Posted 23 September, 2007 in Arizona, AZ News
Arizona’s resurgent movie industry competes
Chad Graham
The Arizona Republic
Sept. 16, 2007 12:00 AM
Two Hollywood movies released this month reveal a rebound in Arizona’s film production industry - and show how much farther it has to go.
Universal Pictures’ The Kingdom with Jamie Foxx and Jennifer Garner will hit theaters on Sept. 28 and is the highest-profile project to date attracted by Arizona’s new tax breaks.
Yet Lionsgate passed up the state with an equally high-profile project.
3:10 to Yuma with Russell Crowe and Christian Bale was shot in New Mexico, although director James Mangold reportedly had decided to shoot in Sedona.
The studio overruled that decision when it learned of New Mexico’s generous production refund and its already-constructed Western sets, Arizona film officials said. A spokeswoman for Lionsgate did not return calls seeking comment.
“It came down to economics,” said Harry Tate, director of the Arizona Department of Commerce Film Office. “Studios have basically put out an edict to their producers and companies they work with that says you will look at (states with incentives) first.”
Arizona took that lesson to heart with The Kingdom, promoting its Motion Picture Production Tax Incentives Program, started in 2006.
“The president of production for Universal . . . pointedly made the statement that they were coming to Arizona because of the incentive program,” said Tate, adding that Arizona beat out California for the location.
“They knew that they were going to expense $70-some million on this film, and a good portion of it would be spent in Arizona,” he said. “They would qualify, in the incentive program, for a tax credit of approximately $5 million.”
Last year under the program, the film office received 33 applications, with 18 approved. Those productions anticipated spending $167 million in Arizona.
In 2007, it received 48 applications, with 27 approved. Those productions were expected to pump $206 million into the economy.
“Overall, the dollars are increasing over the years,” said Rob Gerstner, president of the Arizona Production Association. “This incentive is a huge program that is good for our state, even though there are improvements to be done.”
Neighborly competition
States and countries have competed for years by offering production incentives to try to lure film, television and commercial production to an economy.
While some lawmakers argue that strategy benefits only Hollywood, supporters maintain that a single project can employ many locals and pay higher-than-average wages.
It can also provide a tourism boost for any area featured on the big screen, much like 2004’s Sideways did for the wine country in and around Solvang, Calif.
“States have said, ‘Wow this is something, this is an industry growth area,’ ” said Phil Bradstock, Phoenix film commissioner. “A lot of states and cities have come up with their own tax incentives.”
Louisiana, one of the busiest production centers in the United States, saw the industry add nearly $344 million in the form of wages, profits and sales tax in 2005 compared with $7.4 million in 2003, according to its film and video commission.New Mexico became a Hollywood hotspot by offering very different, but generous, incentives that include giving qualified productions a 25 percent rebate on expenses and an interest-free loan of up to $15 million.
Current movies in production in New Mexico include The Burning Plain with Charlize Theron and The Spirit with Samuel L. Jackson and Scarlett Johanson.
“New Mexico is our biggest U.S. competitor now, and they are winning,” said Shelli Hall, director of the Tucson Film Office.
“They are building a sustainable industry because along with the incentives, they also have a workforce-development program, they are investing in studios. All that comes with more production.”
Back from the brink
Arizona’s fight to rebuild its production industry seems surprising given the decades of iconic film, television and commercial shoots across the state.
Countless Westerns have been filmed at Monument Valley, the Grand Canyon and Old Tucson Studios. That location opened nearly 70 years ago when Columbia Pictures needed an 1860s Western town for the movie Arizona.
The state’s famed shoots include The Bells of St. Mary’s, Psycho, Return of the Jedi and Forrest Gump.
Production during the 1980s boomed but began to taper off in the 1990s with the advent of reality television, national companies buying local Valley businesses and production moving to foreign countries such as Canada.
The recession that followed the Sept. 11 terrorist attacks further diminished the industry.
“Several years ago, the Legislature cut the funding for the film office and basically sent six people packing,” Tate said. “A couple of legislators saw that we needed a film office and they resurrected it. Since about 2003 we’ve been growing it back up to this point.”
In 2006, the state debuted its incentive program, which includes an income-tax credit equal to 10 percent, 15 percent or 20 percent depending on the investment in production costs.
Productions must spend at least $250,000 in the state and hire a certain percentage of local workers. Lawmakers placed a cap on the total amount of tax credits.
The program was revamped this year to set a time limit for productions to use the incentive and it increases the percentage of tax credits starting in 2008.
It also provides for an additional Department of Commerce employee to monitor the credits and allows companies that build or turn facilities into soundstages to be eligible for the tax credit.
“The goal of any tax credit is that the state gets more money back than is put out,” said Rep. Michele Reagan, R-Scottsdale, who sponsored the latest bill. “We have to see some sort of profit or it’s just some give-away.
“The reason why a lot of people are comfortable with this credit is that you have to put out a pretty substantial amount of money to get something back.”
Coming attractions
From Tate’s perspective, there is more work to be done.
Another 3:10 to Yuma could slip away.
“We have an industry here, and it’s a good industry, but we need a little more of the facilitation for the industry in terms of studio and studio space,” he said.
“That’s part of why (Michele Reagan’s bill) had that infrastructure development in there, to entice people to see that opportunity to build studios here.”
Albuquerque Studios, a $74 million, film and television production facility, opened earlier this year in New Mexico.
“They’re still building. They have six stages up and they have two more coming,” said Lisa Strout, director of the New Mexico Film Office. “Now that they are here, it is making a shift. There are projects that we couldn’t have accommodated (in the past).”
Gerstner of the Arizona Production Association warns that New Mexico’s production industry did not happen overnight.
“It was a very slow road and then it finally got legs underneath it, and it exploded because enough people got behind it,” he said. “Just because New Mexico is doing something doesn’t mean we have to do it.”
Of course, not every production picks Arizona based purely on incentives.
Riva Yares, executive producer of Jolene, said her production used locations in Cave Creek, Prescott and Scottsdale.
Yares hopes to show the film at the Sundance Film Festival in January. It is about a teenage orphan who travels cross-country and features Dermot Mulroney, Chazz Palminteri and Denise Richards.
“Other states have better tax incentives, like New Mexico,” she said.
But, “I wanted to stay in Arizona and I wanted to give (local) people work,” said Yares, who owns art galleries in Scottsdale and Santa Fe. “It’s a great place to film, particularly because of the weather. It was just terrific.”
Reach the reporter at chad.graham@arizonarepublic.com or (602) 444-8577.
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