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O California, Where Art Thou: Why Is the Tax Incentives Program Driving Away Indie Film?

O California, Where Art Thou: Why Is the Tax Incentives Program Driving Away Indie Film?

J. Todd Harris is a film producer living in Los Angeles. His credits include “Bottle Shock,” “The Kids Are All Right,” “The Family Tree” and “Miss Nobody” — all shot in California.

I just wrapped an independent movie here in Los Angeles, a musical called “Lucky Stiff” from “Jeffrey” director Christopher Ashley. It’s a pretty expensive movie by indie standards, but the experience was a joy because everything we needed was here, with the best film professionals in the world available and eager to work. Eager? Nay, thankful. If there was one overriding sentiment expressed during our just-over-five-week shoot, it was how grateful everyone on the crew was to have a movie shooting at home in Los Angeles. Like so many productions these days, it would have been incredibly easy for us not to.

There were many reasons we chose Los Angeles, despite the fact that other states have a more accessible and robust tax credit. Even though the story takes place in Brooklyn, London, Atlantic City and Monte Carlo, Los Angeles has the best resources and personnel either to replicate those locations or to build the ones that weren’t here. Also, we knew we’d be able to access local actors for short stints more easily.

Once we decided to shoot here, about six months prior to production,we immediately prepared to apply for the California Film Commission Lottery, which would defray the cost of our picture by more than $1 million — a considerable amount when making a movie financed entirely by equity. But the application due date was June 1, and our start date was June 13.

I knew the California rebate is based on a lottery system, so there were no guarantees, but imagine my astonishment when I heard that we didn’t even qualify for consideration! Why didn’t we qualify? Although the due date for applications is June 1, you can’t start your production until 30 days after, so we were too early. But then it turns out thatyou have to start shooting within six months of June 1, too. Which means, effectively, that if your movie starts shooting in California between December 1 and June 30, you’re out of luck. No Spring-set rom coms need apply!

Furious, I wrote to Amy Lemisch, who heads the California Film Commission, to articulate my dismay and displeasure. To her credit, Amy quickly called me to explain that the system isn’t perfect and that they’re looking at ways to make the lottery more fair and comprehensive (possibly two deadlines six months apart). She also mentioned that the lottery really wasn’t designed for films like ours, which had already decided to shoot in California, but to persuade productions that were on the fence. And finally, she admitted that, given California’s budget crunch, the California Film Commission was happy just to survive with its existing budget, and she didn’t dare rock the boat by asking for more or tinkering with the system.

But the truth is that nearly 90% of the $100 million designated to stem runaway production is allocated to studio fare as it is, with only 10% going to independents. With the number of studio films shrinking every year, independent films of this size have become crucial to the talent pool here in California. What we don’t need is another obstacle to overcome.

All of this got me thinking about “Crooked Arrows,” the movie I shot last summer in Massachusetts, where there are no such restrictions or lottery, the system is pretty user-friendly and there are several companies willing to cash-flow the tax credit during production, which came in extremely handy to our cash-challenged movie. Even though Massachusetts is not an inexpensive state to shoot in and doesn’t have the depth of crews that L.A. has (no place does), its substantial and readily available tax credit will certainly keep Massachusetts on my radar for future productions.

In 2013, I have at least two movies I hope to shoot in the U.S. One is a ski-racing movie, and the other is a Frank Lloyd Wright movie. The ski movie has many different locations it can choose from that have tax credits available – Utah, New Mexico, Wyoming and Massachusetts among them. Since I haven’t applied in California, and we’re looking at shooting in March, the prospects for producing it in-state – even with all the great possible places to shoot a ski movie (Tahoe, Big Bear, Mammoth) – are now remote.

The Frank Lloyd Wright movie really should be shot in Illinois, and possibly Wisconsin, even though there are states with more attractive incentives. But given that we were just able to recreate streets in Brooklyn, Atlantic City and London (thank you, Paramount back lot) here in Hollywood, as well as build or use sets that incorporate green screen at places like Red Studios, DC Stages and the Fonda Theatre, there are very few films for which I would rule out Los Angeles as a viable location. It would be a terrific boost if California could encourage independent films to stay in Los Angeles and avail themselves of its tremendous resources.

Although the economics of tax incentives can be elusive, I believe every municipality and state has a right to facilitate business for its homegrown talents. I’m glad California has mechanisms and funding to keep some production here. I applaud Amy Lemisch for fighting the good fight. But having just enjoyed, along with more than 100 other film professionals, sleeping in my own bed, seeing my family every day and accessing the best film crews and facilities in the world right here in L.A., I’d like to see the state make its incentives program fairer and more accessible to independent films, which increasingly fill the void in an industry dominated by major corporations focused primarily on tentpole pictures.

It’s not just nice for me to work close to home. It’s equally good for my home to get my business.

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Bruce Wayne Gillies, Hollywood Film Office

Notwithstanding – making the process of applying and securing and qualifying for such incentives a catch-22 that doesn't easily (operative word) allow producers access at any and all times defeats the very purpose no matter how much it's dressed up – it's fatally flawed and production continues to leave this state at an alarming pace . Terribly alarming. And J. Todd says it too – "Even though Massachusetts is not an inexpensive state to shoot in and doesn’t have the depth of crews that L.A. has (no place does), its substantial and readily available tax credit will certainly keep Massachusetts on my radar for future productions." Listen to what he's saying – he's not kidding – don't put a band-aid on a shotgun wound. We need a strong accessible incentive plan and lobbying. If not completely from the state then from the local governments and counties and cities who have just as big a stake (if not the biggest) in keeping film production here. Playing second fiddle to any state due to *limitations* in a film incentive program in a state like California, where filming was perfected beginning over 100 years ago, is demoralizing and frankly steals the spirit of making movies move! We can do it better than anyone else in the world – and we aren't – and we should – we have to if we expect to survive. Take a look around SoCal – they don't make movies here anymore – they make them in Louisiana and Canada and Georgia and Massachusetts and so on…

Amy Lemisch, California Film Commission

As executive director of the California Film Commission, I have to agree with Todd's assessment that our state's tax credit program (capped at $100 million annually) is far too small to meet demand. That said, it has helped keep many projects in California that otherwise would have left the state. It ensures that a minimum (not maximum) of $10 million be allocated to independents each year. In fact, last year independents received 36 percent of the total available credits, and outnumbered studio projects more than 2 to 1. Working with limited funding, California's tax credit legislation targets those types of productions most likely to be swayed by the incentive. Studio "tentpoles" with budgets more than $70 million are not even eligible for the program, so as to allow more small projects to make the cut. With such rules in place, we work very hard to ensure credits are allocated in the most fair, equitable and transparent way possible.

I appreciate the acknowledgement that our skilled crews and production infrastructure, combined with our uniquely diverse locations, still make California the first choice for many filmmakers. There's no denying that our incentive program has its limitations, but it's a very valuable tool to help keep more production at home, where it belongs.

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