HB 112-REPEAL FILM PRODUCTION TAX CREDIT  4:31:07 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 112 "An Act repealing the film production tax credit; providing for an effective date by repealing the effective dates of secs. 31 - 33, ch. 51, SLA 2012; and providing for an effective date." 4:31:13 PM DAVE HUNSAKER, Screenwriter, informed the committee he has lived in Alaska for approximately 40 years and has worked as a screen writer for 25 years, working between Juneau and Hollywood. Prior to that, he worked as the Artistic Director of the Naa Kahidi Theater and Perseverance Theatre. He offered his belief that the film industry is just getting started and has generated a lot of interest in Hollywood. He has a project, The Firecracker Boys, which is based on Fairbanks writer Dan O'Neill's book about Project Chariot. This project is funded and ready to go. He said Leonardo DiCaprio is the producer and the director is Bronwen Hughes. He reported that the production is in the process of casting and while the budget doesn't permit the entire production to be in Alaska, some location shoots were done in Alaska and location scouts have been hired. He related the intention is to shoot 30 percent of the film here, which would not be the case without the Alaska Film Production Incentive Program credits. What has prevented more productions from being filmed in Alaska is the lack of trained technical crew, which is changing as more productions are filmed here. He said that while a lot of money has been paid to people outside Alaska thus far, the more projects that are filmed here the bigger the base. He offered his belief that as more films are filmed in Alaska, the filmmakers will discover the grandeur and superior lighting in Alaska. Further, some things simply cannot be found in other places. For example, there are not any good Arctic locations in Canada that have the infrastructure film crews need, noting, Canada is Alaska's huge competitor. Mr. Hunsaker related that Canada has been aggressive. He stated that people from the British Columbia Film office and the Alberta office, which is where Alaska has been depicted, came to Alaska with respect to filming Firecracker Boys. He predicted that once people see the real Alaska it will make them more prone to want to come to Alaska and anything shot here would be good advertising for Alaska. 4:34:37 PM PATRICIA HULL, Actor, Alaska Film Group, stated she moved to Alaska in 1967 and has spent 31 cumulative winters in Alaska. She said that she is representing the Alaska Film Group (AFG) today. She works as a performing artist in music, theatre, film, and television. The AFG is a nonprofit trade organization for individuals and businesses that are involved in the film and video industry in Alaska. The Alaska Film Group also encourages workforce development so Alaskans can be hired into the well- paying crew jobs. Additionally, the AFG has been active in the development of infrastructure to support film production. She offered her belief that Alaska is a really compelling place to make films since it has dramatic locations and abundant summer daylight. However, other places with beautiful locations, such as New Mexico, Canada, and New Zealand, aggressively court the film industry. She recalled that New Mexico even offers loans. She turned to Canada, which in many ways is Alaska's twin. When the Canadian dollar was strong it was really easy to keep films in Alaska, but now that Alaska is 98 cents to the Canadian dollar, Alaska is in a precarious balance point. She explained that eliminating the Alaska Film Production Incentive Program (AFPIP) at this point would have the effect of losing the competitive advantage. Films that would normally come to Alaska will instead go to Canada. In fact, she recalled hearing that a film about the serum run in Nome will be shot in Canada. She highlighted that a chilling effect has taken place due to the risk of the incentive program being dismantled. Last year, the 10-year commitment was made it made people think big and long- term and really start to put their irons in the fire, which has changed with HB 112. 4:36:48 PM MS. HULL pointed out that a number of enhancements were scheduled to go into effect for the AFPIP, including cabinet level review of projects to ensure the best interests of the state and its residents are reflected in the films. Further, a sliding scale application fee from $220 to $5,000 would be implemented, based on the film budget's ground spend, she said. Additionally, the incentive to hire Alaskan residents would be increased from 10-20 percent, which means the film companies will receive more tax credits if they hire more Alaskans, which also would reduce non-resident funding. In fact, Alaskans are trying to tweak the program to really make it work. In essence, creative industries like film are the wave of the future. There isn't any red tape, or any of the difficulties of other industries, plus film companies leave things better than they find them. In fact, one major production company needed a sound stage and subsequently created a $6 million investment in the sound stage. These types of investments are not reflected in the incentive plan, but this sound studio is now part of Alaska's infrastructure. She encouraged members to let the wisdom of the 27th Alaska State Legislature move forward. 