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April 20, 2014

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What would lure Hollywood to Las Vegas?

Nevada is one of six states without tax incentives for filming in state, but it has other things, such as space

VEGAS INC Coverage

The high-paced, tantalizing world of Las Vegas is a huge draw for A-list celebrities and a mere hour flight from Los Angeles — yet we’re not the Hollywood of the Southwest. That title belongs to New Mexico, which offers a 25 percent tax incentive that has lured big film and television producers, bringing in an enormous amount of revenue and employment to what has historically been one of the poorest states.

The dirty little secret is out: Filming movies can pump money and jobs into even the most unassuming states.

With today’s technology, you can film a movie anywhere. Want a first-class Las Vegas casino? Build one in Burbank. Setting a scene in a five-star restaurant? New Orleans will work. Locations can be fudged; cash-strapped producers are following the money.

Nevada is one of only six states without tax incentives to lure film crews. So movie jobs that make sense in our entertainment-based economy are going elsewhere.

But Nevada has a plan. The Motion Picture Jobs Creation Act (Assembly Bill 506), drafted by Assemblywoman Marilyn Kirkpatrick, D-North Las Vegas, would extend tax credit to producers if they meet certain criteria.

The legislation is supported by Senate Majority Leader Steven Horsford, D-North Las Vegas, as well as the International Alliance of Theatrical Stage Employees Local 720, Screen Actors Guild, the Nevada Film Alliance, the Motion Picture Association of America and Directors Guild of America.

“If the Legislature gets busy, we can have film incentives this session,” says James “JR” Reid of JR Lighting, who’s been trying for a decade to get a bill like this passed. “By this time next year, this could be a done deal. We look forward to the days when we’re more worried about there not being enough people or equipment to handle the projects that are rolling in.”

Film tax incentive opponents have mocked other states’ plans, claiming they essentially pay people to do business and that the incentive is another way of saying “bailout.” The timing, they say, is off; we can’t afford to spend money to make money in these times of strained state budgets.

New Mexico’s new Republican governor, Susana Martinez, agrees: On Jan. 10, she presented a state budget that called for reducing state tax credits for films from 25 percent to 15 percent. Five huge projects, including the $150 million “The Avengers” blockbuster hopeful, immediately threatened to pull out. (In the end, she was unsuccessful, but got through a cap of $50 million on total incentives per film.) The issue remains a heated debate in the state whose film industry is second only to Hollywood, as well as in states such as Michigan and North Carolina.

The pushback in other states is giving Nevada an opening to get into the game.

Kirkpatrick’s proposal would require $250,000 worth of qualifying in-state expenditures in movie or TV work — or expenditures in movie or TV work — or $100,000 for smaller projects — to receive a 25 percent tax credit. Any expenditure for the project, from location and labor to the florist’s bill, would be eligible for this credit. And a team would have to do 60 percent of the shooting days in Nevada to get the tax credit, as an extra safeguard for keeping the money in-state.

“There’s a big advantage to coming last to the race, after 44 other states,” says Joshua Cohen, owner and producer of Cohencidence Productions. “We know how to avoid fraud, and we’ve put in those additional safeguards to make sure the money made in Nevada stays in Nevada. We can become a paradigm of what a good tax credit can do.”

This is where Nevada might lead the pack, despite arriving late. New Mexico’s incentives were a pet project of former Gov. Bill Richardson, an oversized personality and one-time presidential hopeful often teased for being too starry-eyed and reckless when it came to luring Hollywood to his state. His most vociferous adversary has been Dennis Kintigh, a Republican representative from Roswell, who has said, “You’re taking money out of the treasury and subsidizing the industry. Just because you spend money, doesn’t mean it gets back to the treasury.”

That’s a valid argument during a state budget crisis, but film incentives are most sought for the jobs and other economic activity they trigger — from set construction to equipment rentals to food purchases — rather than money being deposited into state coffers. Richardson says more than 10,000 jobs have been created and the state has earned $1.50 for every dollar spent, but even supporters have questioned the numbers.

