It’s Not As Bad As We Thought
The film industry takes a deeper look at the tax incentive cap and starts to breathe again.
When news broke that the Louisiana film industry tax credits were going to be capped, and at $180 million — $70 million less than what was redeemed in 2014 — concern was immediate and profound.
After a few weeks, however, talks of lawsuits are gone and the industry seems to be settling in and trying to be patient.
“August is typically a slow month for film here every year,” says George Steiner, president of Film Works New Orleans, a 37-acre film studio that opened in New Orleans East in March. “But we were scheduled to have a project start filming here last week for six months and they canceled because of the credit changes. I think it spooked them.”
Although he says the studio is about to go into its first “dead zone” since it opened, Steiner says he’s optimistic.
“Those people that moved to Atlanta missed the boat,” he says. “All four candidates for governor say they want to work to fix this. There’s no doubt it’s created bad PR, but I think there’s hope.”
Herbert Gains, founder of Big Easy Studios, also in New Orleans East since 2011, shares Steiner’s positive view.
“It’s still a good program, but it’s going to be contingent of the studios’ ability to sell tax credits,” he says. “We’re in a wait and see period right now.”
Leonard Alsfeld, president and CEO of FBT Film, the largest film credit broker in Louisiana, says the cap may even prove to be good for the industry.
“Sixty percent of the credits issued in the last five years were to the big studios — Paramount, Disney, MGM,” he says. “I think that with the cap those $100 million-plus movies probably won’t be coming back in the next three years but I don’t read that as a bad thing. Those studios import so much of their work that local workers are often given the lower level jobs, not the high paid jobs we want.”
Alsfeld says that instead the cap opens up “a tremendous amount of room for independent movies, especially without big studios tying up locations for months and months at a time.”
As of Jan. 1, all tax credit brokers in the state will also have to register with the Office of Financial Institutions, a change Alsfeld welcomes. “That’s going to clean out the questionable folk and just leave the experienced brokers like us,” he says, noting that FBT Film is the only bank-owned tax credit broker in the state, which is something he feels will really be an asset with the new changes.
“Everybody is talking about the cap,” he says, “but the real issue is how the credits are issued.” Alsfeld explains that among the changes are the fact that credits will no longer be issued when the money is spent, but on the state’s timetable.
“Right now the state website says that it will be about 180 days before a refund is looked at after it’s filed,” he says. “Which means a project that could have filed for their refund in their 2015 taxes can now easily get pushed to 2016. And then of course if the cap is met for the year, the credit is not valued and instead gets numbered and put in place for next year.
Alsfeld says his company, however, can eliminate the entire cap issue and any worries of a timely refund by buying a production’s credits. “We’re owned by a bank so we are literally the only company that can say that capital is not a problem.”
While this advantage will likely be good for business, he has concerns about the process. “It’s mid-July and we still don’t know the outstanding balance [amount left on the cap] and we’ll only be able to check it once a month.”
Overall, the consensus among the industry seems to be hopeful optimism focused on 2016’s governmental changes.
“Hopefully the next governor will be able to install the confidence we’ve lost,” Gains says. “I think that once the dust settles, we’ll be fine.”
Kimberley Singletary is the managing editor of Biz New Orleans magazine. A 20-year Southern California veteran, she has been surrounded by the film industry for most of her life and is thrilled to be covering its emersion in her newly adopted home.