Legislature(2011 - 2012)BELTZ 105 (TSBldg)
02/17/2011 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB23 | |
| SB67 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 23 | TELECONFERENCED | |
| *+ | SB 64 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 23-FILM PRODUCTION TAX CREDIT
1:33:16 PM
CHAIR EGAN announced SB 23 to be up for consideration.
SENATOR JOHNNY ELLIS, sponsor of SB 23, said the goals are
pretty simple: they want to continue the amazing growth and
success of Alaska's burgeoning film and TV production industry.
Many people thought it was "pie in the sky" and wouldn't happen,
but "things are coming along very nicely."
He explained that SB 23 offers to extend the successful tax
credits, a signal that the tax incentives are here to stay for a
significant period of time. So, investments can be made that
will take this industry to the next level - in particular, a
sound stage and some other facilities. He said folks in the
business community have the resources and are willing to make
those investments, but they need to know that the tax credits on
the production side will be available long term.
SB 23 would extend the tax credits for 10 years in two $100-
million, five-year increments - not unlike the state does for
other industries when they want to incentivize private sector
work.
1:34:23 PM
SENATOR DAVIS joined the committee.
SENATOR ELLIS said it has been hard to find a brand new industry
for the state and this film program is successful so far.
Extending the incentives would continue bringing new money and
investments into the Alaskan economy and put Alaskans to work.
He said they have already seen the benefits of recent multi-
million dollar productions where hundreds of Alaskans were
working as cast and crew in jobs as varied as electricians,
carpenters, truck drivers, caterers, security guards, and
plumbers. This industry isn't just glamorous; it's real down-to-
earth small business and job opportunities for Alaskans.
SENATOR ELLIS added that businesses across the state, both urban
and rural, have been able to hire some people and do work during
the off season. For instance, commercial fishermen that usually
sit around in the winter time were able to work on "Everybody
Loves Whales." The original legislation was passed in 2008 and
everyone tells him that is why things have gone to the next
level. Since its inception in 2008, 15 productions have received
tax credits for a total of 910 days and had a total "Alaska
spend" of $15 million. As of January 2011, an additional 28
productions are prequalified for the incentives. If all of these
productions are completed, there will be an estimated additional
Alaska spend of almost $84 million. This brings the total
projected boost to the Alaskan economy of nearly $100 million
since 2008. Several people have asked why this should be done if
Alaska doesn't already have a trained workforce, but his
response is get the industry going and get Alaskans on those
jobs!
1:39:08 PM
CURTIS THAYER, Deputy Commissioner, Department of Commerce,
Community and Economic Development (DCCED), introduced Ms. Ayers
and said she would present an overview of the Alaska Film
Office.
WANETTA AYERS, Director, Division of Economic Development,
Department of Commerce, Community and Economic Development
(DCCED), said the statutory authority of the Alaska Film Office
outlines five responsibilities: to cooperate with the private
sector to promote Alaska as a film destination, to provide
production assistance, to certify film production internship
programs, and to cooperate and co-administer the Alaska Film
Production Incentive Program with the Department of Revenue
(DOR).
With regard to private sector collaboration, a number of
different tactics are being pursued. The first is the website,
film.alaska.gov, which provides a variety of information about
the program and filming in Alaska. She said they have worked to
engage a variety of industry organizations, trade associations,
and allied groups to help them find out what the opportunities
in the Alaskan film industry are. Outreach to the business
community and others that benefit from the film industry is
being done so that they are aware of what the opportunities are
- and the phone rings every day about this program.
1:42:14 PM
MS. AYERS said with regard to promoting Alaska, the Film Office
is engaged in print advertising in a variety of different
industry magazines and directories to make sure the message is
out there. They attend a variety of different trade shows and
other events to promote Alaska as a film location and talk to
producers - and there is a great deal of interest. She showed
them a program brochure outlining the incentive program and some
of the recent activity that is happening in Alaska.
1:43:42 PM
She said no industry springs forward fully formed. Now they have
this initial interest in this new industry and various state
agencies are looking at what their role can be; this includes
the Department of Labor, the University, other private sector
efforts for on-the-job training, and other outreach efforts to
just help develop the workforce that will meet the needs of this
industry.
She said the Film Production Incentive Program has a process of
prequalification; that is, going through the production process
and submitting the final application; having that approved and
then advancing it to the DOR and receiving a tax certificate
which in turn gets sold to someone with a corporate tax
obligation.
She said two productions were in the queue as this presentation
was being developed. One of them may have been approved
recently, but overall they have approved 44 pre-qualifications.
Over the life of the program (the last three years) 14 approved
tax credit applications have been advanced. The total production
value for the prequalified applications is about $34.5 million;
those tax credit applications that have been received and
approved, about $4.8 million. And those numbers are changing as
the next two productions are approved.
