THE REEL DEAL
How the Expired Film Tax Incentives have affected the “Hollywood of the East“
In the dog days of summer back in 2009, North Carolina, a state with hundreds of film production credits to its name, had received a much needed break. In the wake of states like Louisiana New Mexico, and Georgia luring film productions away from North Carolina, Senate Bill 943 had been passed by then Governor Bev Purdue, which would raise the tax incentive up from 15 percent to 25 percent, allowing North Carolina to stay competitive and lure big studio productions to come into town and shoot both television and film. It was a huge victory for the film community.
“This legislation will help grow our $91 million motion picture industry, preserve, and create thousands of jobs and increase investments in yet another emerging economic cluster,” Perdue said after the bill was passed. “Providing a strong foundation for North Carolina’s film industry is essential as we work to build a strong and sustainable economy through increased diversification.”
After the bill was passed, more productions were rolling through the state. In addition to North Carolina staples like One Tree Hill, the state was seeing a broader pallet of content, including the HBO series Eastbound and Down, the blockbusters The Hunger Games, We’re The Millers, The Conjuring, and several major network pilots, like CW’s Hart of Dixie, and ABC’s Revenge. Even Matthew Weiner, the creator of Mad Men, chose Winston-Salem to shoot his passion project Are You Here, which brought A-list talent to the Triad, including Owen Wilson, Amy Phoeler, and Zach Galifanakis. And some small film called Iron Man 3 set up shop in North Carolina, as well.
Cut to 2015, and ask a fellow Carolinian about the film industry in the state, and they’ll tell you it couldn’t be busier. But ask a local who works in the industry and they’ll tell you it’s the worst it’s been in years. So what happened?
In 2014 North Carolina legislators voted to let the 25 percent incentive expire at the end of the year. Governor Pat McCrory’s budget proposal converted the tax incentive into a grant program, established under Senate Bill 744. According to Variety, the grant program has an annual cap of $10 million, whereas the 25 percent incentive covered about $300 million in production expenditures in 2014. For 2015, it’s projected that the grant will only cover a total of $40 million in productions. In a report from LA Times, many wondered if other states would follow suit, but many industry observers said it wasn’t likely. “Production will just occur in other states, and an industry will likely die in North Carolina,” Rob O’Neil, a partner and film tax credit specialist at accounting firm Moss Adams, predicted. In a state that’s rich with film history, North Carolina is losing each chance to attract new major productions to the state, with most opting to head a few hours south and open shop in Georgia.
“For the first time in over five years, no pilots were filmed in NC during pilot season, which is typically between February to April,” said Johnny Griffin, director of the Wilmington Regional Film Commission. A major film production typically generates around $160 million in revenue for the state. Forty percent of that amount goes right back to local businesses in the state, with productions needing craft services, locations to shoot, bedding for out of town talent, etc. The other 60 percent goes into payroll. “A show like Under the Dome typically shoots from February to August and employs around 200 locals,” Griffin said. For shows with a higher episode count, production will run longer. Fox’s hit show Sleepy Hollow made North Carolina its home for its first two seasons, shooting over seven months per season, and employing around 250 locals. Doing the math, when multiple productions are navigating through the many landscapes North Carolina offers, people are working.
Per the MPAA from a Variety article on August 22, 2014, “Under the “¦ incentive program, film and TV production supports over 4,000 jobs in North Carolina and brings millions of dollars in direct spending all across the state.” The MPAA continued, “It’s disappointing that the new grant program included in the budget agreement will prevent North Carolina from remaining competitive in attracting this prominent source of in-state economic activity.”
For Will Frasca, 27, a local North Carolina actor, he’s having to explore other options for continuing his career. “I graduated from UNC Wilmington’s film program, and immediately started working on ABC’s Revolution. I was working on a big production and putting my education to use; that’s the American dream.” Frasca stated that between 2013 and 2014 he totaled more than six months of time spent on sets, between Under the Dome, Sleepy Hollow, and Iron Man 3. During the days he wasn’t working, Frasca found work as an office assistant for an investment firm. “I was fortunate enough to work when I could, and when I got the call to be on set, the firm allotted me that time, because they supported my career aspirations.” Since the incentive has expired, Frasca has worked about a month total in 2015. “It’s a ghost town,” he says in regards to the state of film production happening in the state. “We lost a new HBO show Vice Principles to South Carolina because there wasn’t money in the grant program. A lot of it went to Under the Dome.” According to NCfilm.com, it was confirmed that five of the ten million dollars in the grant was awarded to Under the Dome, which doesn’t leave much of an incentive for other big productions to stay in town.
It was recently confirmed that Sleepy Hollow had been renewed for a third season, but was moving down to Georgia and closing up its North Carolina office. Sleepy Hollow took advantage of North Carolina’s many landscapes, having filmed in Charlotte, Salisbury, Wilmington, and New Bern. In a statement from Wilmington’s Mayor Bill Saffo upon the disappointing news and how the expired incentives are affecting the state, “We’re feeling it. We’re seeing the effects of it, and when you’re in a competitive mode where we’ve lost Continental Tire, we’ve lost BMW, we’ve lost plants that were even thinking about coming here, it seems we’ve put out a sign that says North Carolina is not open for business.” This resonates loudly for Frasca, and the many talent and crews looking for work in the state.
