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Wednesday, March 16, 2011 // The Statement EB
..................................* Proposed caps ontheFim
L O S IN G By Kavi Shekhar Pandey Tax Incentive will shake
up the lives of Michigan
. thevfilmmakers.
E xcitement is all around us: students talking in class, pass-
ersby chatting on the Diag, status updates and tweets -
"George Clooney is filming a movie on campus!!!" (give or take
a few exclamation marks).
The movie is "The Ides of March," which Clooney has been
shooting in University locales this week. A-list stars Ryan Gos-
ling, Evan Rachel Wood, Philip Seymour Hoffman, Marisa
Tomei and Paul Giamatti will be alongside Clooney's ownsuper-
nova star wattage.
For much of the University's student body, it's a familiar
thrill. Thanks to the Michigan Film Tax Incentives passed in
2008, the campus was buzzing as Clive Owen, Adam Brody,
Drew Barrymore, Hilary Swank and more of Hollywood's finest
shot movies in and around Ann Arbor over the past few years.
But with Republican Gov. Rick Synder's recent proposal to
significantly reduce the state's film tax incentives, the days of
Michigan movie shoots might be comingto an end. For most stu-
dents, it means the last of texting friends at Michigan State Uni-
versity that they just saw David Schwimmer in the Law Quad.
But for University alum and current students pursuing careers
in Michigan's film and television industries, Snyder's proposal
has completely shattered their world, leaving them with pangs
of anxiety about their future in the industry.
The Golden Age of Michigan Movies
The idea for the film tax incentives took root at the end of
former Republican Gov. John Engler's term in 2002, according
to Jim Burnstein, screenwriting coordinator in the University's
Department of Screen Arts and Cultures. Burnstein was asked
to join the Michigan Film Advisory Commission, which worked
to boost film production in the state.
The council's main goals were to increase jobs by increasing
film production, building infrastructure to create a permanent
film industry and, as Burnstein likes to call it, reversing the
"brain drain" - or losing in-state residents to out-of-state jobs.
"We were trying to keep people who I teach and people who
come out of our program and all the other talented students
at U of M, MSU, Wayne State and all the other great schools,"
Burnstein said. "Get them to stay home, because certainly,
there wasn't anythingthat was getting our creative class to stay
home."
Burnstein and the council then worked with former Demo-
cratic Gov. Jennifer Granholm to finally pass the incentives in
April 2008, offering a tax credit of up to 42 percent of a pro-
duction's expenditures. Film production in Michigan exploded
almost immediately after. In 2007, three movies were shot in
Michigan, spending about $2 million in production costs. In the
nine months of 2008 that the incentive laws were in effect, 38
projects were filmed in Michigan, including Clint Eastwood's
"Gran Torino" and Drew Barrymore's "Whip It" - contributing
to about $125 million in expenditures.
"For five years, I said, 'If you build it, they will come'... well
they came," Burnstein said. "And they came in greater numbers
than our projections."
University alum Marc Zakalik couldn't have finished his
Screen Arts and Cultures degree at a better time. He graduated
in April 2008, and about three days later, he got a call to work
on one of the first movies to take advantage of the incentives -
Miguel Arteta's "Youth in Revolt" starring Michael Cera.
"I started off as an unpaid intern helping outMiguel," Zakalik
said. "But a lot of what I was doing was helping him break down
the script and helping him rewrite it ... which was cool because I
studied screenwriting in college. It was an amazing experience,
especially so soon after graduating - I was with him 13 to 14
hours a day for about three weeks straight."
Two fellow gradu-
ates of the Universi-
ty's SAC program and
native Michiganders, Danny Mooney and Eddie Rubin, were
able to start their own production company in Michigan because,
of the incentives. The duo, who first joined forces in one of Burn-
stein's SAC classes, launched Deep Blue Pictures and completed
two feature films by the time Rubin graduated in 2009.
"We always wanted to stay in Michigan - our crews were
here that we loved to work with and obviously our families,"
Mooney said. "The tough reality is, in the film industry, L.A. and
New York are the places to be ... that's just where the deals are
going. That's where all the shoots were.
"It was a bummer, but when the incentives passed, we were
like, 'Hold up one second, this might actually work."'
Mooney said starting his company in Michigan quickly
became the smartest business decision he ever made. He and
Rubin have made five films during the incentive program, have
given more than 50 jobs to Michigan graduates and hundreds of
jobs to other Michiganders to work on films, commercials and
music videos.
"If we were in L.A. right now, we'd be getting coffee for some-
one," Rubin said. "On top of just getting to bigger fish ina small
pond, we had the support of our family and our friends - where
in L.A., if we had been on our own, it would have been harder to
survive. If we tried to start our own company there, we might
have had to get a part-time job bussing tables."
Films shooting in Michigan also allowed University students
currently enrolled to find gigs while taking classes. University
alum Yuriy Sardarov, who graduated in December 2010 as a the-
ater major, got his first break last spring.
"One of my professors referred me to these casting agents. It
was for this straight-to-DVD action movie," Sardarov said. "And
I had a few callbacks, I got the part, I got into a really good rela-
tionship with the casting directors and they kept sending me out
to do stuff and I kept getting parts - these were all in Michi-
gan."
After his debut, Sardarov worked on two other features
before landing a role in "The Ides of March."
'Black Thursday'
In 2009, film production in Michigan continued to swell. The
first full year of the tax incentives led to 43 productions that
spent $223.6 million in Michigan. Last year, Michigan's film
industry hit its peak, spending more than $300 million for 58
projects including "Scream 4," "A Very Harold & Kumar Christ-
mas," "Transformers: Dark of the Moon" and Hugh Jackman's
"Real Steel."
