Study: Film Aid Costs State

The Detroit News

Michigan paid nearly twice as much money in film incentives as the industry brought into the state the past two years, according to report released Friday by the Senate Fiscal Agency.

The incentives cost taxpayers more than $190,000 per direct full-time job created last year, the report found.

"The nature of the credit and the resulting activity is such that under current (and any realistic) tax rate the state will never be able to make the credit 'pay for itself' from a state revenue standpoint, even when the credit generates additional private activity that would not have otherwise occurred," according to the report.

The study, a compilation of data presented at Senate and House hearings over the past two years, says Michigan spent $137.5 million to generate $80.6 million in private sector activity.

The report didn't shake Gov. Jennifer Granholm's faith in the program.

"We stand by the film incentive program and its ability to create good-paying jobs," spokeswoman Liz Boyd said.

"We're working every day to diversify our economy," she said. "This is a brand-new sector which continues to grow. And we are pleased with what we've seen so far."

The program subsidizes the direct cost of the production of movies and television shows by up to 42 percent.

Since the Legislature passed the incentives, movie and TV filming has been a growing industry in Michigan. It has led to the creation of studios, spawned college programs to teach movie jobs and brought a number of big-name stars to the state. It's also given the national media a positive story to write about a state wracked by job loss and outmigration.

The report analyzed the impact of the film industry incentives on the state budget and does not take into account additional money the movie and TV productions have contributed to local governments and businesses, such as restaurants and hotels.

"I've said all along that any industry that the state decides to pay 42 percent of their costs is going to come to Michigan," said Gary Olson, executive director of the Senate Fiscal Agency. "It doesn't mean there aren't other benefits. Is it worth it? That's up to the people who are elected."

The agency is a nonpartisan government office that analyzes legislation for the Senate.

The film credit was created in 2008 to attract film productions to Michigan. Since then, 105 film projects have been shot in the state.

According to the report of Detroit movie accounting services, in 2009 there were 355 direct full-time jobs created by the tax credit at a cost to taxpayers of $193,000 each. Adding indirect jobs, 1,542 have been created at a cost of $44,000 each.

The number of jobs created was much higher, but because they are temporary, the numbers shrink when converted to equivalent full-time, 12-month jobs.

The film industry does provide a net financial benefit to the private sector, according to the report, but that benefit is less than the net cost of the program to the state.

Michelle Begnoche, communications advisor to the Michigan Film Office, said the industry is still taking root in the state.

"We always knew it would take some time before seeing the benefits seen in other film-friendly states," she said.

State Sen. Nancy Cassis, R-Novi, a longtime critic of the program, said she plans to hold hearings on the report.

"There are better economic alternatives than this film incentive giveaway," Cassis said. "These films are like cotton candy -- they're sweet when they're in your community, but there's no longterm nutrition.

"I think there is a chance to do something before the end of the session. And if not, we will be laying the groundwork for the new administration to review the film policies and get them in line with our revenue."

Republican gubernatorial candidate Rick Snyder is not surprised by the report's findings, spokesman Bill Nowling said.

"This is just a tax incentive that is just not financially feasible over the long term," Nowling said.

Democratic gubernatorial candidate Virg Bernero's campaign could not be reached for comment.

Motown Becomes Movietown

The Wall Street Journal

Michael Imperioli stars as Det. Louis Finch in ABC's new crime drama 'Detroit 1-8-7'

Hollywood has a new favorite location. The Motor City is luring films and TV shows with tax breaks and red-carpet treatment. Was that Demi and Ashton at the Tigers game?

Across the street from a landscape of vacant houses and overgrown front yards, homicide detectives gather to investigate a murder. They analyze clues and debate how best to interrogate the key witnesses. Then, the director yells "Cut!" and everyone heads to a catered lunch of shrimp scampi and beef tenderloin.

The set of the gritty cop show "Detroit 1-8-7" is one of more than 100 film and television productions that have flocked to Michigan in the last two years, the result of generous tax rebates. Producers have spent nearly $350 million in the state so far, a figure expected to reach $650 million by year's end, up from $2 million in 2007, according to the Michigan Film Office. About 80% of these shoots take place in and around this iconic but much-maligned city, sprinkling a little stardust, optimism and controversy along the way.

Workers who used to build cars are learning to build sets. The entertainment sector is "a lifeboat as the auto industry adapts and restructures," says Wayne County Executive Robert A. Ficano.

