Film Industry Gains Financial Benefits in Michigan

April 2008 legislation helped to bring the motion picture industry to Michigan. It has had a positive impact on the local economy, creating jobs and bringing the best and brightest back to Michigan.

Fast Facts
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Must spend at least $50,000 in Michigan to be eligible.
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40% refundable tax credit, across the board on Michigan expenditures.
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Claim an extra 2% if filming in one of the 103 Core Communities in Michigan (click the link to download and print a map of the core communities).
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Labor and Crew: 40%-42% Resident Below the Line. 40%-42% Above the Line regardless of domicile. 30% Non-resident Below the Line.
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$2 million salary cap per employee per production. There is no other cap and no sunset.

For more information go to http://www.michiganfilmoffice.org/Production-Directory/FAQs/Default.aspx

Michigan in fight for film jobs

Michigan in fight for film jobs
Infrastructure improvements touted to give state competitive edge
Nathan Hurst / The Detroit News

Manhattan Beach, Calif. -- If there ever were an exemplary home of Tinseltown magic, it's here at Raleigh Studios' hangar-like sound stages.

In one of these 25,000-square-foot behemoths, special effects masters are working on the futuristic set of "Iron Man 2." Nearby, the phony morgue drawers for the CBS drama "CSI: Miami" await cadavers du jour.

But movie-goers and television watchers wouldn't ever know that the worlds created for big and small screen alike are in the studio just off a traffic-jammed freeway southwest of downtown Los Angeles. For all they know, the filming could've been done on location.


Or in Louisiana. Or Missouri. Or New Mexico. And soon, maybe even in Michigan.

While the Great Lakes State has the nation's most aggressive tax break for entertainment producers, it's far from the only suitor vying for attention from a sector that's estimated to generate some $60 billion annually. And it's not the first.

"When producers are looking at where to take their projects, they've got a lot of options," said Michael Moore, chief executive of Raleigh Studios, which has locations in Shreveport, La., Budapest and L.A.

Moore's company is also set to run Motown Motion Picture Studios, the massive moviemaking project slated to take the place of a defunct General Motors Corp. facility in Pontiac.

While every state rolls out the red carpet for production crews, a handful -- especially those looking to diversify their economies or kick-start new growth -- are giving the industry a generous helping hand to bring business within their borders. New Mexico was one of the earliest contenders to steal Hollywood's thunder; there, Gov. Bill Richardson spearheaded the creation of a 25 percent rebate program in 2002.

Since then, thousands of film and television jobs moved from the hazy sprawl of Los Angeles to the deserts around Albuquerque and Santa Fe, where studios and production facilities have sprouted up, helping to draw business away from the Golden State.

In Louisiana, where filmmakers can get tax credits worth up to 35 percent of qualifying expenses, sound stages have sprung up quickly, too. Production is up, and many of the mechanisms of a surrounding support industry -- post-production facilities, special-effects outfits and consulting agencies -- are opening and growing, centered around Shreveport.

But tax credits and rebates aren't enough to move a critical mass of Hollywood to Michigan.

"States have to start thinking long-term," said Jimmy Lifton, founder of Unity Studios, the multimillion dollar studio and production facility slated to open this year on the site of a shut-down Visteon plant in Allen Park. "There needs to be an infrastructure to support year-round production."

Lifton is just one proponent -- and investor -- in the strategy of building out the industry here in Michigan, by creating facilities, a talent pool and support industries that will, should everything go as planned, keep as much work as possible here, instead of farming some back to California or other states with a larger infrastructure already in place.

The state's tax credit program gives a 25 percent credit for building out infrastructure, which will help add to limited facilities already in the state.

Both Lifton's project and the one in Pontiac include noncore components such as training programs to build an in-state work force and post-production facilities that will allow functions such as film editing and processing to be performed here.

"The key is getting the state to the point where it's not a drop-in center," said Lifton. "It's about getting as many moving parts of the business to Michigan as possible.

"It's not building a business. It's building an industry."

Michigan-Tax Credits for Movie Makers

Will movie law boost last?



LANSING (AP) -- Six months after Michigan began handing out the nation's most generous moviemaking incentives, results are surpassing lofty expectations.

Studios that had planned to shoot elsewhere turned on a dime and flocked here, bringing stars such as Val Kilmer and Drew Barrymore with them. The number of scripts approved by the state film office is up 20-fold over last year. Hotels, caterers and other businesses are cashing in on new economic activity.

