expenditures and a 20% tax credit on payments to non-resident talent, including producers, writers, actors and even stunt doubles.

A relatively recent perk: an additional 10% credit for projects with stories based in Puerto Rico that use the island backdrop. Adam Sandler’s upcoming Netflix comedy “The Do-Over” is the first to tap it.

“Puerto Rico has been in an economic recession for over 10 years now, and the reality is that film incentives have prevailed over every new administration because of their unquestionable impact on the overall economy, creating hundreds of jobs, and promoting related industries such as hospitality and food service,” says Nadia Barbarossa, film division director of Tax Credits Intl., headquartered in Puerto Rico.

Moreover, in May 2015, Gov. Alejandro Garcia Padilla signed a new amendment to the Puerto Rico Film Industry Economic Incentives Act, providing up to a whopping 90% tax credit for projects that meet certain qualifications. “I can only think this is proof that, moving forward, the government will continue to support the film incentives for many decades to come,”  Barbarossa notes.

The island country saw an uptick in audiovisual production when its film law expanded the existing 40% tax credit in 2011 to encompass commercials, music videos, live performances and nonfiction TV programs in addition to film and TV projects. The number of shoots on the island jumped from nine in 2010 to 17 in 2011.

Overall budgets of the projects in 2012 were three times higher than those of the previous year. In 2015, about $100 million was spent on production in Puerto Rico.

“This fiscal year, we have already raised $86 million,” says Puerto Rico film commissioner Demetrio Fernandez, who has observed a surge in TV series production as well as commercials.

Former film commissioner Luis Riefkohl, now a producer, has three mid-budget co-productions with U.S. companies in the pipeline, the titles of which he declined to name. “The first feature, budgeted at $27 million, will shoot entirely in Puerto Rico and tap most of its department heads from here,” Riefkohl says. “The fact that I closed facilities with banks and investment funds in this ‘storm’ debunks the perception that the incentives are not available,” he says.

Among the recent high-profile TV series to shoot on the island was Amazon’s 10-episode drama series “Mad Dogs.” “We have seen fewer film projects coming to PR of late, but those coming here have grown in terms of quality,” says “Mad Dogs” co-producer Luillo Ruiz. Starring Ben Chaplin, Billy Zane, Michael Imperioli, Romany Malco and Steve Zahn, the series centers on a group of middle-aged friends who go to Belize for a celebration that rapidly spirals into a nightmare scenario of lies, betrayal and murder.

The sweat that went into the making of “Mad Dogs” has not gone unnoticed. In tweets announcing the decision not to do a second season, exec producer Shawn Ryan wrote: “I want to thank all our writers, directors and especially our ridiculously hard-working Puerto Rican crew.”

Another 10-episode TV series that shot in Puerto Rico, “Wrecked,” a comedy about plane-crash survivors marooned on a desert island, is set to air on TBS in June.

Of course, the Zika virus scare is a wild card that can throw off many well-laid plans. One project, starring Amy Schumer, has already pulled out. Other sectors are also affected. Baseball players from the Miami Marlins and Pittsburgh Pirates expressed their trepidation about playing in a two-game series at the end of May on the island.

But many believe the threat is overblown. “The Health Dept. sent out precautionary measures to take, but I know absolutely no one who has contracted the virus,” says San Juan-based attorney Antonio J. Sifre, who focuses on entertainment matters. “There are far greater chances of catching the flu or a cold, just like in the U.S.”

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