Signs of activity are everywhere. Hip-looking film-school grads on bicycles run errands in an empty warehouse that once served as a Chrysler distribution center and is now a cavernous 166,000-square-foot production studio for "Detroit 1-8-7." Sets for the show, premiering on ABC Sept. 21, include a city morgue and a homicide unit with cluttered police desks and corkboards covered with mug shots.

The dilapidated Michigan Central Station, once a transportation hub, with marbled floors and Corinthian columns, has served as a symbol of urban ruination for years. It's now a key location for productions including "Transformers 3" and HBO's "Hung." On Tuesday "Hostel: Part III" and "Vamps," a horror-comedy with Sigourney Weaver, both shot in the city's neo-Gothic Masonic Temple. When "Harold and Kumar 3" finished a scene this summer that required turning a downtown street into New York City at Christmas, set designers left the fake subway entrance intact, knowing another production would soon need it.

Want to blow up a building, or burn it down? Detroit is happy to help. Wayne County officials, sitting on countless empty homes and factories, ask only that producers pay for demolition and clean-up. "Stone," a thriller opening Oct. 8 and starring Robert De Niro, Edward Norton and Milla Jovovich, burned two houses to the ground. Location scouts found them on the county's online "land bank," which lists thousands of abandoned properties.

Regional filmmaking has been on the increase for decades, as southern California became more expensive to work in and overexposed on screen. New Mexico, Louisiana, Georgia, New York, Canada and others have wooed the lucrative entertainment business with tax-incentive packages. The revenue and jobs are welcome, and sometimes buttressed by a little brand-building, perhaps attracting tourists or investment.

For Michigan, which by most measures offers the country's steepest rebates, the stakes are higher. It's a shot at redemption, a chance to shrug off wearisome images of high crime, racial turmoil, urban decay—even a bad football team. From Motown Records to Elmore Leonard, the city is rich in cultural legacy. No one expects a return to the glory days when Detroit was a symbol of entrepreneurialism and the automobile business helped make the U.S. the world's greatest economic power. But proponents say any jump-start can lift depressed spirits as well as spur lasting economic improvement.

"Without being too romantic and starry-eyed, this is a dream weaver industry and if storytellers can't bring hope to a region, no one can," says Scott Putman, executive producer/unit production manager on "Hostel: Part III."

The film incentive program offers up to a 42% tax rebate on any in-state expenses from rental cars, housing and food, or the cost of building a soundstage. Louisiana, by contrast, offers up to 35% in its highly popular program. After filming is completed, producers file a tax return, which is audited, and a check is sent out. Producers like to say that every dollar they spend in the state turns into $1.42.

 Movies have their wrap parties and move on, but Detroit is hoping that some of its legions of laid-off auto workers will become skilled crew members who can get steady work. Television shows provide regular employment. Permanent infrastructure can take root: This summer, Los Angeles-based Raleigh Studios broke ground on a $75.8 million studio built on a 22-acre site in nearby Pontiac. It once served as offices for back-office employees at a nearby assembly plant which manufactured GM full-size pickup trucks.

In July, 15.2% of people in the Detroit metropolitan area were unemployed, more than five percentage points higher than the national average, according to the Michigan Department of Energy, Labor and Economic Growth.

Since the tax rebates went into effect in 2008, institutes aimed at retraining laid off auto workers have sprung up. The state's No Worker Left Behind initiative and Trade Adjustment Assistance, a federal program that assists people whose jobs have moved overseas, subsidize tuition for displaced workers to take classes in set carpentry, prosthetic makeup and electrical. So far, the entertainment industry has produced 7,000 production jobs, though many of those are part-time and without benefits.

Initially, producers flew in crew from L.A., but the state offers only a 30% incentive on costs related to out-of-state workers.

"Quite frankly, it has taken them a while to trust us," says Jack Grushko chief operating officer of the Center for Film Studies, which works with the United Auto Workers and other unions to retrain displaced workers.

Murray Mullins, 43, lost his job building axles two years ago and lived off unemployment insurance. Last year he signed up for a class at the Center for Film Studies and landed a set-designer internship on the Pierce Brosnan movie "Salvation Boulevard." "It ain't manufacturing, but the skill sets go together," he says.

Casting offices that once focused on finding models for car shows now locate extras who get paid about $100 a day to fill out a street or stadium. Tiffany Jones, 34, did corporate training videos and auto-show hospitality for Ford Motor Co. before the work dried up. She recently played a cop on "Detroit 1-8-7." "It's not something I ever thought about doing living in Detroit," she says.

