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New Jersey Makes Its Move To Steal Production Away From New York

With Governor Christie out the way, Democrats push through a $425 million tax incentive to bring movie making back to Jersey with a 30% rebate.

No Merchandising. Editorial Use Only. No Book Cover Usage.Mandatory Credit: Photo by HBO/Kobal/REX/Shutterstock (5886038bp)Boardwalk Empire (2010-)Boardwalk Empire - 2010Director: Martin ScorseseHboUSAOn/Off Set

Martin Scorsese and HBO’s “Boardwalk Empire” rebuilt Atlantic City in New York

HBO/Kobal/REX/Shutterstock

It is impossible to underestimate the roll tax rebates play in Hollywood decision-making. It’s the reason Wakanda was created in Atlanta, “The Americans” faked ’80s Washington in Brooklyn, and why there are suddenly a lot of television shows with a “Breaking Bad”-like vibe: Georgia, New York and New Mexico are three states that have a fully funded a tax incentive program that refunds 30% of production costs. Georgia also extends the rebate for above-the-line (actors, producers, directors’ salary).

The latest hopeful is in New York’s backyard.

Yesterday, New Jersey took a big step toward becoming the newest production hub when the State Assembly passed a $85 million a year tax-credit incentive for New Jersey-based film, television and digital productions ($75 million a year earmarked specifically for movie and TV), which Governor Phil Murphy has given every indication he will sign and put into effect in July, 2018. The program will run through 2023.

Under the Governor Christie, whose term ended in January, the state’s smaller 20% tax incentive for film and TV, signed in 2005, was allowed to lapse following his public spat with MTV’s “Jersey Shore,” which the governor felt painted the state in an unfavorable light and was undeserving of its $420,000 rebate.

No Merchandising. Editorial Use Only. No Book Cover Usage.Mandatory Credit: Photo by Mtv/Kobal/REX/Shutterstock (5885256s) Mike Sorrentino, Nicole Polizzi, Vinnie Guadagnino, Sammi Sweatheart Giancola, Pauly Delvecchio, Ronnie Magro, Jenni Farley, Angelina Pivarnick Jersey Shore - 2009 Mtv USA TV Portrait

“Jersey Shore” – 2009

Mtv/Kobal/REX/Shutterstock

“I believe it was political more than [Christie] didn’t like ‘Jersey Shore,'” said Tom Bernard, the co-founder of Sony Pictures Classics and a member of the New Jersey Motion Picture & Television Commission, in an interview with IndieWire. “My feeling was Christie was running for President from the get-go and Republicans at that time wanted to keep a really long distance away from Hollywood. If you do the research and talk to the town, it brought an enormous amount of cash into that area just with the amount spent on the municipality to be able to shoot and buildings that were rented.”

It’s a loss of revenue that Bernard, who was appointed by Christie, said he and the commission have helplessly watch drain out of the state over the last eight years as a number of filmmakers, including Clint Eastwood (for “Sully”) and Martin Scorsese (for “Boardwalk Empire”), wanted to shoot in the state.

“Take ‘Boardwalk Empire,’ which was suppose to shoot in Asbury Park until we wouldn’t give them a tax rebate deal — it goes to Coney Island [and Brooklyn] and spends $300 million dollars there,” said Bernard. “Think of what that would have meant for Asbury Park.”

But not everybody agrees with Bernard about the net financial benefit of a large tax incentive. Christie’s publicly-stated problems with the rebate went beyond the crudeness of MTV’s Snooki and The Situation. The state’s non-partisan Office of Legislative Services (OLS) studied the $425 million program and recently reported a projection that it would have negative net fiscal benefit to the state. Bernard, and other supporters of the bill, believe the OLS isn’t properly calculating the businesses and jobs the state will need to support film production.

