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THOUGHTS ON THE NEW N.Y. STATE FILM TAX CREDIT REGS?
I’m trying to keep the blog Sundance/Park City/Slamdance-focused for the next ten days, but I want to take note of the new New York film tax incentive regulations proposed in Governor Patterson’s new budget. From Georg Szalai’s article in the Hollywood Reporter:
New York film and TV industry executives on Tuesday lauded Gov. David Paterson’s budget proposal that includes $420 million per year in state money for the continuation of a 30% tax credit for productions in the Empire State through 2014.
The governor’s 2010-11 budget proposal calls for spending cuts in various areas but for production incentives worth $420 million per year for the tax years 2010-14, or $2.1 billion over five years, up from the $350 million allocation made last year that is nearly used up….
Paterson’s budget also contains some fine-tuning of the current program of tax credits on below-the-line costs. Experts say the tweaks could provide a boost to New York’s post-production industry and are designed to help businesses in the state. Budget materials from the governor’s office say the tweaks should “enhance the state’s return on investment.”
For example, tax credit recipients must conduct at least 10% of shooting days at a qualified New York facility, at least 75% of postproduction costs must be incurred in the state to be considered a qualified cost, and only purchases of taxable property and services from registered sales tax vendors are eligible in the credit calculation.
The great news here, of course, is that the credit has been extended. The New York State credit is a well-administered, intelligently constructed incentive that has been responsible for keeping the film industry alive here in New York. And while it has been a particular draw to television programs, whIch actually shoot on stages, it has also been great for independents. Typically a location-based indie will book a stage for a day, build a doctor’s office or kid’s bedroom, and fulfill the one-day stage shoot requirement. Now, that requirement has been upped to 10% of production shooting days. So, a 20-day indie shoot would have to shoot two stage days, a 30-day shoot three, etc. (Not sure how odd-number shoots are rounded.) Many indies don’t need to shoot on stages and only do so to fulfill the location requirement. (Building is expensive in New York City, and the new neo-neo-realists, as A.O. Scott calls them, are defiantly location-based.) So, for these filmmakers, the new rules add an extra expense.
The second and lesser-remarked upon change regards post-production costs. Here, I’ll wait for more details. (I think it’s safe to say, though, that if these rules go through it will be tougher to schedule DIs at the New York labs one year from now.) One thing that immediately jumps out, though: these proposed new rules would seem to get rid of the credit for foreign productions that shoot principal photography in New York and post in their director’s home country. (Full disclosure: my production company does its share of these productions. However, so do lots of other New York producers, and all of these productions hire New York crew and bring foreign dollars into the local economy.)
So, good and bad news above. I’m very curious to hear your thoughts. Please post below.
