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Thursday, May 30, 2024

‘Needs to be brought up to current standards’: Film incentive, other issues addressed from film panel

Some officials in the industry spoke about modernizing the film incentive and boosting workforce development in the region, which could be better accomplished with the help of local legislators.

WILMINGTON — A two-hour panel discussion regarding the film industry was at the center of Wilmington Business Journal’s Power Breakfast Tuesday.

READ MORE: ‘Outer Banks’ creator talks about new Amazon show to film in Wilmington

Some officials in the industry spoke about modernizing the film incentive and boosting workforce development in the region, accomplished with the help of local legislators.

“Film is a bipartisan issue,” Susi Hamilton, president of the nonprofit Film Partnership of NC, said at the panel discussion. 

Hamilton was one of five to speak about the state of the local film industry at the Wilmington Convention Center. Joining the discussion was Dan Brawley, chief instigating officer for the Cucalorus Film Festival; Johnny Griffin, president of the Wilmington Film Commission; Kristi Ray, independent filmmaker and Honey Head Films co-founder; and Ashley Rice, president of Cinespace Studios, formerly EUE/Screen Gems.

Hamilton pointed out the state’s film incentives needed to be amended and “brought up to current standards.”

In the audience were New Hanover County legislators Sen. Michael Lee and Rep. Deb Butler, both up for re-election this year.

The film incentive in North Carolina started 15 years ago as a 25% film tax credit not to exceed $20 million per project. That changed in 2014, when the General Assembly allowed the incentive to sunset. It came at a time when the state was growing in box-office hits, such as 2011’s “The Hunger Games,” filmed near Brevard, and 2012’s “Iron Man 3,” produced in Wilmington. 

The incentive’s expiration decimated the industry, sending many workers to Georgia, which has since become the biggest film hub in the nation, bringing in $1.24 billion last year.

North Carolina reinstated it as a grant program in 2015 with a 25% rebate, capped at $10 million. It has grown since and receives $31 million from the General Assembly each fiscal year. 

Lee is known for tripling the state’s grant program and making the money available to films recurring. He told PCD he will continue to “strongly support” and work in strengthening the incentive it in the future as well.

The program as of 2024 looks like this:

  • A feature-length film must spend at least $1.5 million
  • A television series must average an in-state spend of at least $500,000 per episode for TV/streaming series
  • Made-for-television movies must spend at least $500,000
  • A commercial production must have a minimum spend of at least $250,000

There are also caps on how much money a production can receive from the incentive:

  • For a television or streaming series, grant awards shall not exceed $15 million per season
  • For a feature-length film (including made-for-television or streaming movies), awards cannot exceed $7 million
  • For a commercial, awards cannot exceed $250,000

The incentive is viable 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. Each project goes through an auditing process to account for every dollar spent in the state. Projects are ineligible if material is “obscene,” as defined in G.S. 14-190.1, or is “harmful to minors.”

“We’re constantly in talk with the legislators regarding the film grant program,” Griffin told a crowd of more than 100 attendees.

The General Assembly has to sign off on any changes made.

“Everyone always asks me: Have you spoken to your legislators?” Griffin continued. “I’m like, ‘You know what? I don’t need to speak to my legislators about the film because the other 99 counties in North Carolina have to get on board with everything.’”

While Wilmington is considered the hub of film in the state, productions have rolled in 78 of 100 counties, according to Hamilton. Just last year legislators attempted to modify the film grant program to also bring an economic boost to more distressed counties; the bill stalled.

Rice said Cinespace was drawn to Wilmington because of its attractive location, the stellar film crew base, facilities, infrastructure and the incentive. It also purchased Screen Gems in Atlanta. 

Whether North Carolina has an incentive is the number-one question Griffin said he receives when traveling and networking to bring new projects to Wilmington.

When the incentive was depleted for two years, Griffin told PCD doors constantly shut. Today, less of that happens, except for bigger budget films and series. He used NBCUniversal as an example.

“They’ve got Universal Pictures doing big $100-million-plus movies, they’ve got NBC Television doing network television, and they’ve got their streaming division, all spending money at different levels,” he said to PCD. “And with our current incentive, it works for some projects and it doesn’t work for others. So we’ll have a meeting in a room with 20 people representing different divisions of the company and very quickly, some sort of look and go, ‘Oh, you know what, this really doesn’t work for us — because maybe we’re spending like $150 million movie and your incentive caps out.’”

Griffin said sometimes those larger projects may bring part of a production in town before wrapping and going somewhere else to finish.

