' ' Cinema Romantico: Iowa Goes Hollywood

Wednesday, September 30, 2009

Iowa Goes Hollywood

When I was back home in Des Moines for the Springsteen show I picked up a copy of the Des Moines Register (Iowa's answer to the Ypsilanti Courier) along with my delicious coffee at Zanzibar's and happened upon an article detailing my home state embroiled in a serious film industry controversy. Yeah, that's right, punks, the film industry...in Iowa. How do you like us now?!

Well, as it turned out, the film industry liked Iowa a whole huge bunch after the state introduced - its words - "half-price filmmaking." What does that fancy-pants nickname mean? Basically, this: A production company filming in Iowa can qualify for tax credits equal to up to 25 percent of what is spent in the state on the production while the film investors can also qualify for tax credits up to 25 percent of expenditures.

This has become all the rage. The state of Michigan introduced a similar scheme early last year in which they offered up to 40% in tax credits to spark a fledgling film industry (enticing, amongst others, Clint Eastwood and his "Gran Torino") and many other states have done the same with variations of how many tax credits and what sorts of incentives they will provide. Earlier this year Iowa decided to enter the game and up the ante. 50% was the highest going rate.

Of course, these film projects must be shot in Iowa and they "must spend at least $100,000 in qualified Iowa expenditures and must have a state or local economic impact sufficient to justify assistance" (according to the aforementioned Des Moines Register).

It seems it did not take along for "half-price filmmaking" to go awry. The program began rather modestly in July 2007. According to a memo from Michael Tramontina (the same Michael Tramontina who resigned his post last Friday), Director of Department of Economic Development, to Iowa officials for the program's first two years "twenty film projects (were) awarded a total of $31 million of tax credits." Then suddenly "from May until August 2009 approximately $100 million of projects (were) induced by the DED board." Filmmakers saw what was happening, obviously, and climbed aboard the, as they say, gravy train.

The memo (read the memo here) goes on to list a slew of improprieties. A few of them are as follows:

-"Files on each film were inadequate. Most of the necessary information was in unsorted email archives."
-"Contracts were amended, often to increase amount of credits requested substantially, after Director/Deputy approval."
-"There were only receipts for two of eighteen film projects. Some receipts were obviously prepared in a single batch by the filmmaker who claimed for all of their vendors on identical receipts which were usually not signed."
-"Ledger sheets that were accepted as claims were vague and overly broad. It appeared everything was allowed. Tax Credit certificates were issued for the full amount requested. It appeared nothing was ever disallowed."
-"Many vendors clearly resided outside of Iowa."

But the most explosive claims (by which I mean the claims getting the most play in the media) were "reports of two vehicles purchased through the tax credit program that were not used directly on a film." Especially when you consider these "two vehicles" were (gasp!) "luxury vehicles" - specifically a "Mercedes Benz and a Land Rover". Plus the "amount of credits claimed (for the vehicles) was the full purchase price rather than the lease cost during the project."

I think, though, my favorite nugget from this whole debacle has to be the one reported by Jennifer Jacobs regarding now fired Iowa film office manager Tom Wheeler that stated: "Even today, the entire film office is one cubicle inside the state's economic development offices."

One cubicle! Sweet Maria! My workspace is bigger! Couldn't they get the poor guy an actual office? It could have even been a windowless office! I'm sure Mr. Wheeler wouldn't have complained!

The same article by Jacobs also indicated "the tax incentives were announced with little fanfare the year before partly because leaders feared too many simultaneous projects could overwhelm the state's limited resources." Ah, foresight.

All this is why Iowa Governor Chet Culver, whose seat is as hot right now as Dev Patel's in "Slumdog Millionaire", has put the whole program on a halt (for now) and leading to the whole situation being deemed a "fiasco", and as "Elizabethtown" taught us: "a fiasco is a disaster of mythic proportions. A fiasco is a folktale told to others that makes them feel more alive because it didn't happen to them."

Except it appears this is happening to just about everyone. Every state that decides to "spark" its film industry is taking it on the chin one way or another. Maybe we should look a little closer at Michigan's program. They were a state, like Iowa, that was hit hard by unemployment and saw this as an opportunity to create jobs and boost the economy. According to the New York Times "The first round of Michigan credits cost that state’s taxpayers about $48 million in 2008, while generating about $53.8 million in new employment income, and the equivalent of 1,102 full-time jobs."

But upon closer investigation it is revealed "(t)he MSU report mentions direct gains of 2,763 jobs, but adds that these involved short-term employment of just 23 days on average, producing a 'full-time equivalent' of just 254 jobs." Hmmmmm.....