"We were in that elite group of regional film industries if
you're looking outside the coasts," Burnstein said. "And really,
we owned the Midwest - we were at the top of the food chain."
The Michigan film industry locomotive appeared to be
unstoppable as 2011 began. The state bagged "The Avengers,"
the long-in-the-making Marvel superhero team-up movie fea-
turing Iron Man, Thor, Captain America, The Hulk, Hawkeye
and Samuel L. Jackson as Nick Fury, to be partially filmed in
Michigan. But with an approximate budget of $105.million, the
jewel in the crown was "Oz: The Great and Powerful," directed
by Sam Raimi (Spider-Man) and starring James Franco, to be
filmed in Pontiac's Raleigh Studios - a just-converted facility
that was once a General Motors plant, offering over 175,000
square feet for its sound stages.
The incentives appeared to be making a positive economic
impact on the state. According to a study conducted by the
accounting firm Ernst & Young, film productions in Michigan
created more than 2,600 jobs in 2009 and more than 3,800 in
2010 - both direct and indirect jobs com-
bined. Dollar- ... -...
wise, this translated to a total state resident income impact of
$108.9 million in 2009 and $172.5 million in 2010.
But it all came to a screeching halt on Feb. 17, 2011, which
Rubin comically coined "Black Thursday." Snyder unveiled a
proposal that would completely restructure Michigan's film tax
incentives. Under the new plan, the essentially unlimited up-to
42 percent tax credit would be replaced by a yearly cap of $25
million - with $75 million in additional honored subsidies over
the next fiscal year - to be handed out in appropriations each
year.
"When people say (the current incentives program is) a tax
credit, they think what that means is you're reducing your tax
liability - instead of what you owe on your taxes, we're reduc-
ing it by 42 percent," said Ryan Kazmirzack, a spokesman for
Snyder. "That is not how it works - it is actually a subsidy. The
state of Michigan literally writes a check. Instead of saying,
'You owe less money,' Michigan is actually paying out moneyto
Hollywood film producers ... we came to the conclusion that the
film subsidy right now, is unsustainable."
Kazmirzack called the Ernst & Young study "flawed," argu-
ing that it was commissioned by organizations that had an
interest in maintaining the incentives. He then explained that,
according to the governor, a significant flaw in the current
incentives program is that it is not capped. He explained that if
a production spent $1 billion, the state would pay out $420 mil-
lion in subsidies, at the maximum.
"Right there is pretty much the entire amount that has to be
cut from education," Kazmirzack said. "There is no way you can
budget not knowing how much you have to give out."
For Michigan filmmakers, the announcement was a crush-
ing blow.
"To be completely honest - I cried," Rubin said. "Literally,
no joke, no exaggeration. I was devastated, thinking we had
built our company off the backs of the incentive and used it to
not only benefit ourselves but benefit the state, benefit so many
of our friends and colleagues."
Before Snyder's proposal, Mooney said "everyone in the film
industry here was just flying."
"People were getting new jobs, our friends were buying new
places, getting new cars ... it wasn't like people were getting rich
off this," he said. "Everyone was makinga stable, solid income.
But that day, everyone we knew became unemployed besides a
couple film sets."
Zakalik said he felt "cheated."
"I've been, for the lack of a better term, busting
my ass in this industry trying to make some-
' thing of it. I'm really happy here, and to hear
that my job is just going to disappear overnight is really, really
frustrating."
Snyder had alluded to his dislike of the state's generous film
tax incentives on the campaign trail, so his proposal was not a
blindside to the industry. What was unexpected was the extent
to which the governor wished to reduce the program.
"I think it's kind of ridiculous," Zakalik explained. "It's a slap
in the face - you might as well throw the $25 million out of the
window. It's being wasted."
"We knew he was going to bring it down to 30, 35 (percent).
We were thinking we would still be competitive," Rubin said.
"But with the $25 million cap he pulled the rug out from under
the industry. There is no way the industry can survive on the
cap."
Beyond the cap, Rubin isworried about the proposal's require-
ment that the incentives will be doled out in appropriations.
"Every year, the film community will have to come before
the appropriations committee and state their case, 'I think we
deserve this money,' " he explained. "So even if you have say,
$100 million in appropriations, you're never going to have long-
term commitments - infrastructure, studios - built because
there's a chance next year that they may not get the money."
' The first apparent casualty of the proposal was "The Aveng-
ers," which pulled out of Michigan to film in Cleveland, Ohio
after producers were unsure whether they would be receiving
the tax incentives.
But according to Kazmirzack, Michigan let "The Avengers"
film crew leave because of the irrational demands of the pro-
ducers.
"They put in their application and demanded an answer by
5 p.m. as to whether we were going to give them literally mil-
lions of dollars," he said. "That was not reasonable. Of course
the state is not going to approve a request with one day's notice
to give away millions of dollars."
Burnstein was disappointed to lose such a high-profile proj-
ect, especially to Michigan's rivals.
"The governor (of Ohio) is acting like it's the Ohio State-
Michigan game, and he just won," he said. "And he did, that's
the sad part."
Moving Out of Miigan
Mooney, Rubin, Burnstein and other filmmakers have been
working to fight Snyder's proposal, attending tax policy and
budget hearings and talking to state legislators before it passes
into law.
See FILM TAX, Page 8B
MOVIES FILMED IN OTHER STATES
"The Last Song" (left) was filmed in North
Carolina, and "The Soloist" (below) was par-
tially filmed in Ohio. If the proposed cuts to the
tax incentive are passed, it's likely that Michigan
will lose more movies to other states.
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