A public conversation must be had about Los Angeles losing its title as the world’s capital of entertainment, not to mention the money that goes with the position
I’ve been in Los Angeles just a short while, yet it seems many filmmakers are leaving — hundreds of them, in fact. Permanently. Was it something I said?
Or is it something the California government isn’t doing?
As the California Film Commission works on next year’s round of film tax credits for its now-full applicant list, I began wondering why I keep hearing stories about production companies relocating to Louisiana, movies shooting in New Mexico and states such as Illinois, Michigan, New York, Georgia and Massachusetts offering much better incentives than the alleged home of entertainment, California.
Even though I’m new in town, I’m aware that so-called “runaway productions” – those productions that leave the L.A. Zone to film elsewhere – have been doing so for many years.
And they’re still leaving even after a bill was signed by Gov. Arnold Schwarzenegger in 2009 that brought in a set of incentives to help blast a hole in California’s deficit. The state now offers filmmakers a 20 percent tax credit if their budgets are between $1 million and $75 million and if they’re producing a miniseries or TV movie.
The incentives also assist TV series that shot all their previous seasons outside California, and independent films not financed by publicly traded companies are eligible for a 25% tax break, the latter only as long as their budgets are between $1 million and $10 million. Wages paid to above-the-line employees such as writers, directors, musicians, producers and performers are not eligible in the writeoff scheme.
Yep, it’s bloody complicated.
Find out more at the California Film Commission, the organization administering the tax program — which, by the way, is not as competitive as New Mexico or Michigan because California’s rebate is capped at $100 million every year, whereas New Mexico and Michigan don’t have caps. Hello California? Hello? This could be one of the reasons so many are leaving you!
And, as well as this, the California bill does not include commercial productions in its incentives. The Association of Independent Commercials Producers doesn’t agree with this. It estimates ad companies spent $2.16 billion on U.S. production costs in 2008, 54% of which was injected into California’s struggling economy. Surely this tax-credit exclusion is a mistake?
Rick Fishbein, who has 25 years in the film industry and is managing director of Green Dot Films in Santa Monica, thinks so.
“I was disappointed commercial filmmakers were left out of the tax incentive,” Fishbein told me recently. “Ad makers already feel like the orphaned child of the film business, yet we do the same production job as big studios. I employ crew members all year round, doing my best to keep the work in L.A. The lawmakers who passed these incentives clearly didn’t want to help small business owners, and that’s what the majority of ad production companies are.”
Fishbein’s company made 65 commercials last year for brands such as McDonalds, Burger King and internet fantasy role-play game World of Warcraft. But he says his clients’ budgets are 25% lower now than in previous years; many regularly go to New Zealand or Argentina to save money.
So filmmakers are not only leaving Los Angeles for other states, they’re leaving the country too! Have I arrived here at the wrong time? Is this town no longer the beloved home of the entertainment industry? Perhaps I should go set up a sheep farm next to Peter Jackson’s Weta studios in New Zealand instead?
Amy Lemisch, director of the California Film Commission, says the first draft of the state's incentive legislation did include commercial producers. “The film and TV incentives were one part of a billion-dollar benefit package for lots of industries, like car manufacturers,” she explained. “The program is targeted because we’re allocated a limited amount of money each year. Choices were made by legislators to include the type of production companies most likely to leave the state and go film elsewhere.”
OK, so despite this "brave" effort by the California government, filmmakers are still leaving. According to statistics from film permit allocator FilmL.A., the amount of "permitted production days" – or PPDs, as they call them – for feature films, TV and commercials fell 30 percent, 17 percent and 12 percent, respectively, from 2008 to 2009. And although this year’s PPDs first-quarter figures look promising, it’s too early to tell if the trend of companies leaving L.A. has slowed down.
So, in the meantime, how to solve this Los Angeles Desertion Syndrome (LADS, as I’ll call it, in typically British fashion)?
Well, I’ll tell you.
Despite the recession, I think all businesses connected with film (and their representatives such as local chambers of commerce), Mayor Antonio Villaraigosa’s office, the big movie studios and organizations like FilmL.A. should get together.
No Hollywood means no tourists; they will all be heading instead for Michiganwood or New Mexicowood.
A public conversation needs to be had about Los Angeles losing its title as the world’s capital of entertainment.
And once the officials realize this is not good – that the entertainment industry’s dollars are Los Angeles' lifeblood – they should consider passing a temporary five-year, Los Angeles-only bylaw or begin a new “Shot in L.A.” program that offers between 1.5 percent and 3 percent in a “top-pp” tax break as well as the California state incentive. (It's similar to the Scene in San Francisco rebate program that gives filmmakers who base productions there up to a $600,000 refund of city fees and payroll tax.) It would be for all filmmakers shooting within the 30-mile “zone” of Hollywood; a kind of bonus tax credit scheme on top of another.
Admittedly, this “Top-Up Tax” credit will be expensive, but only temporarily, especially if the beautiful residents of L.A. see it as a “loan” to the entertainment industry in order to keep their city on the film map for the foreseeable future.
And five years is, I think, long enough to embed a change in a film studio’s production strategy (along the lines of: “Yippee! We can save more money in Hollywood, let’s stay here and/or come back!”). And it’s also long enough for other competing states – and governments around the world offering movie incentives – to panic and realize Southern California is deadly serious about keeping filming in the place where it belongs: Los Angeles.
So what do you think? Should I be made mayor? Or is this an impossible wish list and I’ve totally missed something?