A Los Angeles developer is proposing to build a major movie and TV studio complex in Kapolei with possible state help under an ambitious plan that would rev up Hawai'i's film industry.

SHM Partners has an agreement with Campbell Estate to lease 22 acres next to Kapolei Business Park for the project. SHM plans to build a 200,000-square-foot facility including four sound stages, a mill for set construction, offices and perhaps a screening room, food commissary and tourist area.

The new space for productions would stimulate Hawai'i's movie and TV industry, which now generates an estimated $100 million in annual revenue and about 3,500 jobs. It would also broaden commercial uses in O'ahu's burgeoning "second city."

"The need for other stage space is crucial," said Dana Hankins, an independent producer and owner of Redhead Productions. Hankins was looking for a warehouse or aircraft hanger yesterday morning to accommodate a multi-episode miniseries anticipated to begin shooting early next year. "We don't have any other big-box options."

The only sound stage suitable for large productions in Hawai'i now is the Hawaii Film Studio at Diamond Head. The state facility, which CBS built in the 1970s for "Hawaii Five-0" on 7.5 acres, recently had a $7.3 million renovation.

If the Diamond Head studio is not available, typically, productions turn to large warehouse space, which is expensive to retrofit and extremely hard to find in Hawai'i's tight industrial real-estate market.

NEED FOR SPACE

Two years ago when three TV series were in production here — ABC's "Lost", NBC's "Hawaii" and Fox's "North Shore" — "Lost" and "Hawaii" had to lease and retrofit warehouse space. A fourth planned series called "Rocky Point" didn't pan out.

Hawai'i film commissioner Donne Dawson said "Hawaii" had to be shot in a former Hopaco warehouse in Mapunapuna that wasn't a good fit for neighboring businesses or the show. "It was a nightmare in terms of parking for crew and equipment," she said.

"Lost" rented the former Xerox warehouse in Iwilei, but this season the hit show moved all studio production into the Diamond Head studio.

SHM's Kapolei studio with four sound stages would quadruple the facilities now available for productions requiring large studio space.

The new studio would also compete with the Diamond Head studio, which could make it more difficult for the developers to get any state support.

SHM said it will pursue some form of public financial support.

"You just can't build studios and have it make financial sense," said Larry Hricik, an SHM partner. "They are very, very difficult to make financially viable. There has to be more there."

SHM hasn't asked the state film commission for help yet, but film commissioner Dawson said she told SHM that the state would be hard-pressed to participate in more film studio development.

SUPPLY AND DEMAND

At the same time, Dawson said the state needs more large studio space to accommodate rising demand expected from the state's recently increased tax credit for film production.

"There most definitely is a need. We could use something bigger in scale," she said. "What they're doing is important to the state, and it's important to the further development of the industry."

It's unclear whether the newly modified film production tax credits could be sought under the studio development plan, or whether SHM might pursue other opportunities such as state revenue bonds.

The state hands out an estimated $28 million in film tax credits each year, but they're limited to production expenses. The revised program, which took effect in July, raised the old 4 percent credit to 15 percent on O'ahu and 20 percent on the Neighbor Islands, but caps credits at $8 million per production.

SHM is considering other ways to spread development costs and enhance revenue, such as developing space for a rum distillery on the site.

Hricik said a rum distiller approached SHM about the idea, so SHM included a distillery building with retail space in its conceptual plan.

"There might be some synergies there to attract visitors to the site," he said. "It's not part of our divine plan. Whether or not that happens remains to be determined."

FROM L.A. TO HAWAI'I

SHM is a diverse real estate development company established in 1985. The firm has experience consulting on several film studio projects, and developed Los Angeles Center Studios in 1998 with six sound stages and 400,000 square feet of office space.

Hricik said the Los Angeles project was developed without government aid because SHM was able to use existing infrastructure, parking and office space of a former Unocal headquarters.

"We've done enough of these to know that you need other aspects to make these developments work," he said.

Hricik said Hawai'i's demand for large film studio space is obvious in that productions are routinely scrambling for large indoor space that they can retrofit as sound stages.

"Not only would it be good for us, but it will be good for Hawai'i," he said.

SHM Partners also has a contract to buy an adjacent 100-acre parcel from Campbell Estate that it plans to develop as an industrial park with a Morgan Stanley affiliate. That deal and the studio lease are expected to be completed by the end of the year.

FOUR TIMES THE SPACE

In 2004, TV stations proposed to film four shows in Hawai'i ("Rocky Point" was never picked up). With only the Hawaii Film Studio having a sound stage, two shows filmed elsewhere. Of the three, "Lost" is the only survivor.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.