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

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