Hollywood bids to lure filmmakers back to Tinseltown

Hollywood has the Oscars, but competition has drawn many productions elsewhere. Now it’s trying to reverse the trend

A production crew in Shreveport, La., films an explosion for the film “Battle Los Angeles.”
Jim Hudelson/The Shreveport Times/AP

LOS ANGELES — The annual Oscars ceremony is here. Major film studios are here. The world-famous Hollywood sign is here.

So why is it that only one of the nine best-picture nominees to be honored this Sunday at the 86th Academy Awards ceremony — “Her” — was filmed here? And last year, again only one: “Argo,” the best-picture winner.

In recent years Hollywood filmmakers have been leaving the actual Hollywood in droves, as more than 40 states dangle lucrative incentives to lure them.

Competition comes not just from other states but also other countries, such as Canada and Australia. Canada was the draw in the 1990s. Not only were the incentives good, but the currency exchange rate was favorable to Americans. But what was good for Canadians — or Louisianans — has been bad for the real home of Hollywood.

“What that has meant is loss of spending and jobs here,” said Amy Lemisch, executive director of the California Film Commission.

But now studio executives, labor unions and California communities are joining forces to push for legislation to beef up funding for California’s current incentive program, first introduced in 2009 when action-film star Arnold Schwarzenegger was governor.

The state has allocated $100 million a year through fiscal year 2016–17. The film and television tax credits are so popular that qualified applicants are selected through a lottery system. But that hasn’t been enough to keep Hollywood in Hollywood. “The business model now is that producers look to regions that offer incentives when they make decisions where to shoot,” said Lemisch.

John Goodman, Alan Arkin and Ben Affleck on the set of “Argo,” one of the few recent best-picture Oscar nominees shot in California.
Warner Bros./Everett Collection

Two bills that would expand incentives were introduced this month, one by Republican Assemblyman Tim Donnelly and one by Democrats. The latter has received industry-wide backing. It would extend and expand the program mainly by making big-budget films eligible for credits. “We would allow sort of the blockbuster films to apply for a credit,” said Assemblyman Mike Gatto, a co-sponsor of the bill with Assemblyman Raul Bocanegra, both Democrats. “That’s something California has lost almost entirely.”

California’s tax credit covers 25 percent of qualified production costs, but only for movies with budgets of less than $75 million. Only one of the 41 big-budget films released in the past two years was filmed in the state.

The incentive to get the industry to stay is obvious. Between 2004 and 2012, the state lost more than 16,000 jobs in film-production employment, more than a 10 percent drop, according to a report that came out on Thursday by the Milken Institute, a nonprofit think tank in Santa Monica. During the same time, New York, California’s main rival, added more than 10,000 such jobs, the report showed. In California, the jobs pay well — more than $95,000 on average.

The report concluded: “The areas not covered under California's current incentive program, namely, big-budget movies, hourlong network dramas and visual effects, have been the fastest to flee the state.”

But the task is hard. Even films set in California are now being shot elsewhere. A film in production now, tentatively dubbed “San Andreas,” is about California’s dreaded earthquake fault, but it’s being filmed in Australia. Palm trees were shipped to Massachusetts for a film starring Cameron Diaz that is set in California. “Rock of Ages” is supposed to take place on Los Angeles’ famed Sunset Strip, but it was filmed in Florida. “Battle Los Angeles,” a science fiction war film, was shot in Louisiana.

In the city of Los Angeles alone, these runaway productions have resulted in the loss of more than 9,000 jobs since 2007, according to the Los Angeles Economic Development Council. The number of jobs in the entertainment industry declined 6.6 percent in five years, to 132,900 in 2012.

The decline in films shot in the capital of filmmaking has wider ramifications. “Tourists want to see this concept of Hollywood,” Gatto said. “They want to see where the magic is made. If we were to lose that, that is very difficult to quantify.”

Two feature films, including “Argo,” were shot in San Bernardino County for several days in 2010 and 2012. The productions brought in $902,000 in local spending (including $87,000 in wages, $349,000 at hotels and $30,000 for food and catering), according to the California Film Commission.

Russell Brand, director Adam Shankman and Alec Baldwin discussing a scene in “Rock of Ages,” which is set on Hollywood’s Sunset Strip but was filmed in Florida.
Warner Bros./Everett Collection

But the competition from other states is brutal. Louisiana was the first to launch an aggressive outsourcing campaign in 2004, and others, from New York to New Mexico, quickly followed. Louisiana and Georgia are attracting so many film productions that the region has been dubbed Hollywood South, attracting tourism. Atlanta is building permanent film-production facilities, such as soundstages, and training film crews.

“It just grew and grew every year, and here we are with over 40 states that offer financial incentives to lure film productions,” Lemisch said.

Communities here are trying their own incentives to keep film productions. San Francisco offers a film rebate. Los Angeles doesn’t charge location fees on city-owned properties and tries to expedite permits. Last fall, Mayor Eric Garcetti created a film czar position to stop the exodus, a post now held by entertainment industry lawyer Ken Ziffren.

“The more production we have in the state, the more it will spread throughout the state,” Lemisch said. And Erica Michel, research analyst at the National Conference of State Legislatures, said, “In the last few years, (attracting film productions) has been part of a broader conversation states are having about economic development incentives in general.”

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