July 28, 2014

Film industry wants CT’s tax credit moratorium lifted

Photo | Contributed
Photo | Contributed
Film producer Andrew Gernhard relies on the state’s film tax credits.
Photo | HBJ File
Rocky Hill-based Synthetic Cinema International shoots scenes from a recent movie produced in Connecticut.

As "Who Wants to Be a Millionaire" begins its new run in Stamford, the motion picture industry is awaiting Connecticut's final answer on another important matter: Will the state continue to focus its entertainment industry tax incentives on big television shows and studios, or resume its bid to attract film productions as well?

Since enacting its generous film tax credit program in 2006, Connecticut has enjoyed a surge of interest from the industry — just over 600 film, TV and video titles were produced at least partly in the state between 2007 and 2013, more than double the number in the previous six-year period, according to unaudited data posted on the Internet Movie Database website.

Fretting over the incentive's ultimate impact on jobs and the state budget, however, lawmakers have tinkered with the program since 2006, including last year when they enacted a moratorium barring many motion picture productions from claiming the tax credit through 2015. Connecticut did so even as New York, California, Georgia and other states have worked to expand their own incentives to woo the industry.

The result is that fewer films have been shot in the state.

State lawmakers will likely revisit the moratorium in the upcoming legislative session in January, and will face pressure from parts of the entertainment industry to resume the tax credit for motion pictures.

"We still have feature films come to the state since the suspension has been in effect, and we've had a lot of interest from people calling," said George Norfleet, head of the Connecticut Office of Film, Television & Digital Media. "But at the end of the day, most sophisticated producers … do count on building in some type of a tax incentive, and if you cannot provide that then oftentimes that production company is not going to choose your jurisdiction."

Since 2006, the state has offered three tax credit programs for production, infrastructure and digital animation. The film and digital media tax credit has been the most popular and is tiered to reward productions that make higher expenditures. Companies can receive as much as a 30 percent tax credit if they spend over $1 million on production costs.

Andrew Gernhard is one of those producers who has counted on the film tax credit. For nearly a decade, his Rocky Hill-based Synthetic Cinema International has focused on producing horror movies, claiming nearly $200,000 in tax credits last year. Synthetic is now branching out into other genres, filming an adaptation of the Wally Lamb novel "Wishin' and Hopin'" in Norwich.

"We would not be here if it was not for the Connecticut tax program," Gernhard said. "You can shoot anything in Connecticut besides tropical beaches — and I do love that — but if the tax credit disappeared, we would definitely look for other states."

Wallingford director A.D. Calvo, who filmed "House of Dust" in Connecticut and is now making "The Missing Girl" in New London, said the motion picture tax credit is very important to him and the moratorium almost made him re-think shooting in the state.

"Luckily, I had submitted a pre-eligibility application prior to the moratorium, and we had already been working on the project so I was able to get grandfathered in," said Calvo, who landed $380,000 in credits in fiscal 2013. "Without a doubt — I would have made my last film in Rhode Island, right across the border, if I hadn't gotten my tax credit grandfathered in."

Calvo's and Gernhard's productions generate significant sales receipts in Connecticut — about $2 million combined in fiscal 2013 — but they pale in comparison to the expenditures rung up by TV and digital media companies Blue Sky Studios, ESPN and World Wrestling Entertainment, which totaled $143 million for the same 12-month period. That represented nearly 75 percent of the $194.5 million spent by all film tax credit recipients, who secured $51.5 million in tax credits.

The moratorium left intact incentives for television and digital media, the part of the industry Connecticut has put increased focus on. Hartford-based Back9Network, for example, is getting ready to run its golf programming on DirecTV starting this fall, while NBC Sports continues to grow its new Stamford headquarters. ESPN is expanding in Bristol and Blue Sky Studios in Greenwich is preparing its animated "Peanuts" movie for a November 2015 release.

"The program has performed beyond our wildest expectations, in terms of building a long-term industry here," said Kevin Segalla, co-founder of the Connecticut Film Center, where "Who Wants to be a Millionaire" is building its studio. "What we knew in 2006 was that we had proximity to New York City, which is a major media hub, and that we had the potential to bring some of that media into Connecticut. That is absolutely working.

"I think at the time in 2006, there was more of a focus on motion pictures," Segalla added. "The motion pictures work here, but what we found over time was that television works even better. The thing that's great about that is that television comes with the longer-term jobs."

Segalla said the television industry has achieved a critical mass in Connecticut and two major networks are currently considering much bigger investments in the state.

But Gernhard said those TV jobs remain centered in just a few locales while film locations can generate unexpected windfalls for Connecticut towns that would otherwise see little of the spending tax credits generate.

"Movies buy from everywhere," Gernhard said. "When they come in for a project, they are buying from local hardware stores, national hardware stores, pet stores, restaurants … When we go to caterers, all of a sudden for the month we're spending $30,000 or $40,000. That's huge."

Calvo believes it was the initial gold rush to the silver screen that laid the foundation for the small screen's emergence in Connecticut. He has lobbied for a resumption of the motion picture tax credits, arguing legislators could set a threshold for eligible productions of $200,000 while requiring Connecticut residents to make up at least half of any movie crew to ensure a payoff for the smaller awards.

"The beautiful thing about these smaller films is they are the incubators for the workforce that has lured these studios to come set up television shows here," Calvo said. "A lot of the people that worked on my films have gone on to work on those TV shows."n

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