Bringing Hollywood to the Show Me State

Monday, April 29, 2019
Spectators watch from the Common Pleas Courthouse as extras rehearse before filming a scene for the 20th Century Fox feature film “Gone Girl” in downtown Cape Girardeau in 2013.

The Show Missouri Film and Digital Media Act seeks to generate new revenue for the state

We all know: in 2013, the cast and crew of "Gone Girl" graced the streets, bars and riverfront of Cape Girardeau for six weeks. Here in Cape Girardeau, the film's economic impact looked like this: 116 Missourians employed. More than 7,000 hotel room nights. More than $7 million contributed to the local economy, prior to the film's opening.

The filming in Southeast Missouri was largely thanks to the media tax incentive, which provided an incentive of up to 35 percent of the amount expended in Missouri for production and production-related activities, and was capped at $10 million. Since that incentive sunset in 2013, the filming of several major television series and motion pictures, including "Ozark," "Sharp Objects" and "Three Billboards Outside Ebbing, Missouri" have passed on bringing their film crews and economic impact to the Show-Me State.

Now, Missouri legislators are hoping to revive the tax incentive with House Bill No. 1661, authored by Rep. Kathryn Swan (R). An identical bill, Senate Bill No. 366, has been introduced in the Senate by Sen. Denny Hoskins (R).

The House bill -- and identical Senate bill -- would grant a 20 percent tax credit for qualifying in-state expenses and 10 percent for qualifying out-of-state expenses. An additional 5 percent could be earned for both qualifying in-state expenses and qualifying out-of-state expenses if at least 50 percent of the qualified film production project films in Missouri.

The bill is directed at enticing film and television crews to film in Missouri and excludes news or current events programming, talk shows, production primarily for industrial, corporate or institutional purposes and for internal use, sports events or programs, gala presentations or awards shows, infomercials or any production that directly solicits funds, political ads and production that is considered obscene. It would begin in 2020.

In its initial six-year trial period, the amount available to be reimbursed would be capped at $4.5 million per year, and granted at the discretion of the Department of Economic Development (DED). The DED would have the power to determine which projects are reimbursed in which areas of the state, so that funds would be available to both rural and urban locations. All receipts for any money a production company asked for reimbursement for would have to be turned in to receive the tax incentive.

Dr. Jim Dufek, mass media professor at Southeast Missouri State University and member of the Missouri Motion Media Association (MOMMA), hopes the bill is passed and successfully brings film and television production to Missouri, so the cap can eventually be raised for more opportunity and growth.

"There are so many ways to tell stories, there's a lot of storytellers, there's a lot of holes to fill to do that," Dufek says. "These storytellers are trying to be very unique and very creative, and in doing so, states around the United States want those storytellers to come to their part of the country to use that as a background. ... The best way to do that is ... give them a little incentive to come here."

Dufek believes passing the bill would be beneficial because the local economy benefits not only from the millions of dollars spent in production that will receive the rebate, but also from the non-incentivized money spent on clothing, food and personal expenses by the cast and crew while they are in the area. It also benefits from the money spent by the people who come to town to watch the filming, he says. Finally, there are "residual effects," as Dufek calls them, that the filming of movies has on a location, as tourists come to see the sites where their favorite movies and shows were filmed.

Alyssa Phares, senior director of sales and strategy with VisitCape, says most tourists she leads on bus and walking tours throughout Cape Girardeau take photos at the mural on the outside wall of The Bar, where "Gone Girl" was filmed. She says the guests are "intrigued" by the economic impact of the movie on Cape Girardeau.

"Any exposure in a film, television or streaming service production has some impact on the destination in which it is filmed, if that destination is accessible," Phares says. "The production serves as another marketing tool for the city."

The ones that got away

Dufek says although he does not see any negatives to the proposed bill, there has been some pushback about giving money to transient people who come in, tell a story and then leave. Many of these critics, Dufek says, believe incentives should instead be put into preserving historical structures that will last within the community.

These points are legitimate, Dufek says. However, he points out if an incentive is not offered, film crews will not come to spend money here in Missouri at all. He also believes it's about bringing in more than storytellers: it's bringing in a "long-term commitment" that might attract other storytellers to spend in the area.

In some states across the nation, however, the film tax incentive program is controversial. Since 2009, 13 states' programs have sunset, many because studies showed the incentive was not economically beneficial to the state, and that steady jobs were not created within the state as hoped, as many production crews brought in employees from out-of-state.

Kentucky is one example. In 2018, the state approved $421 million in incentives for filmmakers, more than twice the $162 million the state approved during the first eight years of the program combined, from 2009 through 2017. Because of the way Kentucky's program functions, production companies can prolong the start of their project for two years after their incentive is approved, while taxpayers' money is set aside for these costs in the event the project is completed and the tax incentives are needed. This has sparked criticism of the state's priorities, especially in regards to education.

Still, Dufek and other proponents believe the advantages outweigh the disadvantages. It's something Dufek has witnessed firsthand through MOMMA, a consortium advocating for the film tax incentive: Dufek met with scouts for the HBO series "Sharp Objects" who wanted to shoot the series in the Sikeston, Missouri, area. He says although they "loved the area, they loved the river," they ultimately decided to film in Georgia instead, where they could get 35 cents back on each dollar they spent. On average, HBO spends $6 million per eipsode, according to a 2017 statistic from

Variety.com

. "Sharp Objects" shot a total of eight episodes.

