Steve Bing, Ryan Kavanaugh to Build $400M Hawaiian Studio, Vote on Tax Incentive Tuesday (Updated)

Joint committee considering bill that would boost production and lead to construction of elaborate production facilities on Oahu and Maui

Last Updated: April 30, 2011 @ 9:59 PM

EXCLUSIVE

UPDATED: The so-called "Relativity bill" could be passed in Hawaii to pave the way for a major expansion of film and television production in the 50th state.

The bill would substantially increase tax credits for shooting in Hawaii, and lead to the construction of two $200 million production complexes in the state by Ryan Kavanaugh's Relativity Media and Steve Bing's Shangri-La Business Group.

It has been passed by the Hawaiian Senate and House of Representatives. On Friday, a joint committee met to consider the bill, which will now go for a vote on Tuesday, May 3.

Read also: Relativity Announces First Homegrown Slate

Kavanaugh told TheWrap that the new studios would make Hawaii "one of the most competitive places to shoot in the world." (Videos were used to help sway legislators on the project; the first suggests that the film "A Perfect Getaway" had to be shot in Puerto Rico instead of Hawaii because the former cost $5 million less.)

Plans call for 10 adjoining 18,000-square-foot stages on 31 acres in Maui, and a similarly-sized complex in Oahu. The total construction budget for the two complexes, which are described by Relativity as "green" and "state-of-the-art," would be just under $400 million, and would be shared by Relativity, Shangri-La and the state.

Smaller complexes in Kauai and Hawaii are also under consideration.

The bill calls for a 40 percent tax credit for shooting in counties with a population under 700,000 and a 25 percent credit in counties of more than 700,000, with a $25 million cap on each project. It also institutes an income tax credit of 40 percent and 35 percent, again depending on the size of the county.

The bill also establishes a training and advancement program for local crew members.

 

"After reviewing the bill and working closely with Shangri-La, this is exactly the kind of credit, training program, commitment to build, and company affiliation (with Relativity) that the state of Hawaii needs to turn its economy around," former president Bill Clinton  wrote in a letter to Hawaiian legislators.

After commenting on the bill's ability to boost employment, create "long-term sustainable jobs" and dramatically increase the value of Hawaii's film-based economy, Clinton concluded:

"The Shangri-La/Relativity commitment to build the most environmentally-friendly stages in existence, coupled with the economic benefits of this bill and Hawaii's timeless appeal, will make Hawaii the most attractive place in the world to shoot a film."

The state tax department has estimated that the increased production credits will cost the state $46.3 million in lost revenue.

But Kavanaugh claims the passage of the bill and construction of the studios "will bring $2 billion a year to Hawaii … and grow their economy 10 fold within a decade." He says that five Relativity staffers have been living in Hawaii for the past four months working on the initiative.

Numerous films and television shows have shot in Hawaii, from the "Jurassic Park" movies to the current "Hawaii Five-0" TV series — but other productions set in Hawaii have filmed elsewhere. A video presented to the state legislators, for instance, uses the Relativity film "A Perfect Getaway" as an example. The film is set in Hawaii, but saved $5 million by shooting in Puerto Rico.

 

Statistics presented by Relativity in support of the bill show Hawaii's current 20 percent tax credit lagging well behind a number of other states and Canadian provinces.

The figures estimate that production activity will increase from $100 million to $2 billion, and economic activity from $129 million to $3.5 billion.

It also predicts a substantial increase in film productions, from 11 films and one television series in 2011 to 70 films and five series in 2016.