Tuesday, September 3, 2013

State film incentives: job creators, or fool's gold?

I've been getting a lot of feedback after having written this article and this one, looking at the efforts by local entrepreneur Bert Hesse and California-based Pacifica Ventures effort to build a massive movie studio complex on the Eastland Mall site. Some of the people writing me in the wake are saying it would be a shame to see North Carolina let its film incentive program die in 2014, as the TV and movie industry jobs created will simply migrate to other states. Others say its a shaky proposition that could leave the city holding a multi-million dollar liability.

I'd relayed the point in one of the stories that some say TV productions, which can stay around for years, might make better investments than movies for states looking to lure productions to town. Dana Arnold,
CEO of Pacifica Ventures, emailed me this response:

Both features and television create longterm crew development that generate permanent jobs.  Yes, permanent jobs! 

It is true that feature films do come and go, but with a competitive, politically supported incentive program… the feature films keep coming (as well as going) and as they come and go, they provide a stream of work to the same local crews, over and over again. 

A carpenter working at framing houses might make $55,000 a year as a "full" time employee working 12 months of the year for one employer ("trackable" full time employment, by job category): that same carpenter would most likely make over $85,000 per year building sets for two different features, but might only work for 7 months (considered part-time, by job category). 

If you were a carpenter, which job would you want???

What is missing in North Carolina is the "brick and mortar" infrastructure of permanent studio facilities… which is what Eastland will provide to Charlotte.

However, as you are well aware, the politics of film and television incentives can be "incendiary": especially when it means financially supporting the major studios with substantial financial incentives to bring their work.  

I find it hard to understand why incentives for auto parts manufacturing, oil drilling, airplane assembly, or chip foundries are somehow more politically appropriate than incentivizing media production.

Given the strong feelings that surround film incentives, I thought it'd be interesting to give one of its more motivated backers a chance to make his case publicly. Having heard him, what do you think?


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Anonymous said...

After working as an extra for two TV series, I can concur what this person is saying. Most of the crew I saw working on these sets were local NC residents...70% of the crew! In addition to film providing employment for NC residents like carpenters, electricians, and production crews, the film industry is also helping many of our residents who are unemployed or underemployed. I have met many people who are suplimenting their income or living mostly off of earnings that they make as background for movies and TV series. They travel all over the state to do these jobs. That is money spent on gas, hotels, food, and revenue created from taxes taken from the wages that they make working on set.
In addition to the employement opportunities film provides, there is also the benefit of revitalization to areas where they film. One of the series filmed in the area is filmed in my hometown of Mooresville. They have taken abandonned buildings and coverted them into permanent sets that they use. The production company acutally leaves the towns that it films in in better condition than when they found it. Southport, NC is seeing more tourism as a result of Safe Haven being filmed there. They are seeing revenue from souvenier items that focus around the filming of this movie in the area. The high country had an increase in tourism thanks to the Hunger Games.
I find it curious that we have no issue continuing to give money to large banks and corporations that make millions in profits, but hesistate to give an incentive (which is more like a rebate/coupon) to an industry that can benefit this state in so many ways. We have already lost the Hunger Games to Atlanta. If the incentive goes, I can assure you so will all the jobs and revenue...right to Georgia and other states that have similar programs to offer.

Wiley Coyote said...

In 2010, Governor Bev Perdue signed into law House Bill 1973 and House Bill 713 that creates the following changes to the North Carolina Film Refundable Tax Credit:
HB 1973:
•Creates a single, easy to use 25% film refundable tax credit.
•Eliminates the 15% and Alternative Film credit.
•Increases per project cap to $20 million (was $7.5 million)
•Defines, employee fringe contributions, including health, pension and welfare contributions as qualifying expenses.
•Defines per diems, stipends, and living expenses as qualifying expenses.

HB 713:
•Eliminates the 6.9% corporate income tax on the tax credit taken by a production company. This allows the production company to realize a full 25% of qualifying expenses.

In 2012, Governor Bev Perdue signed into law Senate Bill 847 that changed the following to the North Carolina Film Refundable Tax Credit:

SB 847:
•Extends the sunset date to January 1, 2015

So what do we want?

During the time Perdue was increasing the tax incentives and caps from $7.5 million to $20 million, she was also freezing salaries for state workers and teachers and raiding the Education Lottery twice, the second time tapping into school construction funds.

ANY tax credits issued should be required to have an ROI attached showing how much was gained for the state in giving the credits and how many workers were permanent NC residents.

Anonymous said...

1. If film/tv co.'s can pay a carpenter $85,000.00 for 7 months work when market pays $55,000 for a year, they do not need taxpayer money.

2. These tax incentives also put all the other companies that depend on carpenters at a tremendous disadvantage to be able to recruit top-tier talent.

I like that studios are filming here but they should strive to make their own way like every other company.

Anonymous said...

I back the film incentives 100%. It is a direct influx of money into our economy.

Anonymous said...


Anonymous said...

extend it for 2 years, with a limited amount of funds, the City/County commitment to city fair #3, has already happened. let's see what develops at the eastland mall black hole. Let's hope it's a positive move forward.

Anonymous said...

anon 3:18,

The incentives distort the marketplace when they outpay an electric or millwork company employer more than double the going rate (when annualized) with those essential state tax dollars.

To add insult to injury, its these same electric and millwork companies sending their tax dollars to NC just to watch them get doled back out to the production co.s to outbid them for the best workers.

Skippy said...

These are part time and temporary jobs and you know it... If these millionaire Hollywood liberals want to make movies they can stay in the over taxed and over regulated utopia that is California that leads in the country in unemployment.