Michigan film industry rises and falls as tax credits come and go
When Michigan's auto factories started to close, many wondered what to do with them. The state decided to try and turn them into movie studios, which worked for a time. Until the tax credits ran out. Now those new studios are empty former factories once more.
The new movie Oz: The Great and Powerful comes out next spring.
But this land of Oz was shot in Michigan.
Oz — directed by Sam Raimi, starring James Franco, and distributed by Disney — was the high-water mark of an ambitious program to convert some of the state's abandoned auto plants into film studios. State taxpayers funded 42 percent of the filming costs at Michigan Motion Picture Studios in Pontiac, outside Detroit, in hopes it and other productions would establish a new industry in the state.
But the studio has largely been idle. Michigan’s Republican Governor Rick Snyder vowed to cut back the state’s film subsidy program, and Hollywood studios began taking their business elsewhere. Now Michigan’s pension fund, which guaranteed bonds to finance the struggling movie studio, is left holding the bag.
State governments across the country are trying to lure Hollywood dollars resulting in steep inter-state bidding wars for big film productions.
“The definition of mental illness in Hollywood is making a large-budget motion picture without some kind of tax incentives, which we call euphemistically soft money,” said Peter Dekom, a prominent Hollywood entertainment attorney.
He should know; he’s helped states like New Mexico build its film incentive program. On average, he says, major movies look to incentives to finance about 13 percent of their budgets.
It’s easy to inveigh against tax breaks as corporate welfare, but Dekom insists there’s a right way and a wrong way to foster the film business.
The Michigan program, he says, tried to build a film industry overnight.
“When you don’t have local crews and you don’t have local infrastructure, all you’re doing is incenting people from other jurisdictions to come and take advantage of your credits, and then leave,” he said. “It’s kind of like heroin addiction without the benefits.”
A well-designed program, he says, builds opportunities for local crews who put money back into the economy.
The United States is one of the few industrialized nations that does not have a strong national incentive program to back its native film industry, and Dekon doesn’t see that changing.
“Right now, you’re not going to see anything from the federal government. It’s just not happening,” he said.
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Our purpose in creating the 42% incentive was to wow people and it did just that and it allowed us to begin the build that we wanted to have that would allow us to sustain within five years.
Producers or Michigan taxpayers rather were not responsible for over 40% because iif you do the math, when producers brought in their crew when they brought in materials from out-of-state the tax incentive for them became somewhere closer to 32% not 42. that very rarely happened over the course of the time that the original incentive plan was in place.
We had a strong group of people supporting us from the Michigan Production Alliance to a number of other stakeholders who came into Michigan with certainly the thought of making money but also certainly to help the state of Michigan grow its industry.
Michigan Production Alliance was involved in the incentive push well before the cameo appearance by Michael Binder. We were building a crew base that was very strong developing camera assistants, developing production designers and script supervisors.
Sadly what the governor did was simply cut it off at the knees which first of all killed trust - and many shows in the hopper just left within days of the announcement. ...and then began a slow exitus personnel to other states where they could work.
Had he done it in a different more thoughtful way , we could have ratcheted down the incentives as we had intended to do and maintain a certain level of trust. Trust and relationships are everything in this industry and that would've helped Michigan sustain what we were developing - instead now we have only small films coming here which doesn't help the indigenous crew members. Instead for vendors and crew members, we are bled. In both our lower wagers and market issues on equipment rates. Understand also that Michigan had to jump into the game because the playing field had not been level for some time. it became level for several years. realistically our model has to change. I personally would like to see a state wide incentive which is based on the states promotion of the film industry like it promotes it's other economic development engines. Or Something like the American jobs creation act that was begun under George Bush in 2005 which allows producers to gain tax benefits at the backend a national program.
One of the big problems with Michigan's original incentive was that commercials were supposed to be included in it which were and always will be our bread and butter. That would've helped sustain studios and production companies within the state of Michigan, indigenous facilities and crew would've benefited a great deal more than through feature films alone.
We hope we can convince the state to include commercials in some kind of a model that includes commercials through economic development promotion in that way we can sustain a greater number of people in Michigan.
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