"We'd get phone calls from practically every studio in America asking us about the tax plan and how it would work," Reitz recalled. "We said: 'Maybe we should become consultants and get paid for this.'"
State tax incentive programs vary, but most are structured knowing that film and TV companies based in California or New York don't have significant tax liabilities in other states. So they either pay a rebate after production is wrapped or allow the credits to be sold.
In Georgia, the tax credit is up to 30% of the money spent on production in the state (20% plus a 10% bonus for promoting the state). That includes not just location filming costs, but money spent on salaries for actors and crews and any costs for building sets. On a movie with a $100-million production budget, the state tax credit could be up to $30 million.
Georgia doesn't pay a rebate, so if studios don't have a tax liability there they must sell the state tax credit to gets its benefit. That reduces the value of the credit to the studio, because it must give a slice of the credit to the buyer and pay a commission to brokers like Reitz. So in the case of a $30-million credit, a studio that decides to sell it would net about $26 million, after broker fees and other costs.
Spending an afternoon with Reitz in his Atlanta office gives an insight into how the process works.
On this day, Reitz was working to sell off a $147,000 chunk of a multimillion-dollar tax credit Viacom was getting for filming a variety of movies and TV shows in Georgia. Viacom owns the BET, MTV and Nickelodeon cable channels as well as Paramount Pictures, which shot the movies "Footloose" and "Flight" in Georgia.
He had jotted down a list of half a dozen potential buyers on a yellow notepad, including an NFL player, a Middle Eastern investor, a Florida-based retailer and an oncologist, who had been referred to him by an accountant friend.
Reitz, wearing bluejeans and resting on a leather sofa next to an antique movie light, called the doctor first.
"Let me tell you what you're going to save," Reitz said, pausing to punch some numbers into his laptop. "I can get you 88 cents on the dollar," he said moments later. "We can knock this down by $11,000."
The oncologist didn't take long to give his answer. He agreed to wire Reitz $81,699. In return, the doctor will get a tax credit voucher with a face value of $92,840, which he can apply toward his 2013 Georgia state income tax bill.
Reitz, meanwhile, will earn a commission of 2%, or $1,857, for his short phone call with the oncologist. As is often the case, he'll split the commission with another broker who worked on the deal. After the commission and other fees, Viacom will end up with $79,842 from the transaction.
"In the early days, people were very skeptical," said Fitzgerald, Reitz's partner. "Now it's an easy sell."
Big deals can be lucrative. The going rate for, say, a $20-million credit would be $17.6 million before fees. Reitz and Fitzgerald would pocket a $200,000 commission, or 1% of the credit amount, and probably share some of that with others who worked on the deal.
Such large paydays are rare, however. A few minutes after his call with the doctor, Reitz got an urgent email from Weizenecker, the entertainment industry attorney. Viacom and TV One, a cable network co-owned by Comcast, had sold off more than $6 million in film tax credits to various investors but had $325,000 remaining. Did he have any buyers?
Reitz scanned his list of buyers and quickly called Weizenecker.
"I can commit them to a contract by tomorrow," said Reitz, whose authoritative voice has led to his being cast as TV judges, policemen and lawyers. "If you can scare up another $400,000 to $500,000 from Viacom, I can sell that just as quickly."
Although tax credits have been blamed for loss of production in California, they have been a boon for Hollywood's financial consultants.
Burbank-based Entertainment Partners, a big payroll-services provider, says it has handled the transfer of more than $200 million in tax credits for 100-plus projects since 2011. Most of the buyers are Fortune 100 companies.