California film tax credits

Later this year, the state of California's film tax credit program will go into effect. Will this really bring more tv and film projects back to SoCal?
Will this harm film production in other places like Canada and Georgia.

BTW, this month alone, 35 tv and film projects were shot in Georgia.

Well As someone who has thought a lot about it. I live in Los Angeles, and work to a degree in the production of Low budget film.

About two weeks ago i went to a seminar from the state commsioner and heard her pitch:

The Short Answer: Yes, but probably not as much as they probabbly hope.

The reason is simple. Its capped at 250 million-which is a lot, and may or may not increase- however there is a lot of film in California-a lot of it. Still more then you might think there is. They have had smaller credits for years-and every year they did they had to get a lottery system going for films. Which meant you submitted your paperwork, entered the film and...i think in some years had like a 1/10 chance of getting in. talked to a person at this seminar who did it last year and he was 117 on the waiting list-meaning if a 116 films dropped out he was called up. Not good odds.

I suspect when all said in done its going to be some version of 1/4 or much worse get in the current plan get it.

Mean while places like Atlanta Gauranteed you got to film there. They gave nice tax credit gave you the paperwork and you where off to the races.

Film tax credits typically work like this-you get a certificate from the state saying you'll get this much credit, then a financer or a bank will give you the%25 upfront to make the movie or some version of it minus the credit. The bank then sold people who actually took the credit(a couple of states took out the middleman-i know some european companies outright invest).

But well-without this certainity-without saying okay i have raised 80% of my budget- and this chance to say we can start filming tommorow. I dont see how you can really go forward.

You can possibly instead of filming in Atlanta film in LA now-but the kind of commitments you do in Devolpment mean thats difficult. I am going to benefit these kinds of productions are the kind that are most likely going to benefit from this. Or well movies that where going to film anyway and this is icing-which is the kind of stuff the bill isn't designed for but well there you are.

Becuse there is a lot of filming in LA still. Theres a large talent base of Actors is one reason. People ask why Supergirl is filmed here-but well compare it to Izombie. Mellissa benoist is the former star of one of the most popular TV shows in the last decade, and was also in an academy award winning film of this year. The Star of Izombie, main credit is that shes a former Power Ranger. Shes good(i like her a lot), and we can't compare talent-but you can compare fame. Benoist probabbly lived in LA, and may not have moved to Vancouver.t. Every week Supergirl TV is reporting a new Star or Guest Star People have heard of or have some measure of fame

. Arrow which is filmmed in vancouver, and they do get names-Mark Hamil is guest staring and i think pretty much everyone who has been in Doctor who has been in it for one day-but it still a name-people will get on a plane-but well permenetly no ones there-its hard for TV. Not impossible for the right price-but well thats budget. its easier to get people in LA.

I know for Duo. I am making a very small movie with a budget of maybe 100k at most. Not a lot in film terms. However-well there is good chances that i can get actors people have heard of. Actors like to work, and if i can say you can drive to pasadena for a couple of days to film something-they don't have anything that week sure.

Once when i was devoloping a project a couple of years ago an actor who was a costar on the Show Stargate SG-1 randomly agreed without reading a script to work scale. I am decent friends with an actress Who was just got a pilot with NBC and was on Sons of Anarchy- i am actually not sure i am going to ask her a part, if only becuse onestly i want to go more in terms of Youtube stars and social media-but well theres that. i haven't started calling agents yet, but i feel that i can get them to return my calls(my strategy is: wait till the budget is locked makeup the schedule and see whose free)

The day before the superbowl, an actor who had the lead role in one of the comericals(hes a character actor) asked to be my facebook friend. We got into a conversation that revolved if i had any parts to consider him-i do think i will.

and I was joking the other day with a semi well known actor who didn't like the supergirl costume-that given hes well known for playing hulking villians in movies that one day he maybe punching it[to probabbly no great effect]. Would like to get him-don't know if i can-but if its not to hard for him, and maybe if i give his girlfriend whose an aspiring stuntwoman somethhing to do-well who knows. I can get a 6'4 bruiser.

