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The Honolulu Advertiser

Posted on: Friday, January 28, 2005

State's film industry slumping

By Sean Hao
Advertiser Staff Writer

Network shows "Hawaii," "North Shore" and "Lost" helped boost television and film production spending statewide to a record $161 million last year.

Visitors John and Charlotte Ray get a close-up at the set of the popular television show "Lost" on the beach at Mokule'ia. "Lost" is threatening to leave the Islands, and state film officials say the higher costs of operating here make Hawai'i a tough sell.

Lucy Pemoni • Associated Press

Now with "Hawaii" canceled, "North Shore" on hiatus and "Lost" threatening to leave the Islands, the state film office expects that spending could drop to only $100 million this year.

The Hawai'i Film Office released the figures yesterday as film industry officials lobbied state lawmakers for increased tax incentives to keep and lure new entertainment projects.

Hawai'i already offers producers a 4 percent tax credit on qualifying expenses and a 100 percent tax credit on investments under the state's Act 215 technology incentive program. However, the production credit is not competitive with incentives offered by other communities, particularly when the high cost of filming in Hawai'i is taken into account, said Donne Dawson, state film commissioner.

Dawson said the investment tax credit typically is too complex and restrictive to be helpful for many projects. The Lingle administration is proposing to raise the 4 percent production tax credit to 15 percent on O'ahu and 20 percent on the Neighbor Islands.

The credits would be capped at $7 million a year per project. The industry also is seeking a grant or loan program to finance productions.

Productions of commercials, TV shows and movies typically generate 4,000 jobs a year, according to the Film Office. Before last year, the record for television and film spending in Hawai'i was $142 million in 2002.

"We know that if we do not provide (incentives), productions will go elsewhere," Dawson said. "We have example upon example of that."

Among the projects lost to other communities was Adam Sandler's "The Longest Yard," which will be shot in New Mexico, Dawson said.

Critics of movie tax breaks contend Hawai'i's high cost is offset by its unique scenery, year-round warm weather and safe atmosphere, when compared to certain foreign locations.

The debate on incentives comes on the heels of the ABC television show "Lost" asking the state for help cutting production costs, if the popular show is to remain in Hawai'i. The show, costing about $2 million per episode, is operating at a $500,000-per-episode loss.

Despite the show's success, it's unlikely to become a moneymaker for several years, industry experts said.

If the state were to bail out "Lost," it's unlikely producers would be willing to pay the state back later should the show become a financial success.

"I don't think so," said Ricardo Galindez, a local attorney for "Lost." "When we're negotiating with a studio, this is not a one-on-one negotiation. This is a studio that's being courted by virtually every other state in the union and foreign countries."

Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.