Top 10 Most Pirated Movies on BitTorrent

Transformers 3 continues to top the chart for the second consecutive week, while Mr. Popper's Penguins and Screwed both make their debuts.

[Read More]

Why I Do Not Film in Michigan

by Jeff Steele

In response to my recent post on how to improve the Illinois Film Tax Credit, a reader asked if I thought the industry “felt snubbed” by Michigan Governor Snyder’s recent comments about their film tax credit.  Rather than responding in the comments of that post, I thought the answer warranted a larger discussion of political stability and tax credits.

Q: What are your thoughts on the MI film tax incentive now that the cap has been lifted. Did Gov. Snyder snub the industry too much with his former negative remarks about the tax incentive?

A: The good news is that the Industry is not a collective hive-mind, like the Borg. Studios and indies have different motivations and tolerance levels with regard to political and statutory risk. That said, most industry professionals don’t get snubbed – that would be an emotional response to a media construct. We “the industry” prefer a more pragmatic “risk tolerance” approach to political saber rattling.

In my experience as a financier, it can take up to a year before a film finally goes into production, then another 3 months of prep, photography and wrap, followed by another 3-6 months to file and get your tax credit certified (even longer if you’re earning tax credits for post-production.)

That means the producer, financiers, bond-companies, insurers, and studios need to project 18-24 months of political stability to be reasonable certain they’ll actually get the tax credit they’re entitled to.

If a jurisdiction is undergoing political hostility toward their film tax credits (or other tax credits like energy, housing, technology, etc.) then producers and financiers cannot (and should not) take that risk – and “tax credit insurance” is not a solution.

States like Louisiana, Georgia and Illinois that often modify their credits in an effort to improve them, do not pose a statutory risk. States with openly hostile politicians in the executive or legislative branches don’t necessarily pose a risk if the tax credit is not up for review, but if it is, then that is a risk.

It’s because of these factors (and more) that I have never recommended a producer (or fund) send films to Michigan, even in its heyday. Their film tax credit program has had problems on every level, from its inception; it’s the antithesis of political stability.   At this point, Gov. Synder’s remarks are par for the course and help remind us why we shouldn’t shoot in Michigan (regardless of how juicy that tax credit percentage looks on the surface.)

10 Responses leave one →
  1. January 20, 2013

    Question from LinkedIn:
    Could you tell us more about your experience in Michigan? Iam from Michigan and have been told by many that it is a booming film state. However, it all depends on one’s experience. I had thought of writing a film with a locale in Michigan.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
    • January 20, 2013

      If you’re a small film that just got funded and can get into production quickly (get in, get out), then you might make it through relatively okay (especially if you’re a MI native.) If you require a longer runway (90% of the time), then it’s not worth the risk. There are plenty of other things to worry about that can go wrong on a film – this need not be one of them.

      GD Star Rating
      loading...
      GD Star Rating
      loading...
  2. Gwyn_Graybeal permalink
    January 21, 2013

    Do you feel the same way about filming in New Mexico? We got a hostile governor in 2010 who not only capped the film incentives, but made them drawn-out and difficult to understand. Film production in our state initially dropped exponentially, but has picked up a little bit. The governor says she supports the film industry, but she has made no move to modify or remove the cap, even while our economic indicators for the state of New Mexico have plummeted to 49th in the nation since she has been in office (we lost a lot of jobs when the film industry–particularly television–left). I just worry that the damage has been done, and that even if we manage to elect a different governor in 2014 it may be too late.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
    • January 22, 2013

      I’ve always like New Mexico, but I think the market’s actions speak for itself. Nothing is forever; politicians come and go – you just have to play the long-game.

      GD Star Rating
      loading...
      GD Star Rating
      loading...
  3. Harbormon permalink
    January 21, 2013

    I rarely hear you refer to North Carolina as a strong production state even though it has enjoyed a robust feature film and TV production schedule for the last three years after its 2011 modification of its tax incentive. In fact 2012 was the most successful year ever with over $350 million in production expenditures, including Journey 2, Iron Man 3 and a host of smaller feature and TV projects. Granted, with the recent tack-over of the Legislature and Governorship by Tea Party republicans for the first time in over 140 years, there may be a question mark surrounding the future of our tax initiative, and it comes up for review in 2014. I would be interested in your thoughts about the state, as we are in the planning stages for two motion pictures that would rely on those incentives.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
    • January 22, 2013

      North Carolina is a stalwart of the production-location states that has tried to improve its credit over the years. If you wrap filming before 2014 then you should be okay, because statutory changes are generally prospective not retroactive (unlike Section 181, which is back…again.)

      GD Star Rating
      loading...
      GD Star Rating
      loading...
  4. January 22, 2013

    From LinkedIn:

    Hi Jeff,

    Will you soon be able to shoot non-union films in Michigan because of the changes recently put through? I’m not saying I would want to, because you get what you pay for.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
    • January 22, 2013

      Life is too short to shoot non-union.

      GD Star Rating
      loading...
      GD Star Rating
      loading...
  5. March 20, 2013

    I am an independent filmmaker in North Carolina. The film incentives bill has been great for us and I am sad to know that they will be sunsetting at the end of 2014. I read the article you posted on this site a while back, regarding the different type of offers that could be made to secure actors. I am very excited because I have a party interested in enabling me to make those offers! Is there any way you could contact me so I can clear up the few questions that I have regarding this process. It would mean the world to me.

    GD Star Rating
    loading...
    GD Star Rating
    loading...
  6. JGISD permalink
    October 21, 2013

    State film incentives are guaranteed once they are granted. All the producer has to do is hold up their part of the bargain and do what they agreed to do and the state MUST fulfill their end of the contract. There is no “political risk.” Legislatures can’t invalidate existing contracts.

    The ones who can easily get stiffed however, are the states. Producers often apply for incentives in several states at the same time, and play them against each other, with only one state eventually winning the project and the rest left hanging.

    GD Star Rating
    loading...
    GD Star Rating
    loading...

Leave a Reply

Note: You can use basic XHTML in your comments. Your email address will never be published.

Subscribe to this comment feed via RSS