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Confronting "Ran-Away" Production in California

When the producers of Ugly Betty announced they’d be moving the TV show from Los Angeles to New York, the city finally woke up to the fact of runaway production. At Secret Headquarters, a post/design facility in Culver City, chief Greg Huson had convened a panel to discuss “Keeping it SecretHdqtrsLocal.” The panel, moderated by Secret Headquarters operations manager Dave Bogosian, included Jim Horwitz, constituent advocate for L.A. Councilmember Bill Rosendahl; Amy Lemisch, director of the California Film Commission; Paul Audley, president of FilmLA, a private non-profit organization established for public benefit to process permits in the LA region; motion picture producer Eric M. Klein; and location manager Richard McMillan. “This is an evening of tips and tricks on how to do it better,” announced Huson, who said that Secret Headquarters’ “creative salons” would focus on creative issues in filmmaking. Huson also noted that the next Secret Headquarters’ creative salon would take place in September, and be an opportunity for DPs to screen creative reels. Anyone interested in being on the list can email the company at ProducerEvents@SecretHQ.com First, it was made clear how bad the problem of run-away production is. Audley noted that in his early days at FilmLA, he visited every major studio and found that none of them were budgeting California for all their major films.  “One was budgeted for $110 million,” he recounted. “It was more expensive to shoot in NY, but they’d save $23 million by going to Connecticut and $10 million by going to NY. That major studio only budgeted to show their execs WHY they were leaving California–and the others didn’t even bother any more.” Has the city of Los Angeles’ sense of entitlement created the problem? “The film industry is our L.A. cookie jar and other people are reaching in our cookie jar,” McMillan said. “But the film business is international, not just ours. I haven’t seen Los Angeles market to its own industry.  The whole region has to figure out how to market to its own industry.” Audley agreed, noting that the fact that the studios all have buildings in Los Angeles have prevented many people from realizing just how mobile the business is. “Last year was the worst year on record with feature films shooting here, and this year so far has dropped an additional 50 percent,” he said. “We’re now at the point where we’re losing people, not just films. We’re in direct competition with [all the other] other states.” At the California Film Commission, Lemisch deals with the issue of runaway production every day. She notes that, historically, films have gone outside of California to shoot, driven by creative concerns. “That’s what’s changed,” she said. “It started out as a creative decision and nowadays it’s no longer that way. Instead of producers and production execs making decisions about what works for the script, it’s the finance people making the decisions based on what regions are offering the biggest breaks.” When the Ugly Betty story broke, reported Lemisch, she was in Sacramento, going door to door with legislators, and at last had a very vivid and timely description of what she’d been warning about.  The news of that TV show moving also woke up the Los Angeles City Council, noted Horwitz, who said Councilman Rosendahl geared up to help make Los Angeles more friendly to film productions. That includes a recent brouhaha over whether retired policemen can wear their uniforms while working on film locations; Police Chief Bratton is opposed to that idea, but Rosendahl and others are working to keep the retired cops on the film jobs. But the biggest news came in February when the California legislature finally launched a tax incentive program. Yesterday, Governor Arnold Schwarznegger’s office announced the the first 25 film and television productions to qualify for the film and television production incentive signed into law on February 20. Producer Klein decried productions that leave the state for other than creative reasons. “As a lower budget indie filmmaker I don’t think there’s an easier place to make a film than here,” he said. “Any time I do assessment and budgets for other producers, they’re chasing incentives before they even have the money. You have to tell them that the incentive could be gone by the time they’re ready. We’ve all spun our wheels comparing state to state. It comes to smart producing. I think you have to spend a lot to go somewhere else to save a lot.” But even the biggest budget films can make decisions to leave California based on relatively small amounts of money saved. Lemisch noted that she’s seen productions with a $45 million budget that go to Louisiana to get back $5 million. “They had to spend $2.5 additional to go there,” she said. “But they were still up $2.5 million and so they went.” She described the incentive program that passed in February. Applications are available online. “It’s a very competitive tax credit program for California,” she said. “It’s limited because we have $100 million per year but it’s a good start.” Films that are eligible must have a minimum budget of $1 million for feature films, and a maximum budget of $75 million. Eligibility for TV is only for new TV series produced for basic cable. TV series that shoot elsewhere and want to relocate are eligible regardless of distribution.  