Michigan Film Incentives on the chopping block...

[Frank Cueto]

I don't understand what you mean by that. Can you elaborate? I just don't see where a government tax break represents any kind of equity, since they don't assume ownership of any of the assets or profits the picture might or might not make or have. Nor do I see how it gets "paid back."

Mike, he might be confusing two kinds of incentives.

One kind is for the big out of state productions, which returns X% of the monies spent ont he state to "state personel"

The other kind is a matching funds kind of thing. ie.
If you can find 60% of the budget you need, then the Govt will loan you the other 40% at a very low rate, but they act as a kind of Exec. Prod. so eventually, yes you have to repay the monies to Govt.

We got both kinds here and I deal with them almost on a daily basis.

 

[M Most]

Mike, he might be confusing two kinds of incentives.

One kind is for the big out of state productions, which returns X% of the monies spent ont he state to "state personel"

The other kind is a matching funds kind of thing. ie.
If you can find 60% of the budget you need, then the Govt will loan you the other 40% at a very low rate, but they act as a kind of Exec. Prod. so eventually, yes you have to repay the monies to Govt.

We got both kinds here and I deal with them almost on a daily basis.

That makes sense, but to me, a government loan program is not an incentive. It's small business loan, like any other small business loan. I don't have a problem with it, but I wouldn't classify it as an incentive program.

BTW, New Mexico had a similar program. I don't know if it's still in existence, though.

 

[Chris Ratledge]

As much as we would love to believe our industry is driven by artistic endeavors, it's really driven mostly by one thing - money! And that is what we have seen with these various tax incentive programs. To me, they too often end up being teases. Not the type you marry and build a life around.

Yes, as with everything, Money talks and BS walks, but sometimes BS has a lot of influence itself. And the incentives ARE like teases, until that is, a legitimate infrastructure and permanent filmmaking destination can be established. (such as happened in Vancouver, Toronto) No, not every locale can establish such a legitimate, lasting infrastructure, but I and many others believed MI could have done so if given the chance, with 2 large studios already being built. After just 3 years before the program has been announced for beheading, it's really impossible to know. And now with a counter report coming to light about all the positive economic activity of the incentives, who do you believe? Anything can be done with numbers, and everyone is beholden to some other influence.

I'm also surprised to hear from Michigan folks here who think this is only helping a few people. You can't argue with the overall economic impact even if you've had problems getting crew jobs on these features. Sounds like sour grapes to me.

THANK YOU. I'm glad I wasn't the only one to whom this thought occurred! I would however like to see a modified incentive package that would benefit more in-state talent, crew, and services. Still giving a production 30% back on wage expenditures of non-resident crew aren't enough to keep a lot of bigger productions from bringing in a boatload of people from the coasts to crew a film, even with the loss of the additional 10-12%.

 

[M Most]

...the incentives ARE like teases, until that is, a legitimate infrastructure and permanent filmmaking destination can be established. (such as happened in Vancouver, Toronto)

Vancouver, yes. Toronto is really a different story. Toronto has certainly benefited from both the federal and provincial incentive programs, but it also has had a film industry for many years, albeit one that wasn't dependent on US based production companies.

The better comparison would be Vancouver and Louisiana. Louisiana was able to establish a program that was sustainable, in spite of the after effects of Katrina (or, in part, because of the strong sympathy factor following that awful event, take your pick) and in spite of some major scandals involving the state film office (has anyone here ever heard of LIFT? Didn't think so.....). And they did it using an entirely different approach than Canada, one that was able to work because it was in part based on their own particular indigenous industry and some of its unique needs. They also attracted infrastructure investment (through infrastructure incentives that were funded by both state and parish governments) and built a crew base in 3 different production locations (New Orleans, Shreveport, and Baton Rouge). By enacting a long lasting system (the incentives were extended 2 years ago) and eliminating fears of a "sunset" of the programs, they showed the industry they were in it for the long haul. To date, no other US state - or very many foreign countries - have shown that kind of commitment.

 

[Tim Whitcomb]

Oregon also endeavors to achieve a LONG TERM program. The success of which is dependent on REASONABLE rebates and a Governor who "gets it". We have new legislation
in place that will open the door for us to directly compete NOT with LA so much as to wrangle the "runaway" production to Vancouver. (sorry fellow Canadians )

Started with LEVERAGE moving here. Now Brain Trust and NBC is shooting the GRIMM pilot here as well. If that goes well, we could have 3 TV Shows shooting in our little market.

