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Competing incentives prove attractive, if not too generous

American Film Market 2012: Global Locations - U.S.

Over the past decade dozens of states throughout the U.S. have used production incentives to lure camera crews in hopes of building themselves up as ideal filming sites. Though most imagined huge boons to their local film business, once the economy lapsed into crisis, the incentives — some scrapped and overhauled, while others expanded and extended — triggered radically different results from location to location.

MICHIGAN

Michigan, which once offered an incentive of as much as 42%, provides a classic cautionary tale. The state found itself on the line for millions in tax credits, raising questions as to whether these spends were justified by other benefits to the state.

Michigan Motion Picture Studios alone, the site where Disney shot “Oz: The Great and Powerful” last year, is said to have received more than $39 million in tax credits.

When Gov. Rick Snyder capped the annual budget for incentive payouts at $25 million last year and changed the program from a tax credit to a direct cash refund, production in the state suffered. Though that cap has been raised to $50 million for fiscal year 2013, which began Oct. 1, production levels are still much lower than in recent years.

Michigan Film Office spokeswoman Michelle Begnoche says this year has been one of “rebuilding.”

“We have had to battle perceptions that the film incentives in Michigan were dead,” wrote Begnoche in an email to Variety. “We have been working hard to rebuild the confidence that Michigan is a great place to bring a film or digital media project.”

NEW JERSEY

New Jersey, where incentives were temporarily suspended for a period and then came back at 20%, has a different set of circumstances on its side.

“You work with what you’ve got and New Jersey has location and experience on its side,” says Steve Gorelick, executive director of the New Jersey Motion Picture and Television Commission. “We’ve got crew and equipment here and people know they’ll get cooperation in New Jersey so they come back even if our incentives might not be as big as those in states where they don’t have our resources.”

New Jersey has also managed to attract large amounts of TV production, including “Jersey Shore,” pictured left, and “The Real Housewives of New Jersey,” which have been a big boost to the local economy.

“Of course you want movies to come and shoot in your state,” Gorelick says. “But a TV series is like an annuity because they might be here for five or 10 years, employing people and spending money, so it’s a great strategy to try to have television come into your state.”

LOUISIANA

Louisiana, where incentives range from a 30% to a 35% transferable credit, has been able to show the spend brings a return through an economic impact study.

NORTH CAROLINA

North Carolina offers a dramatic example of how incentives — and increases in incentives — can bring spending and revenue into a state. While North Carolina had been established as a production site decades ago when Dino De Laurentiis set up shop there, the state began to offer incentives in order to remain competitive with other U.S. locations and Canada.

When execs recently noticed a decrease in production and lost some filming to other states, N.C. increased its incentives from 15% to 25%.

“In 2010 there was a direct spend of about $80 million in North Carolina,” says Aaron Syrett, director of the North Carolina Film Office. “When we increased our incentives, that jumped to $242 million in 2011, and so far this year we’ve seen a direct spend of $312 million.”

Syrett believes incentives work for his state because the industry had set up shop there decades before the prks were established and because North Carolina hung back a bit and made a point of learning from the mistakes made by other states.

“You don’t always have to be the first one in and you don’t have to be the one with the biggest incentive,” Syrett says. “People want to know if you have the infrastructure to support their production and that their incentive isn’t going to be caught up in red tape to the point they’ll never see it, so if you can take care of those things for someone, a 25% incentive can easily look better than a 40% incentive.” n

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