Aspiring actor and failed restaurateur Gary Brunner was broke, waiting tables at the Coach Insignia steakhouse on top of the GM Renaissance Center when director Michael Bay came in for a dinner. Ten days later, Mr. Bay offered him a small role in "Transformers 3," says Mr. Brunner, who is 40 years old with slicked-back hair and a gruff baritone voice. The experience makes him feel "like a washed-up prizefighter with another shot at the title."

The rebate has sparked criticism among lawmakers who argue the tax subsidy does not help the state bridge a $500 million budget deficit for fiscal 2011. Upcoming elections could threaten to reduce or even eliminate the incentive. Others argue that the nomadic film industry is not the best way to build stable, long-term growth.

Advocates counter that this argument misses the larger economic impact on small businesses like Just Delicious, whose scones were popular with Clint Eastwood and the crew on the set of "Gran Torino." Or Small Plates, a chic restaurant in downtown Detroit that sees its business spike by 30% each time a production shoots downtown.

"Detroit 1-8-7" is the city's first prime-time network drama, and therefore a possibility to run for many years and provide long-term employment. The show plans to spend $27 million locally on the first 12 episodes, including the cost of building the set, and about $50 million if the series is picked up for a full 22-episode season, producers say. "Everyone feels like there's more at stake than just making a good show," creator Jason Richman says, standing in front of a giant backdrop of the downtown skyline.

The show and others depict the Detroit area as it is, from the Lake St. Clair shoreline in Grosse Pointe to the fabled cruising strip of Woodward Avenue and the old Polish enclave of Hamtramck (now increasingly Middle Eastern and South Asian), blue-collar neighborhoods and burned-out ones.

 Director Tony Goldwyn says his movie "Conviction," with Hilary Swank as a woman in an 18-year battle to get her brother out of prison, could not have been made elsewhere on a $12.5 million budget. But it was the area's aesthetic that sealed the deal. "Our key location is a broken-down poor farm in a bucolic area," Mr. Goldwyn says. The area has "that nice blue-collar feel." Nevertheless the film, which opens Oct. 15, is set in New England.

For the coming movie "The Double," starring Richard Gere, Los Angeles-based location manager Ernest Belding turned a street in Detroit's Harmonie Park into a block in Paris. His team paid storeowners to vacate their businesses, replaced storefronts and street signs with French signs and scoured the state for Peugeots and Citroëns. The movie also made the city a stand-in for Soviet Russia, Switzerland and Washington, D.C.

Of course, Detroit must endure the usual litany of stereotypes. The opening credits of "Detroit 1-8-7" flash images of the GM building, working-class neighborhoods and graffiti. "Detroit, Michigan, birthplace of Motown and once the heart of the automobile industry—now it has one of the highest murder rates in the country," a voice-over intones.

"Everything's falling apart, and it all starts right here in Detroit, the headwaters of a river of failure," says high-school coach turned male prostitute Ray Drecker in the opening minutes of HBO's dark comedy "Hung."

"The city tells a story that's emblematic of the American story," says "Detroit 1-8-7" star Michael Imperioli on a break from playing homicide detective Louis Fitch. "You could just take a camera and drive through the city and you'd have something."

Detroit has mixed feelings about its cinematic allure. The city council protested "Detroit 1-8-7" saying it cast the city in a negative light. Local politicians asked ABC to change the name since "187" is police code (and urban slang) for murder. It didn't help when cops being followed around by a crew from a reality show accidentally shot and killed a 7-year-old girl during a raid, raising questions about whether the camera's presence fed the incident. The city banned camera crews from shadowing police.

Its sky-high vacancy rates are a sensitive issue, too, despite the aggressive demolition program here. "We don't want to send the message that if you need to blow up a house, come to Detroit. That's not the kind of imagery the city needs," says Sommer Woods, the mayor's film, culture and special-events liaison.

A glamorous premiere party for "Detroit 1-8-7" last week at the MGM Grand Detroit hotel and casino let city councilmen hobnob with L.A. celebrities. For a coming episode producers hired a local youth group to play one on TV. The teenagers cleared a vacant lot in a scene's background. The show employs about 200 local cast and crew each day and as many as 146 extras.

