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California’s Film Incentives Program Sees Growth In Jobs & Production Spending, But “Lack Of Available Funds” Still Leads Many Projects To Flee The State

(deadline.com)

Runaway film and TV productions that applied for California tax credits from 2020 to 2022 but were “ultimately denied due to lack of available funds” ended up spending nearly $1 billion in production costs outside the state. That’s according to the latest report from the California Film Commission, which makes a compelling case for greater funding of the state’s tax incentives program.

California currently offers $420 million a year in film incentives, but it’s not nearly enough to support all of the films and TV shows that want to shoot here. New York, with a much smaller film industry, also offers $420 million in credits, and Georgia handed out $1.2 billion last year.

Even so, production spending and employment continues to grow in the state among incentivized projects. According to the report, direct in-state spending by projects that received the tax credits grew by $200 million – from $2.1 billion to $2.3 billion – during the 2021-22 fiscal year, with growth continuing through the first half of this year. Estimated total spending for the first two-and-a-half years of the current program – Program 3.0 – is expected to top $6.2 billion.

“California’s iconic film industry continues to create opportunity and drive economic growth throughout our state,” said Governor Gavin Newsom. “Today’s report from the California Film Commission affirms the tax credit program continues to produce outstanding results and foster diversity and inclusion for a workforce that better reflects our vibrant communities.”

“The competition today is global, so it’s wonderful to see our state’s commitment to maintaining our status as the world’s film and TV production capital,” said California Film Commission Executive Director Colleen Bell. “The tax credit program is an incredibly effective tool, and today’s report confirms it’s working precisely as intended.”

The report says that every dollar that the state spends on film incentives generates many multiples of dollars in terms of wages and gross domestic product. Based on data collected by the Los Angeles Economic Development Corporation, the report confirms that “for every tax credit dollar allocated, the state benefitted from at least $24.40 in economic output, $16.14 in gross domestic product, $8.60 in wages and $1.07 in state and local tax revenues.”

In all, the previous version of the program – Program 2.0 – generated a total of $21.9 billion in economic output and $961.5 million in state and local tax revenue over its five-year run.

But those numbers could have been much higher if there was enough money in the program to fund even more projects and keep them filming in California. According to the report, the state lost 77% of production spending by those projects that applied for but did not receive a California tax credit over the past year, and that 16 out of 28 projects that did not receive a tax credit left California to be produced out-of-state. “These runaway projects accounted for $951 million in production spending outside California,” the report says.

“With the $951million lost globally,” the report says, “productions that did not receive tax credits left California to generate expenditures” in other jurisdictions, including:

• New York: $254 million
• Georgia: $130 million
• New Mexico: $28 million
• Louisiana: $2 million
• Other U.S. jurisdictions: $299 million
• Canada: $88 million
• England, Italy, Ireland, Mexico: $150 million

Five recent projects cited in the report that got turned down here for tax credits and then went somewhere to shoot include Don’t Look Up, which took its estimated $100 million production budget to film in Massachusetts and Washington, DC; Day Shift, which filmed in Georgia with an estimated $100 million production budget; Pinocchio, which filmed in England and Italy with an estimated $150 million production budget; season three of Succession, which filmed in New York with an estimated production budget of $81 million, and The Mighty Ducks, which shot in Vancouver with a budget of $20 million.

Even worse, California is losing out on billions of dollars in visual effects and virtual production spending because the state is the only major production center that lacks a stand-alone visual effects (VFX) credit.

“A recent study revealed that over $7 billion is projected in worldwide VFX spend in 2022, increasing to $10.5 billion by 2025,” the report says. “California is not benefiting from this expanding sector of the motion picture industry due to a lack of targeted incentives.”

