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Miami, FL Law Blog for Entertainment Law, Business Law, and Public Interest

Wednesday, July 13, 2016

Florida Yells "CUT" on Film Tax Incentives

- by Kelly O'Connell 

 

Florida is one of a few select states that offer year-round warm sunny weather, versatile locations, and easy access to capable crew and talent. Despite these features, there is another more silent factor at work that influences choosing a filming location, state tax incentives. Florida once provided these incentives; however the 2016 Florida Legislature session ended with the decision that taxpayers were paying too much with too little to gain in the state’s attempts to attract star power to the Sunshine State.

 

The Florida Legislature approved a budget of $296 million in film incentives for 2010 ­ 2016, yet this money did not last long. Generally, the productions that asked first were given the incentives leaving nothing for these most recent years. By 2014 there was nothing left, after using it for local movies like Magic Mike, Pain and Gain, Spring Breakers and Dolphin Tale, but mostly for TV series such as Blood Lines, Ballers, Glades and Magic City, that were all filmed in Miami.[1] These productions helped provide state revenue and steady job opportunities for Floridians.

 

For four years in a row, the Florida Legislature has denied all attempts to refill the coffers, including final attempts to pass anything this past month.[2] The Legislature and other opponents of the film incentives cited alarming statistics from the Florida Legislature’s Office of Economic and Demographic Research and called for an end to “Hollywood handouts.”[3] This Research found that Floridians get a return of only 43 cents for every dollar the program spends, meaning the state lost nearly $170 million of the $296 million already allocated to the program.[4]

 

Those in the film industry acknowledge that these numbers are accurate but say the legislator is missing the full economic picture. By the Florida Film Commission’s numbers, since the previous tax credits ran out, Florida has lost $650 million in income from films that weren’t shot here.[5] 

 

Floridians win in the grand scheme because jobs are not just created within the film production itself. Local Jobs are also supported in many other areas such as restaurants and caterers serving up daily meals, hotels where the actors and crew live during the months of production, builders who need to build the sets, and other local businesses.

 

Additionally, people eventually seeing the movie or TV serious domestically or abroad are influenced by Florida’s unique attractions thus decide to spend their vacation in Florida. A 2013 survey conducted by VISIT FLORIDA showed the film industry helped induced 22.7% of domestic visitors to Florida.[6] Also, 2012 USF St. Petersburg College of Business study estimated 73 percent of all visitors to the Clearwater Marine Aquarium visited specifically because of the movie Dolphin Tale.[7] This creates a major boost to local economies long after “it’s a wrap” on filming.

 

Moreover, movies and TV series help transform Florida forward. Nowhere is this truer than the city of Miami. In recent years, Miami—once the nation’s premier senior-living destinations—has grown into a competitive global metropolis attracting diverse business interests with a strong international real estate market, expanding music industry, and industrious ports making Miami worthy of the title “Gateway to Latin America and the Caribbean.” Portrayals focusing on these glamorous aspects on screen reinforce chic typecasts and encourages further investment in the South Florida area.

 

Due to Florida Legislature disregarding these more silent factors, Florida is missing out as dozens of movies and television shows with plots taking place in Florida yet actually being filmed in other states. Nowadays, it is completely normal for a faux “Florida” to be represented in another state and to hire then non-Floridian talent and crew to work on set.

 

Recreating Florida sets is now quite common. Once the incentive money dried up much earlier than planned, productions wanting to shoot in Florida took their big budgets elsewhere. While it is impossible to know exactly how many potential productions would have chosen Florida had there been an incentive, films like Million Dollar Arm (potentially bringing in $25 million), Magic Mike XXL (potentially bringing in $15 million), 42: The Story of Jackie Robinson (potentially bringing in $20 million), Paper Towns (potentially bringing in $10 million), American Desperados (potentially bringing in $30 million), Alvin and the Chipmunks 4 (potentially bringing in $20 million), Captain Phillips (potentially bringing in $20 million) and many more decided on other locations where States provided some sort of incentive.[8]

 

Notably, Live by Night (potentially bringing in $35 million), a Ben Affleck movie based on a novel by former Tampa area writer Dennis Lehane set in Ybor City, Florida (a historic neighborhood of Tampa) during the 1920s and 1930s Gulf Coast rum running days wanted to film in the actual location.[9] However, Georgia’s tax incentive lured Affleck to build an identical fake “Ybor City” 270 miles north of Tampa in Georgia.[10] Money was also the reason the 2015 film 99 Homes highlighting the struggle of the Orlando foreclosure crisis instead recreated “Orlando” in New Orleans.[11]

 

More recently, the ABC Studios pilot The Death of Eva Sofia Valdez portraying the “rags to riches” story of a Cuban immigrant in Miami has started filming in Myrtle Beach, South Carolina.[12] Similarly, another pilot by CBS titled Four Stars is a family military drama following powerful rival military families in Tampa.[13] However, the TV series isn’t being filmed anywhere near Tampa’s MacDill Air Force Base, let alone in Florida because financially it is better to film everything in California. [14]

