Why New York? Film-friendly incentives help the Empire State lure big-budget productions

Jim Fiscus/Showtime

Why New York? Film-friendly incentives help the Empire State lure big-budget productions

Why New York? Film-friendly incentives help the Empire State lure big-budget productions
December 19, 2016

For all its iconic sights, creative might and international cache, New York was just a backwater for film production not so long ago. In 1966, Mayor John Lindsay began to flip the script, establishing the Mayor’s Office of Film, Theatre and Broadcasting. But to the average 20-something who came of age in the era of the ubiquitous film trailer, to whom an endless variety of internships and entry-level positions – whether with an indie producer, state-of-the-art soundstage, or one of their many supplier businesses – have always been available, it may seem obvious, natural, even preordained that New York should have a place among the world’s film capitals. 

The more mundane truth is that public policy has done a lot to spur the local industry.

Enacted in 2004, the Empire State Film Production Tax Credit was a major turning point. When that credit was expanded, in 2008, from 10 to 30 percent of qualified “below-the-line” production expenses – with upstate projects eligible for an additional 10 percent rebate – business really started to boom. Last season, a record 52 scripted series were produced in New York City – an increase of nearly 80 percent over a span of three years. Over the past decade, the local film and television industry has grown 53 percent.

In a cultural capital with so many innate advantages, why is an incentive program, worth up to $420 million a year in credits, so crucial? The reason is fairly simple: Film production, by nature, is a more portable business than most. And production companies, like government agencies, come under budgetary pressure. Before the majority of U.S. states began offering some form of tax credit, rebate, or grant, producers would head to Canada, where a favorable exchange rate coupled with tax incentives could cut their costs in half.

Now, an intense competition for film production plays out on a global field. In addition to Canada, Great Britain, Australia and New Zealand have rolled out incentive packages of their own. 

Even Hollywood, the once unrivaled powerhouse, felt the squeeze. In order to stanch the flow of big-budget films and TV series to places offering more attractive packages, California ramped up its incentive program in 2014, more than tripling the annual cap on tax credits from $100 to $330 million. The early reports on the employment and economic impact have been positive, and the revamped program has already enticed a half dozen major television series to relocate to California.

Two of those series – “Scream Queens” and “American Horror Story” – were plucked from Louisiana, a state that had recently curtailed its incentive program. 

One of the first states to launch tax incentives, in 2002, Louisiana had been regarded as a model of success. Of major studio releases in 2013, more were produced in Louisiana (18) than California (15). No wonder the state was dubbed “Hollywood South.”

But in 2015, citing the need to balance its budget and avoid service reductions, Louisiana cappedits annual spend on credits at $180 million – down from the $246 million spent in 2013. The downturn has been felt across the board, from newly built sound stages to the vast ecosystem of supplier businesses.

As any former screen star can attest, in the movie business one good run is no guarantee of longevity. While New York no doubt boasts advantages in brand and backdrop, it’s also hampered by a very pronounced disadvantage: higher costs than other cities.

Today film and television is a nearly $9 billion industry that employs 130,000 New Yorkers, and in order to ensure stability, and to keep that foundation of stable jobs in place, the industry is now asking for a 10-year tax credit extension, prior to the 2019 expiration of the current program.

Studies have shown that tax credits produce an economic stimulus that snowballs, providing a boost not only to film-related industries, but to supplier businesses as well. Film production also contributes to neighborhood commerce – dry cleaning, catering and car services, delis and restaurants.

Across a wide spectrum of fields, from lighting to set, costume, and sound design, small- and medium-sized businesses are responsible for a large portion of the film-related workforce. “These are good jobs,” said Cecilia Friederichs, national business agent of United Scenic Artists, Local USA 829, IATSE, a labor union representing designers, artists and craftspeople. “This is the kind of job that I believe people are trying to create – solid middle-class jobs. We have more than doubled (since 2006) the number of people doing them in my local.”

For every major studio there are any number of family-owned businesses in the film industry. Maria Stewart, for one, grew up in the business. Her father worked in special effects at NBC, and her mother in its prop department. Her parents eventually purchased the business of one of the studio’s suppliers. Today she and her siblings run two companies: Hardware Mutual, which sells materials needed for theater rigging, and Alcone, which provides makeup to the professional industry. The business hit a rough spell in the 1990s when film production was fleeing the state; when the tax credit took effect, however, Stewart was able to double her staff to more than 50.

It’s the “magic of production,” she said, which draws people to film. “People move to New York with a dollar and a dream, and if there is no dream anymore that would really be a shame,” she said. “We felt that in the 1990s when people were taking their productions elsewhere, but not everybody can pick up their family and move. What are they going to do?”

Other benefits derived from film tax credits – in marketing and tourism, for instance – are harder to measure. How can you quantify the impact of television series such as “Law and Order,” “Sex in the City” and “Girls?” Film shoots, celebrity sightings, tickets to “The Tonight Show” are now part and parcel to the new New York experience.

In launching Mayor’s Office of Film, Theatre and Broadcasting, it’s worth remembering that Lindsay was not only concerned with resuscitating the local film sector; the mayor was hoping to support the theater folks who were struggling with the exodus of talent to California.

Back then, Lindsay took the long view. Elite talent, after all, is drawn to exciting industries; exciting new businesses, in turn, follow the talent.

“We’re keeping production that would have moved to Toronto,” said Terry Lawler, the executive director of New York Women in Film and Television. “We’re keeping people that would have left, and who knows what incredible creative contribution they might make? Government can’t really pick winners in this business, but it can provide a space for a lot of new ideas to grow.”

While traditional economic engines like finance and legal services have stalled in recent years, many creative sectors have picked up the slack. These are industries, moreover, which have always held a special allure for youth – same as New York. More than just a city, New York is a symbol of possibility, of what can happen when a critical mass of dreamers come together.

So what is the next big thing? And where will it be born? Nobody knows for certain, but by making a commitment to the creative minds of the future, New York is stacking the deck in its favor. Whenever that next big thing arrives, there’s a good chance it will serve as the economic driver providing prosperity to future generations of New Yorkers. 

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Gabe Ponce de León
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