Competition from other states back California
filming industry into a corner.
What was once ground zero for the motion picture industry worldwide
has now faded into near oblivion. The Hollywood sign doesn't
mean much anymore, and feature film production in general has moved on from Los
Angeles and the state of California.
The main cause of this industry-wide exodus is simple; it's
cheaper to film elsewhere.
As production costs in California
steadily grew, other states have come up with attractive tax incentives for
productions to bring in their business.
Over the last few years it has grown to a point where 41 states offer
some form of either refundable or transferable tax incentives. In fact, states
like Michigan and New
York offer a 30-40% incentive for filming local.
Facing down hurricane of rising unemployment and revenue
decreases, the state has finally taken action, adding $100 million per year for
tax incentives through 2014. The charge to include such a provision was led by
Santa Clarita based Assemblyman Cameron Smyth.
"20 years ago, no one would have ever predicted that the
Aerospace industry would leave California,
and it has," Smyth said at a meeting of industry officials. "And 10 years ago
no one thought that the entertainment industry would leave California
and they have. So we hope that we can act soon enough, that we can stem some of
The Los Angles County Economic Development Corporation
estimates that a $75 million dollar film production in the state results in
roughly $10 million worth of economic benefit. Just three years ago the state
hosted over 70 major motion picture shoots, but this year, the Economic
Development Corporation says that California
will likely only host three.
Such a drop off in filming has taken a large chunk out of
tax revenue in a time when state officials are battling consistent budget
But that's not the only problem. Far worse is that California,
and specifically Los Angeles County,
is home to the critical infrastructure needed for movie productions. Sound
techs, lighting professionals, and a host of other below-the-line crew are deeply
rooted in this town, where the work was formerly steady.
But as filming relocates, so do the jobs. In some cases,
other filming hotspots like Michigan
have already drawn enough business to entice the formation of local movie
crews. In other cases, California-based businesses and production suppliers
have directly been solicited to relocate to a particular state.
This effect is particularly sour in Santa Clarita, where
local filming has a $20 million yearly economic impact and employs an estimated
Luckily, Santa Clarita's filming is heavily based in the
television medium, where a large number of productions remain.
But even despite that benefit, times are still tough for
everybody involved in the business who wishes to remain in Santa Clarita.
For Michael De Lorenzo, President of Santa Clarita Studios,
the reality is stark.
"Santa Clarita is the most film-friendly city in the United
States," he said. "Unfortunately, it's not
enough. It all goes back to the financial incentives. I think everyone's
convinced that this is the place to shoot, we just need the financial
De Lorenzo noted that he's had to consistently adjust his
rates to stay competitive with filming destinations outside the state. With the
recently passed tax incentives, he thinks they could be on the road to
recovery. He just hopes the state didn't wait just a bit too long.
"This new bill is in the right direction, I just hope it's
not too late," he said.
The bill specifically targets the type of filming that has
been leaving the state in droves. In a roundtable discussion hosted by Assemblyman
Smyth Friday afternoon, Mary Ann Hughes, Vice President of Film and Television
Production Planning for Disney, explained that not all productions would
qualify for the tax incentive.
"Feature films between $1 and $75 million [will be
included]," she said. "It is our belief that if you are a dollar over that you
are out. So you're certainly not going to be counting on this incentive if your
budget is right around that number."
She continued by saying that all productions for network
broadcasts or half-hour long cable programs will not qualify for the credit.
Additionally, there is a timing issue that may affect how
rapidly productions can make good on the incentives. Hughes told the crowd of
industry professionals and city/county representatives that while the state can
start allocating credits in July, production companies and studios will not be
able to monetize the incentives until January
The bill is still being analyzed by film companies and
legislators alike, and a cleanup revision will likely take place in May.
After that, the state of California
will be keeping a close eye on the reaction from the industry to see if the
relationship that helped build this entire region can be saved.