4:38:09 PM RICHARD BENAVIDES, President, The International Alliance of Theatrical Stage Employees - Local 918 (IATSE Local 918), stated he is testifying in opposition to HB 112. He said the IATSE Local 918 is the organization that represents both stage, film and television technicians. However, IATSE also supports any union or non-union person who works on films and is part of the film community. The AFPIP has positively impacted IATSE. Over the course of the program, over half of the IATSE Local 918 has worked making good wages on several film or television projects, such as Everybody Loves Whales, Frozen Ground, employing 160 members and 90 members, respectively. Additionally, the IATSE Local 918 has been involved with the University of Alaska Fairbanks (UAF) in training over 250 individuals in Fairbanks and Anchorage. He said some activities conducted at studios to train grip for films, which were streamed statewide so people who could not attend in person could follow along via video, which is still available for people to download. Additionally, the IATSE Local 918 will offer courses this summer. In fact, a student film will be made with UAF film students - assisted by Alaskans already trained in film - to use technicians across the state so students learn how to make a film from beginning to end and learn all aspects of filmmaking, including technical and acting. Referring to the Alaska Film Office's Report to the legislature, Mr. Benavides highlighted the following bullet points: "cooperate with organizations in the private sector for the expansion and development of industry in the state; promote Alaska as a location for production; provide production assistance by connecting folks with Alaska contractors, suppliers, and workers; and certify internship programs, and promote the employment of interns by eligible people." He suggested a person could insert "oil" or any industry in this state into the language of the bullet points. These are the things Alaskans always discuss. In fact, the mantra ever since he worked as staff for the legislature has been to diversify the economy. He asked members why one would destroy a fledgling industry which has shown positive growth and fills the need to help diversify Alaska's economy. He asked members to consider what has occurred, including that the industry has been growing, and thus far has been very positive. He urged members to please vote against this bill. 4:42:24 PM IRENE BEDARD, President, Sleeping Lady Films - Waking Giant Productions, stated that she is Alaska Native and was born and raised in Alaska. She said she has made her career in over 45 productions in the film and television industry. She also said she is so happy to say that she has worked on the international stage, but her home, Alaska, has always held her heart. She said, "Alaska is where I'm from." Last year she incorporated Sleeping Lady Films - Waking Giant Productions in Anchorage. The company is an Alaska Native majority-owned company, with minority partner, Thom Denomme from Canada who has expressed great interest in the beauty and rich culture of Alaska's people. However, for an entrepreneur and an international producer, it was the film tax incentives that made starting a company in Alaska a sound business decision. It has been their mission and vision to show Alaska in all its beauty and grandeur, to show the strength and integrity of Alaskans and to tell their stories which are uniquely Alaska. She reported that the slated projects could provide continuous work for Alaskans and create a unique opportunity to train and develop the workforce and infrastructure needed. She emphasized the key, which has happened in Vancouver, British Columbia, as well, is to have a series of projects moving forward to enable the workforce to get trained, interned, and developed into a very strong group of people who can be used on the international stage. 4:44:32 PM MS. BEDARD stated the company's strategic development has traveled throughout the U.S. and Canada and has made connections around the world, including Europe, Asia, and South Africa. They have been ambassadors of goodwill for the burgeoning industry in Alaska. She characterized the Alaska film industry as one which creates the best overall public relations for tourism and brings Alaska to the international stage at a pretty high level. She offered her belief that it will be a missed opportunity for Alaska if this bill goes through. She said, "I'm deeply saddened to say it is not a good business decision to keep my company here if it does go through and that would be a great loss to our state." She read a statement from her chief executive officer, Canadian producer, Thom Denomme, as follows [original punctuation provided]: I am writing to you in reference to HB 112 dealing with the Alaska Film Tax Credits. I am curious that this subject is once again being broached as we had set our business plan to correspond with the passing of the previous Bill