The question of whether or not to expand tax credits for Hawaii’s film industry has generated quite the debate. While supporters of the bill say that the return on the investment proves to be tenfold and that it will create local jobs, people who oppose it say that the credits will only make the rich richer, taking away funding from important social services. Such polarizing views from the legislature has stitched together a Frankenstein Bill of sorts, which refuses to neatly settle or die because of its complex nature.
The bill in question boldly proposes to increase the current film tax credit incentives from 15 to 35 percent for qualified production costs on Oahu, and from 20 to 40 percent on neighboring islands. Throw in two $400 million studios, a training program and a few bonuses for productions that dabble in special effects and you’ve got the grand vision. “We’re not talking two pictures a year; we’re talking 25 pictures a year–pictures like Snow White with Julia Roberts!” says House Rep. Angus McKelvey.
So what sacrifices must be made in order to revel in the glory of Julia Roberts starring in Snow White Goes to Hawaii? Teddy Wells, co-founder of Hawaii Actors Network (HAN), says, “We’d have street blockage; everybody has to change the way they do things in order to accommodate a large industry like that, and sometimes that’s scary. It’s a whole thing of the fear of change. They’ll be on the beaches filming, they’ll be everywhere.”
After recognizing the subtle complexities the bill seems to invite, the Weekly takes a closer look at this tempting bite of the Hollywood apple with the help of some insight from the House, the Senate and the professionals currently toiling in Hawaii’s film industry.
Hawaii caught its first glimpse of show biz as early as 1898, when Edison Photographers shot footage for a silent travelogue as they trekked through Honolulu. Since then, Hawaii’s alluring landscape has anchored countless productions in search of pristine beaches and lush, rugged terrain. The Hawaiian Islands, home to 11 of the 13 climate zones found in the world, has been sought after by a myriad of filmmakers aspiring to capture this natural diversity. Eight Hawaii films have even become members of the elite club of “Top Grossing Movies of All Time” at the Worldwide Box Office. These include the entire Jurassic Park series, Raiders of the Lost Ark, Godzilla, Dinosaur, Pearl Harbor and Waterworld. Combined, they’ve made more than $4 billion in revenue.
Not only does Hawaii seem to offer the perfect roaming conditions for dinosaurs, but it also offers the hospitality and aloha spirit that attracted Hawaii’s last King (of Rock ‘n’ Roll), Elvis Presley. Elvis’s love affair with Hawaii spawned three films and the first concert in history to broadcast globally via satellite: Elvis: Aloha from Hawaii.
So how is Hawaii’s film industry faring in the present-day economic tumult? Although the Hawaii Film Office recently underwent a series of financial cuts, the film and TV production revenue spent in 2010 reached a record high of $408 million. Primetime series hits like Lost,Hawaii Five-0 and ABC newcomer The River (which starts filming in Hawaii in August) make for a successful story in any state. But add to the mix a solid lineup of blockbuster films such as Pirates of the Caribbean: On Stranger Tides and Just Go With It and potential blockbusters such as The Descendants, Battleship and Journey 2: The Mysterious Island, and it’s evident that the current tax incentives have been fruitful.
The Hawaii State Legislature hasn’t neglected the film and TV business’s lucrative role. The legislative body gathered at the State Capitol last March to honor the entire cast and crew of Hawaii Five-0 and CBS for their widespread success.
Hawaii Five-0 has been renewed for a second season, but many other projects for 2011 have yet to receive the green-light. Although it was rumored that Pirates would finish their fifth and sixth films in Hawaii, the deal remains up in the air–with a gust of wind blowing towards the Caribbean, where Johnny Depp owns an island.
We can, however, feel assured by the long-overdue heartwarming cackle of Roseanne Barr, who (in what must be some surrealist live art installation) will star in her own reality show taking place on her 40-acre farm on the Big Island, scheduled to premiere sometime next year.
Sneak Peek: SB 318
State Sen. Brickwood Galuteria, who introduced Senate Bill 318 (SB 318) says, “In terms of significant new money [it injects] into the economy and how it’s dispersed across the communities and businesses it will benefit, it creates skilled, high-paying jobs.” Galuteria adds as an afterthought, “It also has a natural symmetry towards the visitor industry–for example, Hawaii Five-O brings people to Hawaii, maybe specifically to see what street McGarrett [drove on].”
So is this the picturesque, symbiotic relationship between company and local government we all dream about? Everyone from the humble independent film guppies to the conglomerate sharks will gaily take their bite of free funds and of Hawaii. In turn, local industry attracts more and more films that other states will longingly (but hopelessly) pine after–and then everyone will be happy, right?