IATSE also letting crews from LA work here via a work anywhere program (but dues still go to LA chapter and acrued hours remain intact) helps us build our crews which are now STRESSED and as a result we have over a dozen crew moving up here this past couple months. We expect (hope) that will continue.

 

[M Most]

Oregon also endeavors to achieve a LONG TERM program. The success of which is dependent on REASONABLE rebates and a Governor who "gets it". We have new legislation
in place that will open the door for us to directly compete NOT with LA so much as to wrangle the "runaway" production to Vancouver. (sorry fellow Canadians )

Started with LEVERAGE moving here. Now Brain Trust and NBC is shooting the GRIMM pilot here as well. If that goes well, we could have 3 TV Shows shooting in our little market.

On the one hand, I'm happy for you. On the other hand, if you've been in Portland for any length of time, I'm sure you're aware that it went through similar production spurts in the past. There was a period in the mid 90's that saw not only some features, but also some TV work (the show "Under Suspicion" comes to mind...) come to town. The problem is the same thing happened in Seattle (during the "Northern Exposure" period) and Utah ("Touched by an Angel," "Everwood"), as well as other locations, for short, cyclical periods of time. Usually one show "discovers" a location, and another then shows up. Then.................. well, you get the picture. For your sake, I hope this ends up differently. But history does tend to repeat itself...

 

[Jeremy Torrie]

I was over in Germany the last week and was reading this...am back, and now it's up to 7 pages.

Manitoba has had the best overall tax credit for years, and continues to do so -presently extended until 2014. It also has an annual equity investment program, but those funds are gone with a handful of projects.

What our provincial government has realized is that for every outside dollar coming into our province it generates between $11 and $13 in ancillary revenue. So it's a proven formula.

For example if you have a budget of $1 Million, chances are your MB Tax Credit (which is either spend or labour-based) is in the neighborhood of $250-300,000. But it's all based on what you actually spend, and the audit confirms the spend; the Province will not issue its Part B to Revenue Canada (they also provide a tax credit) until they've verified the moneys producers claim to have paid folks does in fact flow through...these two entities work together and cut the cheque back to the single purpose production company that was set up prior to prep to take advantage of these credits.

The tax credits are interim financed up front through a bank at 90% of the value until the Part B's come in. They end up representing a fair amount of a financial structure, and this is what we see time and again...someone somewhere has 50% of the money but cannot find the rest...and this is how the tax credit game goes. Producers openly shop to see what their net bottom line is going to be, and make decisions based on how much soft money can close the gap. If we help out on securing a presale or two combined with the credits, then it's done, budget is locked, and off we go.

The other factor that is often overlooked is the union rates in our province are generally less that anywhere else, especially LA. When we show we can provide incredibly competent crew for a much more competitive hourly or weekly rate PLUS the 65% labour tax credit on top, it becomes very, very clear why we have so much business up here.

 

[Frank Cueto]

I was over in Germany the last week and was reading this...am back, and now it's up to 7 pages.

Manitoba has had the best overall tax credit for years, and continues to do so -presently extended until 2014. It also has an annual equity investment program, but those funds are gone with a handful of projects.

What our provincial government has realized is that for every outside dollar coming into our province it generates between $11 and $13 in ancillary revenue. So it's a proven formula.

For example if you have a budget of $1 Million, chances are your MB Tax Credit (which is either spend or labour-based) is in the neighborhood of $250-300,000. But it's all based on what you actually spend, and the audit confirms the spend; the Province will not issue its Part B to Revenue Canada (they also provide a tax credit) until they've verified the moneys producers claim to have paid folks does in fact flow through...these two entities work together and cut the cheque back to the single purpose production company that was set up prior to prep to take advantage of these credits.

The tax credits are interim financed up front through a bank at 90% of the value until the Part B's come in. They end up representing a fair amount of a financial structure, and this is what we see time and again...someone somewhere has 50% of the money but cannot find the rest...and this is how the tax credit game goes. Producers openly shop to see what their net bottom line is going to be, and make decisions based on how much soft money can close the gap. If we help out on securing a presale or two combined with the credits, then it's done, budget is locked, and off we go.

The other factor that is often overlooked is the union rates in our province are generally less that anywhere else, especially LA. When we show we can provide incredibly competent crew for a much more competitive hourly or weekly rate PLUS the 65% labour tax credit on top, it becomes very, very clear why we have so much business up here.

