the choir has been preached to....now what?

The production industry was out last night. 

A town hall meeting in Livonia (and a simulcast of the event in Grand Rapids) brought out a couple of thousand folks, most of whom have benefited from the huge increase in the volume of production work that has come to the state since the production tax incentive legislation was signed into law in April, 2008. 

There were great stories told, and passionate points made--mostly to crowds that overwhelmingly support the continuation of the tax incentive program that has sparked significant economic development to Michigan.  The program was slated for significant changes/reductions as outlined (albeit briefly) in Governor Rick Snyder's budget proposal that the executive branch introduced last week.  There are certainly questions about the program's effectiveness, but the most recent study was done by Ernst & Young, and it shows a great return on investment.

So now that the production community's support is galvanized--across the state--what is next?  If the past week is any indicator, the coming weeks will certainly see extensive debate about the governor's budget.  And while the production tax incentive is a huge issue, it is an issue that has to be taken in the context of some sweeping changes to how Michigan deals with taxation and economic development across the board.  We're looking forward to the discussion, and to finding ways to continue sparking opportunities for our entertainment industry clients working in Michigan.

We hear each other loud and clear.  Now is the time for the rest of the state to hear how a thriving production industry in Michigan can help us all.

production incentives and subjectivity

Production tax incentive programs are definitely taking fire as we come to the close of 2010.  Nevertheless, the soft money that tax incentives bring to production budgets continue to help get projects that otherwise might languish in development limbo off the ground.  As many states and jurisdictions (including our home base, Michigan) debate the sustainability of production incentive programs, there are still a lot of options for producers seeking government help to get from limbo to lensing. 

One of the challenges that face producers seeking tax credit support is that the application and administrative processes for the programs vary widely.  It takes some concerted effort to evaluate not only the bottom line benefits of each jurisdiction's program, but all of the nuances of participating in those programs as well.  And then there are the true variables: the subjective criteria in each of the programs that can be impossible to predict.

In Michigan, projects have been denied tax credits because of concerns about the content of submitted scripts and because the Michigan Film Office determined that there were not sufficient economic development benefits to the state that would result from bringing the denied projects to the state.  Michigan is not alone.  This week we learned that Robert Rodriguez's most recent release, Machete, was denied incentive support in Texas because it portrayed Texas in a negative light.

There really is no escaping subjective criteria in the administration of the production incentive programs.  The key to successful utilization of incentive financing is working with professionals that have frequent interactions with the administrators of the programs in the jurisdictions that productions are considering.  While no one can predict an outcome when it comes to subjective criteria, it helps to know what has happened in the past and to have some insight into how decision makers approach each project as the applications come in. 

Update on December 14, 2010 by Joe Voss

The actor that played the title role in "Machete" has weighed in on the Texas decision....

Summer shooting in michigan

The Detroit Free Press is running a front page story today about all of the features that are coming to Michigan this summer.  We're definitely seeing more activity at the firm, but as the article points out, the debate inside Michigan about the tax incentives is not lost on the production community around the country that considers the state for housing their projects. 

We're getting a lot of questions about what is going to happen with the incentive program.  The rumors that float around--especially in the Los Angeles area--about the state being out of money and not able to make good on its obligations, pop up at least once a week.

As of now- the program lives.  Which means dollars are being spent in Michigan by productions that are free to spend their money anywhere they like.  It also means local crew members are building strong resumes, and the Michigan production community grows stronger by the project.

it's really all about the source data...

Another report came out this week about the effectiveness of Michigan's production tax incentives, and this one was negative.  Coverage of the report is HERE.

So- the big issue with this report is their source for data.  They used the MI Senate Fiscal Agency October, 2008 analysis of the program as a primary source.  Folks that have reviewed that report know that it paints a "worse case scenario" for the legislature to consider.  It basically contemplates the state paying out 100% of the credits applied for, and really doesn't have any basis in the reality of Michigan's obligations to issue credits (and pay refunds, if applicable). That reality involves verification that all of the money being spent by production companies and reported as qualified spend was indeed spent in accordance with the statute (or the Michigan Film Office and the Department of Treasury's interpretation of the statute, at least).  The state's liabilty is significantly lower once the production companies' expenditures are vetted.

If you're looking at reports about the Michigan production tax incentive program- positive or negative- remember to check the sources. 

hot off the press....

The 2009 Annual Report from the Michigan Film Office was released today-- click through to a copy here.