Donnelle Eller of the Des Moines Registe reports "the state acknowledges it currently has little way of determining how many jobs - most of them temporary - the film industry creates in Iowa." Well, that doesn't seem good. Shouldn't they have considered this before they set sail? In the same article Susan Christopher of Cornell ("Maybe you've heard of it?") University sheds some unfortunate light. "Film projects create work, it doesn't create jobs...It's like a renaissance festival coming to Iowa. There's a lot of activity, so it's very visible, but it's temporary."

Naturally Iowa's filmmaking community is up in arms over the sudden halt to the program as Governor Culver and his cohorts attempt to figure out what the hell is going on. They are fearful the industry will leave and never come back. "Hollywood has come here, Hollywood is looking at us, and Hollywood is very pleased and impressed at what it's discovering." This is what local actress Kim Grimaldi told the Des Moines Register. (Then again Grimaldi was in one of central Iowa's most famous film productions to date, "The YooFoo Club", a film so wretched she probably thinks working opposite Rose McGowan as a crackhead is a dream come true.)

Hey, I love movies as much as anyone. I think that's obvious. Maybe there is benefit to luring filmmakers to Iowa (so long as they massively restructure this entire program, like putting a cap on it - as Michigan has done - and, you know, keeping a few actual records of the whole enterprise), but maybe not. I don't live in Iowa anymore so it's not my tax dollars at work. (Do my Iowa friends have any comment on this?)

Oh, and consider this quote from the Iowa Fiscal Partnership's Victor Elias: "The average cost of salary and benefits for a teacher in Iowa is $56,800 a year. That $50 million would put 879 teachers in the classroom every year. As we’re looking at cuts, we’re saying these are 879 teachers we don’t have to fire or that we can actually hire. As opposed to 15 film projects that will be here for a few months or so and then leave." Hmmmm....

John Carlson of the Des Moines Register pegged this as being "hooked on Hollywood." Perhaps there is a bit of truth to this sentiment, though his article seemed to single out Iowans and, for God's sake, Iowa is not alone on that obsession. This is a society where you can hop online and in three seconds find photos of Sienna Miller in New York exiting Starbucks (not that I know about this) and where I once witnessed Jennifer Aniston on location for "The Break Up" on Michigan Avenue exit a hotel to hundreds of people screaming like they were from Manitoba and Labatt Blue had suddenly just become free. Everyone's hooked on Hollywood, John. Wisconsin got hooked and then had to shut the whole thing down. Louisiana hooked and found itself in the midst of a bribery scandal before real tragedy struck and an ex-Nebraska Football Player got screwed! Oh no!

I don't believe that was the driving issue, though. When people need work and states need money it's only natural to gravitate to the quick fix and if one state has already proclaimed a quick fix then your state simply needs to grab hold of the same quick fix and take it up another notch which leads to the next state in line taking it up another notch and before you know it Delaware will be offering 100% in tax credits! Film in Dover! Please! We'll give you anything!!!! And then a year later Delaware will be so broke it will have to merge with Maryland to create Maryware. It's how the business goes. You wanna play, you gotta pay. A lot. Hollywood doesn't mind fleecing all of us. Even in a recession.

"I'm in the big game with the big players. My experience I can give you in a nutshell and I didn't dream it in a dream, either. Dog Eat Dog. From now on, the best of everything is good enough for me." - Sydney Falco (Tony Curtis), Sweet Smell Of Success


Wretched Genius said...

My state tax dollars will be wasted no matter what. So as long as I'm not going to see any benefit from them anyway, I might as well be given a slight chance of meeting a celebrity.

But to be clear, I'm talking about state tax dollars. My little suburb knows exactly how to spend its money wisely.

Rory Larry said...

I'm not exactly sure I get what the economic problem here is, Michigan gave up 48 million in revenue to make 54 million in revenue? That's called a profit in the corporate world. 6 million dollars of profit. What would Iowa's tax revenue from films be with no tax credit? and is that number higher or lower than what it is with the tax credit? You aren't wasting money if you never would have earned it in the first place.

Nick Prigge said...

Excellent questions, Rory, but from everything I've read on the subject I have found nothing that would answer them. The whole deal appears to have been thought out extremely well.

There was supposed to be a report released today in relation to the fiasco but it has now been "delayed."

As for Michigan there were supposedly cash subsidies paid directly to the film companies that were not accounted for.

Also there are supposed projections that indicate if the program continues as it currently is they will end up losing far more then they would earn.

There is a lot of conflicting info on all of it.