Home Archived Articles Improved Film Incentives Deal Done, State Shoots for Economic Impact

Improved Film Incentives Deal Done, State Shoots for Economic Impact

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For the past many years, Maryland has been the location of a number of critically-acclaimed and commercially successful television productions. Reeling off the names of the programs sounds impressive, as they include NBC’s “Homicide: Life On The Street,” HBO’s “The Wire” and, more recently, “VEEP,” both of which shot interiors in Columbia; and, most recently, “House of Cards,” the Netflix series that will soon wrap production after its sixth season.
Still, the state’s production community couldn’t have been called robust, since its incentive package, a scant $5 million-plus, hasn’t been deep enough to attract new productions.

However, after years of effort championed by retiring local Sen. Ed Kasemeyer (District 12), that’s starting to change. Gov. Larry Hogan has just signed Senate Bill 1154 into law, and it will increase the state’s incentive package not just for one year — as has been the annual ritual — but for five years. To boot, the package even boosts the independent film community, in hopes of repeating the critical and commercial success of such indie blockbusters as 1999’s “The Blair Witch Project,” which was shot in Frederick County.

While Maryland’s new package still isn’t on a par with big-time players like Georgia, California, Louisiana and New Mexico, Maryland’s new package points in that direction and could finally ignite what could eventually become a big burst of economic impact.

Commitment

Maryland has had just enough incentive money in its program in recent years to keep the cameras rolling for “House of Cards,” and until three years ago, “VEEP.” That meant there was no money for any new production, even for an indie community that operates on relatively smaller budgets.

But the new law will increase the Department of Commerce’s film incentive budget by $3 million every year until 2023, when it would be capped at $20 million; it would also end Commerce’s current film reserve fund. That’s a huge improvement, because producers bringing multi-million-dollar productions to any state don’t want to have to move because its legislature ended its film program.

And that’s the key, said Debbie Dorsey, director of the Baltimore Film Office and vice chair of the Maryland Film Industry Coalition (MFIC). “It provides certainty,” she said. “We now have a program which provides industry decision-makers the ability to plan ahead, knowing that Maryland has an ongoing film incentive program in place.”
Furthermore, the indie film markets will be allotted 10% of the total incentive package each year. That means $800,000 in fiscal 2019, with that figure reaching $2.5 million by 2023.

Run the Numbers

Bob Middleton echoed Dorsey’s observations. “This shows the industry that Maryland is here for the long haul, and we’re committed to film production, the jobs and the business it generates for vendors,” said the chair of the MFIC and the president of The Arts Insurance Program, in Baltimore.

“For every dollar spent by a production company in Maryland, there’s $3 in economic impact [after the various multipliers] that comes back to the state,” Middleton said. “It impacts many other Maryland industries: catering, construction, home furnishing, housing, security, transportation, you name it, most of which are small. That’s even better, since small business is the growth area of the economy.”
To see what can happen, all Marylanders have to do is look at what’s been accomplished in Georgia during the past decade.

“For now, we just want to be competitive with Pennsylvania and Virginia,” said Middleton, who works nationwide with the film industry clients. “But Georgia got the idea, and now annually invests $9 billion in film incentives. They filmed the Marvel movie series, “The Walking Dead,” [famed director] Tyler Perry’s projects and much, much more. So, with the multipliers, that means $27 billion in economic impact.”

In addition, he said, the MFIC gets a report from Maryland Film Office Director Jack Gerbes’ office about films that wanted to shoot entire movies in Maryland, which in 2017 would have resulted in $60 million in economic impact. “HBO wanted to film ‘The Immortal Life of Henrietta Lacks,’ which starred Oprah Winfrey, in Maryland,” he said, “but it just shot the exteriors here and shot the rest in Georgia. Same with ‘The Post.’”

Noting that Ohio just upped its incentive program to $50 million per year, Middleton said while some people have an issue with tax credits, he sees that reaction “as kind of a knee jerk. But there’s no way to lose here. The state doesn’t put any money out; the production is only [reimbursed] after an audit of its spend.”