"They could've easily portrayed Detroit however they wanted and shot it in Toronto," says Mikey Eckstein, whom producers hired to help relocate actors—a job that includes everything from finding a math tutor and trumpet instructor for Mr. Imperioli's children to finding an apartment that can accommodate large dogs. "I paid off my mortgage before they even started shooting."

Unlike jaded denizens of Los Angeles and New York, Detroiters are enjoying celebrity sightings. Last month, Ashton Kutcher and wife Demi Moore, in town to shoot her new movie "LOL," attended a Tigers game. Around the same time, Ms. Moore and actor Gerard Butler, who was in town shooting "Machine Gun Preacher," were spotted at a local bowling alley. Hugh Jackman stopped by the polar bear exhibit at the Detroit Zoo. "That all helps reshape our image and show people we're turning the corner," says Carrie Jones, director of the Michigan Film Office. Local eateries, car rentals, and Detroit movie accounting services are all seeing an uptick in business.

Driving through the city's historic Corktown district near Rosa Parks Boulevard, Mike Mosallam, an actor and director who moved back to Detroit to head film initiatives for Wayne County, proudly points out the train station and Slows Bar BQ, a popular spot with the film and TV set.

Even with the burgeoning new sector, the landscape of dilapidated buildings and shuttered storefronts looks bleak. "We're done being sad," he says. "We're trying to build a new industry."

He can only hope the cameras will keep on rolling. "Hollywood follows the money," says Mr. Belding, the location manager. "If Ohio had a 50% rebate, we'd all head 100 miles south and find Paris there."

'Touchback' Continues Hollywood's Economic Boost to West Michigan

mLive

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 'Touchback' is being filmed at the high school football field in Coopersville, Michigan

 

From caterers to port-a-potty companies, crane operators to grocery store directors, area businesses say film productions are pumping money into the local economy and keeping them busy.

The Family Fare grocery store in Coopersville, 1181 W. Randall St., was raided Tuesday by "Touchback" production members filming scenes at the area high school football stadium.

"They wiped us out of all the ice," store director Mike Farrell said.

In one day, the production team spent a couple thousand dollars on ice, fruit, vegetables and refreshments, Farrell said. The store even had to go to  its Allendale affiliate to replenish its stock of mini-Gatorade bottles.

Producer Lisa Kearns said the production will spend millions in the area on everything from gasoline and hotel rooms to restaurants and entertainment.

"This becomes your home (while filming)," Kearns said, adding the area and its residents have been "fabulous."

These temporary residents are hiring, too.

Around 75 percent of "Touchback" hires were local or in-state, Kearns said.

The state film industry put 8,000 people to work in 2009, said Rick Hert, commissioner of the West Michigan Film Office, and he expects that figure to grow this year.
Related content
• More coverage of 'Touchback' filming in Coopersville

Hundreds are being employed in Grand Rapids, many of whom would otherwise be collecting unemployment, Hert said.

"We're building an industry, really from scratch," he said. "We've got enough going on that people are remaining active."

Count Ed de Jong in that group. The Grand Rapids camera and crane operator has worked on a handful of movies and is pulling 12-hour days on the "Touchback" set, shooting interviews for the DVD bonus features.

His 27-foot camera crane, which he says is the region's longest, is being used to film a major scene in the film.

De Jong defends the tax incentives worth up to 42 percent of a film's production costs, which critics claim are too generous and mainly create temporary jobs.

"The economic value to the state is hard to measure, but it's huge," de Jong said. "Do you want a percentage of $400 million in production expenses, or nothing?"

The industry has a substantial ripple effect on other sectors of the local economy, said Ken Droz, Michigan Film Office communications consultant.

"Businesses are benefiting," he said.

Michigan's budding film industry has "definitely helped" Plummer's Disposal Service, said president Nick Plummer.

By the numbers

Nearly $400 million: Filming expenditures in-state since tax incentives began in April 2008

69 million: Estimated tax credit program costs to state for projects completed in 2009, not counting infrastructure tax credits

8,000: Michigan film industry jobs in 2009

Sources: Michigan Film Office, Associated Press

The Byron Center business is providing portable bathrooms for both "Touchback" and "30 Minutes or Less," filming in Grand Rapids. It also worked on a couple of Curtis "50 Cent" Jackson's productions here.

"It's been really good for us," Plummer said.