“The majority of VFX work is performed outside of California, assigned to companies in countries and provinces with a 30-40% rebate on visual effects work without the requirement of filming the same project in that jurisdiction,” the report says. “VFX artists, technicians, programmers, coordinators, producers, supervisors, match-movers, compositors, effects artists, and hundreds of other types of VFX workers living outside of California are being paid for visual effects work from studios and companies based in California. California’s 25% tax credit is not competitive enough for some company’s financial goals; therefore, many California-approved tax credit projects decide to get VFX work done at other locales which provide a stand-alone VFX tax credit.”

“With the addition of virtual production, the filmmaking process’ complex visual effects work has increased,” the report notes. “Companies which perform this VFX technology are finding it difficult to continue to operate in California without the kinds of incentives available elsewhere. They have invested heavily in highly trained technicians and want to remain in the Golden State. However, seeking ways to lower costs means going elsewhere to chase incentives.

“As a result, many California VFX companies have created offshore subsidiaries and are training workforces to work on projects in jurisdictions with stand-alone incentive programs. According to a recent analysis by KMPG, the visual effects market is an estimated $6 to $7 billion industry and is projected to grow roughly12% through 2025. With the growth of streaming services – Netflix, Disney+, Hulu, Amazon Prime, Apple TV+, Warner Bros Discovery, CBS, Peacock – the demand for content and shows with heavy visual effects and virtual production is growing.”

Evaluating the “state’s loss” in the VFX arena, the report cites “compelling data” from KMPG, the giant accounting firm, that shows that “approximately $6 billion of VFX expenditures were performed outside of California in the last five years. To illustrate the dichotomy between worldwide VFX spend and California spend, one company reported that they spent $920 million on VFX labor worldwide, while spending only $38.8million in California.”

California also comes up short in the area of monetizing the global sale of tax credits. “As a key part of a production’s financing structure, companies rely on the ability to sell tax credits to third parties or back to the state,” the report notes. “Jurisdictions with such monetization and refund ability provisions hold a competitive edge. California is one of the few jurisdictions that do not offer this type of incentive.”

Other highlights of the report include:

In-State Employment

The 106 projects approved during the first two and a half years of Program 3.0 are estimated to generate $6.2 billion in direct in‐states pending, including more than $2.1 billion in qualified wages. The 106 approved projects selected for year-two of Program 3.0 are on track to employ a combined 8,135 crew, 4,111 cast and 79,248 background actors/stand-ins (the latter measured in “man-days”) during 2,421 filming days in California. Projects selected for the first half of fiscal year-three are on track to employ 4,497 crew, 1,141 cast and 50,458 background actors/stand ins during 1,297 filming days. In aggregate, the first two-and-a-half years of Program 3.0 are on track to employ a total of 18,736 crew, 9,833 cast and 204,700 background actors/stand-ins with 5,900 filming days. The report notes that productions in the tax credit program also generate non-incentivized post-production jobs and revenue for VFX artists, sound editors, sound mixers, musicians and other workers/vendors.

U.S. Workforce Statistics

The entertainment industry generated $192 billion in total film and television wages, with $84 billion of direct wages earned by workers supported by the motion picture industry throughout the United States. With $27billion in payments to over 359,000 local business, the motion picture and television industry generates millions of jobs across the United States.

Workforce Training, Diversity and Inclusion

Program 3.0 includes several new and ongoing initiatives to promote workforce training, diversity and inclusion. The Career Readiness requirement (continued from Program 2.0) mandates all tax credit projects participate in learning and training programs for students based in California. Working in collaboration with the California Department of Education and the California Community Colleges Chancellor’s office, tax credit projects have fulfilled the requirement by hiring students for paid internships, welcoming faculty members for externships, hosting workshops/panels and staging professional skills tours.

During the height of the pandemic, in-person experiences such as internships, externships, and professional skills tours were suspended. In total, 33 projects in Program 3.0 have completed the Career Readiness requirement, with $169,653 contributed in aggregate to either California Community Colleges or the California Department of Education.

New for Program 3.0 is the Career Pathways Program that targets individuals from underserved communities. It is funded directly by tax credit projects and works with partner training programs across the state.

