Film industry expected to max out $31M incentives in 2021, N.C. senators strive to double funds

Horror film character Michael Myers stands on the sidewalk of Pender Avenue during a scene that was shot in the Carolina Place neighborhood near Wallace Park in September 2019. (Port City Daily photo/Mark Darrough)
Horror film character Michael Myers stands on the sidewalk of Pender Avenue during a scene that was shot in the Carolina Place neighborhood near Wallace Park in September 2019. (Port City Daily photo/Mark Darrough)

SOUTHEASTERN N.C. – In one of the most successful times for the local film industry in years, North Carolina could “very easily” max out its $31 million in available incentives in 2021, according to Johnny Griffin, director of the Wilmington Regional Film Commission.

Reaching that cap could hinder the progress the film industry has made coming out of Covid-19 shutdowns.

Despite a brief hiatus during the stay-at-home order, several shows and films rolled in town last fall, including the next iteration of “Scream” and Hallmark’s “U.S.S. Christmas,” spending an estimated $65 million in the greater Wilmington area.


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State Senator Michael Lee is now sponsoring a bill to more than double the $31-million Film and Entertainment Grant Fund over the next two fiscal years.

The current grant aims to lure filmmakers to the area. Productions spending a minimum amount of money in the state may receive a 25% rebate on qualifying expenses.

In 2019, the state returned $19 million to five productions, four of which filmed in New Hanover County, according to a report from the N.C. Department of Revenue.

As the regional film industry builds off the momentum of the second half of 2020, the state is likely to reach its allotted amount of $31 million in 2021.

“We’re doing more and more business, and we’re having more and more success,” Griffin said. “We need to be able to have more funds available to offer to more projects. The idea is just to make sure that we can keep things moving forward.”

As the main marketer of local assets, Griffin said the first conversation he has with any production scoping out the area is about incentive.

“They need to know if you have money, how much money do you have? What’s the process?” Griffin said. “That determines whether the conversation goes forward.”

If the film incentive isn’t to a filmmaker’s liking, they will turn their attention to North Carolina’s top competitors in Georgia, Louisiana and even Canada.

The area has lost projects in the past when filming elsewhere made at least a $1 million difference in the net cost of the film, Griffin said.

“As it gets below that, then the costs get a little bit more negligible,” he said.

Georgia, a multi-billion-dollar entertainment hub with hundreds of projects each year, touts one of the most generous tax incentives in the nation. With no cap on tax credits, it continues to attract Marvel movies and Disney TV shows.

Productions spending at least $500,000 can receive up to 20% of costs, plus another 10% if the finished product rolls a Peach logo in the credits.

In fiscal year 2019, Georgia paid more than $800 million to production companies, with some returns still processing, according to the state’s Department of Revenue.

Georgia lawmakers mulled over the idea of a cap last year in the midst of the Covid-fueled financial crisis. Instead, a bill mandating film tax credit audits passed in response to findings that the industry’s economic impact was overestimated.

With comparable scenery to North Carolina, Georgia is a double threat, as is South Carolina.

The Tar Heel State lost out to its southern neighbor for Netflix’s widely popular “Outer Banks,” a show written and envisioned for filming along the North Carolina coast. However, House Bill 2 was more to blame than incentives. The creator told News and Observer Netflix made the decision to “insist on inclusivity.”

In fact, the $31.4-million project, filmed in Charleston, could have received about $500,000 more in rebates had it filmed in North Carolina. In South Carolina, it raked back in $7.2 million, according to numbers provided by the South Carolina Film Commission.

South Carolina offers only up to $15 million in incentives, less than half of what North Carolina spends to recruit movies, shows and commercials. With just three projects, including “Outer Banks,” securing large portions of the money, the available incentives quickly depleted in 2019. As a result the state lost out on 29 potential projects, according to the Charleston Business Journal.

“Outer Banks” is continuing to film its second season in Charleston, despite House Bill 2 provisions expiring this past December in North Carolina. Though Griffin said there is increased interest from other projects eyeing Wilmington.

More productions are expected to arrive in the next couple of months, although the film commission cannot disclose any names as of yet.

“They’re still waiting on a couple of things to be able to make the final decision,” Griffin said. “But things are certainly moving forward in that direction.”

Currently, four projects are set up in town. STARZ series “Hightown” and feature films “I.S.S.” and “The Black Phone” will wrap by the end of the month. “Along For The Ride” is in pre-production.

Despite the pandemic pausing work for the first half of 2020, the industry’s economic impact was not far behind that of 2019. Films spent roughly $60 million less in North Carolina in 2020 compared to 2019, but 2019 was almost double the spending of 2017 and 2018.

Griffin called 2019 one of the most successful years for film in North Carolina in about five or six years. The state is still rebounding from the consequences of House Bill 2 and the uncertainty of a fluctuating tax incentive since 2014, when the state legislature voted to change the incentive program to a one-year $10 million grant program, with blockbusters splitting the funds. Previously the state was dolling out $70 million a year to attract shows and movies, such as “Iron Man 3.”

In the years following, Lee sought increased and recurring funding for the film grant in the N.C. General Assembly. He re-ran for his former senate seat in 2020 on a campaign promise to continue supporting filmmaking.

The senator expects the $34 million proposed in Senate Bill 268 to help keep up with the demand through 2023 and boost businesses that profit from productions’ arrivals, such as hotels and restaurants where crews stay and eat – businesses that were hit especially hard by the pandemic.

Republican Lee said he is slowly garnering support on the bill ahead of the budget consideration alongside Democratic Senator Paul Lowe. Lowe serves Forsyth County, home of an active film community, as well, and the University of North Carolina School of the Arts in Winston-Salem.

Gov. Roy Cooper is releasing his recommended budget Wednesday afternoon, kicking off the budget cycle.

“If we have a budget, I feel pretty good about getting some level into the budget,” Lee said of the $34 million. “I’m not sure at what level it will be. I’m hopeful it’s the same amount that I’ve got in this bill. That’s what I’m really shooting for.”


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