When "30 Minutes or Less" hits the silver screen, area moviegoers may recognize the Brass Works Building, 648 Monroe Ave. NW, in the backdrop of the Ben Stiller-produced movie. Scenes were filmed on the roof and in hallways and a tenant's office last week.

The business center's owners, CWD Real Estate, were paid a fee for its use. Nick Koster, vice president of operations, declined to reveal the amount, but said it was an opportunity to earn revenue and generate buzz for the site.

"You want to have your building known and noticed," Koster said.

The tax rebate got Kearns' attention, but West Michigan's skilled, growing crew base has her considering the area for more productions.

"It keeps us coming back," Kearns said.

Pontiac Movie Studio Moves Past the Idea Stage

The Detroit Free Press

Linden Nelson, A. Alfred Taubman, John Rakolta and others from Raleigh Studios will break ground Tuesday on an $80-million movie studio at a former Pontiac truck plant.

Two years after Gov. Jennifer Granholm and state leaders introduced the nation's most lucrative film incentives, Raleigh Michigan Studios is among the first to have brick and mortar results.

The involvement in the project of Raleigh and William Morris Endeavor Entertainment -- which have extensive television experience -- has led to optimism that Michigan could attract more TV projects.

"They are stamps of credibility," said Chris Baum, head of Film Detroit, which markets the region for production work. "We think this will be a positive step to make us a legitimate film center."

Carrie Jones, the incoming head of Michigan's Film Office, said: "This puts us in a better position to land more TV series."

The studio -- at a shuttered General Motors plant on the Center Point campus -- was the brainchild of Nelson, who runs a local development firm.

Besides remodeling the existing plant, the partnership will build a 200,000-square-foot building and hire 3,000 people within three years.

Nelson is chairman and CEO of the studio and pulled together the team.

Putting together a movie studio in the wake of the 2008 global credit meltdown was daunting, Taubman said.

"It's been the most difficult deal I have ever done," said the 86-year-old billionaire developer, who marveled at the 300-plus documents associated with it.
There at the beginning

The Raleigh studio was among three Granholm talked about when she first broached the idea of Michigan becoming a center for filmmaking.

One in Allen Park is still evolving with Detroiter Jimmy Lifton as a tenant. The other, in Detroit, didn't materialize.

Nelson's group won tax incentives from the state and from federal recovery zone facility bonds. Included was $28 million in bonds from the Oakland County Economic Development Corp.

Since April 2008, when the incentives began, 96 movie or TV productions have been filmed in the state. Michigan allows companies to file for refundable tax credits worth up to 42% of a film's production costs. That means if the tax credit is more than the tax bill, the company gets the difference in cash from the state.

Critics say the incentives are so lucrative that the state can never break even. Promoters counter that projects like Raleigh's will lead to more investments with long-term benefits.

"This will be the catalyst for a lot of jobs, ones that will hopefully keep more young people here," Nelson said.

Construction on the sprawling studio should be complete by early 2011, Nelson said.

When the studio is completed, more post-production work will be done here.

Film Commissioner Bringing Hollywood's Movie Magic to Michigan

The Detroit Free Press

 

She has been described as the hardest-working woman in show business. For Janet Lockwood, being Michigan's film commissioner means 12-hour days scrutinizing dozens of tax-credit applications from production companies, dealing with difficult producers and answering a constant deluge of e-mails from everyone from Hollywood studio executives to mothers hoping to turn their children into movie stars.

The veteran director of Michigan's Film Office usually doesn't leave her Lansing office until 8 p.m. or 9 p.m. each day and is so busy that she rarely has time to go to lunch. To get some exercise, she forces herself to walk around her office.

"I have no life," says the former stage actor. "I haven't had a life since April 8, 2008."

That's the date when Michigan passed the most-generous film tax incentives in the country, instantly catapulting the state from an extra in the movie production business into a starring role. For Lockwood, the transformation was like going from 20 m.p.h. to 200.

But this Michigander says she wouldn't have it any other way. The state's 42% movie tax credits have created more than 3,000 temporary jobs, helping people save their homes and cars. "It's really meant a lot," Lockwood says. "The movie industry for the most part makes people smile and Lord knows Michigan could use more smiles."

Lockwood's seven-person office works closely with Michigan's Treasury Department to ensure that tax credits only go to legitimate production companies. Last year, scandals in Iowa led to the suspension of that state's film incentives, a warning to other states new to the incentive game. "We don't want to approve crap," Lockwood says.

