June 05--A state Senate budget committee is expected to debate and pass a measure early Thursday to revamp North Carolina's film tax credits and turn it into a grant program.
Supporters say the proposal would add more oversight as well as target high-dollar deals that create economic growth and weed out low-end productions, student films and others that have gamed the system. But it's unclear if it will be enough to satisfy the film community, which was in Raleigh Wednesday to lobby legislators on the importance of continuing the state's incentive program.
The current film incentive expires at year's end, and state Sen. Bill Rabon, co-chair of the Senate'sFinance Committee, says he believes this is a solution that will earn the bipartisan support of his colleagues that have been leery of continuing the benefits for film companies.
"This is sort of what we're already doing with certain industries, and we're just tailoring this -- because the film industry is unique -- to that unique industry because we appreciate what they do in North Carolina," Rabon, R-Brunswick, said Wednesday night.
The new program, which would have a $20 million budget for the 2014-15 fiscal year allocated from two state reserve funds, was likened as a distant cousin to the state's Jobs Development and Investments Grant program, commonly known as JDIG. That program is administered by the N.C. Department of Commerce and under which awards are based on jobs created and capital investment.
The current film incentives package allows production companies to claim 25 percent of their qualifying expenses up to $20 million for production companies that spend at least $250,000.
Under the plan touted by Rabon, film companies would still be eligible to recoup up to 25 percent of expenses. But the companies would have to spend more to qualify and payout caps would lower significantly.
For a major motion picture feature, the spending threshold would increase to $10 million and the grant payout would be capped at $5 million. For television production, companies would have to spend at least $1 million per episode to qualify, with a payout cap also of $5 million. For commercials, a qualifying company would have to spend at least $500,000, with a payout cap of $250,000.
"There are higher minimums than in the old credit to target higher-end productions with proven value added," Rabon said, adding "I think this is a major step in the right direction and a really good policy move in the proper direction."
The Senate's proposed minimum spend of $10 million for film productions, however, would drastically limit the amount of productions that would qualify for the incentive program. While high-profile projects like "Iron Man 3" ($81 million), "The Conjuring" ($16.9 million) and "Tammy" ($14.5 million) all exceeded that amount, smaller local productions like "The Remaining" ($4 million), "The Squeeze" ($2.1 million), "A Short History of Decay" ($500,000) and "Stuck in Love" ($3.6 million) would not have been eligible.
Although, on average, most television series that shoot in the area spend at least $1 million per episode: "Under the Dome" season one spent $33 million across 13 episodes and "Eastbound & Down's" final season spent $20 million across eight episodes.
Rabon said the bill also would direct the Secretary of Commerce to negotiate with film companies on the front end before determining if they qualify for a grant, and spells out specifics for qualification. Those include that the film cannot contain obscene material or be a news program, radio production, live sporting event or an awards ceremony, among other disclaimers.
"This gives the Secretary (of Commerce) negotiating power," Rabon said. "This is a real business deal and that's the way we want it."
The production must also contain in the end credits a statement that the production was "Filmed in North Carolina" and a logo provided by the state Film Office.
Johnny Griffin, director of the Wilmington Regional Film Commission, and state Rep. Susi Hamilton, D-New Hanover, who is a strong proponent of the state's film industry, couldn't be reached for comment late Wednesday night.
Vans Stevenson, senior vice president, state government affairs, for the Motion Picture Association of America, which represents several major studios, said he hasn't seen the draft measure but thought it was a good signal that Senate Republicans were putting forth a proposal. A bipartisan group of House lawmakers and Gov. Pat McCrory also have put forth varying solutions, which Stevenson said means there are likely to be positive negotiations moving forward into the short session.
"I think basically Sen. Rabon understands the job creation and the economic investment that television and motion picture productions have brought to North Carolina and I believe he has a vision to see that this industry continues and grows over time," Stevenson said. "Hopefully we'll come out on the other end with an incentive package that is competitive with other states and continues to allow business to grow in the state."
Rabon's measure would include a sunset date of July 1, 2020.
It is expected to pass committee and get a first reading on the Senate floor as early as Thursday.
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