NY tax credits save the day

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A Writers Guild of America strike and a gubernatorial scandal each could have put a damper on New York's film and television production community. But did it?

Fugghedaboudit.

In early March, early word from Gov. Spitzer's proposed budget plan had the industry buzzing: It would up the already-generous state initiative (a 10% giveback on qualifying production, which is often coupled with an additional 5% from New York City) to compete with neighboring Connecticut, raise the benefit cap, and cover above-and-below-the-line costs. Then Gov. Spitzer ignominiously became ex-Gov. Spitzer, which could have scotched the whole initiative.

But it took less than a month for the State Assembly to agree on an increase in the incentive, which now ups below-the-line tax rebates for qualifying productions to 30%, increased the program's budget to $575 million, sped up the rebate's waiting period (now just a year rather than two) and extended the program to 2013, with yearly cap increases. Above-the-line rebates are still a pipe dream, but this again makes New York one of the most attractive, and potentially affordable, locales in the country.

"It's not easy to get tax credits," says Steiner Studios head Doug Steiner, who was a force behind the passing of the original incentive, along with Silvercup Studios' Alan Suna. "I think (the state legislature) has tested us and wanted to see results."

Before all this, production in the state and the city had taken a significant downturn during the WGA strike. During the three-month-plus work stoppage that concluded Feb. 12, production in New York City came to a virtual standstill. The impact on the industry was immediate.

"It was very disappointing," says Katherine Oliver, commissioner of the New York City Mayor's Office of Film, Theatre and Broadcasting. "We had a record number of television shows that had started production in the fall."

There were some exceptions: Miramax's "Doubt," starring Philip Seymour Hoffman and Meryl Streep, based on the Pulitzer Prize-winning play, kept its lights on during the strike. But on the television side, most productions wound up in limbo. Oliver's office estimates that New York-based television projects with WGA contracts would have spent $96 million during the work stoppage.

Today, Oliver remains optimistic. "It's starting to pick up," she says. "It looks good for the next few months, which is exciting."

"Duplicity," Tony Gilroy's new corporate spy thriller for Universal starring Clive Owen, Julia Roberts and Paul Giamatti, is one of those films that gives Oliver reason to believe. The project has been shooting throughout the city for weeks, just the sort of lively star vehicle that reminds other locales that New York City remains a shooting destination on par with Hollywood.

"We love shooting in New York," says producer Jennifer Fox. "We don't see it as a challenge at all. New York is the most vibrant and fun city in the world. If you know the city and work with people who know what they're doing, it's very easy."

For all the good cheer, however, the city is dependent on the shifting tides of production. Neighboring states have picked up the pace since New York enacted its rebate system, which means remaining competitive is an ongoing struggle. More than one project has relocated out of town in order to take advantage of those out-of-state benefits.

Take Disney's "Confessions of a Shopaholic": The film takes place in Manhattan and is all about living in Manhattan, but the production is split between Connecticut and New York, with stages in Norwalk. So much for the New York incentive, according to location manager Maria Bierniak: "Connecticut offers a higher tax rebate than New York City," she says. "That was one of the main draws for Disney to come to Connecticut. But you can't fake Madison Avenue very well, so it's worth it to come into the city for those shots."

That kind of talk is enough to put the Mayor's Office into convulsions. "There are some things we can control and some things we can't," says Oliver. "There's always going to be competition with surrounding states offering attractive tax credits. Currency fluctuations are totally out of our hands."

Still, she's quick to add, "New York is not a hard sell."

"Shopaholic" isn't the only production that's decamped for cheaper locales. Picturehouse's "The Women" centers on a quintessentially New York story, but principal photography took place in Massachusetts, which offers a 25% tax credit to local productions.

"By mixing New York and Massachusetts locations, we could make the film for an independent budget," says Picturehouse president Bob Berney. "With our budget, we couldn't shoot the whole thing in New York. We still had to get the key New York locations, like Saks Fifth Avenue."



The multistate strategy that "Shopaholic" and "The Women" used bothers fewer people than significant displacements, like the 2007 ESPN production, "The Bronx Is Burning," which shot all over Connecticut.

"That was pretty embarrassing," says Suna. "It's not that we don't want our surroundings staged. For television shows and films that are about New York City, we believe we should do all we can to have them stay in New York City. We don't want the next 'Seinfeld' or 'NYPD Blue' to be shot somewhere else."

Urban pride aside, shooting in the city poses unavoidable financial strain. "In general, New York is an expensive city for any industry or individual," says ABC Studios' executive vp production Barry Jossen, part of the original team behind HBO's "Sex and the City." "The tax credits currently make it so that it is a viable option, but not ideal by any means."