 

 

According to the California Film Commission, currently, nine projects have either relocated to California or chose the state as their filming destination. “Our success in helping five existing TV series relocate to California in less than a year illustrates the success we’re achieving with the expanded tax credit program,” said California Film Commission Executive Director Amy Lemisch. “Every new TV series we attract or retain brings long-term, high-wage jobs that would otherwise go elsewhere.”[15]  

 

"It used to be the reverse," says Sheena Fowler of the Orlando Economic Development Commission.[16] "For a long time, we were Anywhere USA and would be [a stand-in for] San Diego, Egypt, all these places across the globe. Now they're coming here for two days to film 'Florida,' then going elsewhere."[17]  

 

While 37 states offer some type rebate, grant, or tax credit program, Florida is not the only state halting their incentive programs.[18] To name a few, criticism has been brewing in Louisiana, Alaska, Michigan, and Massachusetts where the programs have been reduced or proposed putting on the chopping block.[19]

 

Those in the film industry while discouraged have not yet given up hope. Some hope that in the future the Florida legislature will decide to resurrect the incentive program with important modifications, such as it not being on a first-come-first-serve basis and being more selective with the money, or placing better limits on the amount of money each project collects. Other proposals include funding at a more local level, by individual county or city.[20]

 

Perhaps the later makes sense for South Florida where the area has likely benefited the most with many domestic and international commercials, music videos, TV series, and movies are captured.[21]  It is a viable option. Just this year, The Beacon Council, Miami-Dade County's official economic development partnership, help finalize a deal to build Telemundo a world-class headquarters and production facility in Miami.[22]  Telemundo was enticed by both state incentives, as well as funding from Miami-Dade County Targeted Jobs Incentive Fund solicited by Beacon Council.[23] It is estimated when the facility is operational; it would have an yearly economic impact of at least $300 million.[24]



[1] Howard Altman, Altman: TV Pilot About MacDill AFB Being Shot in California, Tribune Staff (March 21, 2016 at 12:10 PM), http://www.tbo.com/list/military-news/altman/altman-tv-pilot-about-macdill-being-shot-in-california-20160320/#sthash.sNXzHdD8.dpuf;

Editor's notebook: Why the Florida Legislature needs to OK film incentives,  Orlando Business Journal (May 15, 2015), http://www.bizjournals.com/orlando/print­edition/2015/05/15/editors­ notebook­why­the­florida­legislature­needs.html.

[2]Christine Dimattei, Florida Lawmakers Leave Film Incentives On The Cutting Room Floor, WLRN (March, 23, 2016), wlrn.org/post/florida-lawmakers-leave-film-incentives-cutting-room-floor.

[3] Christine Dimattei, Florida Lawmakers Leave Film Incentives On The Cutting Room Floor, WLRN (March, 23, 2016), wlrn.org/post/florida-lawmakers-leave-film-incentives-cutting-room-floor.

[4] Chris Hudson, Viewpoint: State Taxpayers Win, Pensacola News Journal (March 30, 2016 9:30 AM) CDT www.pnj.com/story/opinion/2016/03/30/viewpoint-state-taxpayers-win/82419254/.

[5] http://politics.heraldtribune.com/2016/03/11/faux-florida-abounds-as-the-states-film-industry-declines/

[6] Fiscal Year 2014-2015 Annual Report Strategic Business Development Florida Department of Economic Opportunity, Florida Office of Film and Entertainment, Nov. 1, 2015.

[7] Jared Leon, Winter’s 'Dolphin Tale' Could Net $5 Billion for Clearwater Area, Patch Media (Aug.17, 2012 12:36PM) patch.com/florida/clearwater/winter-s-dolphin-tale-could-net-5-billion-for-clearwater-area.

[8]  Michael Auslen, Florida film industry's future in the balance as state tax credits dry up, Tampa Bay Times (Nov. 27, 2015) http://www.tampabay.com/news/politics/stateroundup/florida-film-industrys-future-in-the-balance-as-state-tax-credits-dry-up/2255588.

[9] Paul Guzzo, Fake Ybor City rising in Georgia for Affleck’s Prohibition-era film, The Tampa Tribune  (September 28, 2015) http://www.tbo.com/news/politics/filmmaker-affleck-building-ybor-city-in-brunswick-ga-20150928/; Michael Auslen, Florida film industry's future in the balance as state tax credits dry up, Tampa Bay Times (Nov. 27, 2015) http://www.tampabay.com/news/politics/stateroundup/florida-film-industrys-future-in-the-balance-as-state-tax-credits-dry-up/2255588.

[10] Paul Guzzo, Fake Ybor City rising in Georgia for Affleck’s Prohibition-era film, The Tampa Tribune  (September 28, 2015) http://www.tbo.com/news/politics/filmmaker-affleck-building-ybor-city-in-brunswick-ga-20150928/

[11] Mary Shanklin,  '99 Homes' film mostly on point depicting Orlando foreclosure culture, Orlando Sentinel (Oct. 10, 2015) http://www.orlandosentinel.com/business/os-99-homes-orlando-20151009-story.html.

