Locations Show: How Colorado Lured the Hallmark Channel

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Actors Daniel Lissing and Erin Krakow waved the Colorado state flag at a June 18 event at the capitol in Denver -- which also attracted the state's governor, John Hickenlooper -- to promote the fact that Hallmark Channel had selected the Rocky Mountain State as the filming location for its two-hour TV movie and series "When Calls the Heart."

As more than 100 film commissions descend on L.A. to sell their tax benefits, the cable network reveals how the Rocky Mountain State pitched itself for the new series "When Calls the Heart."

This story first appeared in the July 19 issue of The Hollywood Reporter magazine.

Film commissions from cities, states and foreign countries are about to converge on the Los Angeles Convention Center for the annual AFCI Locations Show June 27 to 29, presented by the Association of Film Commissions International, with about 3,500 attendees expected.

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More than 100 film commissions -- evenly divided among U.S. cities and states and foreign cities and countries -- will be manning booths. Their objective: Pitch their colorful landscapes, cooperative governments and availability of experienced casts and crews in order to attract movie and TV productions to their locales. But while scenic backgrounds and a supportive infrastructure all are part of the sell, the deciding factor for producers determining where to shoot their projects increasingly is the size and structure of the location's tax subsidies, because such subsidies can help defray overall production costs.

That, for example, is the reason Hallmark Channel has announced that its new series When Calls the Heart will shoot a two-hour movie and at least six one-hour episodes near Telluride, Colo. -- making it the first series to shoot in the state since Father Dowling Mysteries 19 years ago.

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After considering locations in Canada and elsewhere in the U.S., Hallmark, producer Brad Krevoy and their creative team decided Colorado was perfect for the story set in the 19th century, about a wealthy young woman who moves to a Western frontier mining town to teach school and ends up falling in love. But what closed the deal was the fact that Colorado in the past year raised its tax incentives from 10 percent to 20 percent, which translates into a $2.7 million rebate for Hallmark.

"We have a tremendous commitment to original content that is frankly very expensive to produce," says William Abbott, president and CEO of Hallmark Channel, adding, "We want to put the best quality on the screen, but not necessarily in this state. So I would have to think [without incentives] we would have looked elsewhere."

Abbott says the locations and the cooperation from state and local officials also were important. The production wanted to choose a made-in-the-USA site, if that proved feasible. But, he admits, "at the end of the day, financial considerations always are a big piece of the decision-making process."

Krevoy concurs: "For the past 25 years, I've been a road warrior, going around the world looking for the best production locations and tax incentives. When I read about the improved program in Colorado, I realized for a Western, it was the holy grail."

Donald Zuckerman, a former Hollywood producer who is Colorado's film commissioner, says that until his state upped the ante in 2012, it had seen little out-of-state production because "we had a weak incentive system."

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Zuckerman says the reality is that incentives today are "part of the financing. It's fiscally irresponsible to go someplace without incentives."

Few film and TV productions "choose locations anymore without the consideration of incentives," says Joseph Chianese, senior vp taxes, business development and production planning at Entertainment Partners, which carefully monitors the ever-shifting mosaic of incentives offered by both competing states and foreign governments. And, he adds, "Incentives will continue to drive the business."

The payoff can be significant. If Hallmark produces all 13 episodes it has in development in Colorado, it is expected to spend $17 million locally.

Zuckerman says that in addition to the direct expenditures during production, his state also stands to benefit from a boost in tourism down the road. Beyond the U.S., the Hallmark series will play in more than 40 countries, and the impact of that exposure could go on for years.

Still, the battle over incentives continues in legislatures. Two to three years ago, Iowa, Nevada and New Jersey all cut or ended incentive programs. The recession forced many state governments to reduce programs that directly affect their citizens, and, suddenly, giving a helping hand to Hollywood was seen by some government officials as politically risky -- notwithstanding the case that could be made that the long-term economic payback of such incentives usually outweigh the short-term costs.

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This past year, however, Chianese says that despite battles over funding in Alaska, Massachusetts, North Carolina and even Louisiana, in the end they all retained their programs; and states including Minnesota and Texas added new incentives. New York State passed the largest tax incentive program in the U.S. in March, making $420 million available annually for movie and TV productions. That doesn't include $5 million for using labor in certain areas and $25 million for postproduction credits.

Chianese notes that competition also heated up throughout the world with new incentive programs in Colombia, Mauritius and Malaysia, among others. Germany added €10 million a year to its federal film fund, bringing that budget to €70 million (about $92 million). Even the U.K., which pared its program two years ago, added new high-end television and animation incentives for the first time this past year.

There will be lots of gorgeous scenery on display at the competing film commissions' booths at the Locations Show. But as Colorado came to realize, to remain competitive, a state needs more than commanding views and pristine skies. Specific incentives are necessary to clinch the deal. "If somebody wants mountains, we have gorgeous mountains," says Zuckerman, "but they have pretty nice mountains in Alberta and Utah, too. If you want to play the game, you have to step up with something."