David O’Ferrall, business agent for International Alliance of Theatrical Stage Employees (IATSE) Local 487, recalled the days before film incentives were an issue. “We were a popular destination due to the locations, crew, topography,” etc. “It was during the Ehrlich administration that film tax credits were introduced in various states, when the main competition was Canada and Europe; later, that fight became between the states that had credits against those that didn’t.”

Today, not only is O’Ferrall pleased that the state “believes our production crews are as good as those anywhere in the world” and understands that they are respected “throughout the industry,” but also about “the carve-out for the indie companies. That means more home-grown product and getting more people more experience on crews, which we’ve been able to maintain” in recent years.

“This means kids coming out of Morgan State, Towson University, the Maryland Institute College of Art/Johns Hopkins partnership,” etc., “will have more in-state opportunities” and won’t have to travel to (or move to) other states to find work.

Hat’s Off to Ed

Aaron Skalka, owner/transportation coordinator of Transportation Resources, bases his business out of Annapolis because he chooses to live there, but gets most of his business out of Atlanta and L.A., “because that’s where the bulk of our customers are. We thought about investing $5 million–$10 million to set up a here, but we’re still more conservative in Maryland because the incentives are still not permanent.”

So today, “We have a conservative presence here,” Skalka said. “However, Maryland has made it safe for us to locate here. ‘House of Cards’ has been a huge customer for us.”
But if the incentives are extended for more than five years, that could change.

“In Georgia and in L.A., we have real estate, employees, a bigger fleet and greater infrastructures. Our investment in Georgia is four or five times what it is here,” he said. “My hope in addressing the legislature this past session was to get across that anything they do will help.”
The new law is “a great start,” he said, “but [legislators are] missing opportunities for the Georgia or L.A.-style project, because those states have made investments in the $300 million–$500 million range. When companies like ours see that happen, we can build infrastructure.”

With this new day dawning for the industry, Senate Majority Leader Doug Peters, along with Dorsey and many other stakeholders, tipped their caps to the retiring Kasemeyer (who didn’t return calls for comment to The Business Monthly by press time), who asked Peters to take over the bill and continue the cause.

“In the past, the industry incentive has reached $25 million,” said Peters. “We want to get it back up to that level.”

Peters said he “didn’t realize how many other businesses were beneficiaries of the film industry. Many people who approached me told me how important it was to them, and to the state.”

Eric Luedtke, a delegate from Montgomery County, also grasps the potential of the film industry, calling the passage of the law “a big deal. I’ve always been supportive of the industry, but got involved more deeply by sponsoring legislation a few years ago. I have IATSE leaders in my district, and they’ve talked to me about crew jobs, as well as the issues with people having to go out of state to find work.”
Luedtke said that he and many others involved in the years of discussion have experienced “legislative fatigue on this issue because we’ve had to revisit it over and over,” while also saluting Kasemeyer as a champion of the effort. “As much as Doug and I were glad to work on the new law, know that he’s put more work into this than any member of the legislature.”

Those observers who say that the state offering incentives to spur economic development is “akin to giving Hollywood and movie stars free money are not telling the truth. In fact, it’s specifically written in the law that that’s not to happen,” he said. “This law is about creating and keeping good-paying jobs for Marylanders.”

In Five Years

The next step in the long-term process, Luedtke said, is the incentivization of building a permanent soundstage.

“It’s logical to me that central Maryland would be a good spot to build one,” he said. “Whatever bill we come up with won’t speak to locations, but will include grants to encourage construction. I plan to bring it up during the next session.”

“We’re going to pay much closer attention to the film industry as a job creator,” Peters said. “I think that gets lost in this discussion. When you attract so many people who want to work here — or [see so many] having to leave the state to find work — you comprehend its importance.”

As for Skalka, while he isn’t entirely happy with the scene in Maryland, he now qualifies as hopeful.

“The state’s film community has so much to offer and the [incentives] aren’t a handout,” Skalka said. “This is a great, clean industry that creates great jobs, great wage scales, fantastic benefits and employs thousands of people.

“I want to be really clear that this is a huge step in the right direction,” he said. “The legislature has stepped outside the normal approach, and that means Maryland will now attract long-term projects.”