Tax incentive barriers rise for film producers

Connecticut continues to have confidence in its film industry incentives, though it”™s a tougher road for independent film companies since those incentives have shrunk. Large studios, industry professionals and politicians, however, see film as a likely part of the state”™s future.

The State Representative from Stamford, Carlo Leone was part of the task force commission and legislation team that worked on the original Hollywood East tax credit. “The key goal was to bring long-term production to the state, be sustainable, and eventually grow a work force and education force that could become a full blown industry as it is in New York and Los Angeles.”

However, Leone said, the state”™s financial crisis led to raising the bar for entry last year for film projects wanting to be shot in the state.

The state now requires film, digital and music-related-to-film projects to spend $1 million in the state, up from the original $50,000, to get a 30 percent tax credit.

“In a perfect world I”™d like to see it lowered again,” said Leone. “If anything, the higher barrier has brought more people out to advocate for the tax credit; at the end of the day the industry has to work with itself to make it work. Sometimes the state doesn”™t move as fast as the private industry would like. With the downturn the industry hasn”™t left, and film-related businesses have continued to trickle in, which leads me to believe that we should see the industry take hold in the future.”

Alex Calvo, an independent filmmaker in Fairfield has recently started a petition to get the tax credit lowered to a compromise of $250,000.

“Anything lower than what it is now would be great,” said Calvo. “Raising barriers of entry is not a good way to stimulate the economy because most indie films are below that million dollar mark. What”™s really interesting about the films under a million is that because they”™re smaller, they tend to hire more locally rather than seek out expensive out-of-state options. I”™ve hired kids coming directly out of the Connecticut film industry training program. A smaller production also would tend to hire them at a much better position. We”™ve passed this law to stimulate local activity but we”™ve gone and harmed in-state professionals.”

Calvo said when a smaller filmmaker in the state eventually has a big hit they can”™t be blamed for taking their next project ”“ a $20 million to $50 million film ”“ out of state.

“It”™d be nice to have that loyalty to Connecticut, wouldn”™t it?” said Calvo. “It”™s not only the film industry, they”™re also getting their catering locally, buying things at local hardware stores. This is trickle down in the real sense, not just a hope.”

Trickle-down effect taking hold
A month ago New York City-based film library company, Film Chest, opened a location in Bridgeport with hopeful ideas for the future. Ralph Stevens, owner of Film Chest, said he will be investing in future property purchases in the city and county.

In Stratford the wheels of progress are still in motion at Dogstar Studios.

Allen Christopher, president and CEO of Dogstar, a studio that will occupy the former ExxonMobil Chemical Co. plant on Lordship Boulevard, said studios like Dogstar create industry clusters and draw additional business to the state

It”™s more than just a single studio, said Christopher. The 292,000-square-foot factory is a location with uniquely high ceilings perfect for soundstages and full business offices. ?The studio has film industry companies Mutual Hardware, Global Scenic from Bridgeport, Video Evolution, Redding Audio and Turner Audio both out of Redding, and Boston Camera all signed on as studio tenants ready to relocate to Stratford. The studio also has multiple contracted talent offices for writers, producers, directors, and the like. Dogstar has since the winter also partnered with the owners of the neighboring Ramada Inn, in a deal to offer accommodations to temporary studio talent and clients.

The deal has also led to the emergence of a cleaning company, initially for the hotel, called Greening and Cleaning and the relocation of a security company called Bulldog Security from New York City. The studio, which is to include a learning center called Dogstar Academy and an area television network, channel 51, is tentatively scheduled to open this winter.

“This project will create hundreds of jobs, including many entry-level opportunities,” Christopher said. “Though it has been a long road, in this climate making a major investment project like this happen is no easy task. If the state were to approve a moratorium on the tax credits it would give more confidence and make projects like this easier.”

Dogstar buying time with Chapter 11
On July 12, Christopher said he had to file for Chapter 11 bankruptcy on behalf of DMG Studio Holdings, LLC, the funding enterprise behind Dogstar Studios, in order to elongate the process to a time period suitable to ExxonMobil”™s investment demands. The document lists eight creditors and a $7,366,100 sum; a disputed $6.35 million claim to ExxonMobil makes up the majority of the list. Christopher said the filing is a maneuver to “buy time” while relationships with additional investors are solidified. ?“The problem is we needed more time to obtain proper financing,” said Christopher. “We were given several extensions and it was coming to the point that we needed extra time on top of that, and that”™s what the bankruptcy filing is giving us: Time.”

ExxonMobil would not comment on the bankruptcy filing but a spokesperson said the company is optimistic that a deal will close in the near future.

“Commercial banks aren”™t really lending right now so we have to work with privatized investors,” said Christopher. “It”™s a long and hard process but thankfully things are moving.”

“A lot is going to be based on who gets elected next month,” said Thomas Carruthers, president and founder of the Connecticut Film Festival.

Putting the cart before the horse
He said each gubernatorial candidate has different issues in regards to developing tourism.

“In a situation where you”™re trying to bring an industry to the state you need to put the cart before the horse.

Carruthers said $600 million came to the state in the first two years.

“Did all of the money stay here? Absolutely not,” said Carruthers. “But the state also had nothing in place to measure the amount of businesses it did bring in, even a simple website register list.”

Carruthers said.

“Small three- to four-person digital recording studios and editing studios, could be growing brick and mortar businesses here,” he said. “They are, but these are the businesses the candidates are talking about. Whoever gets into power needs to know this is money falling from the sky; these are businesses with the ability to blow up with success in a couple of years.”

Carruthers said that proposition applies to out-of-state film and digital industry professionals as well as in-state professionals with transferable qualities.

“Carpenters have the basic skills you need in set construction,” said Carruthers. “What they don”™t know they can be taught.”