Monday, April 8, 2013

Slow Saturday Special: Boston Burning For Movie Sets

So how much is it co$ting taxpayers?

"Young Massachusetts film producers finding early success" by Meredith Goldstein  |  Globe Staff, April 06, 2013

Paul Bernon and Sam Slater aren’t dabbling in the film industry. They’re just not the dabbling type.

Bernon, 35, is a principal at Wellesley-based Rubicon Real Estate, which owns and manages about a million square feet of industrial and retail property in New England. Slater, 28, of Boston, oversees real estate holdings, agricultural properties, and his family’s foundation.

These men make money. So when the two developers last year decided to launch a local movie company, Burn Later Productions, they took the venture quite seriously. Now they’ve got the film industry taking them seriously, as well....

While Hollywood filmmakers have flocked to Massachusetts to take advantage of the state’s generous tax credit, Bernon and Slater represent something else: wealthy, homegrown entrepreneurs interested in growing a film business based in Boston. Despite being known for their work in real estate, the newly minted producers say they’re spending half their time on movie business, hoping to make Massachusetts a real base for the industry, rather than just an inexpensive place for out-of-towners to film....

Oh, it's CHEAP to film here?

Ever since the state enacted the film tax credit in 2006, Massachusetts has drawn filmmakers, from hometowners like Ben Affleck, who returned to tell Boston stories like “The Town” and “Gone Baby Gone,” to Hollywood heavy hitters like David O. Russell who, three years after making “The Fighter” around Lowell, is now back in Boston shooting a political drama starring Jennifer Lawrence, Bradley Cooper, and Christian Bale.

So how much of those star salaries did the Massachusetts taxpayer have to pick up?

The tax credit, which reimburses producers up to 25 percent of the costs of filming in the state, has been controversial since its start, with critics saying it’s too expensive and hasn’t created enough jobs for Massachusetts workers, while supporters counter that besides creating jobs, the incentives support tourism by drawing visitors to area sites and movie locations.

Massachusetts Film Commissioner Lisa Strout says that Bernon and Slater are part of a new crop of young, business-minded movie lovers who come to the film industry with sharp entrepreneurial skills.

Strout likens Bernon and Slater to filmmakers like Megan Ellison, the 27-year-old daughter of Oracle cofounder and billionaire Larry Ellison. Megan Ellison founded a film production company and has gone on to make prestigious movies such as “The Master” and “Zero Dark Thirty.” Strout said these producers are committed to the creative process, but they also bring an understanding of the bottom line to their projects.

Related: Sunday Globe Special: Night at the Oscars

Nominated For Your Consideration: Hollywood as History

It's only a movie, folks.

“I think it’s fascinating to people who understand finance,” she said, of the film industry. “How it gets put together, how much of it is debt, how much of it is equity.”

That's what fascinates the state's film director? 

Why am I not $urpri$ed at all?

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Related:

"Mass. tally finds thin return from film subsidies" by Todd Wallack  |  Globe Staff,  March 22, 2013

The state’s film subsidy program cost taxpayers an estimated $44 million in tax credits in 2011, though it created the equivalent of more than 1,200 full-time jobs, according to the state’s latest annual report on the incentives.

This at a time of ongoing austerity and service cuts.

In the report, the state Department of Revenue said most of the economic benefits went to Hollywood and other locales. Only 35 percent of the $176 million that production companies spent in Massachusetts in 2011 went to residents and companies in the state. The state recouped just 16 cents in new tax revenue for every $1 it gave up in subsidies in 2011, the most recent year with complete data.

That return gets a lousy review in my book!!

Wish we could reopen and renegotiate the contract like they do with labor unions, but CEO pay and corporate welfare laws are $acro$anct.

The subsidies created the equivalent of less than 500 net new full-time jobs for Bay State residents in 2011.

Wait a minute, that's a steep drop from 1,200!

The Revenue Department calculated the program has cost an average of more than $128,000 for every local full-time job it created since its inception 2006 — nearly double what the jobs paid the workers in wages during that span. 

Someone stole the tax loot -- or did Hollywood's $pecial effects just make it di$appear?!

“If you are seeing a cost per job that is greater than the salary of those jobs, that suggests there is a pretty serious problem with the tax break,” said Noah Berger, president of the Massachusetts Budget and Policy Center, a watchdog group.

It's called legalized theft.

The film subsidy program offers tax credits that reimburse production companies for up to 25 percent of the cost of filming in Massachusetts. It has become controversial over the years as supporters and opponents debate whether the economic benefits are worth the cost. 

Clearly not.

Created to attract film productions to the state, the subsidy program has done just that. The Department of Revenue estimated that the industry made 77 productions in Massachusetts in 2011. There were 13 feature films, 12 television series, 47 commercials, and five documentaries.

Last year’s figures are incomplete, but the Revenue Department estimated there were 61 projects in the works that were likely to generate $313 million in spending, and cost the state $78.2 million in lost tax revenue, substantially more than the 2011 tally.

But they wouldn't be here of we didn't give them the handout.

Film industry advocates say the revenue agency’s analysis fails to take into account the full economic activity created by the local productions, including the potential boost to tourism by showcasing the state.

You mean the "trickle" down?

Movie companies also insist that the productions have created thousands of part-time jobs in the state and helped countless businesses, such as restaurants and hotels.

Yeah, so WHY AIN'T YOU HAPPY about tossing away so much tax loot?!?! 

What do you mean the part-time job didn't pay at least $64,000?

“The incentive is working,” said Chris O’Donnell, business manager for the International Alliance of Theatrical Stage Employees, Local 481, in Woburn. It has 900 members who typically work behind the scenes on productions, triple what it had before the incentives were put in place.

See: Uniting With Hollywood

Who cares how much it co$ts, huh?

Roughly 40 states offer some type of incentive program for the film industry. As in Massachusetts, the incentives have been controversial elsewhere. Many economists and watchdog groups have long argued that the incentives are too expensive and do not pay for themselves.

Lisa Strout, director of the Massachusetts Film Office, said there are several projects underway in Massachusetts, including two that moved here after Pennsylvania capped its film subsidies.

Governor Deval Patrick recently proposed capping Massachusetts’ subsidies at $40 million a year, and state Representative Tackey Chan, Democrat of Quincy, recently proposed slashing the size of the tax credit by 40 percent for companies that do not spend at least half of their payroll on Massachusetts residents.

That's still too much. 

How 'bout nothing for profitable Hollywood? If they want to go shoot their movies somewhere else, fine. I can hardly afford a ticket to the movies these days, never mind millions in subsidies to pay $tar $alaries!

Both proposals are likely to face opposition in the Legislature.

Where Hollywood'$ voice can be heard.

Separately, the Massachusetts Production Coalition, which represents the movie industry, plans to hold an expo to promote the state’s film industry at WGBH (itself a major recipient of the state subsidies) in Boston on Saturday. More than 50 exhibitors are expected to ­attend.

That's because it is PBS.

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Also see: No Hurray For Hollywood in Massachusetts

Let the credits roll, readers.