To qualify, 75 percent of the film has to be shot in California. “If you are an independent–and you have to show that you’re truly not owned by the studios –you can “sell” the credits but you can’t apply with a $500,000 budget,”  she said. “The tax credit is 25 percent for indies and 20 percent for everyone else.  It’s your total spend minus what you pay writers, direrctors, producers, actors. On lower budget, 80 percent of their budget is a qualified spend.” Even with this tax incentive, noted Lemisch, “everyone is desperate for this business.” But she said that the offers by some states aren’t good deals and may be scaled back in time. “In Massachusetts, they’ll give you a 25 percent credit on your salaries, uncapped, knowing it’ll go back to California and be put in someone’s mansion in Bel Air. They’re starting to talk about capping salaries. A lot of what they’re offering doesn’t make sense. They’re giving away more than they’re getting in return.” Bogosian stated that it’s estimated that only 15 percent of the dollars given to film productions in Massachusetts actually stay in the state. Films that apply for the California tax incentive are required to send in an application and get a queue number. If the production can’t get its financing together in six months, it’s bumped out of the queue. She also reported that different cities also supply additional incentives. San Francisco provides two free policemen a day, for example The panel also discussed the problem of neighborhoods that complain about film shoots. “They don’t realize that four people in the industry live on their block,” said Horwitz. “We’re trying to do PR to push the idea of not getting in the way of filming, It’s our life blood.”  McMillan encouraged producers to spend the money to hire a location manager to be on location for commercials and music videos, to smooth over any potential problems with people in the neighborhood. FilmLA is focused on getting filming permits, and Audley said he could tell stories all day long about issues in the neighborhoods. “If you create something out of control, you’ll end up with restrictions on your permit,” he said. He told the story of a production that decided to shut down a street, blocking a City Councilman from going home. “The next production that came through had a lot more restrictions on that spot,” he said. “It’s a few very, very loud people who come out and try to make it difficult. We have a production planning group that will tell you what neighborhoods will be difficult. We work closely with productions and tell them they need a film monitor if they’re not playing within the rules.” “The problem we find when we don’t get cooperation is that when people come in and scorch the earth, the story stays for years and years in that neighborhood,” he concluded. “Someone told me a horror story of something that happened in 1982. And they still don’t want a production in the neighborhood.” Audley pointed out that there is no single voice of filming in the greater Los Angeles area. FilmLA is coordinating with the Guilds to launch a campaign showing that filming in Los Angeles streets and neighborhoods is about jobs and the economy. Lemisch also reported an effort to stop gouging by local businesses that charge exorbitant fees to film productions. One production in downtown Los Angeles was charged $100,000 per episode by a business seen in the frame. “There is an effort by unions and trade associations to address those issues and try to stamp out gouging,” she said. “On a state level, we don’t charge for permits for filming on state property. We also don’t charge rent.” With regard to the episode of gouging above, Lemisch reported that the LAPD has assigned officers to work in the film industry and let businesses know that there is no charge for shooting in a city street. One attendee suggested that locations could certify themselves as production-friendly, an idea that Audley liked. “I can’t tell that flower shop what a just compensation is when they block the street in front of them,” said Audley. “But we have the power to say we’re not withholding the permit if this guy wants money. As the word is getting out that the old game is over. When it was a  city street or alley being charged for, the LAPD stepped in and said they’d arrest that person.”