“I love North Carolina. I grew up here, my family is still here, but I’m not getting the work,” Frasca said. “For the first time since graduation, I’ve had to file for unemployment and move back in with my parents. My only options are to wait it out for the incentives to come around again, or pack up and move to New York, Los Angeles, or Georgia. In order to do that, I need the money to move. Not to mention Los Angeles and New York are both union, whereas North Carolina and Georgia are right to work states. “ Brian Bumgarner, a local from Sedgefield, has allowed production crews to use his estate as a filming location, most recently The Disappointments Room, starring Kate Beckinsale, and directed by DJ Caruso (Eagle Eye, Two for the Money). A landscaper, Brian had no history in the film industry, but has built relationships with crews in the industry. “They’re like everyone else,” Bumgarner said, “The line of work may be a little different, but they’re true to their word, and they’re great people.” Bumgarner said the crew spent about a month and a half at the estate, where about 95 percent of production took place.
“There was easily over a hundred people on set, and most of them were from North Carolina. These people had to eat, had to find a place to sleep, and they rented nearby houses, and ate at restaurants in the Greensboro area,” he added. “They infused a lot of money in the Triad.”
For him, not only had they brought business his way, but long-term relationships were formed. “I still keep in touch with the [director and crew}, they put me in the movie, we played golf together, and they left the property in even better shape than they said they would. Stand up guys, all of them.” Through his experience working next to the NC film crew, losing the incentives hit a little closer to home. “It’s not like [film productions] come back overnight. You’re now competing with Georgia and other nearby states. You have to market the area again. You’re seeing a lot of talent move elsewhere, and it doesn’t have to be that way.”
Currently, several universities in the state offer individuals the opportunity to pursue a degree in film, and, arguably, none bigger than The University of North Carolina School of the Arts in Winston-Salem. But how useful is a degree in film, if you don’t have the experience of being on a professional set? “It’s difficult for film students to find the internships they want and gain that on set experience locally,” Griffin shares. “Without the incentives and without productions staying in town, these students graduate and they move out of state to find work and they become tax payers in another state.” Though quiet on the eastern front for big studio productions in the state, a few independent filmmakers are gearing up for production in Winston-Salem this summer.
The Moleskin Diaries, directed and produced by Zach Brown, a Winston-Salem native, tells an intimate and intense story about how far we all go for those we call family. Now a resident of Los Angeles, Zach was visiting Winston a couple of years ago over the summer to visit family when the inspiration hit. “I spent five days in downtown Winston over a 4 th of July weekend, and was blown away by how artistic downtown had become. The day I was leaving town I found myself standing in a parking lot where ARTivity on the Green is now located and I told myself, ‘I’m going to write a script that shoots here,’ and that’s when the story took shape.” Of the roughly 23 production-crew members, about 19 are locals in the Triad, many from the School of the Arts.
“There is a reason the school is so widely known for producing such talented filmmakers,” Julia Voth, producer and lead actress on the film said. “For some of them, this is their first feature film, but you would never know it from the product they produce. We have also found some insanely talented actors in Winston-Salem.”
But getting the pro per funding proved difficult.
For smaller films like The Moleskin Diaries, it’s that much more difficult to be approved for the grant. “You have to meet a certain criteria that a small movie like this can’t meet,” Voth said. “But we came out [to Winston] last November to screen a teaser trailer we shot in LA for investors and from that trip we funded almost 60% of the movie, and by the end of May the film was almost 80% funded by local investors. It makes it so much harder to get the film on its feet without the incentives, but we’ve been blown away by the generosity of the people and local businesses. Locals are genuinely excited to have us here and we wouldn’t have been able to do it on this budget without their support.” Zach agreed, “The local support, both financial and otherwise, has blown us away. We will be forever grateful. We wouldn’t be here if it weren’t for them.”
Urban Bloom Photography
“The Hollywood of the East” is how many have referred to our state in the past. The truth in that term, however, dissipates more and more, but there are legislators in North Carolina who are fighting to bring back the tax incentives. Filed in February, House Bill 89, if approved, would do just that. “Anytime you lose jobs, no one benefits. I am hoping to have a conversation in a bi partisan manor to address our concerns and bring NC to a true come back for all citizens,” said NC state representative Rodney Moore. More than 3,000 direct jobs and 4,500 indirect jobs have been lost because of this, Moore claims. Currently, the bill has not been passed through the House. “I am optimistic “¦ Governor Pat McCrory will call the House and Senate back into session and develop a critical economic plan for North Carolina,” Chris Cooney, chief operating officer and co-owner of EUE/Screen Gems, which has a 10-stage production facility in Wilmington, told LA Times.
Without the incentives, North Carolina struggles to keep the lights on for a film industry that’s called the Tar Heel State home for over 30 years. In an MPAA press release from early June of this year, Georgia’s film industry supports more than 24,000 jobs and pays more than $1.68 billion in wages to those workers. “I have crew members [in North Carolina] calling me and asking me if there’s anything coming down the pipeline. Their kids are out for the summer, and they’re making decisions,” Griffin said. Frasca saw the shake-down happen on the ground level. “I was watching third generation crew members make the trek to Georgia, because it’s where the work is now. I hope legislators and people both in and outside the film community will help make the change and bring the jobs back to North Carolina,” he said.
Like a frame in cinematic history, will we make the final cut? Or will what came before and what comes after be spliced, and North Carolina’s moment be forgotten? !