Hollywood exploiting New York: New York bribing producers to choose it over Toronto

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Fifteen years ago, before New Yorkers learned to “grumblebrag” about film shoots taking up sidewalks and parking spaces, and before the musical version of “The Producers” moved from a Broadway theater to a Brooklyn soundstage, New York state decided to try out a new tax credit to lure film and television shoots. Prior to 2004, some filmmakers and TV producers filmed in New York City for its iconic location and local talent, some even inextricably linking their work to the city – think Nora Ephron, Woody Allen and “Sesame Street.” At the time, film was a $5 billion industry that employed more than 100,000 people in New York City, according to then-Mayor Michael Bloomberg. But as many states began offering subsidies for filming – not to mention the generous Canadian incentive programs that made Vancouver and Toronto film hubs – studio executives said New York had to get into the arms race.

“The production heads that I grew up in the business with would tell me that they had stopped budgeting New York,” said Hal Rosenbluth, president and CEO at Kaufman Astoria Studios, a production facility in Queens that has been around since 1920. “We started to see a decline in the business.”

Then came a helping hand from Albany. In 2004, then-Gov. George Pataki and the state Legislature created a 10% tax credit for film and television productions in the state on “below-the-line” costs – essentially all costs other than salaries for actors, directors and writers. The credit was capped at $25 million annually, with New York City kicking in an additional 5% refundable tax credit capped at $12.5 million per year for productions in the city. It was a bipartisan initiative with widespread support among outer-borough state legislators. At the time, Republican state Sen. Martin Golden and Democratic Assemblymen Joseph Lentol and Michael Gianaris were among those championing the legislation.

The real push for the credit came, unsurprisingly, from the film industry – in particular, from real estate mogul Doug Steiner, who founded Brooklyn’s Steiner Studios. On an extensive tour of his sprawling 50-acre, 30-soundstage lot in the Brooklyn Navy Yard, Steiner said that without a tax credit, Steiner Studios could not have become a thriving business. “About six months before we opened, I went into a total panic, realizing we needed a tax credit in New York or it would be the most public colossal blunder of my career and sink me,” Steiner said. That New York got its film tax credit and Steiner Studios in the same year was no coincidence. “We opened in November in 2004, it was signed into law at our grand opening (with) Mel Brooks, Gov. Pataki and Bloomberg.” Brooks’ “The Producers” would be Steiner Studios’ first film in 2005.

In the past 15 years, the $25 million state credit has grown into a behemoth nominally capped at $420 million per year, bringing the state’s total spending on subsidizing the industry to about $6.5 billion. Feature films, TV films and TV series and pilots in New York City can receive a 30% credit on qualifying below-the-line costs, while upstate productions are eligible for an extra 10% credit on qualifying labor costs. If a New York City production has $10 million in below-the-line costs, they will receive a $3 million reimbursement after production ends. Productions apply for the credit through Empire State Development, the state’s economic development arm, and provide information about the number of people hired, shooting locations and ledgers. There is no minimum spending requirement, but some categories – including documentary films and instructional videos – don’t qualify. A portion of the funding is allocated to the state’s post-production tax credit, which offers a 30% reimbursement on post-production costs incurred in New York City, and 35% upstate. See more at City and State New York.

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