Thursday, September 24, 2009

Criminal charges possible regarding film tax-credit abuses, Iowa official says

By LEE ROOD • • September 21, 2009 Des Moines Register

A state official said Monday criminal charges could be forthcoming in the wake of widespread mismanagement and abuse reported in Iowa’s tax-credit program for filmmaking.“I would not rule that out,” said Chief Deputy Auditor Warren Jenkins. “It appears there was a failure to do what is required by law."Gov. Chet Culver on Monday asked Auditor David Vaudt’s office, the Department of Revenue and Attorney General Tom Miller to assist in a review of a state tax-credit program run out of the Iowa Department of Economic Development’s film office.

“I am very troubled by reports of the lack of oversight and accounting procedures of tax credits under this program,” Culver said. “My first priority on this issue is to the taxpayers of Iowa, and I know that Attorney General Miller and Auditor Vaudt will help us to quickly identify changes that need to be made and how we can best move forward.”Failure to perform duties required by law is a crime in Iowa. Those who exceed the authority of their office, make contracts “that contemplate expenditures ... known by the person to be in excess of that authorized by law” or who fail to report receipt or expenditures of public money are, at the very least, committing serious misdemeanors under existing statutes. Knowingly making false records of any sort (documents, certificates or receipts) amounts to a felony.Neither the auditor’s office nor Iowa’s Department of Revenue was consulted by economic development officials about problems in the mushrooming film program until problems surfaced last week, according to both revenue Director Mark Schuling and Jenkins. (Auditor David Vaudt was tending to a medical emergency in his family.)“I think it’s very unusual to not be informed or at least involved,” Jenkins said. “And to me, it’s unusual to hire an auditor without even talking to us.”Culver on Friday froze the tax-credit program, officially known as the Film, Television and Video Promotion Program, administered by the Iowa Department of Economic Development. The state’s DED director, Mike Tramontina, resigned his post after a still ongoing audit uncovered poor management and record-keeping and apparent abuses by film producers.Tom Wheeler, manager of the Iowa Film Office, was placed on paid administrative leave. Wheeler was juggling a reported 50 to 60 current projects and proposals for projects.Culver said new tax-credit certificates would not be issued until questions about the administration of the program were answered.“This is not about harming the growing film and television industry in Iowa, but about protecting public funds and the best interests of Iowans,” Culver said.A memo from auditors investigating irregularities in the program suggested producers and film executives took personal advantage of the program as state administrators paid little attention.

Tramontina resigned after he informed the governor and other state officials of sloppy record-keeping and abuse of the program, including allegations that filmmakers had purchased luxury vehicles for themselves.According to a memo about the audit's initial findings obtained by The Des Moines Register, auditors found a long list of bookkeeping lapses in the program, which has authorized $32 million in tax credits for at least 20 film projects since its inception in 2007.The program was aimed at promoting filmmaking in Iowa as a way to contribute to the local and state economy.The program could cost the state up to $300 million, an Iowa lawmaker said over the weekend. That’s because movie producers rushed in May and June to get $208 million in tax credits committed before a new spending cap began July 1.Schuling said he could not answer a question on the minds of many movie makers and their workers: Which tax-credit projects will the state ultimately honor?“That’s a tough legal question. It’s something that we have to take a look at,” he said. To what extent will we be disallowing tax credits? I don’t have answers to that. It’s just real premature.”Jenkins said he believes the state will be obligated to live up to any legal contract that it signed.Iowa Fiscal Partnership, an arm of the nonprofit, nonpartisan organization that analyzes budget and tax issues, issued a statement Monday saying it supported the suspension and investigation of the film credit program.“The initial investigation has exposed the film credits, as currently in place, as a boondoggle that is draining our state treasury,” a statement from the partnership said. “This is coming at a time when our state leaders are anticipating budget cuts. All spending — including spending through the tax code — needs to be on the table when considering cuts to the budget.”Mike Owen, communications director of the Des Moines-based partnership, said the film-credit program is one of many tax-credit programs in the state that should raise questions with taxpayers. “One of the problems with this program ... is that these tax credits spend money but aren’t subject to regular review or scrutiny like other programs within state government,” he said.Aside from lax management, there were some fundamental policy questions thatneeded to be answered even before abuses were discovered, Owen said. State leaders, can’t tell the public whether the program is achieving what it was intended to do, he said. “Without better transparency and scrutiny even by legislators, how are we going to get the information?”The Iowa Department of Economic Development’s last state audit was for the fiscal year that ended June 30, 2008. The audit identified no problems within the film program, but that was before the film office was deluged with more than 100 applications for tax-credit projects.Jenkins said the audit for the 2009 year is not complete. Especially when programs undergo big increases in activity, he said, state departments have a responsibility to tell auditors where a closer look is needed.
The tax credit program – officially known as the Film, Television and Video Promotion Program – had been administered by the Iowa Department of Economic Development. The state’s DED director, Mike Tramontina, resigned his post on Friday.Culver said he has asked the state’s Economic Deveopment Board not to approved further tax credit certificates until questions about the administration of the program are answered.“This is not about harming the growing film and television industry in Iowa, but about protecting public funds and the best interests of Iowans,” Culver said.

