Trying to fend off the states and foreign countries that are aggressively luring the entertainment biz away from its birthplace, California launched its own $100 million film tax credit in 2009.
So why hasn't runaway production been stopped in its tracks?
Producers say the Golden State's program is simply too limited and unreliable to compete with hungry upstarts like Louisiana or New Mexico.
For starters, California is the only state that allocates its funds by lottery, held every June since 2009. That makes it a bigger gamble for producers who need certainty when writing budgets.
“You can't count on California's lottery, and frankly, that's paralyzing,” said Sarah Aubrey, a producer of the recently released war movie “Lone Survivor,” which was shot in New Mexico. “We didn't scout locations in California, because when we were initially looking at places to shoot the movie, we knew we were going to have to be aggressive about the budget. We wanted to put everything on screen, so from the outset we were looking for a place with a rebate so we could have extra funds to use for production.”
The dollar amount available also isn't enough to meet demand in the industry's home state. On June 1, 2012, for example, 322 productions applied for California's incentive. The first 27 drawn in the lottery ate up the fiscal year's $100 million.
Amy Lemisch, executive director of the California Film Commission, which administers the incentive program, understands why it's a problem.
“Productions need to plan in advance, and they need the certainty that the incentives are going to be available,” Lemisch acknowledged. “Unfortunately, with our finite funding and this very high demand, the lottery is the only solution we have right now to allocate the credits equitably. It prevents any one applicant from getting a disproportionate amount of credits, and because the demand so far exceeds the supply, it's really the most fair and transparent way to allocate those credits.”
The fact that California's program comes up for legislative renewal every few years also adds to producer uncertainty.
To be sure, there were other good reasons why “Lone Survivor” was filmed in New Mexico. Mountains that closely resembled the movie's Afghanistan setting and proximity to an Air Force base that cooperated with the production were key attractions. But make no mistake: Sante Fe's incentives, which shaved about $4.5 million off the almost $40 million movie's bottom line, were a crucial element.
“It's just a financial reality,” Aubrey said. “It's kind of brass tacks. We would all rather sleep in our own beds at night. It's really difficult for our families with kids to travel out of town for work. So we would much rather be working in Los Angeles, but it is very hard.”
And harder if you're making a more expensive movie. Films with budgets of more than $75 million, like network TV shows, do not qualify for California's incentive.
As a result, Disney plans to shoot the next set of “Star Wars” pictures in England and James Cameron is essentially taking up residence in New Zealand to make three “Avatar” sequels.
When asked if he filmed his most recent feature, “Oldboy,” in New Orleans because he had done two documentaries on the beleaguered city, producer-director Spike Lee unequivocally stated “No, the only reason we shot there is because the state of Louisiana has the biggest tax rebate and it's cheaper to shoot there.
“People have left L.A. and moved to New Orleans-Baton Rouge because there is no work here anymore,” Lee added. “Everything is being shot in Louisiana.”
Smaller-budgeted indie films, which do qualify for the California incentive, also increasingly use the credits as collateral to help finance their productions from the start. If they don't make the cut here, they either head to other jurisdictions or don't get made.
For bigger studio movies, incentives are now factored in from the start.
“From Disney's perspective, the value of the incentives is a direct reduction to our production costs,” said MaryAnn Hughes, the studio's vice-president of film and television production planning. “Which is why we're always looking for the certainty that we'll be able to monetize those incentives before we greenlight the picture.”
Disney's latest live-action feature, “Saving Mr. Banks,” was shot all but one day in Southern California. Most of it had to be, since the story of the creation of the “Mary Poppins” movie was mostly set in Hollywood, Burbank and Anaheim. There are a number of flashbacks to rural Australia in the movie, however, and the studio considered filming those scenes Down Under.
But then “Mr. Banks” qualified for the California incentive and went to Simi Valley instead.
“We were put on a wait list,” the $35 million production's director, John Lee Hancock, explained. “What normally happens with a movie, if you didn't have Disneyland and Disney Studios in it, if it were put on the wait list and wasn't sure it was getting that money, it would go elsewhere.”
Television producer Shawn Ryan, an L.A. production advocate who's made “The Shield,” “The Unit” and “Lie to Me” here, reckoned that there were three ways now to keep nonincentivized network shows in Southern California: Simple location necessity, like the pilot for a “Beverly Hills Cop” series he recently produced; if you're overseeing multiple programs, or if the show wants a particular star who has enough clout to demand they work close to home.
Barring that, even a local booster like Ryan acknowledges that it's often easier to shoot out of state.
“Chicago, San Diego and Hawaii really bent over backwards to make it work for us,” Ryan said of the locales where his series “The Chicago Code,” “Terriers” and “Last Resort” were made.
“When we did ‘Chicago Code,' they didn't have a network TV show filming in the city,” Ryan noted. “They were like, ‘Hey, you want to use the El trains? We're gonna shut down the El train for you, at no cost to you.' They closed down streets at no cost. ... It was easier to get some of that stuff done. They wanted that production, had determined that that was valuable from an employment prospect. So the city of Chicago made things happen with an ease and affordability that you don't always see in Los Angeles.”