on Tax Credits and it certainly delivers a red flag to the industry as a whole about shooting in Alaska. The subject of controversy seems to arise in the mistaken belief that the tax credits and incentives are being used to pay the salaries of actors from outside of Alaska, creating a campaign that states, "Why should Alaska taxpayers pay the salary of rich Hollywood stars?" This argument has as much credibility as stating "Why should there be any incentives programs for the oil and gas business in Alaska? These incentives just go to pay the salaries of rich oil and gas executives." This would seem a strange statement as the oil and gas industry is a multi-billion dollar industry creating thousands of jobs across the State. Given the opportunity, the film and television industry could also be creating a myriad of opportunities not only in the film/television business, but also in related ancillary businesses. This includes shipping, catering, the hospitality industry, construction, transportation and most importantly, tourism. 4:46:44 PM MS. BEDARD continued reading, as follows [original punctuation provided]: The best example of how this can affect a region is from my home province of British Columbia. Utilizing a diverse landscape and strong tax credits (sound familiar?) British Columbia transformed itself to the point that film and television is now one of our biggest industries. When you add in the tourism and that was created as a result of this, you can see how this industry has been a tremendous boom to the overall economy of British Columbia. The challenge is that most producers have no idea of the diversity of landscape that Alaska has to offer. Unfortunately most of the shows shot on Alaska show the State as inhospitable tundra. We've had producers in LA tell us they have no winter scenes in their film, so why should they shoot in Alaska? We of course calmly explain that Alaska does indeed have summer, show them pictures of the incredible scenery and mention that in certain places, they can virtually shoot around the clock as there is virtually no night. Now, THAT gets their attention! The challenge is that Alaska has created this tremendous tax credit that has the potential to create a whole new industry for the State and has done absolutely nothing to promote it. The potential is there, the template (from BC) is there, yet the only thing being created is uncertainty and unease from producers when they see Bills such as this one being revisited. The key to making this work is less bureaucrats and more salespeople. Anchorage is ideally situated six hours from LA and six hours from London England. Alaska should be actively promoting to producers worldwide and attending different film festivals such as MIPCOM and NATPE. My partner Irene Bedard and I have been promoting Alaska ourselves as international producers and would be more than happy to work with the State in this regard. 4:48:12 PM MS. BEDARD continued reading [original punctuation provided]: The second part of this equation is building the infrastructure of talent to attract productions. This means creating jobs. For our part, we are creating a Film Institute to help train Alaskans, especially First Alaskans, in the film industry. We would be happy to have discussions on how we can all work together to accomplish this. By following through on this, we are now creating jobs for Alaskans, not for outside production companies. The last point I wish to comment on is likely the most important and that is tourism. I am not privy to the statistics, nor do I feel they can be accurately predicted but I am going to guess that Alaskan based shows have created a tremendous boost to tourism and tourism based businesses. Other States with strong Film Tax Credits, such as Louisiana and New Mexico have also seen a growth to their tourism statistics. Speaking for ourselves, we have a slate of shows that will highlight Alaska in the most positive light. The key to building this industry in Alaska is commitment, training, cooperation between those with a vested interest and a sustained promotional program. As a personal note, I would also like to add that the State has a strong promoter and ambassador in Ms. Irene Bedard. She is the one who convinced me to open up our production company in Alaska. She not only believes in the incredible potential of the State but wanted to help create something beautiful and meaningful in the place she calls home. I will leave you with that. [Thom Denomme CEO Sleeping Lady Films/Waking Giants Productions] 4:49:36 PM FRANCES CHEEVER, President & CEO, Squeaky Reel Productions; Major, U.S. Army Nurse Corps, Retired, stated that she recently retired after 32 years of service, with most of her service at Walter Reed Army Medical Center caring for wounded warriors and their families. She said she is passionate about telling stories about American heroes through film and television, which can entertain, educate, and heal America. As a screenwriter and member of Veterans in Film and Television, she believes she can do so, in particular, with her script 13 Pax, a high-stakes contemporary, military page turner that takes the audience