1:46:21 PM
MS. AYERS said the Film Office has 1.5 full-time equivalent
positions. Dave Worrell is their development specialist and he
manages the office; Erin Gora is the administrative assistant.
Deputy Commissioner Thayer and Special Assistant to the
Commissioner Roberta Graham, Communications Coordinator Mark
Kelsey, and herself have committed a great deal of time over the
last year to this program.
1:46:58 PM
MS. AYERS said the original fiscal note anticipated operating
costs of $275,000/year, but for this fiscal year they had a
$283,000 budget. The additional support costs are undetermined,
and the program has unallocated overhead costs of about $28,000,
for a total of $310,000.
1:47:57 PM
ROBIN CORNFIELD, Vice President, Communications and Marketing,
Nana Development Corporation, Nana Regional Corporation, said
she supported SB 23. It helps create a new industry - that of
making movies - in Alaska that is a renewable resource. They
support expanding the film tax credit incentive as it will lead
to further economic expansion and private sector jobs. Nana
Development Corporation's investment in Alaska's film industry
is a natural. They are an Alaskan company focused on creating
training opportunities and jobs for their shareholders most of
whom live in Alaska. They also have the expertise necessary to
support the industry.
She said that Nana is investing in building the infrastructure
for a film industry in Alaska, and this expanded tax credit is a
key to its success. Last September, they partnered with
Evergreen Films that has invested $10-million in a studio in
Anchorage specializing in 3-D films for a general audience, and
they are currently filming an animated dinosaur movie there
using real Alaska as a backdrop.
She said that in order to support this industry Nana is creating
a new company that will provide one-stop shopping for companies
making movies in Alaska. Nana already has the expertise in many
fields that are necessary for the film industry from catering to
security, transportation logistics, construction, mobile
surveying and lodging.
1:51:08 PM
She said WHPacific uses light detection and ranging radar
technology, called LIDAR [Light Detection And Ranging], for the
purpose of surveying roads, but Evergreen Films found it could
be used in developing the animated dinosaur movie. It does
surveying faster than the traditional method. She brought this
up because it was a surprise to find out that one of their
companies had technology that another one of their companies
could take advantage of. So, WH Pacific, a Nana company, is now
involved in marketing its new-found film services business to
other studios and production companies. This is one example of
the unknown benefits of Alaskans working with the film industry.
MS. CORNFIELD said Nana spent a long time studying the industry
before choosing to invest in it. They discovered that domestic
consumer spending for filmed entertainment has grown year over
year over the past decade including 2008 and 2009 which were
recession years, and that during those years spending also
increased. They also analyzed how the industry might grow and
found that the US accounts for 6 percent of the world's
population and approximately 50 percent of the consumer dollars
spent on filmed entertainment worldwide. But international
markets are becoming more important and are expected to continue
to outpace domestic growth in the near future.
Vancouver is one example of the impact a tax incentive and
investment in the film industry can have, she said. Starting
with a little TV show in 1994 called "X-Files," it has seen
movie production values grow from $400 million to more than $1.2
billion, and the industry has helped create more than 20,000
jobs.
MS. CORNFIELD said because they believe so strongly in the
future of Alaska's film industry, Nana Evergreen and other
private sector partners have begun investigating the possibility
for developing a sound stage in Anchorage. This, along with the
tax credit, they feel, will encourage more producers to come to
Alaska.
1:54:13 PM
MS. CORNFIELD showed a slide of a five-year period from the
beginning of creating a film until it is released. The
production takes about three years and then filming begins. So,
lengthening the timeline for projects to qualify from 24 to 36
months (included in the legislation) will help attract more
producers to use Alaska as a location. Expanding the dollars
allowable under the tax credit from $100 million to $200 is
important as well, as it will allow the industry to grow in
Alaska as the infrastructure grows.
She said Nana's mission is to improve the quality of life of its
people. It has a simple overall strategy to invest in companies
with potential for growth and to look for opportunities that
will provide training and jobs for shareholders. She said the
foundation for this growing film industry started with the
original Alaska film production incentive program, but the
future success of the industry is based upon movie producers
choosing Alaska over several other states and countries in which
to shoot their films. "Everybody Loves Whales" and the economic
impact of filming in Alaska is a good success that can be built
upon. Alaska resident wages were more than $4 million; goods and
services purchases were above $7.5 million. Alaskans were in
front of and behind the camera, 12,000 hotel rooms were used and
more than 8,000 days of rental cars were purchased.
1:58:03 PM
DEBORAH SCHILDT, Alaska Crew Training, and Bryce Habegar
introduced themselves. Ms. Schildt said they both supported SB
23. She said she is a co-founder and program administrator for
an educational 501(c)3 called "Alaska Crew Training, Inc." She
said their training program would not exist except for the
success of Alaska's film incentive bill.