•••

Filming in and around Las Vegas seems like a cinematic slam dunk: A-listers such as Angelina Jolie, Nicole Kidman and George Clooney would have an enormous selection of five-star restaurants and hotels — or, given our proximity to Los Angeles, they could fly home every night. And the crew? If enough work was created in Nevada, the low cost of living makes it easy for them to move their families here.

Cohen says Las Vegas could easily become Hollywood’s unofficial “back lot.” “With the proximity to L.A. and the amount of natural locations we have to shoot here, from the Valley of Fire and Red Rock to the Strip, it’s a no-brainer.”

There’s plenty of space, too, to build sets and sound stages.

“It’s so easy to film here,” Cohen said. “Getting permits is cake compared to other states. It’s just that it’s expensive” because of the lack of incentives.

If a producer is shooting a film for $10 million, for example, it’d end up being $7.5 million in New Mexico after the rebate, or only $6.6 million in Alaska. Louisiana, considered a tax incentive success story, offers a whopping 35 percent tax credit, and has recently nabbed enormous projects, such as the latest “Twilight” movie. California, New Mexico and New York, which has a 30 percent rebate, generate the most film work.

“We could be stealing hundreds of millions of dollars from New Mexico, Oregon and Michigan, because of our proximity to L.A. alone,” Cohen says. “If someone’s working in L.A. and encounters union problems or an earthquake and needs to move, they can be here in a day.”

•••

Las Vegas is the least educated major metropolitan area in the West. Yet, we’re staring down an entire industry with jobs that don’t require four-year degrees, jobs for technicians and people who are good with their hands. Good pay without a college education, but in a career with more longevity than, say, serving cocktails? Has there ever been a better fit for this city’s psyche?

Kirkpatrick’s bill is the ninth attempt at getting film tax incentives, and it just might be the last. At some point — as other states commit to years of filmmaking and construct soundstages and prop houses — Johnny-come-lately Nevada may not be able to catch up.

It’s not that Las Vegas lacks a moviemaking infrastructure.

Dream Vision Studios on Russell Road, the only major motion picture studio and event venue in Nevada and which has produced commercials and created props for Cirque du Soleil, is expanding from 16,000 square feet to 82,000 square feet. It is bringing in Aqua Dome for underwater filming and has the largest hard cyc wall and green screen — both necessary to film special effects — in the state, as well as the ability to do full 3-D filming and editing.

The bottom-line expense of filming in Nevada is a huge reason why the only attention Las Vegas often gets from Hollywood is reality TV, the most cheaply produced form of entertainment. When E!’s “Holly’s World” or MTV’s “The Real World” film here, three or four people (usually out-of-towners) make up the crew, unlike the up to 150 people, including many locals, who are on the set of a cable show such as “Sons of Anarchy,” being shot in New Mexico, at any time.

Many Las Vegas scenes are created elsewhere: the “Hangover Suite” garnered so much attention that Caesars Palace built one for tourists, even though the original was shot on a California soundstage. And more than 95 percent of “CSI” — television’s No. 1 drama — now in its 12th season, is filmed in California.

It doesn’t have to be that way.

The full version of this story first appeared in the April 11 issue of VEGAS INC, a sister publication of the Sun.

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  1. "Good pay without a college education"
    The next time you watch a movie, take a look a the long line of credits. These are intelligent people and extremely fluent in TEAM WORK. You don't get that off the street. There is no college degree for what they are doing, but they have to be motivated to learn and be self-educated. They aren't rent-a-cops at trade shows in the slack months.

    "...in a career with more longevity than, say, serving cocktails?"
    More longevity for those who keep up with the politics, and the politics is in "Hollywood". Don't wait for the production company to come back to Las Vegas for another job or you will be raising shrimp in North Las Vegas to pay NVEnergy.