Since 2020, training providers ManifestWorks, Hollywood CPR, and IATSE Local 695’s SVOP Y-16A Training Program have helped achieve Career Pathways Program goals. A total of 141 individuals have participated in the program: 30 with Hollywood CPR, 39 with ManifestWorks, and 17 with SVOP – all during year-two of Program 3.0.

Relocating TV Series

During its second fiscal year, Program 3.0 welcomed two relocating TV series from Vancouver and Georgia. The first half of the current (third) fiscal year brings two additional relocating series from New Orleans and Florida. To date, a total of 27 TV series have relocated to California under different iterations of the state’s tax credit program.

Big Budget Films

During its second fiscal year, Program 3.0 welcomed five films with budgets greater than $60 million that are on track to bring an estimated $738 million in direct in-state spending. Projects include Atlas, Beverly Hills Cop 4, and Unfrosted. The first half of the current fiscal year brings an additional four big-budget film projects including Joker: Folie a Deux and The Thomas Crown Affair. To date, Program 3.0 has welcomed 11 big-budget films – or half of the 22 feature films accepted into the program thus far.

Sound Stages

California Senate Bill 144 was passed on July 21, 2021, creating the California Soundstage Filming Tax Credit Program to incentivize construction and renovation of California soundstages as well as repurposing of other space into sound stages. The Soundstage Filming Program allocates $150 million in tax credits on a first come, first served basis over up to a ten-year period from 2022-2032.

The report, however, notes that the Soundstage Filming Program “is still in the early stages of implementation,” and that many other jurisdictions are rushing to fill the need. To date, Soundstage Certification Letters have been issued to a total of 13 soundstages statewide – eight newly constructed and five renovated – with a combined size of over 200,000 sq. ft.

“With Los Angeles soundstages operating at over 90% capacity after the 2020 Covid shutdowns,” the report notes, “the necessity for productions to film in other locations has increased the need for more soundstage infrastructure worldwide. Though Los Angeles leads the world in dedicated sound stage space with 5.4 million square feet, global competitors are not that far behind: United Kingdom with 4.7 million, two Canadian jurisdictions with Ontario having 3.3 million and British Columbia having 2.8 million, New York with 2.4 million, and Georgia with 2 million. Within the next three years Georgia, New York, Canada, and the UK have hundreds of thousands of square feet of soundstage space being constructed. Other jurisdictions are also planning large film studio projects to be completed within the next three years including Arkansas, Illinois, Louisiana, Massachusetts, Michigan, New Jersey, New Mexico, Tennessee, Texas, Australia, Ghana, and Ireland.”

By: David Robb

Continue Reading at deadline.com

Arizona Tax Credit Allows Local Filmmaker To Bring His ‘Mensch’ Home

(jewishaz.com)

 

Movies were always going to be part of David Ethan Shapiro’s future.

At 8 years old, the Arizona native was already writing screenplays. A few years later, as the student body president at Chaparral High School, he appropriated the student government ad space during morning announcements to make little movies — he had a captive audience, after all.

“They steadily became less ads and more full-blown short films,” Shapiro told Jewish News. “Some of the teachers weren’t into it, but others were fans and encouraged me to pursue filmmaking.”

The encouragement worked.

After graduating from New York University Tisch School of the Arts, where he studied movies, Shapiro moved to Los Angeles and started making them.

He was the lead producer on, “Come Swim,” a short film that premiered at Cannes and Sundance film festivals and was a semifinalist for an Oscar in the Best Live Action Short category. Shapiro also executive produced and co-wrote “Shadow People,” a feature-length film being produced by Margot Hand and Nat Wolff.

Hollywood is working out for him, but he doesn’t want to live in Los Angeles forever. He’s grateful that the last couple of years living through a pandemic proved to the industry that there can be flexibility in where the business happens.

Thanks to Arizona’s new film tax credit, Shapiro is also grateful to have the opportunity to bring the film business he loves back home.

