The entertainment industry is synonymous with Hollywood. But in recent years lots of film and TV production has migrated to what’s now become commonly known as “Hollywood South.” Louisiana and Georgia form the core of this new industry hub because both states offer tax incentives to film and TV productions.
The ape army descends upon the ravaged remains of San Francisco. Their leader addresses the surviving humans:
“APES DO NOT! WANT! WAR!”
In Dawn of the Planet of the Apes it may look like they’re battling it out in post-apocalyptic California, but they’re actually in Louisiana. Parts of the movie were filmed at the abandoned Six Flags amusement park in New Orleans East.
To quote a popular bumper sticker here in Hollywood South: “This is LA not L.A.”
For the past decade traffic in the show business pipeline between the two LAs has flowed steadily eastward toward the Pelican State.
Herbert Gains is a freelance movie producer from Los Angeles. He shows off a bustling sound stage.
“This is stage one. Terminator was in stage one and two. And Jurassic Park was in stage three, four, five, six, seven and eight," he says.
He came to Baton Rouge in 2005 to film the biblical horror movie The Reaping. He was in the state when Katrina hit and saw a way to help rebuild Louisiana — by making it a first-class filming destination.
"This is our big stage. It’s over 26,000 square feet. As you can see, we’re well into construction of a set here for Geostorm.”
We’re in a giant warehouse. To be exact, we’re on the NASA campus in New Orleans East. Gains had been looking around Louisiana for facilities that could double as sound stages. When the space shuttle program left in 2010 he saw an opportunity to put those empty rocket hangars to use.
At the time he was producing the movie Green Lantern, and the original production plans in Australia had fallen through. So he approached NASA about using their space.
“I had said to them at the time that if it worked, that I had a vision of Hollywood and NASA coexisting in this space. And about halfway through the production they recognized the value and they were very happy with it. And we started talking about a potential long term arrangement,” he says.
From there, Gains started Big Easy Studios. It’s been host to several big budget productions like Dawn of the Planet of the Apes.
Last year 61 productions filmed in New Orleans alone; that’s up from 24 just a few years ago.
There’s no question that the industry is growing in Louisiana. There’s also no question why.
“It’s quite simple: you spend a dollar in Louisiana, we give you thirty cents back,” says Chris Stelly, executive director of Louisiana Entertainment, the film and TV division of the state’s economic development department. His office oversees motion picture tax credits.
When the program began in 2002, the tax credit rate was just 10 percent.
In 2009 the state revamped the incentives and made them permanent. The revisions guaranteed that if a production spends more than $300,000 in Louisiana, the state will issue a tax credit for 30 percent of its expenditures. This resulted in a 175 percent increase in the volume of production.
Big movies like Twilight: Breaking Dawn typically receive $10 million to $30 million worth of tax credits from the state.
But most productions don’t owe any taxes in Louisiana. So they have two other options.
“They can transfer it to the state and we’ll essentially cut them a check, a rebate check for 85 percent of the face value. So if you have a million dollars in Louisiana tax credits and you transfer it back to the state we’ll cut you a check for $850,000,” Stelly says.
Or they can sell their credits to individuals or corporations who do owe taxes in Louisiana.
Jan Moller is director of the Louisiana Budget Project, a Baton Rouge watchdog group.
“If I’m somebody with a very high income and I have a large state tax liability and I want to reduce that liability I can go buy a film tax credit at a discount. Let’s say I buy it at 90 percent of its worth and I can apply that to my income tax liability, so I’m essentially saving 10 percent,” he says.
When productions sell their credits to the private sector, Louisiana taxpayers are essentially subsidizing tax breaks for high income individuals and corporations. Moller says this is hard to justify, even given the advantages the film industry brings to the state.
“Every dollar that we spend on film subsidies in Louisiana is a dollar that we can’t spend on healthcare, a dollar we can’t spend on education, or roads or bridges, or any of the things that promote long term prosperity,” he says.
Chris Stelly sees it differently. He points to a 2012 economic impact study.
“Over a billion dollars was felt at local businesses. So for every tax credit that we issue, nearly $5 trickles through Louisiana’s economy. And that’s good for everybody I would say — it leads to better roads, etc., etc.,” he says.
Herbert Gains hopes that his upcoming movie Geostorm will make it rain all over Louisiana’s economy.
The carpentry workshop at Big Easy Studios is already humming with pre production activity. As filming kicks into high gear, the crew numbers will double or even triple, Gains says.
Studios are pouring money into the state — $717 million in 2012, according to the impact study. But unlike, say, manufacturing, the entertainment industry is highly mobile. Infrastructure incentives were phased out in 2009. And at this point there’s not enough to keep productions in the state if the tax credits were canceled.
“It would dry up. Would it stop? No. But the volume of work would diminish considerably. As long as there are other places to go. Just like any business, they’re looking for the best deal,” Gains says.
For now, at least, Louisiana tops the list for “best deal.” The question is how long the state is willing to subsidize the industry, at increasing cost, to keep the Hollywood in Hollywood South.