Movie Studios: Boston is the new Hollywood.

[kennedy]

I think I might agree with John on this one. Perhaps not entirely about casinos, but about the movie studios, definitely.

 

[riffgo]

Again I have to question agenda here. It is really in anyone's best interest to be able to say, "I told you so" rather than to see this succeed at some level?

 

[tobyjug]

Again I have to question agenda here. It is really in anyone's best interest to be able to say, "I told you so" rather than to see this succeed at some level?

It isn't a question of agenda. I would like to believe that those pictures of Bigfoot, the Lock Ness monster and the Roswell alien are real. But my willing suspension of disbelief won't make the photos true.

But I don't fault anyone for dreaming. Perhaps the promoters are credit worthy and will find the half a billion dollars in loans. Sounds like the perfect profile for a "stimulus project". Then you can say "I told you all along." I hope that you get the chance. (But I wouldn't bet the beer money on it!)

 

[smw2340]

Exec angry over film-tax e-mail
Says may hinder SouthField Studios
By Donna Goodison | Tuesday, February 2, 2010 | http://www.bostonherald.com | Business & Markets

The backer of the proposed $147 million SouthField Studios project in Weymouth has accused Massachusetts Film Office head Nick Paleologos of yelling ?fire in the theater? for alerting Hollywood to a proposed cap on the Bay State?s film tax incentives.

Paleologos? e-mail last week notifying West Coast studio execs about Gov. Deval Patrick?s proposal to cap the tax credit for two years reads like an ?obituary? for the Massachusetts film industry, International Studio Group principal Allan Kassirer said in a blistering response to Paleologos last week. Paleologos? missive will hurt or kill his company?s efforts to build the 12-stage studio, Kassirer said.

?One has to wonder what your motives truly are,? Kassirer states in his e-mail to Paleologos, which was widely circulated among film industry workers. ?You are supposed to be an advocate for the film industry, not the canary in the coal mine for Hollywood!?

Paleologos declined comment, but the Massachusetts Production Coalition, an industry group representing film and TV workers, has jumped to his defense. MPC president Joe Maiella praised Paleologos? work and characterized his Hollywood alert as a proactive move to stem misinformation.

?(Kassirer?s) letter absolutely was completely unwarranted, unfounded and irresponsible,? said Maiella, who is also vice president of sales for Media Services, an accounting, payroll and software agency for entertainment productions. ?To say Nick . . . is trying to undermine the building of sound stages . . . is the most ridiculous statement I?ve ever heard.?

The film-tax credits enacted in 2006 and the 2007 lifting of the cap are credited with bringing 13 major film productions to Massachusetts in 2008 that generated direct spending of $452 million. But the credits have been a net loss so far for taxpayers, according to the Department of Revenue.

As part of his proposed $28.2 billion budget last week, Patrick proposed limiting film credits to $50 million each in fiscal years 2011 and 2012. The MPC criticized the proposal, but Patrick said the temporary cap should not interfere with long-term plans to build studios and would keep Massachusetts among the most competitive states for the film industry. The cap would mean the state?s 25 percent tax credit could subsidize $200 million in film expenditures each year.

Kassirer declined to elaborate on his e-mail, but reiterated his call for an official state film office rather than an ?earmark accountable to no one.?
http://news.bostonherald.com/busine...ax_e-mail_says_may_hinder_southfield_studios/

 

[AdamBC]

Movie studio coming to Devens:

New England Studios has broken ground on the first phase of a $104 million Hollywood-style film and television studio campus in Devens, Mass.

The facility will be built on a 15-acre site along Jackson Road. The studios will include four 18,000-square-foot sound stages, production support offices, mill, storage building, and sound stage support areas for a total of 126,000 square feet. Upon completion next year, 30 full-time workers will be employed with up to 300 jobs from the various production companies leasing the studios.

http://www.bizjournals.com/boston/r....html?ana=e_du_pub&s=article_du&ed=2012-06-27

 

[Ron Newman]

Wasn't this previously planned for Plymouth or Weymouth?

 

[omaja]

What a waste. It's always funny to see cities try to become the "Hollywood of the [insert region here]" - it's successful for awhile, until the handouts aren't there or someone else is offering even more handouts. Once the incentives dry up, production companies will either move back to LA or move on to greener pastures.

 

[Shepard]

On the other hand I think that productions here have been more consistent since the tax break than anyone imagined. If they really wanted to go to greener pastures - other states that have similarly passed tax incentives - they would have gone already. If the goal is bringing productions here (and I'm a bit agnostic about the economic impact of that, but either way) it has been quite a success.

 

[whighlander]

What a waste. It's always funny to see cities try to become the "Hollywood of the [insert region here]" - it's successful for awhile, until the handouts aren't there or someone else is offering even more handouts. Once the incentives dry up, production companies will either move back to LA or move on to greener pastures.

Omaja -- most times the copy this movement is a failure -- although both Austin and Research Triangle sucessfully cloned most of what powered first Rt-128 and then Silicon Valley

Still I remember reading in an airline magazine in the late 90's about:
a) Silicon Sandbar - -the Cape
b) Silicon Bayou -- New Orleans
c) Silicon Forest -- Minneapolis -- I think it should have been Silcon Lakes
d) Silicon Prairie --I think it was Oklahoma although it could have been Iowa
e) Silicon Beach -- South Florida
f) Silicon Alley???

