A fading film star?
Without incentives, Virginia could lose its attraction to production companies as a site for movies

by Lisa Antonelli Bacon
for Virginia Business
January 2006

Once upon a time, Hollywood filmmakers got tired of renting soundstages and building sets to recreate movie locales. Crews had become expensive, expecting — and getting — union wages and regulated work hours. So filmmakers branched out, finding little-known spots around the country to work their magic. The result was authentic-looking backgrounds for movie sets and cheaper labor. While filming on location has been around since Marilyn Monroe graced the silver screen, the film world in the past 25 years has embraced the concept of flying a hundred or so crew and cast members to exotic (or not) locations, where they stay in local hotels, eat at regional restaurants, and plump local economies by spending their per diems on shopping sprees.

Before you could say “roll ‘em,” states were vying for the opportunity to host film productions. Many created film commissions to organize recruiting efforts, touting their scenery, history and even tax breaks to woo multimillion dollar productions to their home states.

With a film office in place in 1980, Virginia quickly became a favorite of filmmakers. As a right-to-work state, production companies could shave costs by hiring local crews rather than being financially hamstrung by union rules. With mountains, a coastline and historic architecture, Virginia could portray almost any climate, topography, or era. By the time Rita McClenny took over as head of the Virginia Film Office in 1991, the Old Dominion was on its way to becoming a Hollywood satellite. Stars like Richard Chamberlain, Charlie Sheen and Patrick Swayze spent months filming here, to name just a few. In the past decade, scenes from many major flicks including “The Pelican Brief” and “Hannibal” have been shot in Virginia. In addition, two in-state production companies — New Dominion Pictures in Suffolk and New Millennium Studios in Petersburg — boosted Virginia’s stature in the industry by producing television shows and independent feature films.

Today, 45 states and even Puerto Rico have film commissions, and competition is fiercer than ever. In fact, Virginia is losing its competitive edge, say some officials, as state governments around the country draw productions with heretofore unheard of incentives.

Meanwhile Virginia is being relegated to the wings. “Virginia has lost more than $800 million in production work since 1994,” says McClenny. “Virginia needs to be more competitive. We are being left behind.”

In the 25 years since Virginia created a film office, the film industry’s economic impact on the state has topped $1.5 billion. However, film office representatives say they can’t maintain that momentum without some changes. “If we do not have the same incentives or advantageous financial situations to offer, they’ll pick our competitors,” says Andy Edmunds, the film office’s locations manager. “Show business is a business. It’s not called show art.”

While the state office can’t sponsor legislation, it supports a proposal by the Virginia Production Alliance for a labor rebate program, similar to ones in force in other states. “The game has gotten so competitive, without something like this, we’re going to be at a disadvantage,” says Terry Stroud, president of the alliance, a professional organization formed to promote production in Virginia. Under its proposal, 25 percent of the first $25,000 in wages paid to each Virginia resident worker would be rebated — in cash — to production companies, which also would receive a 15 percent rebate on goods and services purchased in the state.

Breaks on sales tax have become so common among states hosting productions that it’s barely considered a perk any more. Something else is needed to up the ante. “It’s taken a while to zero in on what we thought the correct incentive is,” says Stroud, adding that economically disadvantaged areas, such as Southwest and Southside Virginia, would offer a 35 percent rebate, making those areas even more attractive to film companies. In December, no legislator had signed on to sponsor the proposal in this month’s 2006 General Assembly session, but Stroud and the alliance are actively seeking a senator or delegate to submit a bill.

To understand why film production is so attractive, consider the impact of the large crews on local goods and services. Filming for the 10-part television mini-series “John Adams” initiated by, among others, Oscar winner Tom Hanks, provides a telling example. Tucked behind the leafy landscape of pastoral state Route 6 in Powhatan County is a large compound of meticulously constructed 17th century-style buildings — the setting for some of the “John Adams” filming. While the cameras aren’t expected to roll until March, local lumberyards have already sold studs in units of 1,000 or 2,000 to the production’s construction crew. And one local landscaper moved enough dirt in one month to earn $200,000.

In the last two years alone, parts of “Mission Impossible 3” were filmed along the Chesapeake Bay Bridge-Tunnel, and portions of the $100 million “War of the Worlds” were shot in Rockbridge County and Roanoke, with one scene reportedly calling for $500,000 worth of gravel. “The New World,” starring hunky Colin Farrell as Capt. John Smith, opened in theaters this month and was filmed almost entirely around Jamestown, a boon to the area as hotel rooms, restaurants and retail concerns buzzed with well over a hundred cast and crew.

In 2004, the Virginia Film Office invested a little more than a half-million and brought in $190 million in film industry money, according to film office representatives. Meanwhile, North Carolina — similar to Virginia in topography, history, and available workers — crushed the Old Dominion in the competition for film sites. “In the last 25 years,” says North Carolina’s Film Com-missioner Bill Arnold, “we spent slightly under $6 million. In return, the film industry spent more than $6 billion here. Every dollar invested gets $1,000 back.”

Even California, America’s film capital, has jumped into the fray to restore lost market share to Lala Land. Between 1996 — when the number of feature film on-location filming days in Los Angeles peaked at 13,980 — and last year, the number dropped by 37 percent, according to the city’s Entertainment Industry Development Corp. Last fall, California lawmakers began framing legislation to provide tax credits for filming there.

When it comes to drawing film productions, every state wants to be Louisiana. After lawmakers approved the nation’s biggest film industry tax-break package in 2002, film and TV production exploded from $20 million to a projected $425 million for 2005. Katrina’s devastating effects slowed investment return, but not for long. In November, Baton Rouge Mayor Kip Holden announced plans for a film industry jobs-training program to reassure filmmakers that Louisiana would still have the best trained, affordable local labor pool.

As incentives go, the success of Louisiana’s labor rebate program — which offers cash rebates on a percentage of monies paid to local workers — has spurred other states to fall in line. With or without the labor rebate incentive, Virginia stands ready to welcome the film world. Thousands of experienced extras, production crews and freelance contractors scan newspapers and trade publications such as Variety for shoots potentially headed for Virginia. There’s even a tour in Richmond for buffs who want to see the locations they’ve seen on screens, put together by screenwriter Helene Wagner and husband Tom. “Anybody who loves movies will love the tour,” says Helene.

Wagner and the rest of the Virginia film community are hoping that the list of locations will continue to grow. But some believe that future growth hinges on the growth of incentives. Currently, 19 states have significant programs. The push to keep Virginia competitive isn’t just about the excitement of seeing familiar sights on film. Nor is the goal to bring in revenues for local businesses and plump state coffers. “We are concerned about a lot more than bringing big budget films to the state,” says Mary Nelson, communications manager for the state’s film office. “We want to create an industry within the state that employs Virginians on a regular basis.”

Locations manager Edmunds doesn’t expect the rebate program to be a hard sell. “It’s a rebate, just like it says,” says Edmunds. “They [production companies] don’t get the money until they spend the money.” The rest of the script will play out when the legislature convenes. Who knows if the General Assembly will think it’s a five-star idea?