Starting in 2023, the Arizona Motion Picture Production Program will offer tax credits to qualified film, television and commercial productions. The catch is that they must primarily be filmed in the state.

That’s a given for Shapiro, who has never forgotten a certain piece of advice from one of his first mentors.

He was told, “Make your early work in your hometown because you will need every favor you can get.”

Shapiro has already opened a production office in Scottsdale and will be ready to start shooting his new film and passion project, “The Mensch,” in January 2023.

The story follows one night in the life of a young and ambitious rabbi when everything suddenly goes wrong for him. Both drama and comedy unfold as he realizes he’s lost his temple’s prized Torah — one that was smuggled out of Nazi Germany — and joins forces with his most loyal congregant to search for it. On this night, he has to face up to his past and start preparing for his future.

“Maybe by the end of the night, this young guy will become the rabbi that the temple needs,” Shapiro said.

Shapiro described the tale as a comedy with a dramatic backbone and said the heart of the film is coming to understand the day in, day out life of a rabbi and his struggles.

To help flesh that out, Shapiro called on the services of Beth Tefillah Rabbi Pinchas Allouche.

“I told him [Allouche] the movie’s about someone who makes a lot of mistakes and has a lot of setbacks — but he’s trying,” explained Shapiro. “I told him the title is ‘The Mensch,’ and he said, ‘that’s what a mensch is.’”

Allouche also met with Jon Rudnitsky, the actor and comedian playing the young rabbi, and gave him some advice from a real-life rabbi.

Allouche said he and Rudnitsky connected quickly and genuinely, in part, because of their similar personalities.

“Rabbis and comedians, believe it or not, have a lot in common,” Allouche said. “In essence, a comedian tries to connect to the layers beneath the externalities of life and, in a way, make fun of them. Rabbis also try to connect, not to make fun of them but to understand them and find a pathway to them.”

Both rabbis and comedians work to understand people, though, for different reasons, Allouche said.

“Comedians have to understand people to know what tickles them and we rabbis have to understand how to help them, and we spoke that language quite a bit.”

Kori Schwarz, an Arizona native and University of Texas at Austin student, is an intern on the project. She’s excited about the opportunity the tax credit represents for more films to be made in her state.

“I am hoping the tax credit will motivate more filmmakers to utilize what Arizona has to offer and I would love to be a part of that,” she said, via email.

She is also Jewish and said she feels naturally connected to the film.

“Growing up, I have always felt passionate about my Jewish identity, so I am excited that I can be involved with something so relevant to my personal life.”

The movie is inspired by Shapiro’s own experience growing up in a Conservative Jewish family in Arizona and attending Har Zion Congregation. (Har Zion combined with Congregation Or Chadash to become Congregation Or Tzion in 2014.)

Though he attended services and became a bar mitzvah, Shapiro said, “as a child, you can’t help but tune religion out. It felt like a chore. But as I grew up, it became more and more a part of my cultural identity.”

As a student at NYU, he took formative courses in Jewish ethics and Jewish history. He studied his family tree. “When I look, there are people there who were exterminated and starved,” he said.

“If the world identifies you as a Jew, you have that realization. So, with ‘The Mensch,’ my hope is to make a movie about conversations that Jewish Americans have when they’re alone,” he said.

A movie about a rabbi felt inevitable.

“I’ve always felt that if I weren’t a filmmaker, I’d have made a good rabbi. People have always said that to me,” Shapiro said.

Jonah Platt, Shapiro’s partner and one of the producers on the film, said he’s happy to support a project with authentic representation and a vision that is deeply personal.

“I see a real dearth of contemporary Jewish storytelling on screen,” Platt said. Most films with Jewish content are about the Holocaust, documentaries or something “schlocky with people saying, ‘Oy vey!’ I’m so sick of that.”

“The Mensch,” however, is not simply a niche film. “It’s a unique story, a Jewish story, but whatever religion you are, you’ll enjoy the story and the characters,” Platt said.

