The Aloha allure

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A 36-day shoot on Oahu is a sweet proposition by any standards. Richard Vane, executive producer of Universal's upcoming release "Forgetting Sarah Marshall," couldn't be happier with the production's North Shore digs at the Turtle Bay Resort, where much of the comic action takes place. He also knows that until Hawaii increased its production tax credit last year, such a shoot was, for many projects, an impossible dream.

The "romantic disaster movie" is the first narrative feature by a studio to take advantage of Act 88, the enactment of which capped a concerted, years-long campaign by the local industry and film commissions to increase the state's 4% refundable tax credit.

In more than 20 years as a producer, this marks Vane's first time shooting on the islands. But it wasn't for lack of trying. "We budgeted for Hawaii, and we budgeted for Mexico," he says of 1996's "The Phantom." "We eventually shot in Thailand because it was cheaper."

By all accounts, the new 15% rate (for Oahu; 20% for production on the Big Island, Kauai, Lanai, Maui and Molokai) is making a crucial difference for productions large and small. "Act 88 is really designed to move things forward across the board -- television, features, commercials and everything in between," says state film commissioner Donne Dawson, whose Hawaii Film Office administers the new credit.

Dawson noticed a "swift change" in both the level of inquiries and the number of actual applications after the incentive went into effect July 1. Between then and May 1, approximately 25 registrants for the credit indicate total anticipated production expenditures of nearly $102 million. Factoring in the credit and the direct and indirect taxes that the production activities would generate, the state economy would receive that infusion at a cost of less than $2 million.

"This is a very good return on the state's investment," Dawson says.

After years of losing business to states with more aggressive incentive packages, Hawaii now stands well-positioned in the increasingly competitive locations game. Soon after the incentive passed, the state rocketed onto P3/Production Update's list of the top 10 places to shoot, securing the No. 5 slot. And within a month of the act's adoption, Oahu was hosting its first episodes of NBC's "Las Vegas," which cast the Turtle Bay Resort as a casino.

Honolulu Film Office commissioner Walea Constantinau points to those episodes of "Las Vegas," along with "Sarah" and the upcoming documentary "Morning Light," as projects that might have landed elsewhere if not for Act 88.

The tentatively titled "Light," under the executive producing helm of Roy E. Disney and Leslie DeMeuse, will chronicle the recruitment, training and competition of the youngest crew ever to sail the 2,225-mile Transpacific Yacht Race between Los Angeles and Honolulu. Director Mark Monroe will wrap principal photography on the Pacific High Prods. docu at the finale of the 2007 race in July.

The project, which Buena Vista will release theatrically in 2008, is a particular success story for Hawaii, Constantinau says. "They could have based everything in California," she says. "They didn't have to do it here."

Disney, a veteran not only of filmmaking but of competitive sailing, clearly preferred Hawaii to California as a training site for the 15 sailors -- some as young as 18 -- who were handpicked for the team. But, he says, "had it not been for the rebate, it would have been a real question as to whether we should come over here."

His producing partner, DeMeuse, says that Act 88 "was really the key to making our decision because the budget just wasn't going to allow us to do much or any training (in Hawaii)."

When even studio-backed projects must weigh budget considerations, the effect of tax incentives on smaller productions can be profound. And because Act 88 is available to projects with production expenditures as low as $200,000, it "has definitely opened things up," Dawson says.

"People have become more confident," says Brenda Ching, executive director of SAG's Hawaii chapter. "Local filmmakers are looking at it seriously and starting to venture out and have their projects done."

International interest is on the rise, too. LeRoy Jenkins, president of Honolulu-based production company Production Partners, considers the tax credit as being a valuable marketing tool. His company, which focuses on commercials for a largely Japanese clientele, is already seeing the results. For his repeat customers, "budgets are increasing because of the incentive," Jenkins says; at the same time, Hawaii shoots are becoming a reality for new clients.

"We're busier than we've ever been," Jenkins says.