Bernard compared the filmmaking production process to construction. “It’s like building a number of different houses,” he said. “There’s so much money that has to be spent on rentals. Where do you rent old-era cars? New Jersey caters to feed the crew … a lumber yard that can satisfy the union carpenters on movie sets, when you go to a town who are you going to pay to close the streets down or hose down the roads. You have to pay the municipality for police and services. Where’s the production office space, the hotel to put cast, the car and truck rental, the drivers. You start to go through all the line items on a budget and you see so many new businesses, new jobs and tax dollars that could be available to New Jersey.”

Nearby, many people in the New York City production world say the key for the New Jersey tax credit involves big ticket infrastructure items – production ready trucks, turn-key production offices near transportation hubs, top-of-the-line equipment rental houses to satisfy top crew. Several production veterans told IndieWire that they recalled an inefficient “pass through” system under New Jersey’s old tax credit, where production would pay an extra 2-3% to a Jersey–based company to rent out items that couldn’t be found in state.

However, there are a number of reasons to believe that this 2019 tax incentive will be far more effective in luring big productions and the vendors that follow. The number one reason is the deal itself – 30% back toward the cost of production, with a low bar of entry (at least compared to New York) that requires only 60% of the production dollars be spent in state, or $1 million total. The deal even has a small allowance, capped at $500,000, for above-the-line costs (actor, director, producer, writer’s salary), which isn’t insignificant for a medium-sized movie or TV show.

The incentive comes at a time when New Jersey is sandwiched between two states, New York and Pennsylvania, that have significant upticks in production due to its tax incentives and from which New Jersey has reason to believe it can syphon away business. The teamsters union estimates that there are 14,000 New Jersey residents who work in the entertainment industry, many of whom are union crew and talent that cross the Hudson River every day to work in New York. While many proponents of the bill point to the need to keep these professionals taxed income in state, Bernard also believes it gives New Jersey a huge advantage over other states.

“For the longest time, you only saw a handful of movies getting made out of Pittsburgh because they only had a handful of qualified crews,” he said. “These bills are really only designed for places that have qualified crews that can handle a volume of productions. Outside Californian and New York, Jersey is likely the third largest state with largest population of qualified crews.”

The other current reality is that the New York incentive has been so incredibly successful that the five boroughs of New York City are bursting at the production seams, led by over 60 scripted television shows (many not even set in the city), in which finding a sound stage is driving many shows to Yonkers, East New York and even north of the city.

On the flipside, nearby New Jersey cities like Newark, Secaucus and Montclair fall within most New York City based unions’ “Studio Zone” (the radius distance varies for SAG compared to IATSE, and so on) – the area in which crew and cast are still considered locals and the production doesn’t have to pay extra expenses involved with housing, transportation and idle days.

Inside the “Studio Zone,” when production wraps, the crew and cast go off the clock. Outside the zone, their paid work day begins and ends from when they are picked up and dropped off at their temporary residence or hotel.

The IATSE "Studio Zone" for New York

The IATSE
“Studio Zone” for New York

Screenshot

As for the need for good sound stages needed to make a TV series call New Jersey its home, Bernard said that there are number of facilities that are ready to move forward, while the number of empty warehouses and large buildings just outside New York City offers an incredible opportunity for the state.

One thing is certain: Bernard and his fellow commissioners, along with the local politicians supporting the effort, have taken advantage of the idle years of film production under the Christie administration, have been plotting the state’s comeback, and are ready to hit the ground running. The best sign of that? The commission’s website, decked out with a deep selection of photos highlighting the wide variety of architecture and landscapes available to productions. They’ve been organized into numerous sub-categories – cabins, clubs and courthouses – to make it easy for producers, directors and location managers to hunt through and become enticed.

The state and individual cities’ ability to facilitate and make shooting in New Jersey easier is not an insignificant factor and requires another set of resources. While the New York production turnaround was fueled by the tax incentive, it was only once Mayor Michael Bloomberg and his commissioner Katherine Oliver converted the Mayor’s Office of Film and TV into a client-facing bureaucracy – making permitting, parking and street closure easier – that New York City become hospitable to more productions. The floodgates opened.

As for New Jersey, Bernard said he was optimistic about the next steps. “Don’t worry,” he said. “New Jersey will be ready.”

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