Film incentive program extended another decade

AP Photo/Michael Penn/The Juneau Empire

The state of Alaska has put a lot of effort into bringing Hollywood to the Last Frontier. Now those movie and TV shows may keep on coming after the House passed a revised Senate Bill to expand the state’s film tax incentive programs through 2023.

SB 23 was revised to further incentivize local hires by tying those and Alaskan business utilizations directly to credits received for actor and crew salaries.

“We directly link the credit for Hollywood producers to Alaska hires and using Alaska business so spending is no longer general for above the line costs,” said Rep. Mia Costello, who chaired the House Finance Subcommittee that worked on the bill. “So the philosophy is they earn their credits by hiring Alaskans and using our businesses and I think that’s what people want.”

Several changes were made to the program, including lowering the base tax rate for “above the line” credits from 30 percent to 5 percent. Additional credits can be earned by using Alaskan personnel or businesses.

The “below the line” incentives were raised from 10 percent to 20 percent. The $100,000 minimum that productions must spend to qualify for credits has also been reduced to $75,000 while the qualifying expenditure credit base rate was kept at 30 percent.

Credits for shooting in rural areas as defined in the bill are tripled.

The program itself was moved from the state Department of Commerce, Community and Economic Development to the Department of Revenue. A review commission also was established using commissioners from the state’s natural resources, commerce, labor and revenue departments.

Among other changes, accountability has been tightened and a credit buy-back feature for the state for 75 cents on the dollar was added.

Three House bills were attached to the bill: HB 289 incentivizes liquid natural gas facilities, HB 276 provides for credit against oil and gas production tax in the Nenana Basin, and HB 252 exempts certain small businesses from corporate income tax to incentivize investments.

More than 70 productions have taken advantage of the tax credits since its inception in 2008, including major Hollywood features like “Big Miracle” and “The Frozen Ground.”

Alaska has a few other major productions in the works that it owes to the incentive program. One is “Walking with Dinosaurs 3D.” Its production company, Evergreen Films, is based in Anchorage and certified by the Cameron Pace Group, co-founded by James Cameron.

Another production, an action/thriller tentatively titled “Hunter Killer” has recently committed to shooting here, most likely in Whittier. The $100 million production will be Alaska’s biggest Hollywood feature film to date. It’s essentially three times the budget for “Big Miracle.”

Producers have recently scouted the state for an untitled $10 million feature film.

Carolyn K. Robinson owns the Anchorage production company Sprocketheads, which helps in everything from photography to casting, and has been involved in the majority of these projects. She’s spent her career in film and television, with Sprocketheads coming onto the scene in 1995.

Robinson said the film scene here was almost nothing before the tax program. She could not think of any feature films that came here before the program. She said it took a while for knowledge of the program to reach Hollywood but the result has brought a whole new industry to the state.

“People in Alaska are getting up to speed on how the feature film works and how to be involved in it,” Robinson said. “And after ‘Hunter Killer’ leaves, it’s just going to be a whole different landscape here in Alaska regarding the feature film industry.”

Evergreen Films CEO Mike Devlin also feels the program has grown the industry and helped pave the way for him and his partners to make substantial investments into a local production house in 2009. He said film is a globally competitive market and incentivizing the production encourages more trained people to come here. He said this industry is also exciting for young people who want to go to film school and return to Alaska to work.

“We’re really glad to build a stable business environment,” he said.

Investments in the company are not covered by the credit program. Only the movie is. “Walking with Dinosaurs 3D” will be its debut feature film. It will use computer-generated models against live action plates shot on location in Alaska.

NANA Development Corp., an Alaska Native corporation, has also developed an interest in Alaska’s film industry and has acquired a minority stake in Evergreen. The company also formed a film production and resource division called Piksik. In release from NANA, Vice President of Communications and Marketing Robin Kornfield said, “The answer that came from this work is clear, if Senate Bill 23 passes with a 10-year extension, we will see a new growth industry in our state that will provide significant economic benefit to residents.”

The tax program has garnered strong support from the Legislature and local economy but it also has its opponents. Local filmmakers have even addressed the Legislature with their concerns. The majority of these issues revolved around local hires, saying that outside companies are given credits and do not promote local economy or job growth since most actors and crew who receive the credits come from outside.

Robinson said the words these notions invoke are “misinformed” and “silly,” as the credits only go toward time spent in Alaska and these outside productions still help grow an industry. She said the films that have been through here have actually increased the local job base as people have trained and become able to fill the demands that productions call for when they’re here.

She said that while they bring personnel in, they also turn to local businesses for help, especially when those businesses have already worked on films.

For this reason, Sprocketheads has already landed on the radar for these companies scouting the state. She said these companies want to hire locally to save transportation and housing costs. The tax idea of getting more films here gives local personnel the experience thy need for such future productions.

“They want to hire locals,” Robinson said.

She gave an example of Karen Pearson, a Sprocketheads production manager, grew in her experience through working on “The Frozen Ground” and learned more about the intricacies of working on a feature film.

So has cinematographer Steve Rychetnik, who Robinson said has worked on every feature film shot here and has already been asked to participate in “Hunter Killer.”


Jonathan Grass can be reached at [email protected].

04/19/2012 - 1:07pm