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Sunday, 18 January 2015 22:00

State extends film industry incentives through 2021 despite critiques

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Filming for “Buzzard” took place in Grand Rapids and other locations around Michigan. Filming for “Buzzard” took place in Grand Rapids and other locations around Michigan. COURTESY PHOTO: ASHLEY YOUNG

After cutting his teeth on low-budget locally produced films, Josh Burge is moving into the big time.

A Grand Rapids-based musician turned actor, Burge leveraged his experience in local films to land a supporting role in “The Revenant,” a feature motion picture starring Leonardo DiCaprio and Tom Hardy that’s being directed by acclaimed filmmaker Alejandro Gonzalez Inarritu.

The reportedly $60 million film is a far cry from the shoestring budget used to produce “Buzzard,” which was shot in and around Grand Rapids and other parts of Michigan and which debuted at the South By Southwest Film Festival last year. But Burge credits his experience in “Buzzard” and 2012’s “Ape” — two local films that both received significant accolades at U.S. and worldwide film festivals and secured international distribution deals — as giving him the exposure needed to land his current role.

“I kind of kid around that I think (getting a role in this film) took away my right to say that the American Dream is bullshit. I can’t really ever claim that again,” Burge said.

While Burge travels to Canada to shoot “The Revenant,” the state of Michigan continues to work to build its film industry from the ground up, having just extended a series of film credits through 2021. In the final days of 2014, Gov. Rick Snyder signed Michigan Senate Bill 1103 that extended the state’s film incentives for another seven years instead of just one year, as lawmakers did previously. However, the new bill still requires the Legislature to appropriate funds to the economic development program each year.

For the 2015 fiscal year, the Legislature has appropriated $50 million for the film incentive program. That money is also good for television production and digital media, such as video game productions.

Although the state’s film incentives have attracted some naysayers, they’ve also garnered some attention from Hollywood. Headlines this summer touted that stars including Ben Affleck visited Detroit to film “Batman v. Superman: Dawn of Justice,” which is scheduled for release in March 2016. “Beverly Hills Cop 4” starring Eddie Murphy will be filming in the city later this year. In the last year, actors Jason Segel and Jesse Eisenberg shot “The End of the Tour” in West Michigan, which was also the location for a handful of smaller films.

Long considered a transient business, the film industry tends to shoot in areas that offer it incentives, sources said.

“We continue to think (movie-making) is a viable industry here in the state and this type of incentive supports that,” said Margaret O’Riley, director of the Michigan Film Office, part of the Michigan Economic Development Corp.

But Michigan is far from the only state hoping to build a viable film industry in its own backyard. States such as New York and Louisiana have developed large incentive programs to lure film crews to shoot in their states in recent years.

Even California, the home base for most major studios, has been forced to ramp up its own film incentive program to remain competitive. An August story in the Los Angeles Times noted that the Golden State saw a 12.2 percent decline in the total number of jobs associated with the industry from 2004 to 2013. On the other hand, New York posted a 23.1 percent gain in the same period.

According to the Michigan Film Office’s quarterly reports, the projects approved for incentives totaled 1,497 direct jobs in the state in 2014. Those numbers are preliminary because the projects have three years from their completion to recoup expenses, O’Riley noted.

Rebates preferable

The state’s film incentive program currently operates on a rebate system, rather than offering a direct subsidy. Productions are given three years to recoup a maximum of 25 percent of the direct production expenditures in the state as well as 3 percent of expenditures at permanent production facilities and 10 percent for post-production work done in the state.

Other legislative changes included in SB 1103 are designed to ensure that out-of-state productions hire one Michigan worker for each out-of-state worker that will be involved in the production. Additionally, the Michigan Film Office must award at least 10 percent of the allotted funding to productions with budgets of less than $15 million.

O’Riley said that it’s best for the state to incentivize productions with a range of budgets. She noted that middle-budget projects in the $7 million to $15 million range have fallen off as of late, but she thought that move was largely industry-driven as studios turn more to high-budget blockbuster films as well as smaller projects.

Production companies also prefer the rebates to the state’s previous incentive system that was set up as a tax credit, largely because of the efficiency of the new program, O’Riley said.

But since switching to a rebate system in 2012, the number of projects in the state has dwindled, as MiBiz reported last year. Under the previous 42-percent tax credit, an average of 41 films shot in the state each year. That dropped to 17 films in 2012 and 21 films in 2013.

Forty films and television shows wrapped production in 2013 and 2014, according to Michigan Film Office records. There were also eight digital media projects that received state dollars.

“(Michigan’s) return on investment is dependent on how much they spend here,” O’Riley said. “It’s really a product of how much they spend versus how much we give back. It varies project to project.”

Skepticism remains

No matter how the state delivers the incentive, public policy think tanks on both sides of the political spectrum remain skeptical on the role of film incentives as economic development tools.

The Libertarian-leaning Mackinac Center for Public Policy based in Midland has been at the forefront of calling for an end to film incentives in Michigan.

“Overall, we are skeptical of government incentives, but the film incentives are the worst,” said Jarrett Skorup, a policy analyst at the Mackinac Center. “The film incentives play states off of each other.”

Skorup noted that a study produced by the think tank found that Michigan has spent $494.7 million on the program since 2008 but lost 102 film industry jobs in that same time.

The left-of-center Center on Budget and Policy Priorities in Washington, D.C. also takes a critical stance on film incentives. A 2010 study highlighted a number of problems with the practice, most notably that the “best jobs go to non-residents” and that “subsidies reward companies for production that they might have done anyway.”

Skorup from the Mackinac Center has similar concerns.

“We paid for Ben Affleck’s housing, and that’s a bad way to do public policy,” he said, referring to how incentive money is often used to provide housing for the film’s stars. “Do you want to spend $50 million on films or roads?”


Read 3870 times Last modified on Saturday, 17 January 2015 22:11

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