to one of the military's far reaching power projection platforms: Alaska. She described the basic mission and skill set of the fictitious team, which is a motley crew of adrenaline junkies - men and women - who have proven their mettle as the premier combat-ready medical team. Last year, after spending only a week in Anchorage she fell in love with Alaska and made the bold move to take her feature film to Alaska and write an entire sequel 13 Pax Derailed which is set in Whittier and makes Alaska a central character. The film will showcase the beautiful scenery, history, and people of Alaska, along with service men and women. While in Alaska, she spent time with the Alaska Army National Guard's Public Affairs Officer as well as the commander of the 212th Rescue squad on Elmendorf Air Force Base (AFB) and Richardson AFB. The military base has been very excited about having her film come to Alaska since it has all the ingredients of a high-concept feature film with sequel or episodic television potential. Additionally, the film is under consideration for optioning by some very big Hollywood hitters. What has contributed to making this film a more attractive venture is the AFPIP, she said. Further, she indicated the Chief of Public Affairs for the U.S. Army wrote a letter of encouragement for this film and endorses it as the script is in concert with U.S. Army values and with funding. Once the U.S. Department of Defense (DOD) production assistance agreement is secured, the DOD will be inclined to support it, she said. She emphasized that having military assets available at Elmendorf Air Force Base and the U.S. Army's support makes Alaska an even more attractive setting. MS. CHEEVER said that currently, she is working with an Alaska- based production company, Sprocket Heads. She anticipated hiring hundreds of local people for this film, including experienced local crew members, Alaska service members, veterans and their families. She concluded by saying that HB 112 could halt the potential future of her film, its sequel, and potential TV series in Alaska. She urged members to please support the AFPIP and honor the commitment to keep the program going until 2023. 4:53:32 PM KELLY BENDER, Owner, Lazy Otter Charters, stated that her company provides water taxi, sightseeing, and has a coffee shop. While she is not directly affiliated with the local film industry, her business is a local business that has benefited from the industry. She related that the film industry has provided direct business opportunities since her company has taken out film productions on their boats. Additionally, her business has enjoyed indirect benefits since the company has taken crew and cast on sightseeing tours. She estimated the industry has provided about $12,000-15,000 during the shoulder season for her small mom-and-pop operation. Plus her business also hires local Alaskans who live in the community. She observed that the state often supports industries with finite resources, but here is an opportunity to support an industry that has infinite reach and can help small community-based businesses and industries. She hoped members would understand that this bill has a much farther reach than Hollywood since it supports many businesses and people in Alaska. 4:55:35 PM GARY ZIMMERMAN, General Manager, Alaska Rent a Car, Inc., stated his business is an employee-owned licensee of the Avis Rent a Car system that has operated in Alaska since 1955 in many communities in Alaska. He currently employs approximately 100 full-time employees. He represents a company that is not involved in film production; however, it benefits from the increased activity this industry brings to Alaska. He offered his belief that a huge economic benefit is felt throughout Alaska from the film production dollars. Although some is as general as increased business to hundreds of companies, other impacts are as specific as direct wages to Alaskans, as well as increased revenues returned to state and local government. Although he only works in one service industry, this same industry generates over $22 million in actual taxes and fees collected from renters, which is paid to state and local government, including hotel bed taxes, car rental taxes, and general sales taxes. He emphasized that as receipts from increased business activity increase so do revenues to governmental agencies. Frankly, the state could not begin to pay for the promotion of or spend marketing dollars that match the advertising done by productions that feature Alaska. This increased awareness helps further the state's goal to promote tourism and aid the tourism industry such that Alaska will surely rank high on tourists' list of where to spend their vacation dollars. In fact, the film industry is just beginning to get traction in Alaska with companies investing in people, training, facilities, and equipment, but HB 112 will effectively kill this industry and the companies that are working very hard to help diversify Alaska's economy. He urged members to look at the title of this committee and do what they can to promote labor and commerce in Alaska by voting against HB 112. [HB 112 was held over.]