California

California is attracting big-budget feature shoots again, reeled in by the state’s rebooted tax credit programme.

The Golden State has always had plenty of attractions as a film production centre — an extensive and historic industry infrastructure, a highly skilled workforce, year-round shoot-friendly weather and, of course, the biggest and starriest talent pool in the world. Not to mention locations including the major cities of Los Angeles, San Diego and San Francisco, an 800-mile Pacific coastline and natural beauty spots including Yosemite, Death Valley and the Anza Borrego desert.

But it was only with the introduction in 2015 of the state’s upgraded incentive programme that California began to win back some of the so-called ‘runaway production’ that had moved to Canada, other US states and many international production hotspots.

California’s 2.0 film and TV tax credit programme, designed in part to attract bigger-budget features and TV series already shooting elsewhere, tripled the size of the state’s annual incentive pool, eliminated budget caps, designated funding pots for four different types of productions and introduced a ‘jobs ratio’ selection formula to replace the original scheme’s lottery system, which ranks each project by wages to below-the-line workers, qualified spending and other criteria.

Of the programme’s $330m annual funding, 40% is allocated for new and recurring TV series, mini-series, pilots and movies-of-the-week, 35% for non-independent features, 20% for relocating TV series and 5% for independent features.

In its second year, the upgraded programme allocated credits of $339m to 64 projects — 17 independent features, 10 non-independent films, 25 TV series, six relocating series and six pilots — with an estimated total spend of $2.4bn.

Over the three allocations to feature films in the programme’s third year, credits totalling $186.3m were awarded to 10 independent and 18 non-independent films.

Small pot for independents

Features to have tapped into the credit programme and shot in California over the past year include The Walt Disney Company’s A Wrinkle In Time, MGM’s A Star Is Born, Cross Creek Pictures’ Roman J Israel, Esq, Netflix’s Bright, 20th Century Fox’s sci-fi thriller Ad Astra and upcoming independent projects including Adam McKay’s Backseat, with Christian Bale, Amy Adams and Sam Rockwell, Netflix’s Bird Box, directed by Susanne Bier and starring Sandra Bullock, and Karyn Kusama’s crime drama Destroyer, starring Nicole Kidman (Greta Gerwig’s Lady Bird shot in the state but was not allocated a credit from the programme’s relatively small independent feature pot because it was not selected under the jobs ratio formula).

California has also lured several more big-budget projects, including The Walt Disney Company’s Captain Marvel, which was expected to make qualified expenditures of $118.6m and receive a credit of $20.8m, and Paramount’s Transformers spin-off Bumblebee. The latter posted $102.5m in qualified expenditures and a credit of $22.4m, the largest awarded under the programme so far. Further recipients include 20th Century Fox’s action drama initially known as Ford v Ferrari, which is expected to spend $78m in the state to secure a credit of nearly $17m, and Paramount’s Coming 2 America, which is on track to spend $64.6m and receive a credit of almost $13m.

In 2017, California hosted half of all the scripted series produced by US studios, according to a FilmLA report. Recent TV productions to shoot in the state include HBO’s Sharp Objects, Ballers and the second season of Westworld, Paramount Network’s Heathers, Scott Free’s Strange Angel and The Mark Gordon Company’s The Rookie.

Series to have recently relocated to California include NBC’s Timeless, which moved from Vancouver and is set to receive a $10m credit from a qualified spend of $40m, and Amazon Studios’ Sneaky Pete that transferred from New York and was conditionally approved for $9.2m in credits on a qualified spend of $53m.

While the 2.0 programme has gone some way to stemming the tide of runaway production, California still struggles to attract the biggest budget projects: according to a FilmLA report only 12 of the top 100 North American theatrical releases in 2016 were shot in California, compared to 14 in 2015 and 21 in 2014.

At least two major productions — Quentin Tarantino’s Once Upon A Time In Hollywood, produced by Heyday Films for Sony, and Paramount’s Island Plaza project — are due to shoot soon, but in its 2017 progress report the California Film Commission noted that the 2.0 programme’s “relatively modest number of large-budget applicants is likely due to the credit cap and the availability of more generous tax credits out of state.”

California’s visual effects industry also suffers because of competition from other states and countries offering generous VFX incentives. The state also secured only a meagre share of major animation work because the 2.0 programme does not cover the form (other than stop-motion).

Industry figures are hoping, however, that the programme will continue to raise production levels in California and that if it does it might be enhanced even more in the future.

Last year, Los Angeles mayor Eric Garcetti suggested that when the 2.0 programme comes up for renewal — the programme sunsets in mid-2020 — the state legislature should increase annual funding from the current $350m to “$500m or more. Maybe even no limit.”

The Lowdown

Financial incentives

The California film and TV tax credit programme offers different kinds and levels of incentives to different kinds of productions. For existing TV series with minimum budgets of $1m per episode that are relocating to the state from another location, there is a 25% non-transferable tax credit.

Independent films (defined as films made by companies that are not publicly traded or more than 25% owned, directly or indirectly, by a publicly traded company) with budgets of at least $1m can apply for a 25% transferable credit applying only to the first $10m of qualified expenditures. And there is a 20% non-transferable tax credit for feature films with minimum $1m budgets (with the credit applying only to the first $100m in qualified spend), new scripted TV series with minimum budgets of $1m an episode, TV pilots with minimum budgets of $1m and movies-of-the-week and mini-series with minimum budgets
of $500,000.

An additional 5% tax credit is available for non-independent projects that shoot outside the 30-mile Los Angeles ‘studio zone’ or have qualified expenditures for visual effects or music scoring and track recording.

Full details on financial incentives in California: California Film Commission

Infrastructure and crews

The Greater Los Angeles area boasts hundreds of equipment rental houses, production and post facilities and a huge crew base — somewhat diminished recently as film workers have followed production to other states. The city has 5 million square feet of sound stage and studio space, although much of it is occupied by ongoing television series and available facilities can be hard to come by during pilot season, the period from February to April when pilots for the following autumn’s TV series are shot. Major facilities include Fox Studios, Warner Bros, Sony Pictures, Los Angeles Center Studios, Sunset Las Palmas Studios, Raleigh Studios and Santa Clarita Studios.

Further south in the state, San Diego boasts the Stu Segall Productions studio facility and green-screen stage Groovy Like A Movie.

In Northern California, San Francisco and Silicon Valley are home to Pixar, Dolby, Industrial Light & Magic, Skywalker Sound, American Zoetrope and dozens of other production, animation, film technology and effects companies.

Size matters

With around 40 million residents, California is the most populous state in the US and the third largest by size. From Los Angeles and San Diego in the south to San Francisco and San Jose in the north is about 90 minutes by air or a seven-hour drive on the state’s extensive freeway system. Los Angeles International Airport (LAX) and San Francisco International Airport — both 11-12 hour flights from Europe — are the major hubs, but there are about a dozen large commercial airports in the state, among them San Diego International, which offers direct flights to London, Tokyo, Frankfurt, Vancouver and Toronto, and San Jose International, with flights to London, Beijing, Tokyo, Frankfurt and Vancouver.

Most of the state’s major production facilities are within an hour or two of one of the big airports, though traffic is always a factor in the big cities.

Los Angeles hotels favoured by talent and executives range from old favourites Hotel Bel-Air and Beverly Hills Hotel, through hip hangouts Chateau Marmont and The London West Hollywood, to luxury locations such as the Beverly Wilshire and the Peninsula Beverly Hills.

First person to contact

Amy Lemisch, director, California Film Commission
alemisch@film.ca.gov

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