17 Comments

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  • stephen delphi

    I’ve used Safari, Opera and FireFox and your story is blank…. Nothing there. go figure

  • keith

    Interesting that LA folk look at the contents of the “cookie jar” as their cookies. Seems to me those cookies have been put there by everyone with a TV/ Cinema screen around the world.

  • Daniel Rucci

    it’s probably cheaper to go to Bangladesh, build an entire cardboard Chicago, and film “Public Enemies” with local labor than it is to film it in Chicago. Welcome to the world of globalisation, and inexpensive plane rides. This also applies to Production within the U.S. now. Watch how Michigan will become a home to major motion pictures. As legislators juggle to compete for the lowest tax rate we will see even more runaway production than ever before.

  • gbeery

    Keep up the pressure

  • SK

    The California incentive money is all gone.

  • BrianGarbellini

    What people also don’t realize is that we are not just talking about the actual budget of the movies going out of state. Salaries of crew members and post people also feed local restaurants and other services. When I’m working alot in production, I go out to eat more, I buy more … Etc. Business’
    and neighborhoods need to realize that ancilary spending stops when they throw productions out of their neighborhoods.

  • Mike Allen

    Politicians never seem to understand how human nature works. EVERYTHING IS BASED ON INCENTIVES. Raising taxes RARELY raises revenue. Lowering taxes raises revenue. Why? Because it provides people with an incentive to work since they can keep more of their own money. When you raise taxes, people are smart enough to go somewhere else with lower taxes. It’s so simple, but California’s politician’s insist on always doing the opposite of what works, because they ignore the most important element of every political decision. HUMAN NATURE. Instead of coming from a background of law schools and special interest advocacy, our politicians should specialize in psychology. Then maybe they would pass laws that provided the incentives to get our population to do what we want them to do.

  • Tito

    There’s no where in LA you wanna shoot they won’t ask you for a ridiculous fee! Specially sate parks which should be close to free… That’s why productions are running away!!!! It’s more expensive to make a film here then anywhere else in the world!!!!
    What LA offer is the largest pool of talent in all departments! An that’s the real cookie jar. If those leave, you’ll see how many productions you’ll get made here, apart from the studios, of course.
    Unions should also start thinking about what they are doing… most people see them as a good thing, but just look at the rest of the world and get real!!!

  • http://www.seattlefilminstitute.com Steven Bradford

    It’s interesting that the lead example for a production running away from Los Angeles to NYC is Ugly Betty, a show that is set in NYC.

  • radu vlad

    FilmLA permits went up from 450/day to 650/day – it doesn’t seem encouraging to filming in Los Angeles – how is this company addressing the RAN-AWAY productions by raising their rates? And looks like they are part of the council too.

  • Jeff

    The hubris of the L.A. film/tv community has finally caught up. Even with all the strikes over the years, the L.A. film & television business has not seen an extended recession. We’re going to now. For a person to which the film industry made his successful life possible, our governor is nothing short of a traitor. He should be twisting every arm in Sacramento to get whatever is needed to keep the work in California. The reality is reality shows cannot sustain the L.A. film/tv business. Unless something drastic is done soon the film/tv landscape in L.A. will soon look an awful lot like the auto lanscape of Detroit.

  • http://paulchristy.com Paul Christy

    As a viewer, I wouldn’t mind even more movies and television shows shot in other states. It gets tiresome to look down on “everytown” from Mulholland Drive. A cop show based in Detroit could be a cool thing! (Not that California shouldn’t make it easier for prod. to stay home.)

  • http://www.anthonysaenz.com Anthony Saenz

    This may be too late for any of us. The hint the city of L.A. as well as our state did NOT take shows our utter lack of reality in this business. As far as gouging the film companies while filming in the city, it is all but accepted by everyone but the film company. “Oh Good a film company is here! I will turn on the stereo LOUD! “- “I will run my lawn mower” – “I will scream at the Location Manager” -” I will call the film office”…..! And “Bingo” They get $. A very, very good return for their “concern”. And no one would stop them. I pray that this really is a change for the better and NOT LIP SERVICE. People are losing their lively hoods over this….

  • Russell

    I don’t work in the entertainment business but, out of curiosity, with the latest CGI, can’t any location be created (just about) on a “green screen”? If so, does it matter where a production takes place? A warehouse in Kansas City with CGI equipment could pretty much satisfy most locale shots for a script. Right?

  • ldtowers

    “Lowering taxes raises revenue. ”

    This a is a myth and a lie. It only works in the short term if other municipalities don’t match the incentives. Even then it is a short term burst as tax lawyers game the system again. Then revenues shrink and infrastructure and services suffer.

  • Sam

    California needs to match the incentives average for other states for 10 years to rebuild the local industry. NO producer would leave the state if this were the case. It is WAY too expensive to shoot in LA… All the independents say they MUST have an incentive in place to finance any film today… THE MUST. This is a matter of financing and NO film is made without financing.

  • http://www.filmgauge.com.au Stephan