Another suitor for filmmakers
Tova LAITER has fallen in love with the backers of her new comedy, “Elvis Has Left the Building,” which stars Kim Basinger as a Pink Lady beauty consultant who accidentally kills several Elvis impersonators and ends up on the run from the FBI.
“I’ve never dealt with people so polite and professional,” says Laiter, a producer who began shooting the film Sept. 15 with director Joel (“My Big Fat Greek Wedding”) Zwick. “When we came to scout locations, they arranged for free hotels, restaurants and transportation. When we needed to shoot at the local convention center, we got to use it for five days -- gratis.”
The object of Laiter’s affection isn’t a scrum of German tax fund accountants or a Silicon Valley zillionaire. It’s the state of New Mexico.
A growing number of states offer tax credits as a way to lure Hollywood dollars. But New Mexico actually is investing in movies -- the state has established a fund of $85 million for the purpose. The money comes in the form of no-interest loans, repayable in two to five years. The state will invest as much as $7.5 million in any movie that passes muster with the New Mexico State Investment Council, as long as filmmakers agree to spend most of their shooting schedule in state and hire a crew made up of at least 60% New Mexico residents.
On top of that, New Mexico offers any film, whether financed by the state or not, a 15% tax rebate for every dollar spent locally. It also has a mentor program that offers an eye-popping 50% salary rebate for advancing the skills of crew members who are either hired for the first time or promoted to higher positions. The law also allows filmmakers to get their tax credits immediately, allowing the money to go directly into the film’s production budget.
“I’m not sure we’ve stolen any film production away from Canada yet, but we’re going to try. This is a way for us to compete with them for film dollars,” says Greg Kulka, the alternative investments portfolio manager for the state’s investment council. For a low-budget film such as “Elvis Has Left the Building,” which was put together by London-based Capitol Films, producers of the upcoming “Sylvia,” starring Gwyneth Paltrow, the state’s investment represents a lion’s share of the movie’s $11.5-million budget. But more importantly, by giving the state a big rooting interest in the film’s success, it smooths over the bureaucratic hurdles that often beset filmmakers in less welcoming environs -- hint, hint -- such as Los Angeles.
“It makes your life easier because the state and the film commission are your partners,” says Laiter. “Everything you ask for is doable. When we had our session to qualify for the loan, the governor said, ‘If you have any problems, just call me.’ That’s a pretty nice situation, where you think to yourself, ‘Well, we’ve had so few problems I haven’t had to call the governor yet.’ ”
From pocket to production
When the western “The Missing” filmed in New Mexico this spring, Gov. Bill Richardson invited director Ron Howard, line producer Todd Hallowell and screenwriter Akiva Goldsman to dinner at the governor’s mansion. “Getting a 15% tax credit on every dollar you spend in the state is a very real savings,” says Hallowell. “We ended up getting millions of dollars in credits that we could put up on the screen.”
It’s hard not to contrast New Mexico’s bold outreach program with the baby steps taken in California. The state has been staggered by a vast exodus of filmmaking dollars to Canada, which offers mountains, prairies, big cities and a lopsided exchange rate that has prompted an onslaught of runaway film production.
Unlike New Mexico’s Legislature, which unanimously voted for its no-interest loan scheme, California’s Assembly balked last fall at passing even the most meager of tax incentives. Things are so bad that when Gov. Gray Davis’ office sent a news release last week boasting about new legislative initiatives that would protect the state’s entertainment industry, all the governor could say about combating runaway film production was that the Legislature hadn’t managed to kill the California Film Commission.
The news release neglected to mention what matters most to filmmakers: the Legislature’s gutting of the state’s much-ballyhooed Film California First program. Launched several years ago with a $15-million war chest aimed at reimbursing film companies for shooting on state property, the program got zero funding this year.
Arnold Schwarzenegger, the gubernatorial candidate with the most personal stake in this issue, was widely quoted last week saying that one of the first things he wants to do when he becomes governor “is bring the movie business back to California.” It’s a nice sound bite, but the candidate’s track record makes it look like a dubious promise. As a $30-million movie star, Arnold has plenty of say in where his films shoot. But of the last three movies he’s made, “The 6th Day” was shot in Canada and “Collateral Damage” was filmed primarily in Mexico.
California Film Commission director Karen R. Constine put the best face on things, saying the state still offers the best talent, locations, postproduction services and infrastructure. But she acknowledged that “we still have to compete in a global marketplace.” Levi Strauss, America’s leading bluejeans manufacturer, just closed its last U.S. factory, meaning the next pair of jeans we buy will be made by a low-paid worker far off in the Third World. My sneakers are made in China, my khakis come from Guatemala. Will America’s movies someday be filmed mostly in Canada or some other low-cost tax haven?
“California is just sitting back, assuming that the business that began in California will always be there,” says “Missing’s” Hallowell, who heads this week to Toronto, where he and Howard will film “Cinderella Man,” a boxing drama starring Russell Crowe. “It’s like Pittsburgh assuming they’d always have the steel business -- it isn’t necessarily so.
“I’m like most film people -- I want to sleep in my own bed at night. But if other states start emulating what New Mexico is doing, it could be another nail in the coffin for keeping filmmaking in Los Angeles.”
New Mexico’s lessons
If California ever regains the political will and the economic means to fight for its most high-profile business, it should study how New Mexico engineered its loan plan.
In years past, New Mexico was a popular location for films, especially westerns, but production fell off dramatically when Canada’s seductive exchange rate reared its ugly head. New Mexico has several key advantages that allowed the state to fight back. It is a new or second home for a significant number of industry people, from gaffers and set painters to such actors as Val Kilmer, Gene Hackman and Shirley MacLaine, who has a home north of Santa Fe and is chairwoman of the state’s Film Advisory Board. Having a wealth of in-state talent means New Mexico can supply film producers with nearly three full film crews; both “Elvis” and “The Missing” have crews made up of 80% local residents. But here’s New Mexico’s real advantage: After squirreling away tax revenue from its mining, oil and gas income, the state has a $12-billion endowment known as the Severance Tax Permanent Fund. When the state was looking for a way to woo film production, the fund provided ample capital from which to draw.
Knowing that film investing was fraught with peril, especially for inexperienced outsiders, the state hired veteran entertainment lawyer Peter Dekom to get the program up and running. Dekom came up with the idea of a guaranteed no-interest loan and helped draft the legislation that sailed through the Legislature last year. He plays a key role in reviewing loan requests, assessing the project’s commercial prospects and reviewing the reliability of the film’s financial backing. The state’s investment is insured by a guarantee from a bank or major corporate entity; if the movie makes money, the state is a profit participant.
“Even if the movie loses money, we come out ahead,” says Dekom. “For every dollar spent in New Mexico, the state is getting three or four times that back in the impact from all the jobs created -- and the buying and shopping that goes on. It’s a great deal for New Mexico.”
Kulka says officials from several other states have called, wanting details about the program. He may be new to the movie business, but he already sounds like an old Hollywood pro. “When they ask me what the key to this deal is, my first comment is always make sure you structure it so you can get your money back, or you won’t have a program for long.”
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