Very well expressed. You seem to have a good grasp on this subject.

Do you have stats for your neck in the woods for the last 3-4 years? Just being curious. I am preping a big presentation on this subject and have been looking for case studies from other locatons/states.

Thanks

 

[Jeremy Torrie]

I believe there should be data at onscreenmanitoba.com

 

[Dominic Cochran]

Oregon also endeavors to achieve a LONG TERM program. The success of which is dependent on REASONABLE rebates and a Governor who "gets it".

Yes, it certainly does depend on a governor who gets it. We had a long term plan and our former guv did get it. And then we elected the guy who shipped Gateway's jobs to China when he was President and COO of the company. He's trying to gut it despite evidence of it's success.

 

[Chris Ratledge]

For the interested, lots of support and common effort is here to save the MI film industry:
http://www.rickswrong.com

According to the facebook event listing, as I type this there are now over 700 people who have RSVP'd to the town meeting this Thursday in Livonia, and I heard there is a second rally planned in Troy as well.

Jeff Daniels to speak @ the Livonia event, online story about the event here:
http://www.mlive.com/jobs/index.ssf/2011/02/michigans_film_industry_players_to_hold.html

A newly-published study by Earnst & Young states that every dollar spent in state tax breaks to filmmakers generates nearly $6 in economic activity. Here's a link to the story from the Detroit News:

http://www.detnews.com/article/20110222/BIZ/102220360/1001/biz

 

[Tom Greenberg]

For the interested, lots of support and common effort is here to save the MI film industry:
http://www.rickswrong.com

According to the facebook event listing, as I type this there are now over 700 people who have RSVP'd to the town meeting this Thursday in Livonia, and I heard there is a second rally planned in Troy as well.

A newly-published study by Earnst & Young states that every dollar spent in state tax breaks to filmmakers generates nearly $6 in economic activity. Here's a link to the story from the Detroit News:

http://www.detnews.com/article/20110222/BIZ/102220360/1001/biz

There is another event being held Thursday evening in Grand Rapids (at the GVSU downtown campus) for those located in West Michigan who are unable to travel to the Detroit area. There will be some kind of teleconferencing or feed from the Livonia event to those of us in Grand Rapids.

The Ernst & Young report which came out yesterday is quite a bombshell IMO, in that it confirms what many of us have been saying for some time...that each dollar spent (invested) generates an additional $6 in economic impact. It is inconceivable to me that a business which is currently thriving and well on it's way to establishing the permanent infrastructure and labor base that it needs to be successful for the long term, is being effectively shut down because it doesn't fit the ideology of Gov. Snyder.

 

[Dominic Cochran]

That report IS a real bombshell...I used to tell people $3-4 ROI just to be conservative. The Pure Michigan campaign was shown to be $2 in a similar study. They're both successful and worthwhile initiatives. See you guys Thursday maybe!

 

[Meryem Ersoz]

here's the link to the actual study: http://www.visitdetroit.com/images/stories/_blog/michigan_film_incentive_studyf.pdf

 

[Peter Strietmann]

I love working in Michigan. All the people I have worked with there are stellar. As the film making infrastructure evolves and grows around the state it can only help the good people of Michigan. Michiganders are survivors, one way or another they will get by. It would be a shame to pull the plug on incentives at this stage.

 

[Chris Ratledge]

There are several people who have done short little video testimonials, mostly with their phones, about their experience and opinions on the filmmaking incentives in MI, myself included. I hope ALL of these get seen by the legislators

Video stories on RicksWrong.com linked here.

 

[AaronPicot]

Well, you can't blame Hollywood. That's why it's called ShowBusiness, not ShowMakeSomeArt or ShowHelpSomeNicePeopleOut.

Lots of good points on this thread, so I will try to make some of my own. Sorry if I sound repetitive.

