Virginia aims to bring home Hollywood bacon

Bring on the stars! Bring on the glamour! But, most of all, bring on the jobs.

That's Virginia's message to Hollywood.

Virginia's first tax credit incentives to encourage production of motion pictures in the state went into effect this week. They come after some 30 years of lobbying by supporters.

Gov. Bob McDonnell signed two bills. One provides a tax break for filmmakers who spend money here, plus credit for hiring state workers. The other increased tenfold the amount of grant money available to qualifying filmmakers, from $200,000 to $2 million. The state will spend a total of $4.5 million on the measures.

The incentives come as Virginia faces cuts in services to plug budget shortfalls, but legislators say the state is not giving away money.

The Virginia Film Office estimates that for every $1 spent in Virginia on movie production, the state receives $14 in revenue. The office, located in Richmond, says film productions employed 4,000 Virginians and spent about $378 million on hotels, labor and other goods in the state in 2008, which the film office regards as an "off" year.

Sen. Louise Lucas, D- Portsmouth, who sponsored the bills, said Virginia can't afford to lose the industry to other states. "We get a better return for this investment than any other I can think of," she said. "It's, simply put, more bang for the buck."

The Virginia Production Alliance, an organization of potential movie workers, for years has pushed for tax credits as a way to build the state's film industry.

"No one used to even talk to us, or to the state," said Terry Stroud, chairman of the alliance. "Two past bills ended in failure. The Senate was particularly opposed because of two words: tax credits."

Stroud said the alliance and others finally convinced legislators that credits could be structured in a way that ensured Virginia got a return on its investment.

Lucas introduced the successful bills in December. Both she and Stroud pointed to the governor's support and the bills' rallying cry of "Jobs!" as reasons for their passage.

To qualify for incentives, a production must film in state, hire Virginians and meet other requirements. Shooting in an "economically distressed" area can increase incentives, as can hiring Virginians as first-time movie employees. Tax breaks can go as high as 20 percent.

The state previously waived taxes on purchase of film-related products, like scripts or supplies for sets, and extended hotel stays. In most cases, state-owned locations can be photographed free of charge. Most incentives are paid after production wraps.

It is likely the new incentives will help the state attract documentaries or projects with budgets of less than $10 million, said Jeff Frizzell, commissioner of the Hampton Roads Film office.

Virginia can offer benefits beyond the tax incentives, such as cheaper labor, he said. "In Virginia, a producer does not have to hire union. Taxes are a little cheaper. Gas and hotels are a bargain, compared to some states. We encourage them to compare and then our incentives might actually be more than is on paper."

The incentives have come at a time when the industry is doing well, said Rita McClenny, head of Virginia's Film Office. She noted that PricewaterhouseCoopers has estimated that the business will grow by at least 6 percent in the next five years.

"It's difficult to find a business that is that secure in these times," she said.

Economist Mark Robyn of the Tax Foundation, a nonpartisan research group, is a doubter. He said states are engaged in an escalating bidding war "to win over a marginal amount of business.... Filmmakers bid states against one another and reap the benefit."

More than 40 states offer film incentives, and many have better deals than Virginia. The same goes for countries like Canada, where Toronto can double for New York City, and eastern European nations like the Czech Republic and Lithuania.

To remain competitive, North Carolina approved tax credits in 2006. The change helped the state land feature films like George Clooney's "Leatherheads" and "Nights in Rodanthe," with Richard Gere and Diane Lane.

The state already had been the setting for "The Color Purple," "Days of Thunder" and the network TV series "Dawson's Creek," located in Wilmington.

In Georgia, state officials in 2008 increased the tax credit to 30 percent for businesses filming in the state. Movie production has doubled since, according to the state's film commissioner. Two movies filmed there, "Zombieland" and "The Blind Side," both topped the box office.

"Given the economic times, this is one of the few positives for the state - an industry that is actually growing," said Bill Thompson, the Georgia film commission director.

Michigan looked to the tax credits as a way to lure business and boost employment. It offers one of the most generous incentives in the country - a tax rebate up to 42 percent. Its film office says moviemakers spent about $223.6 million there last year, up from $125 million in 2008.

At least one Michigan representative is not convinced that the film industry is a boon to the state. Tom McMillin has grumbled publicly that his state's film production tax breaks cost too much. Michigan will pay filmmakers $165 million this year, he said.

"The average job for a Michigan employee of these people is 28 days. This is a transient business," he said. "They are not building studios here. They are taking the money and leaving."

Michigan's film office said several projects are under way to build studios and other facilities in the state.

Other states, including Iowa and Kansas, are getting out of the movie race.

Virginia has enjoyed cinematic success without incentives, especially when it comes to historical films.

The television miniseries "John Adams" brought some $80 million to the state, Frizzell said. "The New World" was filmed around Jamestown and Yorktown.

But several movies have been lost to states that offered better perks.

Virginia Beach's Derrick Borte had hoped to film in upscale subdivisions of his home city, but he said Georgia offered tax breaks that he couldn't afford to ignore. His movie, "The Joneses," with Demi Moore and David Duchovny released earlier this year, received favorable reviews.

Virginia Beach filmmaker Matthew Fine said he looked at locations in Virginia for "Cherry," a coming-of-age comedy directed and written by his brother, Jeff. But Michigan's tax rebate paid for roughly one-third of his budget.

McClenny has long touted the state's scenery, from beaches to mountains, but when she couldn't offer monetary incentives, she said, filmmakers often ended the conversation.

"The real heartbreaker," McClenny said, was "Cold Mountain," the Civil War saga based on the award-winning novel by Charles Frazier that was set in Virginia.

"We worked on it for two to three years," she said. "We had the scenery - everything. We thought we had a great chance. Then came the telephone call. It was going to be filmed in Romania. When it came down to the final decision, it was a matter of dollars and cents."

The 2003 movie starred Nicole Kidman, Jude Law and Renée Zellweger.

Virginia landed one scene, shot at Carter's Grove Plantation near Williamsburg with phony cotton and the oxen that usually work Duke of Gloucester Street in Williamsburg.

The state lost more than prestige, Frizzell said.

"The return can be amazing," he said. "With a big movie like 'Mission: Impossible 3,' which shot here briefly at the Chesapeake Bay Bridge-

Tunnel, they spend $250,000 a day and think nothing of it.

"Think - $250,000 a day. Landing one of those films for a long run would be the goal of all time."

Mal Vincent, (757) 446-2347, mal.vincent@pilotonline.com