Los Angeles moves to keep moviemakers in Hollywood

Rick Orlov

Monday, Nov. 1, 1999 | 10:54 a.m.

In Las Vegas

The Entertainment Development Corp. of Las Vegas plans a meeting this week to discuss whether to create a $1 million fund to offer cash incentives to producers who will make movies in Southern Nevada. Tax breaks for local moviemaking also may be discussed.

Local governments in the Las Vegas area will be asked to participate in the effort to bring more movie productions here.

LOS ANGELES -- While insisting they don't want to be movie moguls or risk tax money on the next blockbuster, Los Angeles City Council members are taking a step to try to halt runaway production.

The council has asked for a report on how the city could create a special fund to provide gap financing for television and movie producers on low-budget productions to keep them in Los Angeles.

"What's most important about this is that we want to send the industry a message on how much we want them to stay here," said Councilman Mike Hernandez, who made the proposal Friday.

Under his proposal, the city would create a revolving loan fund to make money available at low interest to producers of films with budgets of under $5 million.

"We're talking about movies-of-the-week, and those productions that are going to Canada because the costs are cheaper," Hernandez said. "If we can make some low-interest loans to them in return for them doing a major percentage of their work in Los Angeles, it will be worth it."

Hernandez said the city would not seek any share in the value of a film, but would insist that the producers provide a bond to guarantee repayment.

Morrie Goldman of the Entertainment Industry Development Corp. said the proposal represented a major step in showing the importance of the industry to local government.

"We don't know how many companies would use something like this, but it's an important tool to have available," Goldman said.

But Jon Coupal of the Howard Jarvis Taxpayers Association questioned why the city would get into the business of financing movies.

"Municipalities should not be in the movie business," Coupal said. "If they want to provide incentives, they can do it by lessening regulations, not by creating a bank for them. This is an ill-advised use of public funds."

Gap financing is common in the industry to allow producers to raise money to cover their production costs until those costs are recouped.

A recently released study, commissioned by the Screen Actors Guild and Directors Guild of America, found that runaway productions accounted for $10.3 billion in lost revenues and more than 20,000 jobs. Through the first nine months this year, filming at locations off studio lots declined 6 percent from the same period of 1998 in Los Angeles County.