When Lockwood took over the Michigan Film Office in 1992, states competed for Hollywood production dollars based solely on their locations and services. Nowadays, it's all about money. "As long as everyone else has incentives, Michigan has to have incentives," says Lockwood, the state's fourth film commissioner.

Under former Gov. William Milliken, Michigan established a film office in 1979, the year "Somewhere in Time" filmed at the Grand Hotel on Mackinac Island. The first movie Lockwood worked on was 1992's "Hoffa," starring Jack Nicholson.

With her deep voice, wry sense of humor and theater experience, Lockwood enjoys public speaking. That's something she regularly gets to do, whether it be running meetings of the Michigan Film Office Advisory Council or talking to a room full of independent filmmakers at an industry trade show in California.

Her job does have some perks. She got to spend two days in a van with Billy Crystal, scouting for locations. She counts Jeff Daniels as a friend. George Clooney once brought her a cappuccino. And the producers of the 1998 movie "Out of Sight," which was partly shot in Detroit, even thanked her by name in the film's credits.

"I'm still enamored by the business of Hollywood," Lockwood admits. "I love the movies. It's just magic."

Michigan's Movie Rivals Offer Fewer, Smaller Enticements to Industry

The Detroit Free Press

SANTA MONICA, Calif.--Two years after Michigan lawmakers passed the nation's most attractive movie production incentives, no one has seriously challenged the state's dominance in this area. But that doesn't mean every movie is heading to Michigan. Though the state offers a wide variety of unique and appealing locations for filmmakers, it doesn't have everything. "We are not Hawaii," said Janet Lockwood, director of the Michigan Film Office. "We don't have mountains."

In some cases, Michigan loses out to other states that don't cap tax breaks for big-name actors, Lockwood said. Michigan won't pay more than $2 million per star.

Even with these limitations, though, Michigan's 42% movie tax credits are the most generous in the industry. Whether another state will try to top them is anyone's guess. But Lockwood said that a group of major Hollywood producers recently told her that they didn't think that will happen.

Since the incentives went into effect in April 2008, 90 productions have completed filming in Michigan, with dozens more expected to wrap this year.

"Incentives are very important to the production companies," Lockwood said. "It literally drives where they film."

In the U.S., only Alaska can claim that it offers a bigger movie tax credit than Michigan. But its base rate starts at 30% compared with Michigan's 40%. To get to Alaska's full 44% rate, production companies have to hire Alaska residents and film in rural areas of the state during the cold months of October through March.

Alaska's year-old program has attracted 23 productions, including several nonfiction TV shows and independent feature films. The state is still waiting for a big-budget movie to show up. "The name of the game these days is incentives," said Dave Worrell, a development specialist at Alaska's Film Office.

Michigan isn't the only place in the U.S. where moviemakers can get back 42% of their production spending. In October, Washington, D.C., increased its film tax rebate to 42%. Production companies must spend a minimum of $250,000 compared with $50,000 in Michigan, and the rebate is subject to available funding.

These efforts haven't threatened Michigan. Alaska's location and weather limit its appeal to filmmakers, and the nation's capital is too small to offer the diverse locations that many movies need.

Michigan's chief rivals in the movie business -- Louisiana, New Mexico, Georgia, Massachusetts and Connecticut -- all offer lower tax breaks of 25%, 30% or 35%. But that doesn't mean they aren't competitive, particularly in the case of Louisiana and New Mexico. These two states have a head start on Michigan because in 2002, they helped pioneer the use of tax breaks to lure filmmakers away from Hollywood.

Michigan's incentives "haven't put a dent in our level of activity," said Christopher Stelly, Louisiana's director of film industry development. "We have things Michigan doesn't and vice versa. I always feel competition is healthy."

Louisiana can provide the industry with several established film studios and 10 production crews, compared with five in Michigan.

New Mexico officials claim their state is home to the largest studio outside Hollywood, in Albuquerque. Unlike Michigan, New Mexico loans money to filmmakers. Thanks to its incentives, New Mexico now has 250 film-related businesses and 3,000 unionized production crew members.

"We feel pretty solid with our incentives," said Jennifer Schwalenberg, the New Mexico Film Office's deputy director. But she admitted, "We have lost a little bit to other states with other incentives."

Hollywood's focus on tax breaks isn't likely to go away soon. If anything, the incentives have become more important because obtaining the financing to make a movie has become very difficult.