Somerset Inn in Troy hired 15 to 20 extra full-time workers to handle film crews after Clint Eastwood's Malpaso Productions booked office space and close to 90 rooms a night for most of the summer while filming "Gran Torino" across the Detroit area.

The hotel has welcomed smaller crews, too, and has solid leads on more movie industry clients for next year at a time conference hotels are losing dollars because of cutbacks in automotive sales seminars and the poor economy.

"It's incremental business we certainly wouldn't have had if they didn't sign this legislation," said Duane Swanson, Somerset Inn's operations director. "You couldn't ask for a better hotel guest to come in. They're not afraid to spend a buck."

Neither is state government -- to the chagrin of Republican lawmakers who are having second thoughts about the measure signed into law by Democratic Gov. Jennifer Granholm in April.

To entice filmmakers to choose Michigan over other competing states, the Legislature passed bills creating refundable tax credits of up to 42 percent for in-state movie production expenses.

Giving businesses tax credits is nothing new, and such credits can reduce a company's tax bill to little or nothing.

But refundable credits go further. They're more like a rebate for production expenses and can require the state to cut the moviemaker a check.

The Senate Fiscal Agency estimates the state has approved $394 million in production expenses that will cost the government $122 million after accounting for the sales and income tax revenue generated by film crews.

That's six times the increases of up to 2 percent the state gave public universities and community colleges this budget year.

Sen. Jud Gilbert, R-Algonac, said traditional Michigan businesses are paying higher taxes while "we turn around and send a check to somebody from Hollywood, some Pee-wee Herman type. I think that's very hard to justify."

Michigan Chamber of Commerce lobbyist Jim Holcomb said lawmakers should reduce the Michigan Business Tax -- to which a 22 percent surcharge was added to fill a budget deficit -- and "stop handing out unaffordable tax breaks to out-of-state Hollywood filmmakers who are unlikely to make Michigan their permanent business location."

But not every filmmaker is from Hollywood, and there's no doubt the incentives are bringing movie companies and jobs to the economically sluggish state.

Cinepro Pictures Studios was set to film "The Steam Experiment" in Florida because that's where the company is located. But it shot the independently produced thriller in Grand Rapids after hearing about the incentives.

"The decision was purely financial," said Karinne Behr, an executive producer of the movie starring Kilmer and Armand Assante. "Michigan's incentives are definitely the strongest. Hopefully that will be a great success story for the state. It's better to spend the money here than overseas."

Behr said $3 million of the movie's $7 million budget was spent in Michigan.

The Michigan Film Office has approved tax breaks for more than 60 movies this year and next. Just two or three films were made in 2007.

The question, it seems, is whether a truly lasting industry is being hatched in Michigan.

Critics depict the business as fleeting because other states may increase their incentives to keep pace. They say moviemakers like to bring in people from California and elsewhere to make the movies, and add that filmmaking accounts for a minuscule portion of Michigan's overall economy.

But in a state that has shed 479,000 payroll jobs -- 10 percent of its work force -- since state employment peaked in June 2000, anything that brings in jobs and new businesses is seen as a plus by many.

And while the state has nowhere near enough infrastructure to support all the new films, it's further along than Louisiana, New Mexico and Massachusetts were at this point when they began luring the industry, said Anthony Wenson, chief operating officer of the Michigan Film Office.

He pointed out that Michigan once made more commercials and industrial training films than anywhere in the world, and said existing studios are being transformed to welcome the motion picture business.

"Not only are we finding many people getting into the business for the first time but we're also seeing people who left the state to get into the industry moving back into Michigan," he said.

So far, the GOP-controlled Senate has been unable to get enough votes for a bill that would cap film credits at no more than $50 million a year. Granholm, Democrats and some Republicans fiercely oppose the measure and say the bipartisan law approved by all but one of 148 legislators needs time to work, even if it could cost the state.

Job training classes are being held for people interested in the business, and producers qualify for more tax breaks if they hire in-state grips, camera operators and other "below the line" crew.

The film office expects to talk with Michigan State University about potentially developing a film program. Anticipating more work, some smaller sound studios have announced plans to expand.

The state still is awaiting the arrival of big new soundstages that provide more efficient one-stop shopping for the production of movies and TV shows and could allow Michigan moviemaking year-round rather than seasonally.

But Wenson said the state is talking frequently with interested investors.

"The true measure will be two years into this," he said. "It's taken Louisiana almost four years to really pull together ... and be able to say, 'This is a true, viable industry in our state.' Michigan is in this for the long haul."