For extra credit name which of the above was succcessful

The correct answer is none of the above
although if you said f) Silicon Alley -- you are partly right however no-silicon ever ended-up being made in Manhattan -- it was more Digital Alley or webby alley -- irronically for the marketing hype-types -- up the Hudson in East Fishkill -- IBM had already been making some of the best silicon on the planet for a couple of decades

 

[BosDevelop]

What a waste. It's always funny to see cities try to become the "Hollywood of the [insert region here]" - it's successful for awhile, until the handouts aren't there or someone else is offering even more handouts. Once the incentives dry up, production companies will either move back to LA or move on to greener pastures.

Sounds like a good idea for a South Park episode.

 

[AmericanFolkLegend]

I agree with Omaja. It's a "race to the bottom". States give more and more to outdo other states until the only winners left are the film industry. Massachusetts has been able to keep production companies here because we pay for 25% of budget that is spent in Massachusetts. Literally, when Adam Sandler gets paid $20M to be in a movie in Massachusetts the state effectively pays him $5M.
So I would say we made it to the bottom first.

 

[whighlander]

I agree with Omaja. It's a "race to the bottom". States give more and more to outdo other states until the only winners left are the film industry. Massachusetts has been able to keep production companies here because we pay for 25% of budget that is spent in Massachusetts. Literally, when Adam Sandler gets paid $20M to be in a movie in Massachusetts the state effectively pays him $5M.
So I would say we made it to the bottom first.

QAh -- But without the subsidy the "Captn's Bakery" -- the "iconic muffin shoppe" located in "Historice Marbleheade" founded by a guy and his daughter from West Virginy via Ohio or the othe way around -- wouldn't have made it onto TV

They were featured because some one from the production company for Adam Sandler's latest flic -- bought out the entire case of cupcakes ostensibly as a snack for Shaq

Only in Massachusetts

 

[Hutchison]

I agree with Omaja. It's a "race to the bottom". States give more and more to outdo other states until the only winners left are the film industry. Massachusetts has been able to keep production companies here because we pay for 25% of budget that is spent in Massachusetts. Literally, when Adam Sandler gets paid $20M to be in a movie in Massachusetts the state effectively pays him $5M.
So I would say we made it to the bottom first.

These are tax incentives (sales, payroll, and production), meaning the state is forgoing tax revenue it would have generated, and not actual payments. The state isn't actually paying anything out of its current budget to directly subsidize this activity (also, one of the protections in the program is that it doesn't provide the tax breaks to people pulling > $1 million of taxable state income).

Regardless I agree with the main point that tax breaks -> race to the bottom. Sure it sucks, but its also seems to be the inevitable the confluence of a federal system and capitalistic society.

 

[AmericanFolkLegend]

I didn't think they were actually payments. That's why I said the state "effectively" pays him $5M.
But the key point is that they are transferable tax credits based on money spent, not taxes incurred. So they're almost as good as cash from the production companies point of view (the production company just has to jump through the hoop of selling them for cash at 95 cents on the dollar). And from a fiscal budgeting POV its the same impact on the state as if the state were investing in the movie with a direct payment.

 

[Hutchison]

You are right in that these are tax credits and as such there is some "investment". The point I'm trying to make is that a $5 million tax credit /= $5 million "investment". Businesses buy tax credits to absolve themselves of tax liability. Thus if a business buys $5 million tax credit, it can be applied to reduce that business' taxable income by $5 million.

In the your example, assuming a flat corporate tax rate of 10% without any escalators/ceilings (in general it's actually lower), the $5 million reduction in taxable income is really only equal to $500k of reduced tax revenue for the state. This $500k figure is really what should be examined when trying to determine the overall economic impact of the project.

I've never seen the actual numbers so I'll pass on making any comment about how good/bad the investment has been for the state, but I just want to provide a little perspective as to what the scale of these investments really are.

 

[AmericanFolkLegend]

Thus if a business buys $5 million tax credit, it can be applied to reduce that business' taxable income by $5 million.

No Hutch, you just described a tax deduction. Massachusetts provides a tax credit. That's the thing that drives me so crazy about the program. Everyone assumes it's a deduction but it's not.

 

[Hutchison]

I haven't paid that much attention to this, being out-of-state when it was enacted. Most tax credit programs I'm familiar with apply only to above the line income, but if these can applied below the line then you are certainly right.

 

[AmericanFolkLegend]

I haven't paid that much attention to this, being out-of-state when it was enacted. Most tax credit programs I'm familiar with apply only to above the line income, but if these can applied below the line then you are certainly right.

Tax deduction programs apply above income. By definition tax credits are a dollar for dollar reduction of your tax bill. Affordable housing tax credit, historic rehab tax credit, renewable energy tax credit, etc. are all dollar for dollar reductions of your tax bill.
Sorry to beat a dead horse on a Friday afternoon, but this is what pisses me off so much about the Movie Spending Tax Credit. Everyone assumes it's a deduction and they don't realize we're actually enabling Adam Sandler to pay Andy Samberg 25% more to be in his movie.

 

[whighlander]

Tax deduction programs apply above income. By definition tax credits are a dollar for dollar reduction of your tax bill. Affordable housing tax credit, historic rehab tax credit, renewable energy tax credit, etc. are all dollar for dollar reductions of your tax bill.
Sorry to beat a dead horse on a Friday afternoon, but this is what pisses me off so much about the Movie Spending Tax Credit. Everyone assumes it's a deduction and they don't realize we're actually enabling Adam Sandler to pay Andy Samberg 25% more to be in his movie.

AMF -- but just think of the side bene's

You are a bored-out-of-your-gord Mass Dept of Rev worker - -you get the thrill of a lifetime to process a W-2 for a movie star!!

 

[AmericanFolkLegend]

Whig your right! And maybe, just maybe, a bored dry cleaner gets to handle Marky Marks jock strap.