He’s from L.A. but is excited to be shooting the film in Arizona and providing the audience “a unique look for a film — something they haven’t seen a million times.”

Shapiro, too, is excited for people to see an authentic portrayal of Scottsdale and Phoenix.

“At NYU, everyone thought I lived in the wild west so it’s good to be able to represent the real Arizona in our film,” he said. “It’s changed a lot since I was growing up here. There’s more of a bustling arts scene now and I hope to be at the forefront of building on that with film here.”

He also feels good that with “The Mensch,” his first film in Arizona, he’s delivering a positive message to a world that could really use it.

“People had a hard time the last couple of years,” Shapiro said. “‘The Mensch’ is about someone who keeps getting kicked in the mouth by life but his values win out in the end. It’s food for the soul.” JN

By: Shannon Levitt

Continue Reading at jewishaz.com

Sask. Government Commits $7.5M More to Film and TV Production

(cbc.ca)

Grant increased from $2M to $17.5M in just 1 year.

The Saskatchewan government’s is further boosting the film and television industry with an additional $7.5 million for Creative Saskatchewan’s production grant.

In the 2022-23 budget, the grant was increased from $2 million to $10 million. The additional $7.5 million, announced Thursday, puts the total commitment to the grant at $17.5 million for this year alone.

Minister of Culture Laura Ross made the announcement at the John Hopkins Regina Soundstage.

Ross said 13 projects received a portion of the initial $10-million grant.

“We know this additional investment of $7.5 million will continue this momentum, help grow our labour force, increase tourism, and support our arts and cultural sectors alongside so many other important industries.”

In August, Creative Saskatchewan and the government announced the television series King of Killersreceived $8 million of the $10 million available in the grant. It was allowed to surpass the $5-million funding threshold because the project was deemed to have a “significant impact to the local economy.”

“An investment of this calibre is estimated to result in approximately $32 million in economic activity for Saskatchewan,” said Erin Dean, CEO of Creative Saskatchewan. 

“This includes significant opportunities for Saskatchewan’s hospitality and services sector. Productions need accommodations, food and beverage services, costumes, props, skilled trades labour, legal and accounting support, and so much more.”

Ross said the province decided to up the grant because of high demand.

She said the total was allocated in just four months and that Creative Saskatchewan made the case that additional funding could build momentum and generate economic activity.

Dean said the process for receiving grant money is based on eligibility and “first-come-first-serve.”

She said projects receiving money so far include seven documentary series, a sketch comedy series, two children’s series and two dramatic series.

Dean said productions based outside of the province must partner with a local company to receive funding. 

Filmmaker and principal of Wavelength Entertainment Chris Triffo said the additional money is “just the beginning” for the industry in the province.

“There’s never been a time in my career where there’s been such a hunger for content and any jurisdiction that is open for business will get some of that content and some of that capital,” Triffo said.

Triffo said the industry needs to build its workforce in the province, but that continued investment could do so quickly.

“The hope is that there will be 140 to 150 jobs that are created throughout the year and then every year after that it should start doubling and ideally we can get into the thousands,” Triffo said.

“Some of the other jurisdictions have [40,000 to 200,000] that are working and we hope as the government continues to support the industry that we will have more and more workforce here.”

‘The future looks great,’ filmmaker says

The provincial government decided to scrap the old film employment tax credit, which provided up to 55 per cent of the labour costs in film and video productions, in 2012.

The decision forced the majority of those in the industry in the province to move to other jurisdictions.

A study conducted by the SaskFilm and the Saskatchewan Chamber of Commerce found that from 1998 to 2012, the film industry generated more than $500 million in economic activity after government expenses, or more than $36 million in annual economic activity.

A report from 2020 by Statistics Canada showed that the operating revenue generated by film, television and video productions in Saskatchewan in 2007 was $42.2 million. By 2019, the revenue had fallen to $17.2 million.