1 - The film industry is a thriving business in Michigan. Its growth is unprecedented and is turning out to be good business. How's that phrase go? "You have to spend money to make money." If you started a business and within 3 years your bottom line looked this good, they'd make a movie about you and you'd be on every talk show in the country. Even IF the industry wasn't making the state money, it still needs 5 years to have the chance to prove itself!
2 - Fact: our Governor lied to us. He changed his stance on film tax incentives just in time to get the votes he needed to win the election (from "get rid of" to "we'll take a good look at"). He knows it's a big deal. He knows it's a growth industry that's putting people back to work. These are things he claimed he wanted for Michigan, and yet he goes and does the exact opposite of what he said he would do.
3 - People talk about "greedy producers" or "money hungry studios." Ever heard of Thomas Edison? He was the guy that started Kodak and hired thugs to silence all those pesky independent filmmakers from stealing his business. Greed and money have been at the heart of the industry since before Day 1! If you aren't a person that can squeeze a dollar out of a dime, you will most probably never be a film producer. It will always be about the bottom line and Michigan knew that getting into the game, hence the high incentive %. Obviously our weather sucks (60% of the time) and we had little equipment and crew, so something had to kick start the industry. Let's see, what can we offer them, hmmm, how about money?? The art comes second to the dollar; my fellow artists and I accept that and move on.
4 - If Hollywood is the heart of the industry, and that's where all the crew and infrastructure are, then the people of that town have nothing to fear when a few shows are produced elsewhere.
5 - A shout out to my Michigan brothers and sisters who aren't taking this lying down. Democracy means the people decide. Viva la resistance!

This is, of course, my honest and humble opinion.

-Picot

 

[John Tissavary]

I moved to Michigan from Los Angeles last year to help start and run the post production divisions of Cinepro Pictures / Maxsar Digital Studios, so I'm quite involved in the business and consequences of the Michigan film tax incentive.

First, my experience with the incentive has been very positive. It has allowed us to set up a full fledged movie studio that develops, produces, posts, and sells its content. We have, in under a year, with minimal outside investment, employed over 50 people full time. We HAD plans to hire another 50 this year. That's not freelance work, that's full-time employment.

Now that the incentive is all but dead, we will have to lay some people off instead of hire more. Without the incentive we will not shoot in Michigan, though we will continue to operate from here for the forseeable future.

It's easy to see how the incentive has benefited the State. An Ernst & Young commissioned audit has shown a 6:1 benefit ratio - every dollar spent has resulted in $6 being spent in-state.

The reason you see a lot of out-of-state workers on shows is that Michigan is still in the process of building a local crew base. But it was happening. Over time producers would have gained confidence in local hires, and gladly hire more here to avoid paying travel, lodging, and per-diem. It would also be a no-brainer to modify the incentive to benefit resident hires more than imports.

The reality of the movie industry is that productions go where the incentives are, unless there is a greater compelling force (natural location, proximity to talent, etc...). Without incentives from governments around the world there would be less production, as financing projects independently is tremendously difficult, much more so in the wake of the global financial meltdown(s).

This program brought a lot of skilled jobs and large quantities of $$$ to a truly devastated Michigan. I think it is a mistake to kill it.

regards,

John T.

 

[Meryem Ersoz]

I may have reservations about the overall benefits of tax incentives in the bigger picture, but there is no denying the passion and verve of the Michigan production community.

You're all an awesome voice for your industry, and I wish you well. Best of luck preserving what you have obviously been working your asses off to build.

 

[Tom Greenberg]

I may have reservations about the overall benefits of tax incentives in the bigger picture, but there is no denying the passion and verve of the Michigan production community.

You're all an awesome voice for your industry, and I wish you well. Best of luck preserving what you have obviously been working your asses off to build.

Thank you, Meryem!! I'm sure I can speak for all of us when I say we appreciate your support!

Michigan has had a rich production tradition for decades, built primarily around the auto industry. It used to be said that more feet of film were shot in Michigan every year than were shot in Hollywood. Of course it was all corporate and commercial production, with very few features. For almost 20 years, I co-owned several post-production businesses in the Detroit area, doing audio post, animation, motion graphics, compositing and editorial. When the auto industry crashed and burned in 2005, many of the studios, post houses, and production companies in Michigan went down with it.

When the Michigan film incentives were started in April of 2008, it was like hitting a cardiac arrest victim with a defibrillator...the industry came back to life with a rush, and new facilities and opportunities started to follow almost immediately.

I now teach at an accredited film college in Grand Rapids, and every single day I come in contact with dozens of passionate, motivated, creative young people who want to live in Michigan, and make a decent living here while practicing their chosen craft...making movies. Michigan has been suffering a "brain-drain" of creative talent for years...this is one way to reverse it, and provide much needed jobs in a state that has taken it on the chin for far too long.