He meets with regional representatives to keep them abreast of trends and plans to sit down with them ahead of April’s short legislative session. The goal is to discuss ways to improve the grant program and address patterns in the industry.

“One simple idea would be to remove that streaming qualifier for local production companies,” Honey Head Films founder Ray stated on the panel. 

She was referring specifically to how it would help full-time film workers in Wilmington. While a lot of focus often is put on bigger productions, the independent sector in town is also thriving. Both UNCW and CFCC have film programs and the region holds multiple festivals annually, including Cucalorus which turns 30 this year.

“When the studios are full, it benefits everyone,” Brawley said, adding it reaches into the independent sector.

Ray said independent producers likely won’t get a streamer — Netflix, Amazon, for example — with the $500,000 incentive, mainly because talent is needed for the project. 

“You need movie stars, these needle-movers,” she said. “So if we didn’t have that kind of barrier to entry, a streamer requirement, we could turn a $500,000 film into a $625,000 film. Independent producers can stretch those dollars and reinvest them back into workforce development — in a way that studio productions just can’t take the time to sincerely and intimately do — and grow our workforce here.”

Rep. Butler wrote to PCD she is supportive of the grant becoming “aggressively competitive” against others states. For instance, she said she supported a decrease in the minimum spend productions have to make, while increasing the 25% payout percentage.

“I am told by those who are immersed in this business that those few things would really bring more high-dollar productions to the region,” Butler told PCD.

She also would support expanding the talent cap.

Right now, a highly compensated actor making more than $1 million only gets incentive money from the state on the first $1 million. Griffin said it’s a contingency that’s been on the books for years, from the last incentive that sunset. However, the cost of labor has risen from 3.1% in June 2007 to 4.9% in June 2023, according to the Employment Cost Index.

Griffin said a series a few years ago set up in town and talent was making less than a million for a certain number of episodes. “Well, all of a sudden, they decided they wanted to do more episodes, and the talent costs then went over a million, so the incentive stopped,” he said.

In addition to labor cost increases, he said inflation and increasing expenses due to supply chain issues are constantly on the rise. Like other industries, they are affecting film, too, as it’s more to make a movie today than pre-Covid.

Wilmington had its greatest year in film in 2021 since the grant started a decade ago. It brought in more than $300 million of the state’s overall $409 million, which also created around 25,000 jobs; before that, 2012 was the best year bringing in $370 million. 

In 2022, filmmakers spent $258 million on productions, creating 16,000 jobs; however, last year the industry experienced a decline. 2023, which brought in only $43 million, was impacted by the nationwide writers’ and actors’ strikes, affecting every state.

Only two productions are underway right now in Wilmington: “Merv” and “The Summer I Turned Pretty.” Griffin said it’s not picking up as much this year as officials would like, due to another potential strike on the horizon. 

“Folks in Los Angeles who are funding projects don’t want to be in the middle of a project and have to have it shut down,” he said. 

This happened last year in Wilmington with “The Untitled J+L Project,” which pulled in May after the writers’ strike started (the show was eventually scrapped altogether from Starz as both the writers’ and actors’ strikes were ending).

“There are some other labor issues that may come up later this year,” Griffin said. “We still have productions hesitating a little bit.”

Chatter about another strike is centered on the International Alliance of Theatrical Stage Employees (IATSE), which comprises people behind the scenes. IATSE’s contract is up for renegotiation from 2021.

According to Darla McClammery, the business agent for I.A.T.S.E Local 491 — representing just over 1,000 people in Georgia, Savannah, South Carolina and North Carolina — the union is hoping for better wages and benefits. It’s asking for a 9% increase over the last contract, which is standard, she said.

“Personally, I’d like to see it a little bit higher because our wages are already so much lower,” McClammery added. “I would like to see it in the 14% to 17% range.”  

First up to the bargaining table is the IATSE’s West Coast locals and Teamsters, who began negotiations this week. How those actions play out will be a good indicator to what the rest of the IATSE members countrywide can anticipate (there are 160,000 members across the U.S.).

McClammery said the locals will start bargaining with the Alliance of Motion Picture and Television Producers at the end of April, with a goal to have it wrapped by May 11. If requests aren’t met, then McClammery said the goal is to have it completed before contracts expire on July 31.

“We do not want a work stoppage,” McClammery clarified. “That’s not our goal.”