    "Has there ever been a better fit for this city's psyche?"
    Psyche is all there is, nothing more. How about tea for breakfast instead of coffee this morning?

  2. Just what we need to be doing: subsidizing millionaires. There's nothing special about movie making except, perhaps, for the exorbitant salaries movie "stars" get paid. It's just another business and deserves no taxpayer dollars or "special" considerations. And, if it's about "creating" jobs, well, every business "creates" jobs. Are we to subsidize all of them?

  3. As is normal with "lvnofacts101" he does not deal in the facts. These people are not going to cost you anything Jerry. They are not going to pay you as much in taxes if they pass this bill.

    They are going to be more willing to come to Nevada and bring jobs that they don't bring now because of that.

    This means you will get some of their money rather then none of their money.

    You got it now?

  4. Sorry Abby, but you're commment regarding the size of reality TV crews is way off base. Any documentary style show that isn't scripted, i.e. "The Real World" and "The Ultimate Fighter" typically have 6 - 10 camera crews alone. That's not to mention production assistants, production coordinators, story producers, security, craft services, and the top tier producers (line, supervising, senior, executive etc.)

  5. I love film and storytelling in general but there is a very large consensus among economists that film subsidies are a waste of money (just like stadium subsidies). Even left-wing think tanks agree http://www.cbpp.org/cms/index.cfm?fa=vie...

    With the emerging technology allowing independent film makers to make high quality shorts and features you'll see major changes to Hollywood. First they'll demand more and more subsidies in order to complete, then they'll completely collapse. We'll be better off having never given a dime away.

  6. Chunky says:

    Anything bringing jobs to Las Vegas, especially high-profile projects that feature the city is good for local production crews, support services and tourism. Even a two-day commercial budget of $125k+ leaves 25-30% of that in Las Vegas.

    Cheers to Mr. Cohen and JR for fighting this fight. By the same token, the indie film world Mr. Cohen lives in is a far cry from professional studio based feature films and episodic television.

    Chunky has several bones to pick with the facts and statements presented in this story:

    1. Dream Vision Studios is not what they make themselves out to be... it's a commercial warehouse with make-do offices decorated like my grandmothers house, ran by people who have little real clue and even less experience how a professional Hollywood studio set is run. Ms. Tegnelia, please check your facts before falling prey to marketing hype.

    2. Son's of Anarchy is NOT shot in New Mexico and nor does it shoot there for establishing shots. SOA is shot in North Hollywood at Occidental Studios and other locations around LA. Again, check your facts.

    3. Reality brings a few more than 3-4 local positions but aside from specialty positions the pay is low and the hours are long. We have all the reality work we need no doubt.

    As for incentives lining the pockets of Producers and talent, that may be the case but if 60% of the crew is required to PROVE residency in NV that can be a great win.

    The problem we face here in Las Vegas is that few so called production professionals in this town can work at the pace, attitude and skill set of the crews in Los Angeles. Producers come here and hire people in key positions but they often leave saying "never again". Most only hire locals now to save on travel expenses.

    Union problems that are large enough to affect the LA / Hollywood market affect Nevada just the same. The unions may be "Local" as is the case with Local 720 but the allied "Locals" for IATSE, SAG, AFTRA etc. are National by nature, thus you won't get LA Producers flocking to Las Vegas to beat a Union deal as none of the Vegas area Union members would cross that line and the main players are still LA based. Whoever made this statement does not understand the business or the unions.

    Chunky is thrilled to see progress on all the hard work put in by Mr. Cohen, Mr. Reid and others. For the legislation to work we have to have talented and hard working crews in Nevada with the skills and work ethic to compete on that level as well. Tax incentives don't make a movie; teams of people do. Our local crew members as well need to quit shooting themselves in the foot by low-balling prices and that includes the local Producers who co-Produce or Production Manage these jobs.

    If Dream Vision wants to play in this arena they should lead by example offering real-world rates to crews instead of low-budget crew pay and marketing hype to Producers.

    That IS what Chunky thinks!