MS. SCHILDT said her background is film school in Canada, then a
move to Los Angeles where she started in the film business on
features like "Goonies" and "My Girl." After 20 features, 200
commercials and 28 years later, she calls Alaska home. This past
year she was one of two Alaskan casting directors on "Everybody
Loves Whales."
In 2009 with passage of Alaska's film incentive bill they saw a
need for training a larger workforce. AFG wasn't interested at
that time, so Alaska Crew Training was formed. Now, according to
a recent article in the Anchorage Daily News one would have to
watch TV 24 hours a day for two weeks straight to see every new
episode of Alaska-based reality programming since "Deadliest
Catch" first launched in 2005. No other state has more cable
shows per capita than Alaska. "We've entered our next gold
rush," she said. "It's Alaskan-based stories shot here and shown
around the world."
2:01:16 PM
She said an executive producer on "Everybody Loves Whales" gave
her this list when asked what the industry was lacking:
-a film office fully engaged with a website that really works
for producers
-a sound stage, more equipment
-more infrastructure
-and a larger trained workforce
A trained workforce needs a basic understanding of how film
production works and on-the-job training opportunities. She said
49 out of 63 speaking roles in "Whales" were cast with Alaskans
who earned a combined income of over $160,000; two Alaskans
landed lead roles and earned over $20,000 in seven weeks, two
others over $16,000. They came from communities across Alaska,
not just the big towns.
When "Act 1" formed in 2009 they looked at other film training
programs to help them come up with a basic program that could
grow with the industry. It was foolish to train workers without
projects, so they held off offering classes until they knew
there were jobs coming into the state. In 2010 their Production
Bootcamp 101 was launched. To date six Bootcamps have been held
and nearly 100 people have gone through them. The Bootcamps will
be continued in 2011 and they hope to branch out beyond
Anchorage with on-line offerings and start Level 1 and Level 2
courses with instructors from the American Film Institute. She
related how local people successfully started training and found
careers by working on "Whales." She related how many people are
taking classes and working on productions like "Ghost Vision."
MS. SCHILDT said many Alaskans have migrated outside of Alaska
for schooling, for jobs and careers in the business, but she
thought the incentives might give them a chance to come home and
find work in the industry here. Their vision is to continually
increase their class offerings - starting with entry level jobs
because Alaska has a limited pool of seasoned experienced
workers. Their Level 1 and Level 2 classes are best suited for
individuals who already have some on-the-job training and are
looking to increase their skill sets. They are headed toward
deepening Alaska's crew base to accommodate two large features
at the same time by building up to 500 graduates over the next
three years. She said while they have been recognized by the
Alaska Film Office as a training resource for crew, all Alaskans
can continue to work together on building a workforce.
2:06:52 PM
WOODRUFF LAPUTKA, film maker and graduating student from UA
Anchorage, said he supported SB 23. He described some of the
opportunity it has brought about. He was a journalism/public
communications major and found he liked working with film
making. When he found that there weren't enough programs capable
of supporting his interest in filming, he attended the
University of Sterling in Scotland for one year working with BBC
and Channel 4 professionals to gain that experience. He returned
to Anchorage and is now finishing his BA in journalism, but with
a vast added interest in the future of Alaska's film industry.
2:10:13 PM
He said this state has a rich culture in pioneering, and the
interesting thing about the film industry up here is that it
acts just the same as anything else. You have pioneers who take
those "pie in the sky ideas" and make them reality. In Alaska,
in particular, the infrastructure is so new that anybody can
contribute and become a pioneer. As a graduating student and a
young man, Mr. Laputka said, he wants to make his career in
Alaska. The opportunities are now here. Plenty of productions
came through in the fall and even more are coming through in
2011. A vast amount of material is being developed here.
MR. LAPUTKA said as a film maker, he looks for being able to
work in an area that can pay his bills but also that is
conducive to what he requires. One thing that will keep him in
Alaska is extending the film tax incentives and, for one main
reason: it will better enhance the opportunities for
establishment of a functioning infrastructure so that they can
express not only their art but also their business.
He said the various components of the infrastructure are being
pieced together so that it will function well. It is working
similarly to the way it happened in Vancouver 20 years ago.
The University of Alaska Anchorage (UAA) doesn't currently have
a film program, but there is a proposal to have one at the
University of Alaska Fairbanks (UAF). He related that he created
his own program and had it signed off by his professors and
department heads. When it came down to the brass tacks and he
sought that experience he had to go elsewhere. That does not
mean that Alaska doesn't have the ability to satisfactorily
supply the kind of experience and education needed in order to
establish a film program. It only means that it hasn't developed
the focus to create a program like that. Now the focus is here,
because the tax incentive is here. Now is when the
infrastructure is building.
