Should Arizona court filmmaking industry?

Arizona has a long history of film. But the lack of a tax incentive or state film office is hurting Arizona's legacy, advocates say
Arizona Republic
Friday, April 4, 2014
Michelle Ye Hee Lee

It was 1938 when John Wayne, playing the outlaw Ringo Kid, first journeyed through the buttes and mesas of Monument Valley, where his character was picked up by a group of travelers in the film "Stagecoach."

Fifty years later, troublemakers were still traipsing about Arizona. Escapades of post-jail life took recidivist H.I. McDunnough (Nicolas Cage) from Phoenix to Apache Junction in the 1987 cult movie "Raising Arizona." And in 2012, a group of friends known for their drunken binges shot the third and last installment of the "Hangover" series in Nogales to recreate Tijuana, Mexico.

Arizona's film history dates to the 1920s. But nowadays, the state is conspicuously devoid of fictional miscreants in big-name movies, and film advocates say Arizona is not doing enough to market itself as a competitive host to an industry that is all about location, location, location.

A bill surfaced in the Arizona Senate this spring to address that by restoring the state film office, which was shuttered in 2010 during the state's budget crisis. The legislation did not make it out of the Senate, but its sponsor continues fighting for an office he says is crucial.
Most states have film offices that work to attract production crews for movies, TV shows, commercials, documentaries and more. Those offices market their states' amenities and help crews with logistics.

The majority are run through the state or a commerce agency, but an Arizona Commerce Authority spokesman said the film industry is not one of the agency's priorities.

Advocates say creating a state film office is an affordable first step toward reviving Arizona's film legacy. While a lot more needs to be done to make the state truly competitive, they say, having a state office would send a message that Arizona is open for business.

"I think that movie producers and media businesses really do celebrate that opportunity to have the Grand Canyon, the red rocks of Sedona, as a part of their film," said Sen. Carlyle Begay, D-Ganado, a bill sponsor. "They celebrate the opportunity, but unfortunately, we don't have an office or a point of contact.

But opponents of the bill feared setting up the office would create a taxpayer-funded staff that would lobby for tax credits for the film industry.

"Setting up an office of film and media is unnecessary to attract business," said Scot Mussi, executive director of the Arizona Free Enterprise Club, which fought the measure. "That's what the private sector is for."

Business lost

A convoy of vehicles loaded with film gear lined the roadway in an Arcadia neighborhood last week. A Phoenix police officer stood guard.

TimeLine Video, a New York-based film company, was shooting a commercial for JM Eagle Pipe on a breezy spring Phoenix day. Boom mics and cameras focused on a local actor in a plumbing outfit who held up a corroded pipe and delivered his lines in front of an All-American home.

Diane Cricchio, the company's president and creative director, prefers to shoot in Arizona rather than in New York because of lower production costs, mild weather this time of year, diversity in landscape and friendly local crews.
A producer based in Arizona works with Cricchio, and helps the company obtain necessary permits. The producer's contact is Phil Bradstock, the one-person City of Phoenix Film Office.

Since the Arizona Department of Commerce Film Office shut down, a handful of individuals, like Bradstock, have informally divvied responsibilities among themselves in Greater Phoenix, Tucson, Wickenburg, Prescott and Flagstaff. They work to attract production companies, clarify misconceptions, and help crews navigate logistics such as clearing roads, setting up traffic stops or issuing permits.

"There's a lot more behind the camera than you see on camera," Bradstock said.

Begay's legislation would have appropriated $300,000 from the state general fund to create a Governor's Office of Film and Media to act as a liaison for production companies navigating logistical problems throughout the state.

The current setup works, but the lack of a state office means there is no point of contact to work out shoots on state or tribal lands.

"We're only responsible for our parts of the state," said Shelli Hall, director of the Tucson Film Office. "There's no one central location that customers or clients can call to find out about the state and where they should go next."

It is particularly important for a state like Arizona, which has something for everybody. There is snow in northern Arizona, and no shortage of deserts in the south. There are mountains, forests, rivers and lakes across the state. The Valley itself offers a variety of landscapes — from the ritz of Scottsdale to the grit of Apache Junction to the downtown Phoenix urban business district.