[12] Angela Nicholas, ABC TV pilot putting Myrtle Beach area front and center, The Sun News (March 23, 2016 4:36 PM) http://www.myrtlebeachonline.com/news/local/article67818057.html#storylink=cpy.

[13]Michael Auslen, Florida film industry's future in the balance as state tax credits dry up, Tampa Bay Times (Nov. 27, 2015) http://www.tampabay.com/news/politics/stateroundup/florida-film-industrys-future-in-the-balance-as-state-tax-credits-dry-up/2255588.

[14] Michael Auslen, Florida film industry's future in the balance as state tax credits dry up, Tampa Bay Times (Nov. 27, 2015) http://www.tampabay.com/news/politics/stateroundup/florida-film-industrys-future-in-the-balance-as-state-tax-credits-dry-up/2255588; see also Business Incentives, Governor’s Office of Business and Economic Development, www.sutteronestop.com/sites/files/.../california_state_incentives.docx; See also California Film & Television Tax Credit Program 2.0?, California Film Commission (April 13, 2016)  http://www.film.ca.gov/Incentives.htm (“The California Film Commission offers a tax credit incentive program to qualified motion pictures. The Program allows a 20% tax credit for qualified production related expenses to a taxpayer against State income taxes. The program offers a special 5% additional tax credit bonus for those TV series and to “independent films”. New legislation creates a new five-year film and TV tax credit program beginning in fiscal year 2015/16 with expanded eligibility to include big-budget feature films, 1-hr TV series (for any distribution outlet) and TV pilots.  Funding for the new program is $230 million in fiscal year 2015-16, and $330 million per fiscal year from 2016-17 through 2019-20”).

 

[15] Michael Auslen, Florida film industry's future in the balance as state tax credits dry up, Tampa Bay Times (Nov. 27, 2015) http://www.tampabay.com/news/politics/stateroundup/florida-film-industrys-future-in-the-balance-as-state-tax-credits-dry-up/2255588.

[16] Bryn Elise Sandberg, Why Florida May Lose 'Ballers' and 'Bloodline' to Other State, Hollywood Reporter (April 4, 2016 8:00 AM) http://www.hollywoodreporter.com/news/why-florida-may-lose-ballers-878773.

[17] Bryn Elise Sandberg, Why Florida May Lose 'Ballers' and 'Bloodline' to Other State, Hollywood Reporter (April 4, 2016 8:00 AM) http://www.hollywoodreporter.com/news/why-florida-may-lose-ballers-878773.

[18] Fiscal Year 2014-2015 Annual Report Strategic Business Development Florida Department of Economic Opportunity, Florida Office of Film and Entertainment, Nov. 1, 2015.

[19] Elaine S. Povich, Some States Yell "Cut!" on Film Tax Credits, The Pew Charitable Trusts (May 18, 2015) www.pewtrusts.org/en/research-and-analysis/blogs/stateline/2015/5/18/some-states-yell-cut-on-film-tax-credits. (In Louisiana where the incentives were unlimited, the House voted 102-2 to limit film tax credits to $200 million annually (The Alaska Legislature approved a bill to kill the state's film tax credit program 2 years earlier than planned. The Michigan House voted to scrap them starting Oct. 1 2014. In Massachusetts, Republican Gov. Charlie Baker called for scrapping the state’s $80 million film tax credit program).

[20] Let’s entice the film industry again, Miami Herald (Feb. 11, 2016 6:30 PM) http://www.miamiherald.com/opinion/letters-to-the-editor/article59882301.html.

[21] Let’s entice the film industry again, Miami Herald (Feb. 11, 2016 6:30 PM) http://www.miamiherald.com/opinion/letters-to-the-editor/article59882301.html.

[22] Brian Bandell, Telemundo breaks ground on South Florida’s largest media production center, plans 1,300 jobs, South Florida Business Journal (Feb. 9, 2016, 2:10 PM) http://www.bizjournals.com/southflorida/news/2016/02/09/telemundo-breaks-ground-on-south-florida-s-largest.html.

[23] Brian Bandell, Telemundo breaks ground on South Florida’s largest media production center, plans 1,300 jobs, South Florida Business Journal (Feb. 9, 2016, 2:10 PM) http://www.bizjournals.com/southflorida/news/2016/02/09/telemundo-breaks-ground-on-south-florida-s-largest.html;  Miami-Dade County Targeted Jobs Incentive Fund (TJIF), Miami-Dade County (Aug 13, 2014)

 http://www.miamidade.gov/business/targeted-jobs-incentive-fund.asp.

[24] Brian Bandell, Telemundo breaks ground on South Florida’s largest media production center, plans 1,300 jobs, South Florida Business Journal (Feb. 9, 2016, 2:10 PM) http://www.bizjournals.com/southflorida/news/2016/02/09/telemundo-breaks-ground-on-south-florida-s-largest.html.


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