Movies that used to be made for $8 million or $10 million have seen their budgets slashed to $5 million or less, said Stephen Saltzman, an entertainment industry attorney. "You have to be meaner and leaner than ever before," he told a room full of filmmakers this month at the annual Locations trade show in Santa Monica, Calif.

In this kind of environment, it's no surprise that filmmakers have been flocking to Michigan to take advantage of the tax credits. Once they arrive, many of the newcomers are discovering there's a lot more to the Great Lakes State than they realized.

"I was really taken by the people," said Robert Mearns, who plans to direct an urban detective movie in Detroit and was an associate producer of the 2009 Val Kilmer movie "The Steam Experiment," which was filmed in Grand Rapids. "They were very proud to call themselves Detroiters. They really love the city."

Hollywood Jobs Come To Michigan

CNN-Money

As employment prospects in the area dwindle, a new industry offers hope for job seekers like Neal Garron.

Getting a job in this economy is tough everywhere, but some local job markets are faring worse than others. And nowhere is it harder to find a job than in Michigan.

Michigan leads the nation in unemployment, with a statewide rate of 15.2%. Joblessness is even higher in cities like Detroit where the local unemployment rate is 17%.

For a long time Neal Garron was one of Michigan's many unemployed. A husband and father of four, Garron, 40, had worked as an assistant in a recording studio making $9 an hour until he was laid off nearly two years ago.

Garron struggled to find another job and even considered starting his own business. "I thought I would start a small little studio in my house but nothing really came of it," he said.

In the meantime, his wife Shelly worked two jobs to make ends meet. Then Garron heard a few advertisements on the radio for opportunities in the emerging film and entertainment industry in his area.

Thanks to generous tax incentives, many filmmakers have been encouraged to come to Michigan, bringing lot of film and television jobs with them. Programs like the ones at the Center for Film Studies and Film Industry Training help local job seekers learn the skills they need to be competitive for those jobs.

Using a loan from his wife's 401(k), Garron signed up for a two-week course. It was a big gamble, but one that Garron was confident would pay off. His program led to a series of internships and also valuable contacts.

"It's not like getting a job at a factory or something like that," Garron explained. "It's a who-you-know business."



After the producer of an upcoming television show contacted him, Garron landed a job as a boom operator on set. Now he makes $31 an hour working full-time filming the show's first season. Plans are in the works to shoot a second season after that.

Garron is working toward getting into the sound union, which could lead to more on-location audio jobs, and his wife has scaled back her hours somewhat. She still puts in overtime, but now it's to get ahead rather than stay afloat.

"We've never gotten anywhere with our bills and now we're paying bills off," Garron said. "It's wonderful, stuff that we've dreamed about doing, we're doing."

Assignment Detroit

According to career experts in Michigan, there are budding opportunities in the area, thanks to an increasing number of film projects there.

"Michigan has been gaining a lot of film projects based on tax breaks that have been offered" explained Janet Beckstrom, owner of Word Crafter, a résumé service in Flint, Mich. And with that have come job opportunities, she added.

For job seekers interested in pursuing that path, Career Coach Deborah Schuster, who owns The Lettersmith in Troy, Mich., recommends identifying transferable skills for starters. For example, construction workers could have many skills related to set building.

Schuster says applicants interested in switching industries should streamline their résumé to keep it relevant to their goal. "Leave out things that are irrelevant and focus on things that are," she said.

Before trying to obtain additional skills, Schuster cautions job seekers about signing up for a training course and paying a fee. She encourages doing the research to ensure it is legitimate and worthwhile.

Michigan Among Several States Wooing Hollywood

Story from Associated Press

BALTIMORE (AP) — Many states that are cutting spending on schools, roads and other basics have been lavishing hundreds of millions of dollars in incentives on Hollywood studios to lure TV and movie productions — this, despite scant evidence that taxpayers come out ahead on such deals.

An Associated Press survey found that states competing for projects handed out $1.8 billion in tax breaks and other advantages to the entertainment industry from 2006 through 2008.

Several states have even sweetened their incentives recently or are considering doing so, for fear that if they don't land the next major motion picture, someone else will.

"The industry has been able to play off North Carolina against South Carolina against Louisiana against Georgia. Louisiana raises its incentives, and it puts pressure on South Carolina, North Carolina and other states to do likewise," said Bob Orr, a former North Carolina Supreme Court justice who heads an anti-incentives group called the North Carolina Institute for Constitutional Law.