Econ. director resigns; Governor of Iowa suspends film tax breaks

BY JASON CLAYWORTH • • September 18, 2009

Gov. Chet Culver’s staff announced the resignation of Mike Tramontina in an e-mail at 4:56 p.m., simply saying that the governor had accepted the resignation.In addition, the press release included a copy of a letter dated today in which Culver tells Robert Boeken, chair of the board, that he is “very troubled” by accounting methods used to track the state’s controversial tax credit for movies.

Culver then requests that all future expenditures for the movie tax credit be suspended until questions can be answered.The tax credits have been promoted by the Iowa Film Office as "Half-Price Filmmaking." A qualified $1 million project, for example, can obtain as much as $500,000 in transferable Iowa income-tax credit certificates. Movie makers can sell those credits to any Iowa taxpayer for market prices or use the credits to reduce their own tax obligations.The credit, which has been in place since 2007, was enhanced by lawmakers this year to extend breaks to more movie employees. However, lawmakers also added a cap of $185 million a year for five tax-credit programs that largely deal with job creation, film production and business research.The Iowa Department of Economic Development Board is in charge of dividing the $185 million among the programs and has set a $50 million cap for the film tax credit.Film advocates at the public hearing in Des Moines last month said the $50 million cap could be gobbled by one large film and leave dozens of others without tax breaks.Prior to working as Iowa’s economic development director, Tramontina worked as the Director of the Iowa Department of Management for two years during the Tom Vilsack administration. He moved into that position after working four and a half years as Executive Director of the Iowa Finance Authority where he coordinated the State’s housing policy. Tramontina has spent his career in the areas of government and finance. He has worked in the U. S. Department of Housing and Urban Development as Secretary’s Representative for the Great Plains region, as Deputy State Treasurer, as a Research analyst in the Iowa Senate and as a Congressional District Aide. He also worked in the private sector as an investment banker in public finance. Tramontina is a native of Sioux City and a graduate of University of Iowa.

