With cap on film-tax credits, N.J. misses out on some action

Posted: November 25, 2013

Boardwalk Empire, the hit HBO series about Prohibition-era Atlantic City, was filmed not at the Jersey Shore, but on a boardwalk built in Brooklyn. Silver Linings Playbook, the Oscar-winning feature film adapted from a book set in South Jersey, was shot over the river in Philadelphia.

Though Silver Linings director David O. Russell and actor Bradley Cooper - a Philadelphia native - had wanted to film in Philadelphia, "certainly things set in Jersey would tend not to go there right now," said the film's coproducer, Mark Kamine. "There's no tax credit."

Russell had hoped to stay in Philadelphia for his next film, American Hustle - also starring Cooper, and with scenes in Camden and Atlantic City. But Pennsylvania's tax credits, capped at $60 million annually, were running out, said Kamine, coproducer on the film. So Russell shot in Massachusetts, which has no cap on film-tax credits.

"The studios now will only go where there's a tax incentive," said Cheryl Quarantiello, a production manager of 30 years who lives in Brielle. "Years ago, it was different. Now, it's a numbers game."

Concerned the state is getting short shrift from Hollywood and losing jobs and dollars to its neighbors, several New Jersey lawmakers have introduced legislation to revive the state's film-tax credit program, which has allotted all of its money - $10 million a year - through its expiration in 2015.

A bill sponsored by Sen. Ray Lesniak (D., Union) would expand the program to $50 million a year, continuing to 2020.

"We don't get revenues from the film industry, because they get tax credits in New York City and set up shop there," Lesniak said.

New York state's film production tax credit program is capped at $420 million a year. The state also awards a 30 percent credit on qualifying production costs and 35 percent on postproduction costs for feature films and television shows, compared with 20 percent on qualifying production costs under New Jersey's program.

Lesniak's proposal - part of a bill that also would give incentives for redeveloping low-income housing and repurposing health-care facilities - would increase the film credit rate to 22 percent. The bill passed the Senate's Economic Growth Committee, which is led by Lesniak, and has been referred to the Budget Committee.

The percentage increase is "a minor adjustment," Lesniak said. Still, he said, the changes would be enough to make the state competitive: "The industry people tell us yes."

Producers and film-industry groups - who say state tax credits are paramount in location decisions - tout an array of economic benefits by promoting movie and television production, from job creation and spending by crews at local businesses to tourism boosts to cities.

Striking a pose

"Nobody calls it 'the steps in front of the Philadelphia Museum of Art.' They call it 'the Rocky steps,' " Sharon Pinkenson, executive director of the Greater Philadelphia Film Office, said of the site made famous by Sylvester Stallone striking a triumphant pose. "You can't buy that kind of marketing."

Studies commissioned by the Motion Picture Association of America - which counts 40 states with varying degrees of film production incentives - credit the tax breaks with pumping millions of dollars into state economies, generating positive returns on investment.

Critics say the industry studies are flawed. They argue the subsidies are too generous, and the jobs created too transient.

"It's a money-loser for the state," said Gordon MacInnes, president of New Jersey Policy Perspective, citing a review by the state's Economic Development Authority.

New Jersey began offering the film-tax credits in 2006. Citing budget pressures, Gov. Christie suspended the program for one year in 2010, asking the Economic Development Authority to review the program's effectiveness.

'Modest effect'

A study by the New Jersey Institute of Technology found the state had broken even between the cost of the credits and the tax revenue received from the film industry.

Recommending an expansion of the program, the NJIT study said: "A larger program should continue to increase employment while having only a modest effect on net tax transfers."

But the Economic Development Authority disagreed, saying the study had incorrectly counted taxes paid as a result of film and television projects that did not receive credits.

The "conclusion that the program pays for itself is based on the arguable position that the entire film industry in New Jersey is dependent on the film-tax program," Caren Franzini, then CEO of the Economic Development Authority, wrote in 2011.

In 2011, Christie vetoed a bill to increase the program to $50 million, a measure the Office of Legislative Services said would reduce state revenue.

Christie also that year vetoed a tax credit for the hit MTV reality show Jersey Shore, which he said had perpetuated "misconceptions about the state and its citizens."

The credit "illustrates the potential for wasteful spending inherent in the implementation" of the tax-credit program, he said.

In 2006, when the credits began, film-industry revenue in New Jersey was $92 million. It rose to $121 million in 2007, according to the state Motion Picture and Television Commission.

Between 2010 and 2011, when the credits were suspended, that revenue fell from $123.5 million to $84.3 million, according to the commission.

Steven Gorelick, the commission's executive director, did not comment on the reason for the decline. "We had fewer bigger-budget projects," he said. Revenue figures from 2012 aren't yet available, but Gorelick expects an increase from 2011.

"There's still a lot of filming being done here; there's no question about that," Gorelick said. He cited several movies that recently had short shooting sessions in the state, including Annie, an adaptation of the musical, featuring Jamie Foxx and Cameron Diaz, filmed at Liberty State Park in Jersey City; and a slew of reality shows, among them Real Housewives of New Jersey, Jersey Couture, and Jerseylicious.

"That's just mentioning the shows with Jersey in them," he said. "We're probably the reality-show king in New Jersey."

The state doesn't have a network television series shooting in a studio. Law and Order: Special Victims Unit used to film in North Jersey - popular for its proximity to New York - but left for New York when it could no longer get tax credits.

'No economic sense'

Those involved in New Jersey's film industry see lost opportunities. Ursula Ryan, president of the Atlantic City casting firm Weist-Barron-Ryan, sighed at the mention of Boardwalk Empire.

"It's like them building another Empire State Building or Philadelphia City Hall someplace else," Ryan said. The show's executive producer, Terence Winter, has said Atlantic City's Boardwalk was too modern a setting. He considered Asbury Park, he told The Inquirer in 2009, but New York's tax credit was better.

Proponents hope the state will expand the tax-credit program.

"It just makes no economic sense" not to, said O'Brien Kelley, director of the Newark Office of Film and Television. "I can't send a locations person into a jurisdiction that offers nothing."


mhanna@phillynews.com

609-989-8990

@maddiehanna

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