Hollywood Lines Up for $100 Million in California Tax Credits

Atlas Entertainment's Matthew Rodriguez outside the California Film Commission's office on Hollywood Boulevard
Atlas Entertainment's Matthew Rodriguez outside the California Film Commission's office on Hollywood Boulevard
 Dan Steinberg/Invision for The Hollywood Reporter/AP Images

Matthew Rodriguez brought his lawn chair to Hollywood Boulevard Monday morning.

But he wasn't trying for an early seat at a premiere. Instead, he was decamped in the middle of the ninth floor hallway of an office building, one  one of more than 50 producers, directors (and, this being Hollywood, interns) vying for $100 million in California Film & Television tax credits. 

All of which will be determined by Tuesday, by lottery.

RELATED: California Readies for Annual Rush on $100 Million in Tax Credits

Rodriguez, who works for Atlas Entertainment, arrived at 6 a.m. to submit an application for the upcoming movie Winter’s Discontent, an adult comedy starring Billy Crystal.

“We’re trying just to keep it in California,” Rodriguez says. “It’s important for us to shoot in California—that’s where we’re at.”

However, he was candid about what would happen if the project isn’t one of more than 300 expected to apply that gets funded. “If this doesn’t go,” said Rodriguez, “if this doesn’t happen, we will definitely go out of state. It just doesn’t make economic sense to stay."

 

The production could consider Georgia, which offered $140 million last year — it's one of more than 40 U.S states that offers some kind of incentive program. Louisiana is expected to offer about $230 million, with even more in local incentives as well. Connecticut offers about $118 million — and New York will hand out around $420 million this year.

“Tax credits are really the only tool in our arsenal to keep production here right now,” said California Film Commission executive director Amy Lemisch. ”It is such a battle, and unfortunately, without the incentive, we don’t have really many tools to fight with. Ultimately, it’s a business, and [filmmakers are] doing comparison budgets. If they’re factoring in a big incentive from Louisiana, we need to offer something to keep these productions here."

RELATED: Hollywood Tax Credits Renewed in Fiscal Cliff Deal

Randall Miller, founder of Unclaimed Productions, Inc., went through the lottery process in years’ past with little luck. Like many in the entertainment industry, Miller isn't opposed to relocating his production again, he lined up this year in an effort to be closer to his family and to work in the city he calls home.

“I just think there are better crews here,” Miller says. “It’s not that there are bad crews [elsewhere], it’s just that there’s more of everything here. It would be better to stay.”

The tax credit program has been an annual lottery for five years. Each year, applicants come into the Hollywood Blvd. offices between 9 a.m. and 3 p.m. to apply.

At 3:30 p.m., a lottery is conducted, in which each application is given a number and their project is put in a queue. A California Highway Patrol officer draws the winning numbers at random.

By the following morning, emails are sent out to those chosen. Up to 70 applicants -- out of 300 entrants -- will receive funding; the rest are put on a waiting list.  Since projects drop out, some on the waiting list will get funding -- unless they've moved on.

RELATED: California Governor Jerry Brown Signs $200 Million Tax Credit Extension

Though the lottery is a prayer answered for many potential projects, the program is limited not only in financial terms but also as to what projects can apply. The state has tailored the program to retain TV and movie projects most likely to leave for a better deal elsewhere.

Independent films, for instance, are only eligible with a minimum budget of $1 million. Studio projects are also limited. They are restricted to a maximum budget of $75 million, so tent-pole blockbusters are off-limits.

Equivalent restrictions apply to television projects. All new basic cable series are eligible. Network and pay cable series are ineligible, unless they are an out-of-state production interested in relocating to California.

Steve Dayan, a CFC board member and business agent/organizer for Teamsters Local 399, says greater incentives with fewer restrictions need to be made available for California to maintain the top spot in the film production industry. Otherwise, he fears, the state will be number one only in film premieres and award shows.

“The problem with us is that we’re very shortsighted, and I think we should maybe be looking 10 years ahead,” Dayan says. “We really need to increase the amount of money if we really want to compete."

So which types of projects made the cut, and who won the lottery? Exact data for the number of 2013 applicants will be made available at 4 p.m. Monday, and the identities of the projects that get funding will be released early Tuesday.

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