Ross said the benefit of the grants being provided by the government is the “money all stays here in Saskatchewan, so there isn’t any bleed off.”

Ross said the former program “was not serving the film industry as well as the program today. This is totally different.”

“It is the best time to be in Saskatchewan in the film industry,” Ross said.

Triffo was asked about the decision to eliminate the tax credit a decade ago and said he preferred to look forward.

“Nothing that can be gained looking back at that. Today is a new day and the future looks great.”

By: Adam Hunter

Continue Reading at cbc.ca

Why 2023 will see Transformation of Filmmaking in Arizona

(azbigmedia.com)

The closing credits for “Daddy Daughter Trip,” a new film produced and directed by comedic actor Rob Schneider include a thank you to Arizona. As Schneider tells it, the generosity of Arizona businesses and people made filmmaking in Arizona and shooting the entire film in the Grand Canyon state a joy.

My company, Good Faith Casting, had the privilege of casting for “Daddy Daughter Trip.” After 10 years as a casting director, I’ve witnessed amazing talent in Arizona. Sadly, I’ve also seen some Arizona actors move to California for more opportunities or shuttle between the states. That’s why I’m looking forward to a new program that takes effect January, 1, 2023.

The Arizona Motion Picture Production Program will provide film and TV tax incentives up to $75 million a year in 2023, $100 million in 2024, and $125 million in 2025 and each year after. Qualified productions that spend up to $10 million can get 15% tax credit while productions that spend $10 million to $35 million will get 17.5%. Productions that spend more than $20 million are eligible for 20% tax credit. The program also provides an additional 2.5% credit for labor costs involving positions filled by Arizona residents.

To support the coming boom in film and TV production, the Arizona Commerce Authority has partnered with five community colleges to offer a production assistant certification program provided by the Arizona Production Association. Over the next five years, more than 2,000 production assistants are expected to be trained. The Arizona Commerce Authority is also working with the Navajo Nation to promote it as a film destination.

The goal of the tax credit program is to create long-term economic benefits to the state. Arizona lawmakers approved the tax credit bill in order to “develop a substantial motion picture production industry workforce and encourage major capital investment in qualified production facilities in this state”.

The commitment to growth should excite all of us. The program will provide more exposure for local businesses as we saw with Daddy Daughter Trip, which highlighted Bashas’ Grocery and Changing Hands Bookstore and attractions like Bearizona and Butterfly Wonderland. Filming also generates extra business for hotels, resorts and restaurants serving industry employees.

Major success won’t happen overnight. Many states have been offering tax incentives for years. But as every Arizonan knows, our state is unique. From the jaw-dropping Grand Canyon, red rocks of Sedona, and Ponderosa Pines of Flagstaff to Saguaro National Park and Kartchner Caverns in the south. From Hoover Dam and Lake Powell in the west to Petrified Forest National Park and Apache-Sitgreaves National Forest in the east. Arizona is a wonderland of cultural, scenic and geological diversity.

Since becoming a state in 1912, thousands of movies, TV shows and commercials have been filmed in Arizona, including the 1963 film, “Lilies of the Field” which earned director and star Sidney Poitier an Academy Award for Best Actor, and 2006’s “Little Miss Sunshine”, which garnered two Academy Awards. The Arizona Motion Picture Production Program requires the film and series’ credits to note that filming took place in Arizona.

Beyond actual filming, the Arizona Motion Picture Production Program requires preproduction, postproduction and editing work to take place in the state if filmed “primarily at a practical location” rather than a production facility. This will boost hiring for Arizona residents and increase rentals for equipment and facilities.

In 2020, Actor-Director-Producer Rob Schneider and his family moved to Arizona and shot Daddy Daughter Trip entirely in the state. It’s a film Schneider calls a love letter to Arizona. As a casting director based in Arizona, I’m thrilled at the tremendous prospects before us.

By: Bella Hibs

Continue Reading at azbigmedia.com