And thats what get California Gets me-Now.

10 years from now if there is more productions in Atlanta, or somewhere else and things spread out more-i am not sure i can get that so easily. Its a problem.

People talk about Crew a lot and the great work people behind the lines do-but that to a degree is spreading out-i was thinking of filming a movie a movie in New Mexico a couple of years ago, and the Sound Mixer on an academy award winning movie agreed to work for union rates. Thats not true for actors-yet. But it maybe, and it maybe soon.

And maybe this changes-but maybe not. The credit i suspect maybe slows it.

Wow thanks castor really interesting. I am definitely not in the industry but have always been a bit fascinated by these credits. Do you have a good reading to suggest (book, article, etc)? I am mainly interested in learning how the credits can be sold, and more about what you mention of the banks selling (I think credits). Do you know if those kinds of deals are public record?

From a film producers Stand Point a lot of producers books discuss the ins and out of it. However these can be out of date-a lot of websites have the exact numbers.

From a state tax credit standpoint-there a number of websites that discuss whiich state does what-40 states have some version and they vary tremendiously-and can send you a link to the state entertainment comission and they are happy to give you records of what they brought in and what they gave out-as for actual public record on a per production basis-i don't think so, but the general year in number yeah-i have scene these kind of reports before.

as for selling them- Theres like a dozen names of Enteraintment brokers who simply buy tax crediits from productions-i actually got a list (which is out of date now)from the New Mexico Film commision once-they know. If you google this you can find more-there happy to do there business. Like i said you give either give them the credit when your done or they advance the money to make the movie. They can talk about more there individual poolicies how much they give etc.

As for buying them -i have a business with a large tax credit-you can make some pretty good deals here if you want. Generally they do end up with a bank or a credit broker, and while i have never been in the market these aren't the hardest thing in the world to find-an accountant, or even the State board can tell you sometimes. you can get a credit which allows you to pay 90 95 percent on the dollar pretty easy-which is pretty good with large amounts. A lot of these end up going to like chain stores and restraunts that have big tax bills and the like.

To go back to the original point-the bill is in a lot of ways aimed at indieFilms in the 1 to 10 million budget range- which are a lot of the films that are done in Atlanta these days. They get the full credit, and the system is setup so they specifically qualify benefits for non publically traded companies(which i forget as i am not a publically traded company).

These are the kind of films that have more or less left california- the Credits in other places help-but well its cheeper to film in atlanta-studios are expensive and LA and the union rates are almost double what it is in other parts of the country .Once got into a conversation with a Former vice President of production for Disney, and he was telling that there was a point where they did the numbers and the basic kind of Disney movie and Disney Channel Film where litterally to expensive to film at there studio in burbank anymore.

I am not sure this trend is going to go away, though if it could it would be a benefit for the industry-like i said lots of people in town who would be delighted for work-and i still deeply get a sence there is a strong creative space here. So who knows.

But then maybe the same thing happens to atlanta.

Ah got it, I should probably get a producers book even if it is a bit out of date just to get my feet wet. Any recommendations there?

And yeh I see your point about the attraction for indies.

And just so I am following, say you film a move in CA but you (and your company) are from another state. The idea is that you cannot use the tax credit yourself since you have very little taxable income in CA? So you sell it (like you said for maybe 90-95cents on the dollar, a good deal) to someone like a restaurant which has taxable income there (they benefit I guess since they pay $1 in taxes but only paid 90-95cents plus commissions). Am I getting this kind of right?

Independent Film Producer's Survival Guide: A Business and Legal Sourcebook by Gunnar Erickson isn't bad here.

And you have it right. Even if everyone in the same state was the same its how it work the vast majority of the time.

s Movie productions themselves generate very little state taxes-They spend a million dollars however its all expenses and you pass it out to the investors to get the profits in most cases- so they just all sell the tax credits on the market.

