WILMINGTON — Changes could be coming to North Carolina’s Film and Entertainment Grant after a new bill was filed Tuesday in the General Assembly.
Sponsored by six Republican representatives, including Brunswick County’s Frank Iler and New Hanover and Brunswick rep Charlie Miller, House Bill 301 proposes strengthening the grant program specifically to benefit certain counties. Its revisions, however, aren’t necessarily targeting the tri-county region.
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Productions currently receive a 25% rebate on qualifying expenses, such as goods and services, compensation and wages, per diems, stipends and living expenses for film industry employees to work in the state.
The 25% will bump up to 35% for projects that roll cameras in counties with lower ratings of economic well-being in North Carolina. To qualify for the increase, productions would have to film 75% of the project in tier one and tier two counties, considered distressed by the North Carolina Department of Commerce. Offices for cast and crew must also be located in those counties, the bill’s language stipulates.
Expanding the grant in this fashion could affect 80% of North Carolina counties, as only 20 are considered tier three, essentially areas with stronger economic standing. New Hanover, Brunswick and Pender fall in this category.
Since the tiered rankings change every year, exactly which counties would be applicable for the 35% could shift annually.
The department of commerce, which oversees the film rebate program, assesses the well-being of counties based on:
- Average unemployment rate
- Median household income
- Percentage growth in population
- Adjusted property tax base per capita
According to Wilmington Film Commission director Johnny Griffin, the proposed modification is in line with some other states’ film incentives, such as Louisiana, New York and New Mexico.
“They offer what we like to call ‘upticks,’” he said — incentives that drive money into regions that may not benefit as much from film production.
For instance, New York encourages projects to film outside the more popular New York City and spread into rural areas, Griffin explained. While a good economic driver for overlooked municipalities, it can present challenges logistically and be more financially burdensome for productions to set up shop away from populated cities.
“If you go into some of these areas that are more rural, you’re not going to have the crew, you’re not going to have the resources,” Griffin said.
When assessing the crew directory on the N.C. Film Commission website, a quick city check will show Wilmington’s listings, with almost 1,500 available workers, outshine other area crew numbers by three times or more. Charlotte records just over 450 workers, with Raleigh at 500.
Essentially, that means productions would need to truck in crew, book hotels and office space, and find supplies perhaps not as easily accessible in smaller towns. It all drives up a film budget’s bottom line.
“So [legislators] are saying, if we give you an additional 10%, maybe it will offset that cost,” Griffin said.
Filming away from “production centers,” as N.C. Film Commission director Guy Gaster calls them, could mean not having immediate access to a studio, many equipped with sound stages and offices in one place. Five studios are listed on the state commission website, including Wilmington’s Dark Horse Studios and EUE/Screen Gems, as well as Clutch and Creative Networks studios in Charlotte, and Trailblazer in Raleigh. All are located in tier three counties.
According to incentive reports published by the state commission, at least 25 counties have been utilized as locations over the past six or more years. Eleven, including the tri-county region, are considered tier three by 2023 standards; four are tier one and 10 are tier two.
Port City Daily reached out to Rep. Iler to find out why sponsors decided to focus on more distressed counties instead of all 100 statewide. Iler didn’t answer but responded: “I support film grants.”
Gaster said the state commission is not involved or consulted when it comes to crafting legislative bills for the film grant. Nor does it have a lobbyist, since it’s overseen by the commerce department.
“I would hope the proposed bill could result in projects spreading back out across the state, like we had prior to 2015,” Gaster said. “Anything that will encourage production in North Carolina I see as a positive.”
Film incentives have waxed and waned in the Tar Heel state throughout the last decade. In 2010, then-governor Beverly Perdue signed into law a lucrative 25% film tax credit not to exceed $20 million a project — equaling an approximate $80 million in-state spend; productions had to have more than $250,000 in expenses to qualify.
That changed in 2014, when the Republican-led General Assembly allowed the incentive to sunset. It came at a time when the state was growing with box-office hits, such as 2011’s “The Hunger Games,” filmed near Brevard, and 2012’s “Iron Man 3,” produced in Wilmington.