Some states argue that the tax breaks pay for themselves in revenue. Many others contend that even if tax revenue takes a hit, the film industry boosts their economies with an infusion of cash and jobs.

Production companies spend money on sets, props, caterers, and salaries for actors, extras and crew members. Movie crews eat at restaurants and stay in hotels while in town.

Movie shoots can also give a place a little Hollywood glamour, which can, in turn, boost tourism — something that has happened in Durham, N.C., where the 1988 Kevin Costner comedy "Bull Durham" was shot, and in Savannah, Ga., the setting of the 1997 film "Midnight in the Garden of Good and Evil."

"I relate this to creating jobs similar to the way you would turn on a light," said Republican state Rep. Stephen L. Precourt of Florida, who is pressing to increase the state's incentives. "Within days, people could be working here under this incentive program."

New Mexico and New York commissioned studies by the accounting firm Ernst & Young that found the tax credits pay for themselves by producing more revenue than they sacrifice. The studies' authors estimated that state and local governments in New Mexico brought in $1.50 in revenue for every dollar spent on tax credits, while state and local governments in New York state and New York city generated $1.90.

But many economists and policy analysts who have studied the issue independently contend that tax breaks for the TV and movie industry are rarely break-even deals for states, in part because the jobs created are often short-lived. Even the revenue departments in some states would agree.

Connecticut's revenue department, for example, found in 2007 that every dollar in tax credits generated only 20 cents in new tax revenue. Connecticut gave away an estimated $70 million in tax revenue that year.

"The credit does not 'pay for itself,'" Jennifer Weiner, a policy analyst for the New England Public Policy Center at the Federal Reserve Bank of Boston, wrote in a January report about Connecticut's incentives. "Increases in economic activity spurred by the film credit generate some additional tax revenue for the state from a variety of sources. This additional revenue is likely to offset some, but not all, of the initial cost of the credit."

The AP surveyed the 41 states, plus the District of Columbia, that offer rebates, grants or tax credits to cover production costs for movies, TV shows and commercials, and found they committed $1 billion last year alone. New York was the leader in 2008, giving away or pledging $275 million in tax credits to productions that shot in the state that year.

New York said the money bolstered the state's economy with $2.2 billion in direct spending. The state had no immediate estimate of how much tax revenue that translated into.

Louisiana, one of the biggest incentive states, pledged an estimated $358 million in tax credits to filmmakers between 2006 and 2008, including $27 million for last year's Oscar-winning "The Curious Case of Benjamin Button." Now state lawmakers are considering more than $150 million in cuts to higher education.

Filmmakers have grown accustomed to shopping around for the best deal.

California, which is grappling with a projected $24 billion budget deficit, launched an incentive program this year to keep its homegrown business from migrating. Movie-star Gov. Arnold Schwarzenegger even pledged to make a cameo in the Warner Bros. blockbuster "Terminator Salvation," now No. 2 at the box office, if producers shot it in California. The movie was made in New Mexico.

Little illustrates the competition between states better than Miley Cyrus' new movie project, "The Last Song." In April, North Carolina's governor scheduled — then canceled the same day — a news conference to announce the movie would be filmed in Wilmington. The reason for the cancellation: the Walt Disney Co. was considering Georgia, which offers incentives of up to 30 percent versus North Carolina's 15 percent.

Shooting is to begin in Georgia this month.

Determined not to miss out next time, legislators have introduce a bill in North Carolina — a state facing a $3 billion budget gap this year — to increase incentives to 25 percent of production costs.

Some states have started rethinking their show business giveaways. Wisconsin Gov. Jim Doyle wants to eliminate the incentives he signed into law a year ago. A legislative committee has instead proposed capping the annual payout — but only for two years — to help solve Wisconsin's budget shortfall.

Michigan, which offers one of the most generous tax credits in the nation, equal to 42 percent of production costs, gave away $48 million in incentives last year and is expected to pay out $198 million in the 2010 fiscal year, which starts in the fall. And that's in a state that faces an estimated budget shortfall of $700 million for 2010.

State Sen. Tom George said he supports Michigan's incentive program because of the production activity it has drawn to his job-starved state. But he has no illusions about whether Michigan brings in more tax revenue than it gives away.

"We don't get back what we pay out," said George, a Republican who wants to cap the annual payout, either on a per-film or per-year basis. "We don't even get back half of what we pay out. I don't even know if we get back a quarter of what we pay out."