Rebates in place, NYC plays the numbers game

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Hollywood loves New York. Unfortunately, Hollywood has carried on this affair with limited ardor in recent years. New York is high maintenance; Hollywood is, well, a tightwad. Then rebates happened, and now, love is in the air again.

"Initially, there was some pressure to go off to Toronto for cost reasons," director Scott Hicks says of his restaurant-themed romantic comedy remake for Warner Bros. Pictures, "No Reservations," which shot in Brooklyn and Greenwich Village. "But the rebates were the clincher -- no doubt. Without them, I wouldn't have been able to mount such a strong case with the studio. In the end, the differential was marginal and the benefit exponential."

Since New York state got its act together and came up with a 10% rebate system plus a 5% opt-in rebate addition from the city in late 2005, productions like Hicks' have been setting up shop around the state in unprecedented numbers. New Jersey leapt on the bandwagon in 2006 with its own 20% tax credit -- all of the rebates/credits have strict qualifying rules -- which means the bridges, tunnels and streets of the sister states aren't likely to empty out anytime soon.

Of course, not everyone heads to the area for the rebates -- and not everyone is even shooting New York for New York. But enough productions are that each of the naked city's million stories might soon have its own TV series or three-picture deal. Following is The Hollywood Reporter's annual look at how the Empire State, the Big Apple and the Garden State are faring in the never-ending battle of hearts, minds and wallets to entice production and make it stay.

New York City

Numbers ruled in the city of New York in 2006: Records broke -- with 34,178 shooting days, up 10% from the previous year, and 10 pilots shot -- and the tax credit was both extended and expanded, with the city now having $30 million per year to give away through 2011. Katherine Oliver, commissioner of the Mayor's Office of Film, Theatre and Broadcasting, is pleased.

"We're in pretty good shape for the foreseeable future," she says. But Oliver is aware that the city can't compete based solely on rebates. "There's always going to be another territory that has a tax credit that's more attractive. What we really focus on is our basic customer service and really trying to do the best job we can to accommodate production needs when they are in the city."

To that end, the city continues to offer its vendor service program, plus outdoor advertising, to qualifying productions, as well as a digital library of city structures for location managers. And last year, the commissioner's office also took over as the studio contact for movie premiere events, "furthering the philosophy that we are a one-stop shop," Oliver says.

All that's very useful, but the rebates still constitute the tipping point for most penny-pinching studios. Jim Serpico's Apostle production company appears ready to corner the city's TV pilot market; it already has FX's established "Rescue Me" and now is behind both NBC's Brooklyn cop drama "Ft. Pit" and Fox's Mike Figgis-helmed "Canterbury's Law." "Law" is actually shooting in New York -- for Providence, R.I. Without rebates, at least one of those productions wouldn't have happened.

"The rebates helped us plead our case as to why you can do a show in New York as opposed to L.A.," Serpico says. "But if given the ultimatum that we couldn't shoot ('Pit') in New York, we would have chosen not to do it at all."

Of course, that means the streets and the grids can get crowded. NBC's Spike Lee-directed pilot "M.O.N.Y." featured a downtown car-crash scene that filmed on the same day and on the same part of the grid as Universal's "The Bourne Ultimatum." Although it'll probably get edited out, there's a chance that the same wreckage will appear in both productions.

"The busyness of New York has been good, and it has been bad," "Bourne" producer Patrick Crowley says. "The good news is a lot of people are working; there's a really high skill level. But we're in the middle of pilot season, so it's difficult to get equipment and crew."

Perhaps most striking about the "Bourne" project, however, is that it is the exception to the rule: "Bourne" likes New York for New York and won't be claiming any rebates for its 20 days of first unit and 17 days of second.

New York State

Numbers were as big a factor in the Empire State's production surge, but the New York State Governor's Office for Motion Picture and Television Development doesn't release them. Executive director Pat Kaufman nevertheless insists that the state's rebate program "has been an enormous success; we're pulling in tons of production as part of the incentive program, and we continue to -- I believe -- break records."

The numbers that had everyone buzzing late last year came from the New York Production Alliance's assessment of film, TV and commercial production in the state and were researched by Cornell University and the Fiscal Policy Institute. The report attempts to quantify both the direct and indirect impact of production while examining trends and ultimately setting a baseline for future study.

"One of the things that's the hallmark of this industry is there is no centralized data," NYPA vp John Amman says. "This is the first time the industry itself in New York was looked at independently. If we want to make the case for ourselves in Albany and city hall about the importance of the industry, we need to have research like this done."

