California’s $ 330 Million Incentives Not Enough, Independent Producers Say | Characteristics

Weeks after the governor of California made available an additional $ 330 million in tax incentives for at least the next two years, independent producers are still unimpressed with a system they say does not go far enough. to support the community. The government’s strengthening of the 3.0 $ 1.55 billion Film and Television Tax Credit program, which was introduced last year and allocates $ 330 million annually for the next five fiscal years through ‘in 2025, headlines. However, Senate Bill 144 passed in July by Democratic Gov. Gavin Newsom – who was eager to win Hollywood favor as he approached his victory in Tuesday’s recall election that threatened to oust him from office. functions – is designed to attract and maintain top-budget TV productions and features such as HBO Westworld and Sony’s action thriller Brad Pitt High-speed train, both of which benefited from tax credits.

A large community of independent filmmakers in California have grown accustomed to using other incentive programs across North America due to inadequacies in their own state. The 3.0 program administered by the California Film Commission has some money in store for them, but it involves a complicated application process and is insufficient. The latest iteration of the state program reserves 8% or $ 26.4 million of the total annual allocation of $ 330 million to the self-employed, an increase from 5% or $ 16.5 million of the same. annual sum awarded under program 2.0.

Allocations below 3.0 are split between qualifying independent productions of $ 10 million or less, which have access to $ 15.84 million or 4.8% of the pie, and those over $ 10 million, which must share a share of $ 10.56 million or 3.2% of the total annual endowment. Projects with a budget of at least $ 1 million are eligible for a 25% transferable tax credit that applies to the first $ 10 million of eligible expenses. There is more than one allocation cycle for entity projects each fiscal year. January 2022 will be the next cycle and growers can expect a response around a month later. The commission decides who gets what based on the ranking of the employment ratio, a complex equation that determines which productions will create the most jobs, and therefore bring the state the most tax revenue.

Non-independent bias

The 3.0 program makes $ 115 million in tax credits or 35% of the pie available for non-independent studio and streamer functionality; $ 132 million or 40% of the total allocation to new television series, recurring series, pilots and mini-series; and $ 56.1 million or 17% for the relocation of television series. “As an independent producer, I can’t watch the California state program with any level of confidence that we’re going to get anything,” notes William Santor of producer-financier Productivity Media. “They want to be in the studio business, which I understand because they want to keep it there rather than going to Georgia or New York or Louisiana, but that doesn’t do anything for the independent sector.”

“The independent feature film tax credit is very different from the rest of the tax credits offered in that it is a transferable tax credit,” explains Michael Heimler, director of production and Black Bear Pictures finances. “It’s not a discount – you have to sell your tax credits at a reduced rate… It’s only really beneficial for independent productions to a very limited extent, whereas if you had to go to other places. like Georgia or Massachusetts or Toronto or Vancouver, you might be able to receive a much larger amount.

Even before an independent producer can get money by selling the tax credit at a discount to a lender like Three Point Capital or Forest Road (who act as brokers and transfer the credit to a buyer who will use it to reduce his tax payable), he must go through the long process of developing a budget plan and applying for credit. As an award-winning independent film producer, there’s little motivation to spend a lot of time doing this when the larger independent production companies with more resources can submit a handful of projects, see what sticks and “take advantage of the. tax credits ”.

“We work with states like Oklahoma, North Carolina, and New Mexico; you submit an application, it takes them four to six weeks to turn it over, then you go through a process to make sure it meets their state guidelines and go over budgets and schedules, ”says Keith Wells, based in California, number 11 Entertainment.

“What’s different with California is that you have to plan the shoot a year, a year and a half in advance before you even submit the application. This means that you have to lock in talent early on, which if you do it far, usually means agents want a deposit or something like that to retain talent. So for small indie films it doesn’t work.

Wells would like to shoot his action movie Wild forest in the state he lives in but has looked further. “There is a lack of interest in having a robust tax incentive usable for independent films,” he comments.

Arclight Films chief financial officer Brian Beckmann says that while he applauds the state’s efforts, it doesn’t make much of a difference for independent filmmakers. “Sure, there will be a slight increase, but the percentages and the way they go about it just isn’t as competitive as some of the other states, as well as other countries. With federal and state tax credits in Canada, it’s almost more profitable to just cross the border.

California Film Commission executive director Colleen Bell said efforts have been made to ensure independent productions get the help they need. Thirteen independent feature film projects from 23 films just awarded in the July cycle include $ 2.5 million in tax credits for Poolman by Barry Linen Productions and $ 262,000 for Deadly Instinct’s Bad death. Major projects like Universal’s untitled Jean-Marc Vallée project will receive $ 17.3 million, while Netflix will receive $ 15.8 million for the cop from beverly hills 4.

“We recognize that the application process for independent filmmakers can be arduous as the application is complicated and requires staff and people familiar with developing these budget plans and understanding the rules,” Bell admits, adding that program staff understand. people who were former film and television producers.

“We work very hard to help all these productions and filmmakers who apply by supporting them throughout our application process. It is important that they feel that they are competing on an equal footing, and we want to give them a sense of confidence and certainty that they are doing so.

The production quarantine in Canada is lifted

Lakewood

U.S. growers look to head north in numbers as Canada loosens border restrictions and quarantine rules

The easing of Canada’s border restrictions with the United States and the rest of the world is the latest move that has boosted production in the country to such an extent that producers say it has become difficult to access crews and to the facilities. The federal government executive order that as of August 9 any fully vaccinated U.S. citizen or permanent resident can enter the country follows a July rule change that allowed U.S. talents and teams with exemptions from work to forgo a 14-day quarantine that had been in place from earlier in the pandemic.

Producers say removing the quarantine will cut budgets by 10-30%. “We were waiting for that to happen,” says Brian Beckmann, CFO of Arclight Films, which is preparing for a Canadian shoot later this year. “Quarantine was a huge expense. It was complicated, whether it was visas or additional entry formalities, accommodation and working with talented agents.

XYZ Films founding partner Nick Spicer said the quarantine meant the company had put some productions on hold to avoid “a planning nightmare for actors and filmmakers.” However, he remained involved in all-Canadian productions. In contrast, Limelight filmed the thriller Naomi Watts and the world premiere of Toronto Lakewood in Ontario last summer after being quarantined.

Michael Heimler, head of production and finance at Black Bear Pictures, the Los Angeles-based company behind The Imitation Game and I Care A Lot, filmed The Marsh King’s Daughter in Toronto this year when all non-Canadian elements, including director Neil Burger and stars Daisy Ridley and Ben Mendelsohn had to endure quarantine.

More than 73% of the Canadian population is now fully vaccinated, according to Covid-19 Tracker Canada, and more than 75% in Ontario according to the latest data from CBC. Motivation to film in Canada is high – while remaining cautious amid the wave of Delta variants – due to the insurance support program, incentives and favorable exchange rate. “There are so many people everywhere because everyone is doubling production, taking this time to move forward. And consumption is at an all-time high, ”says Berry Meyerowitz, President of Quiver Distribution. “I don’t think Canada has slowed down at all. You will see more Americans come in.

Jeremy Kay

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