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California Fights Incentive-Led Production Losses by Susannah Robbins
Crew from 'Alcatraz', a television series produced by J. J. Abrams, sets up in North Beach San Francisco. photo: courtesy SFFC
CALIFORNIA'S SIGNATURE FILM AND
television industry faces unprecedented global competition from most states and many countries which offer aggressive incentives to entice productions to film there.
To counter this trend, California instituted its Film and Television Production Tax Incentive program five years ago, which is effective but underfunded. Indeed, the demand for tax credits far exceeds supply.
However, efforts are currently underway in Sacramento to modify the incentive program and curb the production exodus. Assembly Bill 1839, introduced by Assemblymembers Mike Gatto and Raul Bocanegra, would expand the program and level the playing field for filming in California.
The bill has widespread support and the backing of numerous groups, including the California Film and Television Production Alliance, a coalition of guilds, unions, producers, small businesses and associations that have been fighting to keep our industry afloat in California.
While the modest tax credit program has been successful in retaining some productions, it is not achieving its true potential. As currently structured, the program is limited by both its funding size and the types of productions that can qualify.
This year, only 26 of 497 production projects that applied for the California credit were chosen to receive them with the remaining projects placed on a waiting list. Many of those will undoubtedly seek other locations that provide more attractive incentives.
Over the past four years, an estimated $2 billion in direct production spending has been lost through the flight of those waitlisted film projects to non-California jurisdictions. The fact that these targeted projects leave the state when they are denied a tax credit is a testament to the very real need for a competitive incentive program to retain and grow our iconic California industry.
Another limitation of the current program is that it is only available to films with budgets under $75 million. Last year, 54 films with budgets over $100 million were produced, only one of which was shot entirely in California.
California's media organizations are spending serious advertising dollars to get the 'Film Works' word out. photo: courtesy SFFC
These productions shoot the bulk of their films in states like Louisiana, Georgia, New York, and in Vancouver, Canada, and in other countries, and then just do establishing or exterior shots here for a handful of days. That translates to as much as $5.3 billion in jobs, local spending and taxes for which California could have competed.
In San Francisco, we lost the potential for 46 location filming days, employing an estimated 125 people per day on one of the blockbusters which shot just four days in San Francisco in 2013. This was a loss of an estimated $85 million dollars which could have been spent in the Bay Area.
Without adequate funding, California will continue to lose direct spending and tax revenues from film and television productions that film elsewhere due to more competitive programs. AB 1839 combines the many important and positive elements of the current program with the needed changes that address the program’s limitations.
While the biggest boost to the program is an infusion of additional funding, making the incentive available to a greater number of productions, there are several other aspects of the bill that will help bring back not only filming, but also jobs and economic activity to the state.
To ensure broader distribution of productions around the state, AB 1839 would provide a 5% bump to productions that shoot outside Los Angeles. When productions go on location, they must buy whatever they can’t bring with them from local community businesses. This infuses millions of dollars locally and boosts our state and local tax revenues.
This provision will be most helpful in cities like San Francisco, where producers would love to shoot more if not for the expensive price tag.
In a fabulous location overlooking Chinatown and the Bay Bridge, an 'Alcatraz' camera car is readied for action. photo: courtesy SFFC
Providing an extra 5% to film outside of Los Angeles could be just the key to encourage production managers to base their filming in cities like San Francisco, rather than shooting there for just a handful of days.
This translates into local jobs and local spending, in addition to the boost for tourism that big crew filmmaking and burnishing Bay Area icons often provides.
AB 1839 cleared its first large hurdle when it passed the Assembly nearly unanimously in May. In addition to the principal authors, 70 plus other lawmakers have added their names as coauthors of the bill in support of the effort to help California retain and attract film and television productions, along with the jobs, local spending, and tax revenue they generate.
In addition to the legislative support of the bill, the issue has drawn the attention of thousands of industry workers and supporters. Over 21,000 people have signed a petition calling upon the Legislature to make California competitive again.
Hundreds of them will convene at the Capitol on August 20th to show their support for the industry on a day of mobilization that aims to bring attention to the seriousness of the issue.
You can take action to help ensure the passage of AB 1839 by adding your name to the petition and signing up to make your voice heard at the Capitol on Mobilization Day. Join us to help California have a thriving film industry again.
Click on the links above, comment below or send us your unique "California Cinema Story".
Susannah Robbins is the Director of the San Francisco Film Commission, and production manager and location scout, and can be reached .