Monday, September 14, 2009

Louisiana raises stakes with bigger tax credits for film

By GARY PERILLOUX Advocate business writer Published: Sep 6, 2009

Louisiana incentives aimed at wooing everything from Hollywood movies to video game developers to Broadway production companies got turbocharged in the Legislature this year.
That means the state will forgo more revenue, allowing investors to get bigger income tax breaks with credits they buy from movie makers and software developers.
Laws enabling that expansion come during a year in which the state faced an estimated $1.3 billion shortfall in the financial year that began in July.
How did that happen?
In part, because of people like Susie Labry. A former state clerical worker and former cashier at Calandro’s Supermarket on Government Street in Baton Rouge, Labry found herself in 2004 — amid a career of 15 movie speaking parts and 206 roles as a movie extra — able to make more money in movies than elsewhere.
Through e-mail blasts this year, Labry mobilized more than 1,200 members of a grass-roots trade group, the Baton Rouge Film Meetup, to contact legislators. That network led to several thousand movie industry supporters statewide doing the same.
“Every time we did a blast for committee meetings, we stacked that room,” Labry said, referring to legislative committees that considered film incentive bills this year. The result is a film incentive once scheduled to drop from 25 percent to 15 percent by 2012 ended up rising to a 30 percent tax credit, with no date for ending the program.
“We explained it in simple, baby terms,” Labry said of her frequent e-mails calling for tax credits with no sunsets and no scale-downs. Still, she confesses, “With the 30 percent — we really were shocked that it did pass. In this economy, we won. We got through (the financial obstacles) and we were at the Capitol every day.”
Independent audits from a Chicago consulting firm, Economic Research Associates, helped Labry’s cause. Commissioned by the state’s economic development department, an ERA study released in March showed:
--Louisiana added 2,200 film industry jobs in six years.
--The state gained an annual economic impact from the industry of $763 million, $429 million of it from direct production in 2007, the latest year for which full figures were available.
--Louisiana saw an estimated $6.64 in economic activity for each $1 spent on film tax incentives.
Secretary of State Jay Dardenne authored legislation setting up the incentive programs in 2002, when he served in the state Senate and when former state Rep. Steve Scalise shepherded passage of the incentives in the House of Representative.
In the years since then, many states copied the incentives, with Michigan offering a tax credit potentially worth more than 40 percent and Georgia offering a package worth up to 30 percent. It was the aggressive entry by another Southern state, one with more economic activity, people and infrastructure than Louisiana, that quickened the resolve for more lucrative Louisiana incentives.
Louisiana really could not afford to stand pat, Dardenne said.
“I think it’s going to be an ever-shifting sand in this marketplace,” he said. “The very nature of the business is that the producers and directors are going to be looking for the most economical place to be able to make movies.”
To protect its investment in entertainment, the state couldn’t afford for the tax credits to sunset, much less to scale down, Dardenne said.
“I think the reality of what other states are doing and the general competitive nature of this business probably dictates that for Louisiana to remain competitive, the incentives are going to have to stay in place,” he said.
Although more than $1 billion in Louisiana movie production work has taken place on about 200 projects since 2002, film industry insiders sensed a hesitancy on the part of some studios to bring projects to the state.
After a Baton Rouge Film Commission trip to attend an industry conference this year, businessman Michael Trufant — who has brokered some of the movie tax credits to investors — said the group learned that major studios were loathe to bring work to Louisiana as long as a scale-down of incentives remained in the law.
“That production tax credit is what drives the business into our state,” said Amy Mitchell-Smith, executive director of the Baton Rouge Film Commission, and the 30 percent tax credit with no end in sight makes a discernible difference. “Maybe (a movie) won’t shoot until 2011 or 2012, but a producer knows that they can count on Louisiana being at 30 percent down the road. You can count on a state that has a credit without a sunset.”
In August, Labry and her Baton Rouge Film Meetup counterparts staged a red-carpet gala at The Echelon Center on Florida Boulevard to celebrate the expansion of film incentives. On hand were producers and directors, but there also were acting coaches and security company owners — people whose livelihoods increasingly depend on the presence of the movie industry in the state.
Among them was Paul Lockett, whose JPS Security and Consulting LLC firm has completed work on 10 Baton Rouge-area movie productions. JPS employs 75 but the payroll can exceed 100 when a major film project contracts with the firm, Lockett said.
“Location is everything,” he said, “because if there’s filming going on in a higher-crime area, they want to be sure that the actors are not going to be accosted.”
Because equipment also is valuable, Lockett said JPS has convinced film companies to examine a security company’s experience and not value a contract on cost alone. Often, it’s cheaper for companies to keep equipment on location overnight and pay for security, rather than move cargo back and forth, he said.
Hotels, restaurants and car dealers benefit from local filming, Lockett said, and the Baton Rouge Film Commission lists nearly 50 vendors offering 15 percent discounts to movie productions on sushi, laundry, hair styling, fitness, flowers and more.
“This is just the beginning of what you’re going to see here,” Lockett said. “It’s not going to go away. It’s probably going to be bigger than anyone can imagine.”
New Orleans and Shreveport (particularly, after Hurricane Katrina) have grabbed the majority of filmmaking in the state, but Baton Rouge film officials were heartened by the recent announcement that Columbia Pictures’ “Battle: Los Angeles” would film in the fall at the Celtic Media Centre in Baton Rouge.
Mayor-President Kip Holden said the city-parish would continue offering local incentives for major motion pictures, like the $175,000 cash incentive that sweetened the deal for “Battle: Los Angeles,” a picture that could climb to a $60 million budget, Metro Councilwoman Alison Cascio said. The Baton Rouge portion would be about $25 million, city-parish officials said.
In 2007, Baton Rouge saw $36 million in direct film and TV spending by 19 projects in the Baton Rouge area, Mitchell-Smith said, with $25 million spent on 40 regional projects in 2008, when bigger-budget films tended to make short stays in Baton Rouge while being based in New Orleans or other sites.
Veleka Gray, a Mandeville-based acting coach with Baton Rouge and New Orleans clients, said the emergence of a Louisiana entertainment industry enabled her to move back to her home state. Amid Broadway productions and 15 years on mostly New York-based soap operas, she starred in “Love of Life,” “The Young and the Restless” and “Somerset,” in which she appeared opposite Sigourney Weaver and Ted Danson.
“Thank God for the tax credits, because we need it,” said Gray, a New Orleans native who does bemoan Louisiana’s right-to-work status when it comes to the movie industry. Non-union actors and crew members don’t get the same pay, food and work conditions that their union counterparts receive, she said.
“The possibilities are just endless to me,” Gray said. “It is unbelievably exciting to be in Louisiana right now for all of us — and that we don’t have to go to Los Angeles. I get to stay home and eat more po-boys: This could not be more wonderful.”

The Advocate

Wednesday, September 9, 2009

Depeche Mode Video for True Blood and a Romance?

One of my favorite bands, Depeche Mode with a new video for True Blood the HBO hit series.

A new story about the filming of True Blood is below about a possible on set romance.

The Vampire Queen and Eric Northman...together?

Today MTV UK posted a specualtion that Evan Rachel Wood and Alexander Skarsgard of the hit HBO vampire series True Blood are "reportedly dating". This account comes based on a mention by Perez Hilton that the stars, who play the Vampire Queen Sophie-Ann and now legendarily sexy Eric Northman, have been spotted together in Louisiana on/near the area where Skarsgard is filming the remake of Straw Dogs. Supposedly, Evan, who has only been in one episode of True Blood, thus far, but will make another appearance in Sunday's Season Finale, flew out to Louisiana specifically to be with Alexander. However, again, this is currently only speculation.
Prior to this new romantic development, Evan was involved with the gender-envelope-pushing goth rocker Marilyn Manson. I think it's safe to say, that if this rumor is true, her tastes have definitely improved. Wood and Skarsgard would make quite the beautiful couple wouldn't they? Let's keep our fingers crossed that they confirm their budding relationship to the media.

September 9, 1:47 PMTrue Blood Examiner Gabrielle Faust