Not necessarily. Galuteria says, “We give them tax credits and then they provide jobs, and in some cases [the TV series] stays–like Five-O or Magnum, but in the case of films, it comes and then goes away.” He continues, “I think what we want to ask of those who take advantage of the tax credit is [this]–in the event that your film is a blockbuster, how can the state also reap the benefits from the box office so we become stronger partners on the backside?”
Developing the bill didn’t come without a few hindrances. Galuteria says, “There were some abuses of these types of tax credits in the last session.” He remains optimistic though, “I don’t want to lean on the abuses too much, because it is a good bill and that was more an exception than a rule. It didn’t die because it wasn’t worthy; it died because we ran out of time.” (Galuteria is refering to House Bill 1308 (HB 1308), which died last session.)
Show Me The Money
Not everyone seems to be wooed by the charming promises of the bill; State Senator Sam Slom, who opposes SB 318, says, “Number one, we don’t have the costs–which is what the original provisions were, and number two, this bill really was a bill that was being lobbied for by one company, Relativity Media.
“The third point that I made is that I think our film credits are already generous enough, as indicated by the number of movies and television series that were generated…Sometimes these companies try to pit one country or state against another and say, ‘Well Canada is doing this, LA is doing that or Puerto Rico is doing this.’”
Slom’s aversion comes from his consistent stance to improve the general economic landscape rather than focus on subsidies for individual companies or projects. He thinks we are being led down a primrose path.
“Relativity Media put on a dog and pony show here. They had two events at the legislature which the ethics commission ruled were not appropriate for legislators to go to.” He continues, “I didn’t attend any of those things, although we did hear that they brought in actors–they brought in Cuba Gooding Jr. and Dan Aykroyd before the committees.” Bill Clinton, who has financial ties to Relativity Media, also sent a testimony in favor of the bill.
Slom’s hand-wringing continues, “I think that this argument…is a phony argument because there’s no way that we would be able to compete because of labor rates–specifically to take a place like Toronto. That’s why so many of the movies are shot there, that’s just the fact of life. If you can’t build automobiles in a certain area because you’re growing corn or you have wind power, that’s the way it is.
“As long as we have the personnel, the film studio and the expertise here, then people will come and they will find that this is a good place to do business and do shooting.”
It’s All Relativity
Motion picture front runners Relativity Media, which reportedly amassed over $15 billion in box office revenue worldwide, guarantees to bring 30 films and 20 TV shows to the state of Hawaii annually. But in order to win over a flock of new production, McKelvey expresses Hawaii’s need to raise the bar. “They [Relativity Media] said ‘if we’re going to do this you have to be just as competitive as other states.’” McKelvey continues, “If you’re only at 15 to 20 percent, you’re half of that of every other state, so you need to make it 40 percent.”
While McKelvey claims that the doubling of a credit will not jeopardize social programs and other necessary core functions of the state that are being cut back, the state Tax Department claims there would be an estimated loss of $46 million in lost revenues to raise the credit to 40 percent.
Wells says, “Relativity Media understands that we currently do not have the infrastructure to be able to handle 30 films and 20-something TV shows. They have agreed that if they pass the bill, they would build the infrastructure.” Wells continues, “They would put a state-of-the-art, $400 million production studio on Oahu and Maui.”
That’s not the only benefit to arise from this sweetheart deal, Wells says. “They would develop a training program, which would model after the one they did in Canada. They would train the local people to work in such a knee-strong industry–I think that’s huge! I mean, who’s going to do that?”
The surviving rationale seems to be quite simple; building more sound stages in Hawaii will inarguably attract more films, which will, in turn, stimulate Hawaii’s revenue.
“This turned into a huge industry development,” says McKelvey. “I’d put it on the level of what happened in 1969 on Maui when the Sheraton said ‘We want to build six hotels on the beach here.’ What excites me is that this is a recession-proof, clean, sustainable green industry.”
The statutes sought to make the film studios LEED Platinum Certified, which means that all materials will be recycled and reused. McKelvey says, “You’re talking about the growth of construction without a single permit, a single land use commission, without a single town and council hearing. Wouldn’t it be nice to see people in the trades working without having to fight against our neighbors to save Sandy Beach?” He laughs, “That alone makes this process work!” The house of representatives plans to reintroduce HB 1308 from scratch next year.
Lowell Kalapa, president of the Tax Foundation of Hawaii, tells another source that the film industry is “Not a beneficial mechanism to attract economic development,” suggesting the need to re-examine what the proposal could possibly mean for Hawaii’s resources.
Wells expresses a different sentiment, “I’ve been in Hawaii for almost 16 years and I’m a father and one thing I’ve noticed is our youth. From a little kid, we basically tell them in order to make it in this world, you have to leave Hawaii and go to the Mainland because that’s where the opportunity is, and I don’t agree with that.” Wells pauses, “I don’t agree with the fact that we’re telling our kids that you have to leave your home. Here is our time to build an industry where they can stay and work.”