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It was a blockbuster moment in an industry of hits and flops.On Tuesday, the California Film Commission released the first list of feature films that qualify for the second year of the state’s improved tax-incentive program. For the first time since...

California film incentives take spotlight, but blockbusters need greenlight

It was a blockbuster moment in an industry of hits and flops.On Tuesday, the California Film Commission released the first list of feature films that qualify for the second year of the state’s improved tax-incentive program. For the first time since...

California film incentives take spotlight, but blockbusters need greenlight

It was a blockbuster moment in an industry of hits and flops.

On Tuesday, the California Film Commission released the first list of feature films that qualify for the second year of the state’s improved tax-incentive program. For the first time since 2009, when California started handing out tax credits to keep movie and TV work in the state, a $100 million-plus production, Disney’s sci-fi fantasy “A Wrinkle in Time,” was among the 28 projects approved for tax credits to shoot here, in the state.

That’s another success for the new program, called 2.0, which in 2015 replaced the $100 million-per-year incentive plan with a plan that raises that credit to $330 million each year.

•RELATED STORY: New production incentives are paying off for local TV projects as program ends first year

After decades of film and TV production fleeing to more generous jurisdictions, local unions report capacity employment and vendors are back in thriving business. Which is exactly what 2.0 was designed to do when the state Legislature passed the bill creating the program.

What could be better? Well ... more really big movies.

Bring on the biggies

While nailing “Wrinkle” is a great thing for California, it’s no $250 million blockbuster like “Captain America: Civil War” and “Batman v Superman: Dawn of Justice,” and will not spend as much in the state as such super-tentpoles would have. That’s because 2.0 caps the amount of a movie’s budget that can earn tax credits at $100 million. It’s an improvement over the previous program’s $75 million cap and has already resulted in more major studio productions getting made here. But it’s a big reason why “Wrinkle” is just its first nine-figure production.

“The largest movies are not being shot in California,” noted Paul Audley, president of FilmL.A., the official film office for the city and county of Los Angeles. “Our tax credit program capping at $100 million still has encouraged the biggest films to seek out states and countries that have no cap, like Great Britain. While the credit is returning extraordinary value and jobs, it is unable to attract the biggest live-action films.”

Atlanta still a magnet

Beside that, even the $330 million pool now available for movie and TV production in California each year isn’t quite the same as, say, Georgia’s unlimited pot to some producers.

“It’s not enough,” says Lucy Fisher, who made her last two movies in the young-adult “Divergent” series in Atlanta. “We live here, everyone hates going on location and having to live like a gypsy in another city. But $330 million is, you know, three big movies. It’s really small compared to some place like Atlanta, which doesn’t even have a cap.”

There’s another thing. Designed to generate what are called below-the-line jobs – such as drivers, set builders, location managers, lighting technicians – 2.0 doesn’t allow expenditures on higher-priced talent like actors, directors and producers to qualify for tax credits.

“It’s the majority of a film,” Gregg Bilson, CEO of the gigantic Sunland props house Independent Studio Services, says of those so-called above-the-line costs. “On an average $100 million film, 80 percent of that is above-the-line. That number will change depending on who’s in it, but even if it’s just 50 percent of the film, if the incentive doesn’t apply to half of a $100 million film, the California incentive compared to other incentives out-of-state and out-of-country is effectively half or less.”

Actor-producer Seth Rogen, who filmed his first “Neighbors” comedy in L.A., found it cheaper to shoot last May’s sequel “Neighbors 2: Sorority Rising” in Atlanta. That was made pre-2.0, but even if Rogen’s film had qualified for the latest California incentive, Rogen would still have gone elsewhere.

“Are they above-the-line tax credits?” Rogen asked. “No? See, then it doesn’t matter. For big movies, it won’t be enough to draw them. Above-the-line is where a lot of the money, especially on these big, giant movies, goes. Half the money, often. That’s the first thing when I ask ‘How come we’re filming in this city?’ ‘Above-the-line tax credits.’ And Georgia does that.”

‘2.0’ better for the long run

Audley pointed out, however, that while both California’s first year of 2.0 and Georgia’s program in the same time period generated about $1.7 billion of production spending in each state, it cost Georgia over twice as much, around $500 million, in incentive payouts. The first fiscal year of 2.0 had to share $100 million with the last year of the previous California program, so it only had $230 million in tax credits to allocate for the same impressive result.

CFC Executive Director Amy Lemisch said having no above-the-line credits helps California.

“We feel that our program is more sustainable because of that,” she explained. “It’s not going to be perfect for every project, but we think that it’s quite competitive.”

Folks who work in California sure think it is. Bilson, who has studio outposts in seven other states, guesstimates that his Sunland operation has seen a 25 percent uptick in movie and TV pilot business since 2.0 started. As noted, it’s been a boon for unions, too.

“[2.0] created a situation where we now have a number of feature films that are just starting to be produced here,” Ed Duffy, vice president and business agent for North Hollywood-based Teamsters Local 399, said. “They are good-sized feature films. Though I think the incentives are going to have trouble attracting back the big tentpole picture, if you have a picture that costs $125 million or something like that, [that] is a pretty healthy picture.”

Bustling Local 44 of the International Alliance of Theatrical Stage Employees in Valley Village represents 5,800 below-the-line workers, the largest such roster in Hollywood. Its business agent, Ed Brown, has a plan for bringing his members even more work.

“They ought to pay those people less money,” Brown suggests to producers of movies with expensive above-the-line talent. “They should be fair and equitable and share the wealth. My members don’t get residual checks. “Every writer, every actor, all the people that are not covered on this, get to take years off and go out to the mailbox and pick up that $100,000 check for a movie they did two years ago. My people don’t get any of that.”

Credits still worth it

Some above-the-liners are getting that message. Writer-director-star Dax Shepard’s big screen reboot of the old TV series “CHiPs” was, at $24 million and change, the highest-budgeted movie made here with the help of 2.0 tax credits.

Of course, it would have been ridiculous to shoot the California Highway Patrol comedy out-of-state, but much stranger things have happened. Both talent flexibility and the tax credits were crucial factors.

“We had a very, very modest budget,” Shepard explained on a panel at the Film in California Conference in Studio City in May. “We had five action set pieces, that’s why this incentive was absolutely imperative. We would have had to have gone to another state in order to get all of these done. And people worked for less because they got to stay in L.A. Honestly, we negotiated deals with different heads of departments that said, ‘If it’s here in L.A., I’ll do it for this, and if I’ve got to go to Louisiana, it’s 600 times that.’”

At the same panel, Warner Bros. executive and one of “CHiPs’” producers Ravi Mehta pointed out,“The incentive helped us a lot also because we’re a very heavy below-the-line movie.”

Our editors found this article on this site using Google and regenerated it for our readers.

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