2:13:38 PM
Foreign interest and foreign investment is going to be the big
bolster in what will decide how the growth and future of this
film industry will go. In order for that to occur, more time is
needed to insure that they have an interest in coming here and
the tax incentive. As a young film maker who originally came
from Florida, Mr. Laputka said he has a big interest in
continuing his career here in Alaska.
2:15:24 PM
D.K. JOHNSTON, independent filmmaker in Alaska, said he has been
an Alaskan resident since 1997. He moved up originally from
south Texas, but he has gained a real big foothold in the state
as a film maker. He attended middle school here, graduated from
Service High School and obtained his Bachelor's degree in
journalism/public communication at UAA in 2006. Later he wanted
to pursue his passion of film making and had to leave the state
where he obtained his MFA degree in film for the New York Film
Academy out of Los Angeles. He got to see how the "Hollywood
system" works, and he said that "they love us up here." They are
intrigued by the kind of landscapes Alaska has to offer and the
talent it has to bring to their personal projects.
He said many in the Anchorage LIO can testify to the pros and
cons of getting a film production program at UAF. The staff
there has been organizing to implement an education program
which would open doors for many Alaskans to train and work
professionally in the film production industry. If this program
is successfully added into the state's education system, it
could help increase the number of trained production crew to
compensate for various productions looking to shoot here, and
future film makers would be capable of taking on larger roles in
production that could potentially increase local production of
motion pictures. Right now the majority of educated and
experienced production crew in the state receive their training
elsewhere and those who have returned are now doing their best
to train others interested in making film production a career.
MR. JOHNSTON said he came back to Anchorage to take part in the
film industry because as people have said today, Hollywood is a
stepping stone for many productions. The major studios are
looking to shoot their films in states like Alaska which offer
very nice tax incentives. In order to remain competitive,
however, with other states and countries establishing
professional crew base and a film degree program in the
University of Alaska is an important step in the right
direction. He hoped extension of the film tax incentive program
would encourage branches of the UA system as well as local
school districts to increase their education in film and
television production. He summarized: "The more education our
state can provide in these fields the more likely we are to
encourage other Alaskan students to consider continuing their
education and training here at home as opposed to going
elsewhere."
2:18:55 PM
ALLEN ERICKSON, White Fox Studios, said he would let another
producer, Larry Golden, take his time to testify.
LARRY GOLDEN, Aurora Films, said he had been making films and
television in Alaska for 37 years and has witnessed a lot of
productions going on by both his colleagues here in the state
and some from outside. He said his work has been nominated for
two national Emmy awards and it has appeared on PBS in the
national prime time schedule several times; he has won many
national film festivals and was the executive producer for the
most successful locally financed feature film, "Spirit of the
Wind."
MR. GOLDEN said he supported the goal of bringing production
companies into the state. Every dollar they spend here is
another dollar that goes into Alaskans' pockets and those
dollars circulate. But he wanted to see something more happen
through this program, which is for legislators to use incentive
programs to further incentivize or enable local ownership of
more media production companies. He explained when a non-
resident production company comes here, they spend money, and
that is good, but if an Alaskan production company owns a
production, and it's a commercially successful TV series or
feature film, the profits from that distribution stay in Alaska,
and that is vitally important.
He said New Mexico has found a way in its incentive program to
score points for production companies coming into their state
and to adjust the tax benefits in such a way that non-resident
companies that use local personnel in key creative positions,
such as directors and writers, not just positions as crew or
truck drivers, that provides a much greater benefit to the
state. It helps ensure that the stories that are told and the
way they are told are more realistic and more consistent with
the real Alaska. That can be enhanced through the incentive
program.
MR. GOLDEN added that in 1976, he was the one who proposed to
some legislators that the state legislature create a legislative
teleconferencing network. That idea was picked up and he was
hired as staff to the task force that set up a demonstration
project of teleconferences. They held six audio and three video
teleconferences. He said it does his heart good to see it being
used for the benefit of people around the state.
2:26:06 PM
JAMES MCLEAN, independent screen writer, Anchorage, said he
moved to Alaska in 1976, and that he had seen a lot of films
that were allegedly set in Alaska. And as an Alaskan screen
writer he winces every time he sees a deputy sheriff in a county
in Alaska because there is no such thing.
SENATOR MENARD joined the committee.
MR. MCLEAN said of the six features he has finished, four were
optioned, one is in production, and another is in preproduction.
They are using Alaskan crews, actors, producers, and Alaskan
money for the most part. One of the reasons he can do
"Doppelganger Principal" (a film starring Ed Asner) here, is
because of the incentive program. It wouldn't happen without it,
because it's too speculative for a lot of people. This program
is critical for films to be made in Alaska about Alaska and
about Alaskan people.
CHAIR EGAN thanked everyone for their comments and said he would
hold SB 23 and continue taking testimony next Tuesday.
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