Culver City Enacts Tax Incentive to Lure Productions

4:27 PM PST 02/23/2011 by Daniel Miller

The measure is seen as a way to even the competitive playing field for studios in the city, which is home to Sony Pictures Studios and Culver Studios.

The city that bills itself as "The Heart of Screenland" has enacted changes to its tax structure in an effort to attract more film and television production business. On Feb. 8, Culver City suspended a business tax that production companies filming at studios in the city had long been required to pay. The suspension of the tax will last five years.

The measure was approved unanimously at the Feb. 7 City Council meeting and is seen by councilmembers as a way to even the playing field for studios in Culver City that compete for business with production facilities in other Southern California locales and states across the country. Both Sony Pictures Studios and Culver Studios are located in the city, which gained its "Heart of Screenland" motto due to the countless films and television programs filmed there over the years.

"This is the city where Gone With the Wind and The Wizard of Oz were filmed and we see many benefits of the studios succeeding in Culver City," Mayor Christopher Armenta said. "We are aware what is going on regionally -- there was the feeling that the studios (in Culver City) were suffering in terms of competition."

Indeed, a handful of jurisdictions in the area have recently enacted incentive programs or changed their tax structures to spur production. For example, in December the Los Angeles City Council passed an initiative that reduces taxes for production companies filming in the city. And in recent years, states including New Mexico and Georgia have poached business from Southern California by offering tax incentives.

"My biggest competition today is Georgia and all of these states that offer incentives," said James Cella, CEO of Culver Studios. "I think what (the city) did was a positive thing to make Culver Studios more competitive in a very competitive landscape."

Before suspending the tax, Culver City had considered placing a $12,000 annual cap on the tax for production at studio facilities. Los Angeles, for example, maintains a production tax that is capped at $12,495 annually.

Culver City's tax was $1 per $1,000 of the cost of operations for a production. The city had long operated without a cap on the tax, sometimes resulting in bills of $20,000 or more. According to a city staff report, the issue was brought to Culver City's attention when two production companies doing work at a studio in the city disputed the taxes they owed. Though the companies ultimately paid up, they later left the city because of the situation.

Before settling on a five-year suspension of the tax, the city had considered a two-year moratorium, but opted for the longer term in order to better study the potential benefits of the initiative, said Councilman Jeffrey Cooper.

He said that at the end of the five-year period, staff would study the impact of the tax suspension and examine "what difference it has made not only for the studios but for the (city's) ancillary income -- basically from the uptick in production and having these people around our city."

Sony also supports the tax suspension.

"With its historic sound stages and other first-rate facilities, Culver City has much to offer filmmakers, and the tax moratorium will help further distinguish it as one of the premiere filming locations in California," said Gary Martin, president of production administration and studio operations for Sony Pictures Entertainment.

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