Such feedback must be heartening to the industry leaders who worked for years to overcome legislative resistance to a higher tax credit. "We were fighting against this pervasive sense that Hawaii is such a beautiful place, and we have such a unique look that people are going to come here anyway," Dawson notes.

Beauty has its pull, but affordability is a powerful inducement. At the recent Locations Trade Show, the most prominent feature of the state's booth was not the arrangements of tropical flowers but a five-foot price tag that read, "Save 15%-20% on Your Hawaii Spend." And, Constantinau says, "The document that almost everybody took, without fail, was the summary of the tax incentive."

Key to Act 88's appeal is its simplicity, particularly in comparison with the state's investment tax credit -- known as Act 221 -- which, until July 2006, was the most significant financial incentive for prospective productions. As a money-raising tool for production entities establishing a long-term presence in the state, it has been essential. But Act 221, which provides a dollar-for-dollar tax credit to Hawaiian investors, was not intended for the one-off projects that are integral to the industry. It involves a lengthy, complex process.

Act 88, in contrast, offers "business certainty and an immediacy to the budgeting process for producers," Constantinau says.

"One of the reasons we were pushing for the increased production tax credit is that the investment tax credit is a very complicated process," says Bryan Noon, head of finance for ABC Television. The network's hit series "Lost," going into its fourth season, is a well-established part of the local production industry.

"The easier the process, the more money we get to put in the picture," Noon adds.

"Lost" increasingly has ventured beyond its Hawaii Film Studio headquarters, located near Honolulu, to use other Oahu sites for expanded flashback story lines. "We're spending a lot more time in other parts of the island," Noon says. "The tax incentive helps. It allows us to do bigger and better things."

ABC's pop-culture phenomenon is the highest-profile TV series in production in Hawaii, but it's far from alone. A&E's "Dog the Bounty Hunter" and Discovery Kids' "Flight 29 Down" both shoot on Oahu, as do surfing series "The 808," upcoming from Fox's Fuel TV, and the N's "Beyond the Break," which was developed by TalkStory Prods., a local company that used the investment tax credit. And MTV has picked up two reality series set on Maui: "Living Lahaina" and "Maui Fever."

TV series play an important role in developing infrastructure and a crew base. Ching, who also is chair of the Hawaii Film and Entertainment Board -- a coalition of film commissions, unions and trade associations -- points out that Act 88 was intended not only to bring in productions but also "to stimulate and grow the local film industry."

To that end, Constantinau stresses the need to "get enough work in the pipeline" to encourage private industry to build infrastructure.

Likely to lead the way on that front is a proposed studio complex on Oahu that would significantly increase the state's soundstage capacity. Plans for the tentatively named Kapolei Studios predate Acts 88 and 221, but developer Steve Smith of L.A.-based SMH Partners is pleased that the incentives are in place.

"There's no question that 88, in the current competitive environment, is pretty critical to keeping a studio busy over there at this point," Smith says. "We're bullish on prospects for filming in Hawaii. The problem that they have right now is they don't have the capacity."

Kapolei Studios, which would occupy a 22-acre site on the island's fast-growing southwest corner, would go a long way toward solving that problem. The first phase of construction, which Smith hopes to begin this year, calls for four soundstages. The state-owned Hawaii Film Studio contains only one soundstage, and there are no expansion funds on the horizon.The crew base seems to be less of an immediate issue. Both Disney and Vane found no shortage of skilled locals for their crews. "I had budgeted more people to come from L.A. than it turned out I needed," Vane says.

But Ching points to escalated training programs for the unions and guilds as a first step in meeting the challenge of managed growth.

"We need to make sure our people are trained and that we have the resources," she says.
Having achieved the incentives that make it a competitive player, the 50th state appears poised to stake its claim as a production center.

"This incentive is going to make a huge difference, as the one in New York did," Vane says. "People used to shy away from New York because of how expensive it was to house people and do stuff there. But now, (the state's) going through a boom. And I think Hawaii will go through one, too."
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