She said local IATSE members are working currently on the local Amazon projects, as well as on HBO’s “Righteous Gemstones” and Netflix’s “Outer Banks” in Charleston. A Lionsgate production, “The Hunting Wives,” is also set up in Charlotte. 

“We are very fortunate,” she said. “We’re always looking over at Atlanta — and right now Atlanta is not doing so well. They have 8,000 members and around 10 jobs in production.”

Georgia’s House of Representatives has proposed a change to its incentive from being open-ended. It had a 20% rebate on approved production expenses without a cap, which can tick up with an additional 10% in some cases. A new bill presented last month proposes to limit the incentive, but has yet to pass.

Any hiccup in politics can have a lasting effect on a state’s film industry. But Brawley said he sees Atlanta’s booming industry as a good thing rather than a challenge for Wilmington. 

“We’ve always been the city, a film industry about personalities,” Brawley said. “We need to continue to invest in the personalities who make this film industry valuable. And that goes from the ground up. What Darla does, the people that make up the crew base in Wilmington are the heartbeat of this community. …  No matter what happens in Atlanta, Georgia, or Los Angeles, or New York, or anywhere else in the world, as long as we continue to support those people that make this community special, it will continue to be a very special place to make movies.”

Programs have launched locally to help grow pipeline. GLOW Academy started one three years ago to help students get ahead in TV and film. Honey Head Films hosts a summer camp for high school girls to get real-life experience working on a film. Cucalorus also funds the Filmed in NC grants, which offers money to local filmmakers to get their projects off the ground and prioritizes women, marginalized voices and people of color. Brawley said applications would open soon.

Hamilton and McClammery helped found Film Partnership of NC in recent years. It pays interns to gain experience in the industry, with the goal to diversify and expand the film workforce base. The program has received funding from the City of Wilmington, New Hanover County and was included in the state budget. 

“Governor Cooper put funds in for the Film Partnership of N.C. so that we could take it statewide,” Hamilton said. “And Senator Lee, on the Senate side, was able to secure those funds in our budget, and, of course, Representatives [Ted] Davis and Butler always have been supportive of the industry. So I say all this, although it is Super Tuesday, it really does transcend politics.”

Hamilton added she would like to see workforce development folded into the incentive long-term to grow the talent pool and give people like Griffin better tools to secure more productions.

Sen. Lee told PCD he is looking “forward to partnering with the film community to address the workforce training issues.”

Cinespace also runs Cine Cares, a diverse workforce training program, in its Chicago and Toronto studios and will be adding Wilmington as well. 

Rice noted the film industry isn’t insular. When its economics are bolstered, it affects other industries. 

“Hotels, restaurants, retail, shops,” Rice listed. “When the film industry is working, everyone is working.”

One audience member, Matthew Coleman, from marketing firm CAP3 echoed the sentiment.

“We actually have some employees that come from the film industry and we work with some studios in the film industry,” he said. 

He asked the panel what other challenges need to be addressed currently. Griffin and Rice shared the same end-goal: a direct flight to L.A.

“I don’t know if our friends from the airport are in the room here today or not,” Griffin said with a laugh, admitting he’s been asking for a direct route for years.

“When you look at where films are being produced, and you look at these other cities, Chicago, Toronto, Germany, Atlanta —  all of these places have multiple flights every day to Los Angeles and Wilmington does not,” he said. “It may not seem like a big issue, but for our executives, they lose a lot of time. And time is money for them.”

Rice, who worked for ABC and Disney, agreed, having traveled from L.A. to the panel. She added her dream is for Wilmington to become a “core budgeted city.” That means there are multiple places in the film industry — Chicago, Toronto, L.A. — that automatically get budgeted in from some production companies. 

“Our dream is that Wilmington becomes one of those cities,” Rice said. “We can’t just wait for someone to say, ‘I need a beach.’ There are many, many stories that are told in other states that are not set in those respective cities. … We have the capacity, we have the workforce here to support filmmaking of many different avenues and many different creative needs. So if we could become a core-budgeted city, that’s a dream. Because then you’re a part of inception, you’re a part of the beginning of the process of when they decide to bring up a production.”

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Shea Carver
Shea Carver
Shea Carver is the editor in chief at Port City Daily. A UNCW alumna, Shea worked in the print media business in Wilmington for 22 years before joining the PCD team in October 2020. She specializes in arts coverage — music, film, literature, theatre — the dining scene, and can often be tapped on where to go, what to do and who to see in Wilmington. When she isn’t hanging with her pup, Shadow Wolf, tending the garden or spinning vinyl, she’s attending concerts and live theater.

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