(the investors by the way can Amatroize there expenses on the film pretty much anyway they want- so you want to deduct 500,000 of your expenses this year great. or Next year sure!. Film is a great way to play with taxes)

I should note that some states(but not California) say that the crew have to live in state -ie the grip the gaffer or the money you psend on them isn't counted for tax credits, but none of them care about the money:)

On a related note, the State of New Mexico just voted to increase its tax incentive program. I think I read in IMDB that the 1st Justice League film might film in New Mexico.

Yeah- That plus the amoritization qualities which you lets you invest 10,000 in and then deduct 10,000 from your taxes as expenses...

Yeah TV and movies remain a great way never to pay taxes agian ever.

Wow thanks for all of the background and links. Haha who would have thought this would have been a go to page for an education on the film industry

Thanks for the info, Castor. What do you think of the sate of Illinois tax credit program? Does it offer too little? How successful do you consider it to be? A lot of tv shows film in Chicago right now. The biggest one, even thought its set in NYC, is Fox's Empire. It's the most watched show on broadcast tv right now and gain on AMC's The Walking Dead.

Why did Empire's producers choose to film in Chicago instead of NYC, where the show is set?

My (limited) understanding is that there was also an influx of talent from Michigan with the demise of the tax credits there.
Will see if something happens in NC now.

Th Fall of Michiicagn helps- The Illinois Credit is probably nothing to sneeze at to(its pretty okay at 30%)- buut thats actually ideentiical to new york.

Also new York is traditionally a fairly tricky place to shoot-plenty of TV shows do it, but theres a reason the show is Brooklyn 99 instead of Manhattan-Mantatta proper is if not imposable to close down a street pretty close to-really do much filming at all in the bureau-it does happen but it tends to be limited.

(amazing spiderman 2 has a big scene in Times Square-they litterally spent close to 20 million to build mix of sets and CGI to do it-that hard. Actually in general i think all the spiderman films where mainly shot in LA- Gotham in the nolan movies was largely chicago)

Chicago looks from a distance like New York, and its easier to do diffrent things there easier in general-so you can move a bit around a bit more-also probably get soundstage extc (Plus Film Crew is more expensive in New York, studios-etc- yeah its hard. )

All of these things i think are doable-but I get the iimpression that empire in particular was a show that Fox put some effort behind but not gigantic amounts- so that when it turned into by far the biggest hit of the season, they quiite didn't knoow what too do with it. So it exists in Chicago and you shrug your shoulders.

Now saying though to your points-most of the above is kind of True of Atlanta-but i one of the point problems maybe there is just so much Crew and Stuff that adding one more TV production to the place may not make sence.

Will say curious about North Carolina as its a werid case.

Most of the crew will probabbly go to other states i think-but maybe not all of them-people get married etc

From what i understand that most years about 90% of the productions happened in One Large Studio space-thats larger then pretty much any indivudal space in LA. I may just go out of business, or it may stay awhile, for good rates.

Which is all a way of saying I think Maiden Studios is in North Carolina-and while actually if it stays and want to keep doing stuff it can maybe make some deals.

Cool! Thanks again for your insights Castor much appreciated.

When does the credit program go into effect? Can tv productions that were filming elsewhere, but return to California get it ?
The Walking Dead spinoff, Fear the Walking Dead is most filming in Vancouver, with some filming In LA. The pilot was filmed in LA.

Could it later leave Vancouver and just film in LA and get the credits?

August September is the anticipated date it goes into effect.

And i believe in fear the walking deads case if it left the state and filmed a season then returned to the state it could get the credit (there somewhat tolerant of pilots that are filmed before the credit went into effect). Generally while shows sometimes change locations it would seem kind of odd for a show in its second season to move to LA(X-Files moved from Vancouver to LA i belive in like its sixth season, but thats after David Ducuvneys contract matured and he more or less forced the issue)-but well as the expression goes stranger things have happened. The Credit may make it easier, but like i said: its still very much a lottery and there is a good chance that The walking dead wouldn't get it at all.

castor