Silver screen lining

Mich. film tax incentives spurring growth for state's industry, MSU study finds

Andy Vallentine has his sights set on seeing his work on the silver screen. The telecommunication, information studies and media senior plans to move to New York or Los Angeles in hopes of becoming involved in the movie industry — a market that Michigan has been trying to tap into with numerous incentives. These incentives give tax credits to companies for filming in Michigan and using residents and local businesses during production. Although Vallentine said these incentives are encouraging, it’s not enough to keep him and some other filmmakers in Michigan. But according to an MSU study, it could be the boost the state’s economy needs.

“It’s a waiting game — it’ll probably change in six months and another state will have better incentives,” Vallentine said. “It’s a good idea, but you have to get started in California or New York.”

Michigan passed the incentives, or film production credit, in April 2008. They provide a refundable tax credit of up to 42 percent when a production company films in Michigan, according to the Michigan Film Office.

Several stipulations determine the incentive’s amount, including where the company films in Michigan, if workers are Michigan residents and if the expenditure directly impacts the state’s economy. Productions must also spend a minimum of $50,000 in the state to earn the incentive.

MSU study

A report released in February from MSU’s Center for Economic Analysis showed during the first nine months of the incentive, productions spent more than $65 million in 2008 and employed almost 3,000 people. It projects total spending from the productions will increase to more than $187 million by 2012, according to the report.

In 2008, 32 productions were completed, an increase from two in 2007, according to the report.

The most surprising finding was how quickly producers moved to Michigan, said Steven Miller, director of the Center for Economic Analysis and an assistant professor in the College of Agriculture and Natural Resources, who conducted the study.

Miller said he was “a little surprised to what extent the services required for production can be found here in Michigan.”

“Financial services, completion bonds, things of that nature, I would think would be housed in California, but those can be found in Michigan with little problem,” Miller said.

English senior and co-president of the MSU Filmmakers Club Matt Larner said in an e-mail the incentives will allow more films to be shot on location and will help Michigan’s economy.

“The film incentive was the best thing (Gov. Jennifer) Granholm ever did,” Larner said. “Since everything else seems to be going wrong, Michigan needed a new industry and I’m certainly glad it’s film. And since studios have been popping up all over the United States, aspiring filmmakers may no longer be required to move to Los Angeles in order to pursue that dream.”

“Renting an industry”

State Sen. Nancy Cassis, R-Novi, is cosponsoring a pair of bipartisan bills that would downsize the incentive.

“It’s sweet, like cotton candy initially, and there was a lot of hype generated but these credits provide no long-term economic nourishment for Michigan,” Cassis said. “We’re trying to change that and support the permanent infrastructure for sustainable jobs.”

The bills would cap the incentives at $50 million a year, expand credits for “brick-and-mortar” buildings from 25 percent to 30 percent and allow the credits to apply to commercial and industrial ads, she said.

It also would require 90 percent of employees in the films to be Michigan residents.

“There’s a certain degree of a shot in the arm for local communities when (companies) come in and rent hotels and caterers, but it’s not permanent,” Cassis said. “It doesn’t pay itself back to the state coffers.”

The bills are now in the Senate Finance Committee, which is chaired by Cassis.

“I think we’re renting the film industry — we’re not creating one,” she said. “They come and then they leave and that’s why we wanted to move toward something more solid and more sustainable.”

Incentives limited

Miller said while the incentive package is wide-ranging, there are limitations to things deemed inappropriate for taxpayer money.

The package does not provide incentives for filming of commercials or advertisements, he said.

“It is somewhat limiting in that we want to portray Michigan as a place to visit and not subsidize someone’s economic activity for their own gain,” he said.

On April 14, Granholm announced Unity Studios, based in Burbank, Calif., will build a $146 million studio in Allen Park, Mich. The studio is projected to create 121 jobs initially, according to a statement from the governor’s office.

Granholm attributed the studio coming to Michigan, which beat out Louisiana for the project, as a result of efforts to bring productions to the state.

Still, Vallentine said, although jobs may be available, they would tend to be more production-oriented.

“You can learn how to light for films but if you want to direct, plan or write — anything where its super creative — then you have to go somewhere else,” he said.

“I want to go be part of the process of creating something from the beginning to end, not just in the middle.”