Film Grant Program Included In Draft State Budget

By Jenny Callison, posted Jul 29, 2014
Update: This version contains comments from Rep. Ted Davis and a further statement from Bill Vassar.

Film incentives are still showing signs of life as the N.C. House and Senate continue budget negotiations.

In the budget draft under discussion, the current tax credit program is changed to The Film and Entertainment Grant Fund, outlined in Section 37.8, Article 10 of Chapter 143B of the General Statutes.

“There is created in the Department of Commerce a special, nonreverting account to be known as the Film and Entertainment Grant Fund to provide funds to encourage the production of motion pictures, television shows, and commercials and to develop the film-making industry within the State,” the new section reads.

To qualify for a grant, according to the draft legislation, a feature film would need to have $10 million of “qualifying expenses,” a television episode at least $1 million, and a commercial for theatrical or television viewing, at least $500,000.

Grant funds would be capped at $5 million for a feature film, $5 million for a single episode of a TV or video production and $250,000 for a commercial.

The draft legislation limits productions that would qualify. Funds would not be awarded to a production that contains material that is “obscene” or “harmful to minors”; reports news or sports or is a talk, game or awards show.

The draft legislation is based on a film incentive amendment submitted to the N.C. House  in June by Rep. Ted Davis (R-New Hanover) as Davis’ effort to salvage some kind of incentive program in the state. His earlier attempt to retain a modified tax credit program failed.

Grant programs, unlike tax credit programs, are often at the mercy of legislative budgets, industry leaders say. Because grant programs do not have automatically recurring funding, the amount of available funding can vary from year to year, and film projects have to wait until a state’s new fiscal year to know how much money will be available.

The draft legislation does not specify how much money would be made available for film industry grant in 2015, but a fund of $10 million has been mentioned.

"We're saddened by the idea of a $10 million appropriation," Johnny Griffin, director of the Wilmington Regional Film Commission, said on Tuesday. "That amount is woefully inadequate for us to grow or even maintain the current level of success we've had.

"Our local delegation is still working, however, and we hope they will be able to do something to improve the size of the grant fund," Griffin added. "We'll comment on [the legislation] fully when it is final."

Davis said he's making every effort this week, as budget negotiations wind down, to make the draft legislation more favorable.

"I have worked harder for film incentives than I have ever worked on anything my entire life," Davis said Tuesday afternoon. "And the fat lady isn't singing, but she's starting to warm up. I'm trying to get as much as I can on film incentives for as long as I can."

Davis said he's had many emails from film workers, especially in the Wilmington community.

"They're asking me, 'What's the writing on the wall? Should I put my house on the market?'" Davis said. "I feel for these 4,200 employees. I'm not going to stop [working] until it's over."

"We are disappointed by the $10 million grant set aside for film in the proposed state budget," said Bill Vassar, executive vice president of EUE/Screen Gems Studios in Wilmington. "The legislative session is likely to last another 72 hours. Rep.Ted Davis and other members of the House are working diligently to find additional funding that will keep the North Carolina film industry alive. In the waning moments of the past legislative sessions, film has been recognized as an important economic engine to the North Carolina economy. We are hopeful for similar results in this session before the end of this week."

Meanwhile, said Vassar, there is a high level of activity in the Wilmington area.

“The studio is at almost 100 percent capacity through the end of the year. We have clients lined up for next year,” he said.

“We are waiting for word from our elected legislators as to how important they think the film industry is to the economic future of North Carolina,” he said. “The decision about film will affect 4,200 full-time and 15,000 part-time employees as well as over 1,000 locally owned businesses.”

In 2013, about $61 million was paid from the state's general fund in tax credits to qualifying productions. The proposed grant fund for 2015 is one-sixth of that.

Griffin points out that if the current television series return to the region in 2015 and utilize all of the $10 grant funds, there would be no money left to recruit other productions.

A mid-year report from the state’s film office, released July 25, showed an estimated production tally of $268 million in direct state spending for the first six months of 2014 and nearly 19,000 job opportunities for North Carolinians.

“The 2014 mid-year figures eclipse last year’s total direct in-state spending mark of more than $254 million by productions,” the report stated.

Productions contributing to this year’s expenditures thus far include the return of television series Under The Dome, Banshee and Sleepy Hollow and the upcoming new series Secrets & Lies as well as the studio feature films Max, The Longest Ride, Max Steel and the Untitled Armored Car project.

Of those projects, the Wilmington area has served as the filming location of Under the Dome, Sleepy Hollow, Secrets & Lies, The Longest Ride and Max Steel.

Asked for comment on the pending legislation, officials from the N.C. Department of Commerce - of which the N.C. Film Office is part - said they would have a statement once they had reviewed the compromise budget.
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