Cricchio noted, for example, that while her commercial was set at an Arcadia home, if the script were to change and require mountains, she could simply turn the cameras around to show the nearby backdrop of Camelback Mountain.

Advocates say there are missed opportunities and unnecessary barriers created by the lack of a state film office that could tout and market the variety available statewide for clients' specific needs. Compared with the fact that almost every other state has a point of contact, it is a glaring omission, they say.

That omission has turned away clients exploring Arizona as a potential location, said Alan Benoit, a Gilbert-based location manager who works with companies from around the world.

"It is a message," Benoit said. "It says your doors are closed. And how do you explain that?"

Mussi said his free-enterprise group is not against attracting more business to the state. But setting up the office would be picking winners and losers, he said.

"We should not be setting up offices to specifically attract one type of business to Arizona," Mussi said.

Tax credits

Even if advocates win the battle to create a state film office, it would only be a first step — albeit a less politically risky one than offering tax credits, which more than 30 states use to entice film crews.

The theory behind tax credits is to give financial incentives to filmmakers to hire local crews and spend locally. The return on investment, however, is debatable.

A 2012 study commissioned by the Motion Picture Association of America found film tax credits were successful in generating revenue for states and boosting tourism. But competing studies found states may not be gaining as much in return as the film industry believes.

Arizona's Motion Picture Production and Infrastructure Credit provided production and infrastructure income-tax credits from December 2005 through December 2010. Nearly 300 productions — films, TV shows and music videos — applied for the credit during that period, of which 56 were completed and received $22.5 million in tax credits by the end of 2010. Those productions reportedly invested $109.6 million in Arizona.

However, a 2008 mid-program report by the former Arizona Department of Commerce found the film-tax incentives were not generating dollar-for-dollar revenue for the state general fund, making them financially unjustified.

"The difficulty in creating tax incentives is to make them large enough to have an impact on economic decisions, but not so large as to be unduly generous or burdensome to the state general fund," the report said.

Incentives are what infamously lured the wildly successful "Breaking Bad" TV series away from California to New Mexico, highlighting New Mexico as an industry-friendly state. Since Georgia lawmakers passed enticing tax credits for filmmakers, that state in recent years has become a hub for movie and TV shows, including the hit zombie-apocalypse show "The Walking Dead."

John J. Kelly, a producer and production manager who was executive producer for "Into the Wild," "127 Hours" and "Divergent," said a state film office is a helpful resource, but a competitive tax credit is what ultimately attracts him when picking locations.

The most attractive states for locations, Kelly said, offer the most competitive film production rebates — essentially, refunding transferable credits if companies spend over a preset minimum and purchase a certain amount of local goods, services or crews.

For "Divergent," which was shot in Chicago, Kelly had 600 to 700 Chicagoans on the payroll every day. He hired more than 1,000 people locally, and was there for 10 months. His movie gave back to the local economy after he was attracted with the rebate, Kelly said.

"It's such a huge metropolitan area (in Phoenix) that ... you can do so much there that can easily be sourced out to a local crew. But there are just no rebates," said Kelly, who grew up in Glendale. While Kelly is well aware of the various film locations available in the state, he said producers have to think about the bottom line.

Ongoing efforts

There have been several efforts in recent years to bring back Arizona's film tax credit.

Last year, a Senate bill would have reserved $70 million in annual multimedia-facility and production-tax credits. The Arizona Tax Research Association fought the bill, arguing the proposal would appropriate funds for film tax credits ahead of money for schools, health care, prisons and other state functions. The bill failed.

A similar bill was introduced in the House earlier this year. It failed as well.

Louisiana offers what is considered one of the most competitive rebate programs. In 2012, the state's film credit programs brought in over $1.1 billion in sales for local firms, according to a 2013 analysis.

Chris Stelly, executive director of Louisiana Entertainment, which operates out of the Louisiana Department of Economic Development, said investing in film production has been an important state priority.

Stelly's office acts as a liaison to production companies looking to shoot in the state.

"It's quite beneficial because it ensures that we at the state level don't miss anything, but it also provides assurances to the client that they are going to be taken care of and their needs are going to be met," he said.

While setting up a film tax credit has been successful for Louisiana, Stelly said it is important for states considering such a program to plan carefully.

"You have to have responsible fiscal policies to ensure the state is receiving as much benefit from these programs as possible," Stelly said.