Arts & Entertainment

New York's film, TV incentives could tax L.A.'s economy

Tax CreditsEntertainmentPoliticsTelevisionFinance

IS THIS city poised to take a bite out of Hollywood's bread and butter?

A dramatically expanded state tax credit for film and television productions has made New York a more appealing shooting locale than ever, bringing a wave of projects into the city this summer. Barring an actors strike, local soundstages expect to have more demand than they can fill in the coming months.

"We've had an onslaught of calls," said Douglas C. Steiner, chairman of Steiner Studios, a sprawling production facility at the Brooklyn Navy Yard.

It's a remarkable shift from just five years ago, when the entertainment industry largely steered clear of New York because of the high costs and logistical hassles involved with shooting here. But aggressive efforts by local and state officials have made the region more production-friendly -- including a tax credit adopted in 2004.

In April, Gov. David Paterson signed a bill that boosted the tax credit on below-the-line expenses for qualified productions to 30%, up from 10%. Television series and movies filmed in New York City are eligible for an additional 5% rebate. (Below-the-line expenses are generally the costs beyond those of the cast, writer, producer, director, stunts and story rights.)

The lucrative incentives immediately got the attention of production executives at major Hollywood studios.

"It's having a huge impact right now," said Jim Sharp, executive vice president of television production for 20th Century Fox Television, which decided to produce its new ABC show, "Life on Mars," at the Kaufman Astoria Studios in Queens. "If you try and lock in a soundstage facility, there are people standing in line. You better not blink, or you're going to miss an opportunity."

Unlike about 40 other states, California does not offer a tax credit program to keep its signature industry at home. And it now faces increasing competition not just from New York but also from states such as Michigan, Mississippi and Georgia, which have recently adopted incentive programs.

Gov. Arnold Schwarzenegger supports the idea of offering more than $100 million worth of tax credits to keep production in California but has been unable to persuade the state Legislature to adopt such incentives. This year, with the state facing an estimated $15.2-billion hole in its next budget, the governor has yet to propose legislation to stem runaway production.

New York officials tout their expanded program not as an attack on California but rather as a way of leveling the playing field with nearby states such as Connecticut and Massachusetts, which dangled new tax incentives before the industry in the last few years, siphoning away an estimated $750 million from the New York economy.

"Projects that were written for New York and should have been in New York were going to our neighbors," said Pat Swinney Kaufman, executive director of the Governor's Office for Motion Picture and Television Development.

But New York's move has caused ripples of anxiety in Los Angeles, which has lost much of its homegrown industry to Canada and other more affordable regions in the last decade, along with thousands of jobs.

Feature films make up the bulk of the so-called runaway production. The number of film production days shot on location in Los Angeles has plummeted nearly 40% since 1997, according to figures from FilmL.A. Inc., a nonprofit group that handles film permits.

Helping to offset the decline has been a surge in TV production. But union officials, who represent below-the-line workers, such as technicians and stylists, fret that New York's beefed-up financial incentives will now lure away that work as well.

They're most alarmed by ABC Studios' decision this month to decamp the series "Ugly Betty" from Los Angeles and move it to New York for its third season because of the tax credit program.

Several of next season's high-profile new shows are following suit. Production of the detective drama "Life on Mars" was going to take place in Los Angeles, but a change in show-runners allowed it to move to New York.

Fox's much-anticipated supernatural thriller "Fringe" will also be done in New York after Warner Bros., the studio producing the series, concluded that the tax credits made it more appealing than Toronto. And NBC's "Kings," a modern-day David-and-Goliath story, will use Gotham as a backdrop because of the financial incentives.

In addition, Hollywood studios have told the city to expect a slew of feature films later this year, said Katherine Oliver, commissioner of the Mayor's Office of Film, Theatre & Broadcasting.

The prospect of losing more productions to New York has exacerbated the worries of Los Angeles-based crew members, who are still feeling the aftershocks of a 100-day writers strike that largely froze production on both coasts earlier this season.

"Television is really the lifeblood of the below-the-line economy in Hollywood, so if we start losing TV series to other states, then obviously it's going to create more hardship for our members," said Steve Dayan, business agent for Local 399 of the Teamsters, which represents casting directors, location managers and drivers.

Production executives said that they'd like to keep shows in Los Angeles but that the economic climate had forced them to make clear-eyed choices.

"The fact that our country and our company are having a tough year puts a lot of focus on the financial side," Sharp said. "If there's a show that creatively works in Los Angeles or New York, clearly New York has an advantage."

ABC's decision to relocate "Ugly Betty" boosted the pressure on California officials to do more to fend off the new suitors. The show's 150 full-time crew members who lost their jobs took the unusual step of placing an ad in Daily Variety calling on Schwarzenegger and other elected officials to enact incentives to keep production in the state.

"We implore you to do everything in your power to level the playing field and bring our jobs back to California," the crew members wrote.

Still, Los Angeles isn't expected to lose its perch as the leading TV production hub any time soon. The city is home to many stars who prefer to work there, and the proximity gives Hollywood studios more oversight.

On top of that, New York City has just three major soundstages, which limits its capacity to handle large productions. All plan to expand, and city officials are considering licensing additional facilities, such as warehouses and armories, to keep up with the demand.

Alan Suna, chief executive of Silvercup Studios in Queens, said he thought established series would move to New York only if the decision made creative sense, as it did for "Ugly Betty," which is set in New York.

"I don't think anyone in Los Angeles should feel a slightest bit of panic," Suna said. "If they have palm trees in them, don't expect them to be shot here."

"Anyone thinking we're displacing Hollywood is foolhardy," said Hal G. Rosenbluth, president of Kaufman Astoria Studios.

The region more likely to feel the brunt of New York's aggressive tax incentive program is Canada, which has already lost business because of the strong Canadian dollar.

Foreign production spending in British Columbia dropped to $536 million in 2007 from $950 million in 2006, according to the province's Ministry of Tourism, Sport and the Arts.

In an effort to keep up, the province boosted its own tax credit rate last month.

matea.gold@latimes.com

richard.verrier@latimes.com

Times staff writer Marc Lifsher in Sacramento contributed to this report.

Copyright © 2014, Los Angeles Times
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