2012 was considered a peak year, bringing in 20,000 job opportunities and $376 million from the industry. It fell a little more than 30% in 2013 to $250 million.
Legislators replaced the incentive with a curtailed grant program the following year. Originally it was allocated $10 million annually in incentive payouts, though by 2015 the General Assembly tripled the pot. Two years later, the money became recurring and Governor Cooper eliminated any expiration on the program.
North Carolina’s Film and Entertainment Grant fund consists of $31 million per fiscal year, which runs July 1 through June 30. The commission’s website states “any unused funds carry over from fiscal year to fiscal year.”
“It can carry over if the legislature doesn’t transfer it away,” Gaster clarified. “But there’s not a set pool or a set amount of funds available, specifically, each year.”
The $31 million is a “starting amount,” he added, since the state’s payout commitments can be higher. That’s because film productions have three years to close out the books to receive the incentive and sometimes it doesn’t happen the same year cameras roll.
For instance, a 2021 incentive report shows “Reprisal,” “Halloween Kills,” and “The Georgetown Project,” all filmed in Wilmington, and “The Eyes of Tammy Faye,” which shot in Charlotte, were paid $22.3 million on $90.6 million in spending. Yet, the four projects were in production two years earlier in 2019.
This fiscal year Gaster said early estimates show $92 million to be paid from the grant and in 2024 roughly $69.5 million. Some of those remittances could be from productions that were in North Carolina in 2020 or 2021 — the latter considered a banner year for film statewide. $416 million was funneled in and added to the creation of more than 25,000 jobs. It eclipsed 2012’s peak and to date is the largest tally since the North Carolina Film and Entertainment Grant started.
2021 also ushered in changes to the grant program, with the General Assembly continuing to reduce the minimum amount productions dole out for qualifying expenses. In 2018, it went from $5 million to $3 million for feature-length films, $1 million an episode for a TV series, and $1 million for made-for-TV movies, a then new category.
By 2021 production companies were required to spend at least $1.5 million on films slated for theatrical viewing and $500,000 for a made-for-TV movie. A TV series had to put forth at least $500,000 per episode, with commercials bankrolling $250,000 to receive incentives.
HB 301 proposes to decrease numbers further, making it a half-million dollars for all feature-length films. There is no distinguishing between “theatrical viewing” and made-for-TV movies in the bill.
It comes as the industry undergoes its own metamorphosis; global analytics company Comscore noted in 2022 almost 40% less film content made it to theaters compared to that of 2019. It also found households watched 5.4 streaming services per month as of March 2022, compared to 4.7 in March 2021.
Decreasing qualifying expenses to $500,000 for films may not affect Wilmington’s industry to a large degree, Griffin indicated. He said scouts looking to shoot in the Port City mostly have larger budgets.
Last fall, for instance, “The Supremes at Earl’s All-You-Can-Eat” had a $23-million budget and was approved for a $5-million rebate. Fox’s series “Welcome to Flatch,” which filmed season one and two in both New Hanover and Pender counties, was approved for a $6.5-million rebate in August, making its budget around $26 million. The recently wrapped “Zoey 102” has been approved for $3.5 million from the grant, indicating a $14 million budget.
In 2022, more than $250 million was brought into the state from 74 projects and created 16,000 jobs. The department of commerce reported 2023 is also off to a good start, showing $98.5 million so far has been slated for direct in-state spending for five projects, while generating more than 9,700 job opportunities.
There are caps on the amount production companies can receive from the state for each production; those remain in place in HB 301. It maintains feature-length films are paid incentives up to $7 million and $15 million for a single season of a television series. Commercials and projects for TV and online distribution top out at $250,000.
Griffin said the Wilmington Film Commission doesn’t have an official stance on the proposed revisions in HB 301. He wasn’t provided any advance notice of its content, nor was he involved in discussions.
“We’re trying to dig into it a little bit and learn a little bit more about it,” Griffin said.
HB 301 has gone through a first reading and is in the Commerce House Standing Committee before being passed to the Rules, Calendar and Operations Committee, according to the bill’s filing.
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