Film and television producers, including the NBC Universal affiliate of General Electric Co., are fighting any tinkering by the state with the tax credit that has drawn NBC talk shows to Stamford and scores of productions to Fairfield County.
The Connecticut General Assembly is considering switching the state”™s 30 percent tax credit on film production to a 25 percent rebate, which proponents say would net more money for both producers and the state.
Opponents argue, however, that the change would subject the incentive to annual review under the state”™s budget process, scaring away production companies who fear their incentive would be stripped after they had committed to creating a film or TV show in Connecticut.
Last year, legislators put several checks on the program, including that the tax credits can only be applied to goods and services purchased from Connecticut businesses, and used in Connecticut. The program also capped a production”™s ability to take tax credits against the salaries of actors and producers of productions, at $20 million.
A small parade of NBC executives and managers appeared in Hartford this month to oppose any new changes, while noting the impact the Jerry Springer Show and two others have had on downtown Stamford”™s economy since taping began last year.
“We would not be here today but for an analysis that my team ran in 2008 ”“ and which continues to run weekly ”“ on what states offer what tax credits, and whether the existing infrastructure and the skilled labor pool makes sense in that community,” said Richard Ross, senior vice president of production for NBC Universal. “Without the credit in its current form, Connecticut would not have been part of that analysis. However, because of it ”¦ we now have a permanent address in Stamford with 175 full-time employees.
“Because of the permanent production footprint NBC now has in Connecticut, and because of the positive experience we realized in Stamford proper and in the state in general, Connecticut is now always part of NBC Universal”™s dialogue when exploring production locations,” Ross continued. “The larger team, of which I”™m part, controls in excess of $2 billion a year that”™s allocated for television production. I”™m here to attest today that the credit in its current form keeps Connecticut at the top of the discussion when NBC is making television location decisions.”
Tracie Wilson, an NBC Universal manager who runs the company”™s Stamford Media Center, estimated the company”™s three talk shows in Stamford have increased foot traffic in Stamford by nearly 40,000 people. She uses a different measure to gauge the show”™s impact on Stamford ”“ slices of pizza served, some 20,000 in all.
“During a typical production year, we”™re ”˜traveling”™ about 4,672 guests to the greater Stamford area from August through May, which is our taping schedule,” Wilson said. “We have a couple of very happy pizzerias that are our new best friends, and there are other vendors and local businesses as well that are very happy since we”™ve come into the Stamford area.”
Brian O”™Leary, a tax counsel for NBC Universal, said the tax credit program also spurred the company to relocate its fantasy sports league production staff to Connecticut from Westchester County, N.Y.
“What is crucial about the program, in large part, is its predictability,” O”™Leary said. “It is a transferable tax credit that, every year, our production team can budget. They know that every year Connecticut will be a partner in meeting our budget constraints, and in return we will continue to produce, invest and create jobs in this state.”
Despite NBC Universal”™s commitment to Stamford and Fairfield County and its obvious economic impact, state Sen. Gary LeBeau in his role as co-chairman of the commerce committee in the Connecticut General Assembly worries the state may be giving away too much,.
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“This credit is much higher than any other tax credit that is on our books,” LeBeau said. “It”™s (a) significantly higher tax credit than other credits ”“ say, for instance, the research and development tax credits.”
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By switching to a rebate program similar to one offered by New Mexico, LeBeau said both the state and a film production company could profit, given the fact that most production companies have been selling the credits at a discount to deep-pocketed corporations, to obtain immediate cash in exchange for the value of the reduced tax liability the tax credits offer those companies.
He offered the example of a film made in Connecticut that generated $100 million of creditable expenses, resulting in a $30 million tax credit at full value. Given the assumption that tax credits are selling for about 80 percent of their value, a production company selling that credit would fetch $24 million. But under a 25 percent rebate program such as New Mexico offers, the production company would recoup $25 million, while the state would save $5 million.
“Everybody is looking at the New Mexico program,” acknowledged Linda Sobin, Connecticut advocate for the Motion Picture Association of America, while saying her organization supports the tax credit program in Connecticut staying intact, voicing the fears of NBC Universal and others that a rebate program could be canceled in any given year.
Doug McAward is general manager of the proposed Dogstar Studios in Stratford, and said that the facility already has 25 tenants lined up and plans to start a school within the facility to train filmmakers and technicians. McAward said he would support the idea of a straight rebate on expenditures rather than the more complicated concept of a tax credit.
“As a producer, I would rather not have to deal with brokering credits,” McAward said. “A rebate is much easier ”¦ There”™s no middleman.”
Even as Connecticut has enjoyed rapid film industry growth since 2006 when its tax credit law was passed, the proposed revisions could serve to show that legislators have a lot to learn about the cottage industry they created. The initial version of the bill included a component that would require half of any film or TV production to be produced in a Connecticut soundstage ”“ a requirement that invited a primer in film production from industry insiders.
“I understand the intention of this bill ”¦ is meant to spur the growth of new infrastructure in the state, but frankly it will have the direct opposite result,” said Bruce Heller, co-founder of the Connecticut Film Center in Stamford. “More than anyone we at CFC would love for movies to shoot more in studios; however, that is just not how films are made. To give an example, the movie ”˜Old Dogs”™ shot just 20 percent of the production in our facility, but they kept us fully booked for eight months. And, more importantly, they spent over $50 million in the state. Under the proposed legislation, ”˜Old Dogs”™ would not have come to Connecticut and we would not have our facilities here.”
“It is my experience that most feature films rarely film more than 10 percent of their shooting schedule on stage,” agreed Michael Nickodem, a film location manager who has worked on multiple local projects. “The expense of building sets on a stage far exceeds the cost of shooting on location. Not even the benefits gained from a tax credit program would be enough to offset those expenses and entice film productions to come to Connecticut. The result of passing such a requirement would invalidate the tax credit program and effectively end filming in the state of Connecticut.”