The same thing occurred with the Netflix series "Ozark." Dufek says the producers shot some footage in the Missouri Ozarks, but most of the show was filmed in Georgia. This was a loss of $5 million to $7 million on average per episode of the 20-episode show for the Missouri economy.

So it goes with movies, too. The Oscar award-winning film "Three Billboards Outside Ebbing, Missouri" was shot in North Carolina, although Missouri was initially one of the locations considered for the film. North Carolina offers a 25 percent rebate on all qualifying in-state expenses and purchases made by productions. The program is capped at $31 million per fiscal year, with unused funds carrying over to the next fiscal year.

"It's unbelievable that we missed out on that," Dufek says, specifically of "Sharp Objects." The sentiment could function, however, as a general lament for each of these missed opportunities. "It could've been here."

Dufek saw the drawback of a lack of film tax incentive again while at conferences for the Film Commissioner's Institute in California, working to attract storytellers to Missouri through MOMMA. He says at one of these events, a young group from Minnesota was scouting a location for a short feature with a $1 million budget, and Dufek had "all but sold them on Cape." Cape Girardeau checked all their boxes: a university, students, a picturesque location, a river. When they found out there was no tax incentive, however, Dufek says it was like "the lights just went out," and, like the end of many stories about scouting locations: the group ended up filming in Georgia.

The states we're losing business to

It begs the question: what is Georgia doing to attract all these storytellers? A lot. They offer 30 percent back, with an uncapped percentage of the money spent in the state. They also return 30 percent on above-the-line costs like directors and actors' salaries, according to

indiewire.com

. These incentives have brought films such as the Marvel movies to the state. They are one of three states, including Louisiana and Massachusetts, that have earned five-star ratings for film tax incentives from Film Production Capital, a full-service tax brokerage and consulting company specializing in film and media.

Other states are vying hard, too: New Mexico, where Dufek believes the film industry is about to take off, provides 25 percent tax rebates on qualified expenses to filmmakers shooting in the state. Television production companies that bring long-term series to the state can receive rebates of 30 percent, according to the Santa Fe New Mexican. The program allows the state to pay out $50 million of rebates each year.

New Mexico's program is not without controversy, however. Lawmakers and the governor are looking to lift this $50 million cap, as they credit it with causing a nearly $300 million backlog of yet-unpaid rebates. The program has garnered concern the program will reach a "breaking point," no longer attracting producers to the state because they will not want to wait to be paid, according to the Albuquerque Journal.

Closer to home -- and less controversial -- Illinois ranks in the top five states for film production in the nation, according to the February 2018 WTTW news story "Illinois Now Ranks Among Top 5 States for Film, TV Production." Its film tax incentive program offers a 30 percent tax credit to film and television producers, plus an additional 15 percent spent in Illinois on labor when hiring residents from economically disadvantaged areas where there is at least a 10.5 percent unemployment rate. Productions longer than 30 minutes must spend at least $100,000 to qualify for the incentive, and the incentive has no cap.

Illinois' incentives have attracted Fox's "Empire," NBC's "Chicago Fire" and the film "Gringo," to name a few. According to the Chicago Sun-Times, in 2019, the incentive helped create 13,848 jobs and add revenue to nearly 4,000 individual businesses providing goods and services to the industry. The industry generated $473 million for the state.

Kansas City's success with the film tax incentive

Right on the other side of our state, the KCMO film development program, in partnership with the KCMO Office of Culture & Creative Services and the KC Film Office, rolled out an incentive program in 2016, becoming the first and only city in the U.S. to implement its own incentive program when their state did not have one. It features no sunset and up to a 10 percent cash rebate on qualified expenditures with a minimum of five cast and/or crew for feature films, TV, commercials, music videos and short films. The program also features a community benefit requirement, in which the cast, director, key department head or producer gives a learning outreach opportunity for emerging artists or young people interested in the industry during their stay in Kansas City. Among other incentives, there is a 0.5 percent marketing bonus for additional testimonial videos that promote Kansas City and the crew's experience there.

As a result, the Netflix series "Queer Eye," which previously filmed seasons 1 and 2 in Atlanta, is filming Season 3 in Kansas City. The city has also hosted filming for "American Ninja Warrior," as well as national commercial projects and independent films.

"It keeps doors from closing as we work to attract projects," says Steph Scupham, Kansas City Film Office director and vice president of communications for the Missouri Motion Media Association.

Scupham says there are 90 incentive programs around the world, with 35 programs in the U.S. "Each film and television show is a business with an assigned budget. The producers need to put as much of that budget on screen as possible, so they work to find a location that makes business sense while still making creative sense."

Dufek agrees with Scupham. If these business creatives are attracted to Missouri through tax incentives, Dufek believes the state will benefit both now and in the future.

"I don't see any negatives for it," Dufek says. "I see positives because I see a long-term benefit more than just a film, a TV show. Once that word gets out that there's opportunities here, I think we could attract more storytellers. ... I believe what we've done [in Missouri with media tax incentives] has been very good."