Tom Sellitti, co-producer for FX's "Rescue Me," disagrees. "A lot of people think it's expensive to shoot here," he says. "Quite honestly, it can be done. You can stay on budget. The tax cut really helps."

He notes that "Rescue Me" nearly shot in Toronto before the decision was made to settle in New York in 2004. "When we were starting, it was still so close to 9/11, that it was just the right vibe and the place to do it at the time," he says. "It seemed a bit false to go to Toronto or somewhere else and try to cheat it."

Indies have also retained a measure of loyalty to the city. Sony Pictures Classics' "The Wackness," an independently produced dramedy starring Ben Kingsley, shot exclusively in New York.



"It needed to be shot in New York City," says producer Brian Udovich. "Crowd control and location coordination were a challenge ... (but) it was a well-organized and straightforward process."

STATE'S RIGHTS
New York's neighbor to the south has also benefited from tax credits -- the state's and its own. Many productions in northern New Jersey have some kind of New York component, which benefits the Garden State every year.

"We've had more films in this part of the state than ever before," says New Jersey Motion Picture and Television Commission associate director Steve Gorelick, noting that 96 productions filmed in his state last year. New Jersey waives sales tax and offers loan guarantees in addition to tax credits for qualifying productions.

"These projects would not have been here if there hadn't been a tax credit," he adds. It's just impossible to attract a substantial amount of filmmaking if you're not competitive in terms of incentive."

A proposal to raise the cap on New Jersey's program was vetoed earlier this year, however, and the end of HBO's "The Sopranos" has left a void on which Gorelick puts a $57-million price tag. And at presstime, the proposed New Jersey budget had managed to leave out any funding at all for the Commission.

But early in 2008, CBS' "The Guiding Light," whose studios reside in Manhattan, recently vowed to shoot exteriors in Peapack, N.J.

"Their philosophy is to get out of the studio more, and we certainly encourage that," says Gorelick.

Film productions also remain constant. New Line's "Be Kind Rewind" shot in Passaic, N.J., while Darren Aronofsky's "The Wrestler" just finished principal production. And to "Wrestler" producer Mark Heyman, shooting in New Jersey was helpful because of the terrain's compact diversity. Additionally, working in northern New Jersey permitted "Wrestler" to use New York crew members without worrying about housing costs.



Nevertheless, the state's incentive remains somewhat problematic because New Jersey has a $10-million cap on the program, which means productions may have to wait to get their money back. "Wherever you fall in line, it can be a significant waiting period, which is a bummer," says Heyman.

SPEED BUMPS
Delays aren't the only flaws in regional tax incentives. Sony Pictures Classics' "Frozen River" (the Grand Jury Prize winner at Sundance) was shot entirely in New York state, but it didn't qualify for the credit because the production was too small to use a stage, one of the program's requirements.

"We didn't have enough of a lead time in our budget, which is completely ridiculous," says director Courtney Hunt. "Believe me, it was that small."

In general, most New York productions have greatly benefited from the initiative, but New York state film commissioner Pat Kaufman explains that the goal isn't competition.

"We're not trying to go one-for-one with our neighbors ... but we did feel we had to increase the amount of the incentive a lot," she says. "Many of our neighbors had put it in incentives programs that are much richer than our program. We came to the conclusion that we needed to up the ante a little bit."

While small productions like "Frozen River" might have issues meeting criteria, other New York state productions, including Warner Independent's "Funny Games," had no problems in that regard, and the check is in the mail.

"Payment seems to be going according to plan," says producer Chris Coen, who says the annoyance for him and German-based director Michael Haneke was the prevalence of union matters.

"Haneke found the union control very restrictive," says Coen. "I do feel the New York state unions have far too much control in the film business. It seemed to me that many of the crew were more interested in worker's rights than the film and the job they were doing."

For better or worse, Coen might be on to something. Even if the new tax incentive passes, the entire entertainment industry faces more problems if AFTRA or SAG decide to strike this summer.

"That's just part of the cycle of labor management contracts," says NYPA's Johnston. "If it happens, it's going to happen."

Film commissioners express similar sentiments. "I think we're all holding our breaths," Kaufman admits. "We're hoping that the two sides can come to an amiable agreement."

Likewise, most producers and their ilk have fingers crossed. "People talk about (a possible strike)," says "Rescue Me's" Sellitti. "It's not something anybody would welcome. Everybody's really happy to be back at work."
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