Using 2003 as a base year, however, the report did come up with specific numbers, some of which Amman says "really threw us back." The NYPA revealed a $10.1 billion direct economic impact from production in the state of New York in that year, while the indirect impact totaled $4.7 billion, and what the study calls "induced" economic impact -- created when workers and business owners "engaged in producing the direct and indirect effects spend their incomes on consumption goods and services" -- tacks on an additional $5.4 billion, resulting in a total of $20.2 billion in economic impact for the state.

"We were glad to find that out," Amman says, "but we were not expecting the number to be the size it was."

"It was a very good exercise," Kaufman says of the study, "because it does help to give a baseline. I now look forward to following this process in the future so we can see how the industry is doing."

Additionally, the state has taken action to staunch the decades-long bleed-out of commercial production from New York with what Kaufman asserts is the first statewide "incentive program specific to commercials." Commercial production companies now will be able to get back 5% of qualified expenses at the end of the year; any increases from one year to the next will then get back 20% of the increase, according to legislation passed in spring 2006. There is a city of New York opt-in augmentation, as with the film and TV rebates, but the city has not
taken the state up on it yet.

Customer service also has played a significant role in Kaufman's office. Chris Coen, producer on Warner Independent Pictures' upcoming remake "Funny Games," encountered a problem with a troublesome neighbor on Long Island in a neighborhood where the crew had to build a temporary dock. "The commissioner came to our rescue," he recalls. "And we had lots of support from different people in the government. It was all quite political."

The state also has kept busy with blockbusters based in the city of New York; any projects dealing with state parks, the Port Authority of New York and New Jersey or the Metropolitan Transit Authority require the state's involvement -- as with portions of "Bourne Ultimatum" and Warners' "I Am Legend."

"Just because so many of these big productions are being drawn into (New York City) doesn't mean that suddenly our phones stop ringing," Kaufman says.

New Jersey

Meanwhile, New Jersey has its own accounting system, and the Garden State is happy to dole out numbers -- though from 2005 (2006 figures aren't available yet). All of the state's statistics show a marked increase in productions and dollars spent -- and that's without a full year of tax credits to account for.

The New Jersey Motion Picture & Television Commission reports that 937 productions shot in the state in 2005, including 92 features and 173 TV series, giving the state its highest production revenue

to date, with $85.5 million in direct expenditures. Film commission associate director Steven Gorelick says he expects the 2006 figures to be "fairly comparable."

That might be an understatement, as Gorelick notes that once New Jersey instituted its 20% tax credit program -- good on above- and below-the-line expenditures, as long as 60% of the budget is spent in the state and filming begins within 150 days of initial approval, and without a stage requirement -- there was an immediate uptick in interest.

"As soon as it went into effect -- boom!" he recalls. "We had a bunch of features." The only real restriction, he notes, is that there's a $10 million annual cap on the program. Additionally, the state offers a loan-guarantee program useful for indie filmmakers who need cash upfront; the state will guarantee 30% of a bank loan taken to finance a movie and up to $1.5 million if 70% of it is shot in the state and if it spends half of its budget there.

Elsewhere, Gorelick believes the state will benefit in the long run from the relocation of equipment house Arri CSC to Secaucus. "We now have the world's largest camera- and lighting-supplies company right here," he says, which means those looking to utilize the tax credit can pick up some of their equipment without the hassle of New York traffic.

New Jersey can boast productions such as Picturehouse's "Gracie," produced by (and starring) Andrew and Elisabeth Shue, and New Line's "Be Kind, Rewind" from Michel Gondry, and it has a consistent fan in actor-producer Queen Latifah, whose Flavor Unit Entertainment shot VH1 and BET's "Wifey" series, as well as the upcoming feature film "Perfect Christmas" in New Jersey. Nonetheless, it often remains -- at least in its northernmost corners -- a secondary set for New York productions, as with "Legend" (the film's special effects unit set up at the Bayonne Military Ocean Terminal).

Ultimately, the blending of New Jersey and New York doesn't seem to bother Gorelick. "At the location film expo, we're often located right next to (the New York booth), and we joke that we should get a cutout of the George Washington Bridge and plaster it between the booths," he says. "It's a very connected industry. People could be shooting entirely in New Jersey, but in industry parlance, they say, 'It's a New York shoot.'"
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