Posted on: Friday, January 30, 2004
State tax credit for films ends with 'Big Bounce'
| • | Movies with & without ACT 221 |
By Sean Hao
Advertiser Staff Writer
As "The Big Bounce" bounds into theaters today it will highlight the end of Hawai'i's generous support for one-shot movie deals.
The movie, partially shot on O'ahu's North Shore in 2002, deals with seduction and chicanery surrounding a big heist. It's an ironic plot considering many have questioned whether Hawai'i taxpayers were left in the lurch when "The Big Bounce," and before it "Blue Crush," packed up production and left town.
Investors in the two movies got millions of dollars in tax write-offs through Act 221, which was intended to attract permanent high-technology jobs to Hawai'i.
When news spread that the technology tax credits were being used for movies, the state tax department banned their use for productions that "do not contribute to Hawai'i's economy on an ongoing basis."
"The Big Bounce" and "Blue Crush" were among five feature films shot in Hawai'i during 2002, which led to a record $147 million spent by the movie industry in the state, according to the Hawai'i Film Office.
Production spending fell by an estimated 50 percent last year, said Donne Dawson, film office manager.
The ban on use of Act 221 for movies happened in March, and some blame it for the drop in movie production.
"As a consequence of all this negative publicity ... there was massive public sentiment against Act 221," said Nancy Grekin, a Honolulu attorney who represented both "The Big Bounce" and "Blue Crush." "That caused people on the Mainland to look at it and say, 'What's wrong with you guys anyway? It sounded like a good thing and now it sounds like you don't want us there after all.' "
This spring lawmakers will consider changes to Act 221 that might put back some of the incentives for movies. There are several bills in the Legislature dealing with film incentives, and this week Gov. Linda Lingle introduced a measure that would boost a separate film industry tax credit from a rebate of 4 percent to 15 percent of costs incurred on O'ahu and 20 percent on Neighbor Islands.
To guarantee a boost for the economy the credit would include the caveat that a certain number of jobs be created or post-production work be done in Hawai'i.
"The whole idea of using tax credits is to create sustainable businesses and economic opportunity," said Ted Liu, director for the Department of Business, Economic Development and Tourism. "By definition, movies are one-shot deals."
Hawai'i taxpayers may never know just how much Warner Bros. Pictures saved on "The Big Bounce." The company would not provide a figure and the state tax department considers such information confidential. However, if the cost to the state was in line with the estimated $15 million to $18 million tax credit given to "Blue Crush," the combined tax loss for the state could be in the range of $30 million to $36 million over a five-year period.
Proponents of tax credits for movies argue the state gets a lot more from the process than jobs connected to the film production.
"Every time ("Blue Crush") is shown people see these incredible, beautiful scenes of our beaches and I think we're getting priceless publicity for our state," said Grekin, during a recent speech before the Hawaii Venture Capital Association.
Because of the state's high costs and lack of a large core of skilled workers and post production facilities, incentives are needed to attract movies here, Grekin said.
Critics contend such tax credits are just a bonus for movie producers.
"It's the unique backdrop and the setting" that attract Hollywood to Hawai'i, said Lowell Kalapa, president of the nonprofit Tax Foundation of Hawai'i. "Why do you need tax incentives? It's just absolute gravy."
Even without Act 221, Hollywood keeps coming to Hawai'i. Next month, Adam Sandler's "50 First Dates" will hit theaters joining several other films shot in the state recently without the benefit of Act 221 including "Tears of the Sun," "The Rundown" and "Along Came Polly."
State film office manager Dawson says the 50 percent drop in movie production in 2003 versus 2002 was for several reasons.
"I think that 2002 was an unusual year where there were several instances where Hawai'i was subbing for other locations," Dawson said. "Especially after 9/11, I think a lot of producers wanted to keep their productions closer to home and within the United States. In 2003 we started to see that trend fade somewhat."
Act 221 still can be used to pay for movie productions, but only under circumstances that involve the creation of on-going jobs. Santa Monica, Calif.-based Film Planet LLC, which wants to shoot several low-budget movies in Hawai'i, is among a handful of film companies that have qualified for Act 221 credits.
As for this year, the state has commitments for the filming of two pilot episodes for TV shows and the possibility of landing three others, Dawson said. As for films, "There's nothing firmly nailed down yet, but there's several possibilities within six months," she said.
